Q1 2020 Earnings Call
Good morning, ladies and gentlemen, welcome to the summit. She won 2020 results conference call. Please.
Please be advised that this call is being recorded.
I'd now like to turn the meeting over to Mr., Paul Dykeman, Chief Executive Officer. Please go ahead Mr. segment.
Thank you operator, and good morning, everyone. Before we begin let me remind everyone that this conference call. We make statements containing forward looking information. This forward looking information is based on a number of assumptions subject.
Number of known and unknown risks and uncertainties that could cause actual results to differ materially from those disclosed for imply.
We direct your due to our earnings release, Mdna and other security filings for additional information about these assumptions risks and uncertainty.
Joining me on the phone this morning, as Ross shrink, our Chief Financial Officer.
I'd like to start by thanking our tenants for their support through this difficult times, but most importantly, the management team in place that at summit have done an outstanding job under the stressful time working from home or state Supervisors working from there.
Vehicles, it's the skill and experience of our people that will get us through this challenging time and will help us emerge even stronger than ever.
Texas. This morning are to review the first quarter results discuss your initiatives and short term programs to operate through the cobot 19 pandemic.
Our objectives since early March our to ensure the health and safety of our team or tenants and communities that we operate.
Preserve capital to maintain our strong conservative inflect flexible financial position.
Mitigate risk to our business and our properties.
To generate the best operating results possible in this new environment leveraging off the significant experience and knowledge of our team.
Turning to slide for our record gross and operating performance in 2019, clearly demonstrated how we can build value in our key target markets.
Portfolio growth generated 54% increase in revenues driving strong and accretive increases in our net rental income and EFO.
We're also pleased to see another solid year same property NOI growth with very strong increases in our TJ Montreal in Alberta markets.
Additionally, with the internalization of our management team in May or June a experience expenses are now amongst the lowest ratios in or industry, a real advantage as we work through these current issues facing our business.
With these results are strong financial position, we entered 2020 in great shape.
As you can see on slide five our growth and record results in 2019 continued very strong and consistent track record of generating value since our inception in 2012 as we look forward. We're confident we will resume this pattern of annual growth.
As the parent current pandemic eases.
Slide six details are solid and stable first quarter 2020 results, which included one month of operating under the Corona buyers pandemic revenues rose just under 38% results for portfolio growth over the last 12 months, increasing rents and near full occupancy.
The increase in revenues generated a 40% increase in our NOI.
38% Ryzen EFO same property NOI remained strong at 5.3% compared to last year.
FFO per unit was impacted by the large acquisitions during the quarter, we expect to see the accretive contribution from these new properties in the second quarter and going forward.
And again, we continue to believe we are among the lowest DNA rates in the Canadian real estate business and this a significant strength as we work through these the situation as you can see the percentage of.
DNA as a percentage of asset value was very low in the quarter.
Following a strong portfolio growth in 2019 to first quarter of 2020, we're very active and we added a number of very solid accretive properties to our portfolio as loan on site. So shown on slide seven overall, we acquired nine properties totaling 747000 square feet all within the very strong GTT market.
For cost of approximately 176 million the overall in going cap rate was approximately 4.4, which also included the purchase of excess land on which we can build an additional 200000 square feet in the future generating enhanced yields.
The new acquisitions will come to contribute to our revenue growing forward and add to our ability to generate operating synergies economy scales and further enhance our results over the long term.
We're also pleased to recently announced the sale of our interest in DC to data Center in Richmond Hill as you can see on slide eight with the closing of this transaction on May 11th we received payment of Aro standing mezzanine loans, including accrued interest 5.5 million. These funds will.
Enhance our liquidity position going forward. We also recorded unrealized at $21 million gain or 15% 15 cents per unit on the sale. The proceeds of the realized gain will be received in stages over the next in eight next 18 months or so as construction on that project was completed with US in transaction, we only have one.
Handing mezzanine loan of $22 million left.
As we started the year end call, we want to provide you with more color on their three target markets, starting with Ontario.
You will notice that the culprit 19 pandemic began in March we are fortunate to have a very high occupancy across the portfolio, mostly in very tight markets with low embedded average rents per square foot that are below market.
Slide 10 shows why Ontario remains our key focus going forward as of March 30, Onest Entre represented approximately 52.6% of our total GL eight.
Property NOI rose a very strong 7.3% in the first quarter on top of a solid 5.5% in 2019.
Our leasing programs are driving strong increases in cash flows in the quarter, we generated a solid 99.6% retention ratio on renewals with a 22.2% average increase in rents over in place rents and particularly 23.4% in the target GCA market.
With the current embedded rents in Ontario at $6.68 or $6 in 40 cents per square foot GT. We're confident we will still see further lists as leases or renewed going forward.
Slide 11 demonstrates that Montreal regions continues to generate solid unstable per for performance as of March 30, Onest the portfolio represent approximately 18.5% of our total GL eight.
Our leasing programs also generated increase solid increases in cash flow with retention of 98.4% in Quebec portfolio generated 5.4 increase in rents again. The current in place rents are below market. We expect further rent increases in the future subsidy quarter end, we did complete an additional renewal for 100.
Yes, and square foot tenet, one of the largest this year.
For an additional 18 month term at a 22% increase in monthly rent.
Slide 12 outlines our performance in Alberta through the first quarter as you know we completed our major acquisition of properties in both Calgary and Edmonton late last year in Alberta, now represents 28.7% of our total Julie at March 30, Onest same property NOI Rosenthal at 4.4%.
And this portfolio is currently today at 97% occupied up from the 96% at March 30, Onest and just to remind people. We were at 91. When we initially bought that portfolio. So we're both ahead of our pool from Russia and the ongoing.
The 5.5% is actually closer to 5.8% today.
We remain confident or Alberta, we'll we'll continue to perform well through this pandemic due to a strong fundamentals as detailed on slide 13.
The portfolio is predominately made up of good quality class a buildings with the remaining 31%.
Recorded as class B importantly, theres, a heavy weighting in base rent from a diversified group of creditworthy tenants, both international and National tenants. The majority in warehouse and distribution sectors. We believe will benefit what trends towards ecommerce, you'll see that oil and gas now only represents 5% of our total base rent.
In the portfolio.
In the appendix you will find more details on our Alberta portfolio, including our top 20 tenant list by property type I will now turn things over to Ross.
Thanks, Paul.
We believe the most important message today is that we entered the cobot 19 pandemic very strong financial position as detailed on slide 15.
Total liquidity available at March 31st was approximately $200 million, including cash available borrowing capacity.
Potential new financing on a portion of our unencumbered properties.
New 300 million dollar three year unsecured credit.
Also provides us with increased flexibility.
And with over 47% of our total debt now occurring floating interest rates.
Capitalizing on the current low rate environment, saving an estimated 1% to 1.5% and cost over fixed rate.
Yes.
Sites, our balance sheet remains very strong as shown on slide 16.
Our leverage ratio is very is very conservative and reflects a fair market value increase of $21 million on our data center properties recognized in the first quarter.
Over the last year too we have capitalized on low interest rates and extend the average churn for the mortgage portfolio with their average term maturity rise to 5.8 years at March 30, Onest from 5.7 year years last year.
As of March 31st we had approximately 46 million available on our credit lines.
Slide 17 details our mortgage portfolio maturities by year.
Showing that we only have.
2% mortgages coming due through that made or 2020, which is monthly principal repayments on the existing mortgage mortgages and only 10.6% in 2021.
As a result, we believe we are not overly exposed to any credit risk.
You also notice that the average interest rate for our maturing mortgages between 3.7 and 3.9%.
Representing a solid opportunities to generate significant savings on maturities going forward in the current low interest rate environment.
As you know we have a $350 million original coming due this november.
We are evaluating for possible strategies to deal with as well as outlined on slide 18.
And extended by six months.
During Q2 2021.
Placing it with regular property mortgages or we can issue unsecured bonds.
Our negotiate new unsecured term loans.
We continue to monitor the debt markets and do not expect any issues and repaying This bridge loan.
On a positive interest rates are very favorable today, and we don't see any major uptick in the near term.
On the leasing front.
As outlined on slide 19, we continue to made solid progress on our renewals.
Fortunately, we only have a small number leases remaining to renew this year, but there are a majority coming due in the fourth quarter.
We're also seeing solid increases in rents on renewals with an average 14.3% overall increase at a much higher 23.7% increase in our key GCA market.
Importantly, we retain approximately 96% of tenants in the quarter. Despite this challenging environments.
As you can see on slide 20, we only have just over 3% leases remaining through new this year and only 9% in 2021.
We believe with our low embedded rents that are below market. We can generate solid increases in cash flows at least matures in years ahead.
Ill, Karen I'll turn things back to call to wrap up.
Thanks Ross.
We want to spend the balance will call. This morning, reviewing the initiatives that we currently have in place to help us manage through the issues facing our.
Facing our tenant businesses, resulting from the pandemic.
As I mentioned earlier, our short term objectives are to preserve capital maintain a strong and flexible financial position.
Mitigate risk and generate the best possible operating results in this environment.
Turning to slide 22, our acquisition program is essentially on hold and all people are now working collecting monthly rents.
We did complete nine accretive property purchase on the first quarter, adding up 747000 square feet.
Our development program is also being deferred again to preserve capital we continue to complete any plan planning and permitting necessary for future projects to ensure we are ready with shovels in the ground as Rick recover from the pandemic, we will care for carefully evaluate proceeding on any specific projects with the long term tendencies and full occupancy.
Which will generate strong returns for our unitholders.
Importantly, if we do proceed with certain construction projects they will be financed by construction loans it will not be it a drain on our current liquidity position.
From an operational perspective on on slide 23, or people are mostly working from home.
We do continue to have our regional staff.
Drive around to help tenants out with their issues and.
Sorry, yes.
Clearly our main task currently is to click monthly rents and we are proactively in discussion with smaller tenants listening to them working with them to collect as high level as possible.
For April we collected approximately 96% of our total rents.
And up to May 12, we've collected 87% of May rents.
But we've also done rent deferral or at least extension deals with another 8% of our tenant base effectively getting.
Accounting for 95% of or rent collections.
Another key strengths is our tenant base, primarily large and creditworthy businesses that we're confident that will ensure through the pandemic as you can see on slide 24, there are certain small pockets that are experiencing financial hardship, we're working with them to determine how best to help them through these challenging times for example, entertainment retail and restaurant business.
As in the portfolio are experiencing tough times. The tenants currently only represents 1.2% of our total tenant base.
Additionally, certain additional businesses that are part of a larger supply chains, such as automotive or having short term issues with automotive plants shutdown longer term, we're not concerned.
These businesses.
Importantly, should we experienced vacancies the majority of our properties can be easily transition to space that continues to see strong demand, including ecommerce logistics, where hopes and fulfillment centers.
As an all real estate business, we are seeing a number of our tenants that are experiencing this financial hardship.
As discussed on page 25 were in close contact with all these tenants and discussing their issues.
Our first preferred strategy is to negotiate an extension to their lease which is closer to current market rents.
Some tenants are in need of some sort of rent deferral and we are most likely to accept proposals from creditworthy companies with strong covenants that are willing to pay at least part of their monthly rent during these pandemic months.
Other mostly is much smaller tenants may need a full deferral.
We also closely monitoring the details of the recently announced federal government rent really program and how it might apply to the certain tenants.
Looking ahead, we are confident that we will weather the storm and emerge even stronger than ever.
On the chart on page 27 shows our key markets entered the pandemic and what are the strongest positions ever our target GTN Metro markets are at all time low availability, resulting in very.
Take markets was essentially no new supply.
Rents and those portfolios are well below market.
This market strength as a key benefit as we move through the current challenging environment.
Turning to slide 28, you will see that the industrial market is performed reasonably well through past economic crisis importantly in the industrial market entered 2020 with historically low availability rate nationwide of 3% and while the current crisis may be far worse than anything we've experienced in the past we're confident the industrial market will remain strong.
And resilient.
Our portfolio also possession possess a solid fundamentals that we believe will help right out. This challenge as you can see on slide 29, almost all our NOI is divided derived from quality class, a and class B properties. Our diversified tenant base has a heavy weighting to businesses that are we're confident remained solid prosper over the long term incur.
Loading warehouse and distribution. Most importantly, we continue to see hi stable occupancy at 98.4 at the end of the first quarter and we've actually increased that to 98.9 as of May 11th.
Looking ahead, we're confident we will continue to perform well over the short term emerge even stronger as the pen demick eases and people are able to turn returned to work.
As detailed on slide 31, with our strong fundamentals, including our low overheads strong liquidity well positioned in diversified portfolio are very experienced team. We're confident we can work through the issues that are currently facing us.
We're also confident with the solid fundamentals in the Canadian light industrial sector that we detailed on page slide 32.
And looking ahead on slide 33, we believe the industrial market will prosper and emerge from this pandemic due primarily to the growth in E Commerce and other factors that are your merchant in emerging as Canadian business Battle with this new environment.
Longer term, we will return to our strong track record of growth by employing the same strategies that have generated such superior returns for our unitholders. In summary, we were pleased with our performance in the first quarter, but recognize that this pandemic will impact our businesses and the months ahead, we'll keep you updated on our progress. Thank you for your time and attention. This morning.
And now we'll be pleased to answer any questions I may have operator.
Thank you.
We'll now take questions from the telephone line. If you have a question Andrew using NIST speaker phone Vincent your handset before making your selection.
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Please press star one at this time, if you have a question there will be a brief pause for the participants register thank you for your patience.
The first question is from Japan.
Well from Echelon partners. Please go ahead.
Thank you good morning.
Morning.
Well you bought you've already answered my question regarding ranked action Robert Thank you for the color on that but on the on the development front.
No. It's it's.
Could be.
Early.
Do you see any pressure on the development yields at the moment or do you expect any pressure once you be you reopened your development projects.
And just to be clear, they're the ones that are in the ground, we have to down and well with our partner Cooper construction.
One of those buildings, we've got 76% Preleased. The building was just finished.
This is pending so we're just putting those tenants in there now so one once mice space left their lease the second 212000 square foot building.
We're actually in discussion with the on a letter of intent on the entire building at rental rates that exceed our pro forma so so there's still lots of demand, particularly in the DTA.
The other there's two developments.
That were in the planning process will continue to get the point, where we get building permits Theres. One building we bought last year that we're going to do a 60000 square foot expansion on its all those there in the planning process, we're going to complete those.
In a couple of months from now.
Comfortable.
More likely we'd like to have pre leasing done, but we potentially could still do spec development today, we havent seen rental rates softened at all yet.
In trouble.
Right. Okay. Thank you thanks for answering my question Okay.
Thank you.
The following question is from Chris Cooper of CNBC. Please go ahead.
Good morning.
And just maybe looking at the at the Red collection.
Formation.
So the for May 5%. So far has not been collected has that is that all.
Already been bills in other words are there is at 5% that was due at the beating the mine that hasn't been collected and if thats. The case, just with respect to the 4% that was not collected in April.
Our all those tenants included in that 5% or is that a different batch.
Sure and again.
Obviously, we're we're still only at the end may 10th and Oh, there is lot a lot of variable. So we're actually very pleased where where we are because be a with the announcement of the rent really program. We thought that that number tenants might use that as a reason to not pay so it's been a little slower than April, but we're pretty much tracking the sale.
So in April we were at the 96% we did agree too, but 1% of deferrals. So we accounted for 97% so of the 3% that wasn't collected in April.
As I mentioned on the call have a 1.2% of that is these entertainment tenants was 13 of those and then there is another 1.8%, mostly smaller tenants and mostly local tenants that are in that category. So when we jump forward most of the deferrals that we're doing or with larger tenants.
Both in the international and National in the automotive industries.
Distribution of retail.
And actually more than half of all the deferrals or on our Ontario portfolio. So we are getting down to that last 5% and so the same 3% is in the 5%. So there's about 2% that we either will.
Keep knocking on their doors and collect or they'll they'll go into this bucket.
Essentially its phases that we've gone through so we've we've close to we'll probably have another four to six tenants to deal with that I would consider our their larger ones, whether it's a lease extension a deferral or something.
Once we do that then I think the next phase we're going in and it's probably all told of 30 to maybe even 40 tenants some of the really really small ones that we picked up.
Where the work is going to be required and but overall it is net 2% to 3% of our portfolio and some of them I really do think is going to be difficult for them to recover and do do well, but they might but some of these entertainment tenants, whether it's a rock climbing wall facility, we have a indoor soccer clubs.
It's hard to see how those tenants are going to be able to come back to business, but they're all in that 15.
18000 square foot, so they're fairly small and a lot of these spaces can be reconverted back into industrial space, but this is where I do think the rent relief program might help both if we can get 75% a three months rent on some of these smaller tenants maybe that might be the thing that would help them survive maybe they might extend that program I don't.
No, but basically at the end of the day, where we see or or issues or somewhere in this 1.2% to 3% range.
Mostly ending smaller tenants and when you look at our portfolio breakdown mostly in this.
I would call local category and I think the total number in our entire portfolio across the country, we allocated 4% of our tenant base would be considered local.
Got it thanks for that color and then maybe just last one from me.
He has held for sale it looks like you added another property in there this quarter.
So at this point have you completed a review of your your entire portfolio and earmarked the ones that you want to.
To sell and just maybe in general how is how is that process going indeed have you had any expressions of interest on any of these four properties and just.
Any color on that thanks.
Sure and yes, we have picked up and we've owned them for seven years to BC properties from the original rate that we took over so those are two and then we've added to that are in Edmonton.
One is a very small bay has 32 tenants in it or something is more of a retail property, that's where as some of these rental collection issues as well.
And a small dysfunctional.
Industrial building, its 30 or 40000 square feet.
We did have some offers but right in the middle of all of what was happening.
People, either got cold feet that they want to wait so.
We still have a few people knocking on the doors, but this was not a time too.
Be pushing to try to sell things if something happens it's good in our vacancy we've we now have.
One building that's 58000 square feet that were you can be broken up into two or three tenants, but we're also doing its effort lease or for sale. So thats not in our properties for sale at this point, but we'd look at that and I mentioned last time.
If we were able to sell the ones that we have listed for sale there might be another $30 million to $50 million, but again, we would only do that if they are stabilized and we think we can get the kind of right kind of value, they're not they're just not core long term.
Thank you.
Okay.
Thank you.
The following question is from Brad Sturgis.
And does reliance Securities. Please go ahead.
Just a follow on on the rent for question, maybe looking at tenants that have already paid the run or would there be any larger tenants at this point that have paid but your RASM essentially on a watch lists or maybe little more concern both from a credit perspective.
No.
Now so everyone that's on the deferral and paid.
We're comfortable to that I mean, I'm sure you've heard us on another call and other real estate and that's why we still youre dealing with some tenants there's a few tenets mostly.
Subsidiary of an American company that have taken an interesting approach, which is they buy the randomly paid 25% or they randomly pay 50%, saying, yes, we'll we'll begin to do that for the next three months and then pay it back overtime. So we kind of don't like that which so if there is legitimate interest in the in the business and so we've sorted through a lot of those.
These are difficult the discussions but for the most part we're saying and again, we haven't really mentioned that.
Other than these entertainment tenants at 1.2% most of our their tenants if they wanted to could have operated in the so someone elected to to slow down the.
The ones I mentioned in the automotive so if the Honda plant shuts.
They've had to layoff people because they have no place to produce there for this just in time delivery, there's new phrase out there now lets call just in case delivery. So.
I think there's going to be an increase in inventory, but to your question no. We're comfortable all the deferrals that we've done or with what we believe our high quality tenants that have been businesses for 2030 50 years.
But we still fighting with a few of these Americans.
Which is at the end today again, we see this is a loan and if you're if you're going to borrow money from us did not pay your rent than you should be interest on it or you should open up your lease and there should be some benefit to us. So we're still we're getting down like I said, we're down to probably the last four to six of those kind of tenants.
But there's no one on those lists that were concerned about at this point.
Okay in terms of just the general market and looking at property valuations.
Much of machine from from a cap rate or price per foot basis.
In the short term.
Given what's happening with depend demick or not really.
Not really so.
I mean were.
What's the issue is just the selling market is dead right now so people like us are saying, we're just going to put pen down and pause for a little bit and sellers are going well probably not so like I said I don't want to sell is this market and we're not buying in this market. So there's just not a lot of transactions to even gauge that.
But when you look at the fundamentals and that's why I'm very comfortable where our GTN metro portfolios in particular.
I can't see replacement costs going down.
You'd have to have a very long and deep recession to create the type of vacancy that would disrupt the supply and demand chain. So.
Well again, what I haven't talked about as we have a lot of particular in the GCA incoming calls for space requirements I've seen one even in the.
So.
So for west of trial.
With over 1 million square foot requirement summer only six months or overflow some of the logistics players are overwhelmed right now, but there is other uses like going we're negotiating with wealth now for that new 212000 square foot space. So with the demand that is still there.
I can't see what's what's going to cause the replacement cost number so I don't see that replaced or price per square foot unless you got into a distressed situation, which again I don't think with these low interest rates, you're going to see a lot of distress sellers. So so right now I'm not anticipating or expecting.
Both short term the change in cap rates.
Or even long term, but again.
It's hard to guess it what's going to happen a year from now.
Yes, and my last question just on on the data Center investment Montreal, what would be the update there.
Hi, good could you see similar return profile for that investment.
We'd love to.
Again.
We really the this data center to ended up getting leased to the same tenant in data center, one which is a phenomenal tenet.
I would love for them at some point to say they need to expand into Montreal.
The issue with the one in Metro it's it's nine stories.
It's really we've resisted the ish.
The temptation to try to lease that a bit by bit we think the the trend of where data centers are going are these wholesale large players and kind of that's what we're doing so in the meantime, we're getting paid to wait so we're being patient, but so there's lots of people knocking on the door to door I think from this pandemic.
Everything I've read data center reads in the us are seeing upticks in and I.
I wouldn't be surprised.
Something will happen there, but if you can get as similar type of tenet.
This would be the prospects, but it's a hit or Miss type of thing so for now.
It's it's just alone, earning a good interest rate, but potentially there's the upside that's the design. We did with these mezzanine loans is that we didn't want to completely lock way because we saw the opportunity.
But we took some of our risk off the table, but we still have this participation feature that allows us to to get some of that upside.
Okay, great. Thank you.
Okay.
Thank you.
The following question is from the Lynch you good job of Scotia Bank. Please go ahead.
Thank you and good morning.
Good morning, all morning.
What's your portfolio occupancy is up to 97% mall, so looks like you're doing a good job there.
What drove that occupancy upside.
Thank you all portfolios outperforming the market and also if you have any vehicle. These expires in the next six to nine months.
Okay. So.
[music].
So a couple of lease deals that we didn't even briefly mentioned them. They are just take there just one started on may eight it was 51000 square feet at a 10.
The tenure deal.
And the reason, we are able to get that lease.
Previous owner was really stuck with thinking the rents were going to be 66, and a quarter and we started that lease at five and its steps to 525 550 over the over the 10 year. So that's that that one is with.
Tire distributor company.
We did a new six year deal in Edmonton on a cross dock facility rents are starting close to 16 and growing.
Again that tenants and another one of the portfolio. So.
We did another short term tenant when we first went in and 44000 that ones coming up that tenant may or may not stay so.
What we do in a situation, where this where the markets a little bit weaker.
We've gotten very good it trying to fill holes and keep occupancy as high as high as you can so.
There is one large theres a few more expirees, but little over 200000 square feet in Alberta between now and the end of the year.
Some of the two of the tenants, we're talking to our absolutely showing signs that they want to renew.
Theres, a one larger one that most likely will not but we're already talking to potential tended to go in there. So.
Yes, we're it's a different strategy had to be very proactive there and when it comes to Oh performing the market absolutely. We're so I think the the numbers in the market or kind of in that 90, 192% range. So we're definitely outperforming the market, but do you have to be very quick reactive and you might have to take a little bit less on rental.
Or be flexible on your terms. So we're doing some short term one year deals whatever it takes to kind of keep the occupancy up but it's not a dead market like there is lease deals getting done I know, there's a lot of concerned.
About our our position in Alberta, that's why we try to add a lot more information on the kinds of properties high quality, a building, but particularly if you look at the top 20 tenants very diversified international national tenants all of those kind of tenants are not going to go bankrupt.
And a lot of them are in businesses that are likely to continue to perform in the top 20 tenants in Alberta, three of them or oil and gas companies. Two of those are public company. So it's easy to see how they're doing.
We still haven't seen what.
What if the federal government is going to do to help the oil and gas industry, but clearly.
Alberta is where.
We'd be concerned, but we're doing a fantastic job of keeping the buildings fill and you just have to be.
Flexible and what you do and I think I did mentioned number but we bought this at a 5.5 yield today that yield has grown to a 5.8. So we've we've given ourselves a little bit of a buffer but.
Some of these smaller tenants that I'm talking about that 1.2% to 3% a lot of them are in Alberta. So we fully expect to see our vacancy number go up in Alberta, but.
2% to 4% or something like that.
Sure. Thanks, So thats very helpful.
Then on new acquisitions around one some of this $6 million GT at 4.4 cap rate.
Is that going in cap rates or how does your own some pickup from then on your dummies expirees.
Then I assume the upside from access line for expansion should be over and above.
Yes, so that the 4.4 cap includes the full value of the land so the mainly foods cold storage building.
Obviously, the theyre doing extremely well can be expanded by 100000 square feet 70000, cold storage and 30000 square foot freezer storage.
Kubota they they they're doing a build to suit they moved out. So there are there for another year. So we're going to do a 60000 square foot expansion and a three while expansion is very cost effective.
So the same thing with deeply food. So you don't have you already have the land.
Not having to pay the development charges because you that's already built into that so.
A couple of them had some steps in the rent I was just Ross I don't have it in front of me.
But one page on our.
It's in its been here somewhere I think we showed one of the properties has like a 32% built in rental escalations over the term.
The deeply foods gets an average 2% increase per year. So feel we'll definitely move up and once we do some of these expansions this whole that whole acquisition package will will move.
Comfortably above five.
Okay. Thank you.
Switching gears on the debt financing respected seen from $2 million credit facility, what does the current interest rate.
It looks like Youre exploring unsecured bond issues as well.
Looking that credit rating agencies 40, debenture, the credit rating as well.
Yes so.
The how much the world has changed in the and any week so.
Cursing myself for having some discussions back eight weeks ago I've never seen as good as it's been in 30 years of in the business to what's unfolded.
Current interest rate and I think bras made it may not at this 0.22, 0.26% occurring again 2.26. So so between this and whats underline roughly another 250 million. So we have 600 million.
That we're paying interest at a very very low rate, we're not that concern right now normally having this much floating rate debt would be a scary thing for us we wouldn't want it we want to lock it in but given the current environment, we don't see interest rates going up. So so we're getting a short term benefit that will help offset some potentially some of the.
Vacancy issues on these smaller tenants that we might have on the balance of the year, but yes, we are comfortable.
I think I signaled at last in February that we sell the we would be in a position to get a triple b low rating, we still think thats possible and achievable, but it's a terrible time to be in the market for new entrant I mean, there the good news is.
We're seeing lots of deals some from more seasoned higher rated companies, but also lower rate rate a company. So it really comes down.
Could we do it most likely could do we want to do it will be a question of all in cost and so when we explore this and I think none of it's going to start until after Q2 results and into the fall and we get a little bit more now normalcy.
I think is the time to explore it but at the time the decision will be we'd like the flexibility of moving or portfolio more into the unsecured environment.
But we're not going to do it if the cost incremental cost over traditional mortgages is too high so we'll make that evaluation and back eight weeks ago. The costs for the all in interest rate on a triple B low bond for us would have been pretty much exactly the same as market is so clearly has widened right now.
Yes.
We've we've heard mortgage debt spreads are higher but the underlying bonds are down so the all in cost is roughly in the same the same spot as it was before.
But for the unsecured bonds the spreads would be much wider so we'll see a we'll monitor those markets but.
And then as a fall back if we really want to that's why we've talked about doing.
Term unsecured piece with potentially looking in talking to banks, if if their pricing is a little bit better than the actual bond market. So we've got lots of flexibility as Ross mentioned there. There is an extension option in there it's with two large.
Large large institutions that we have great relationships with so we can extended out a little bit longer but.
So, earning since we're paying a low interest rate, we're not unhappy to be waiting a little bit longer to to deal with this.
Got it. Thank you again, maybe just last question on the gentleman disclosure.
The new disclosure on slide 14 selections engines out 30% international attendance, 55%.
You know how well capitalized.
Actions Devin.
And if their revenues have been significantly impacted as a result of this crisis.
And then you track there then coverage.
Okay.
Yes.
The part of this exercise that we we felt we understood and newer tenants quite well before but I'll tell you now we know a lot more information. So it was part of the rent deferral discussion, we're asking for financial information we're getting.
Details.
Some of them or underlying lead their public companies some of them or not.
They are still private companies, even other international but.
One of our tenants is a subsidiary of a Hong Kong based company.
The majority of or international tests, or our Canadian subsidiaries of of US people it's abroad.
Diversified.
Yes.
Tenant base so.
If if industrial to long term really ties in well to GDP. So we're going to have a bad recession that was negative GT.
All of our tenants are going to be impacted.
The some of the distributors of food and things like that so.
We're watching them like I said, we're not we're not overly concerned about anything that's going on right now it's just.
When us as pandemic and people starting to get back to work.
Clearly I think the U.S. is going to be more aggressive for that so in terms of the parent companies I think theyre going to come back to operating quicker than potentially some of the.
Canadian ones and so yes, we're happy with that I said as it turned out where the people didnt pay.
Our in these local tenants and the smaller and smaller type use and again when we were designed this portfolio.
Seven years ago, the smaller local tenants is not what we are targeting so we picked up a couple of multi tenant buildings in a portfolio deal last year in Ottawa. So there's some tenants in there that are are having the same struggle and then.
Alberta, we picked up.
Most of the the additional smaller tenant so right now or portfolio material doesn't have a small tenants. So that that portfolios is probably the most stable and intranasal.
Where we've done most of the deferrals, we're very comfortable with the companies that are there like they've been in business for 30 to 50 years, they've just saying listen I.
Hi, my they're going to go to the bank or try to do things that its credit is very tight. So if we can help them out, but we always want them to pay something so whether it's 25 present, 50% one tenant just said I only need help with Mayo pay it back in July so the bulk of the deferrals and it should go down in the month of June from where it was in May.
And then down even further in July if if things do start to open up.
Majority of that deferred rent will get paid back in the first half of 2021.
Okay hold that's that's great color. Thank you guys.
Okay.
Thank you.
Following question is from Mike Mckee of digital Bank. Please go ahead.
Good morning, Paul and Ross.
Finally might have a couple of housekeeping items here.
First one is just on the deal that you did to sell DC to the fair value gain on them as long as I kind of trickle through.
Interest income going forward and those long cash well actually sorry, I mean, we've received cash from just wondering how that interest rates.
It's going to get well whatever interest was accrued on them as one so what we were able to do with our partner here is.
Effectively sell this property before the development is complete so we had built up to a power shell and so actually which is the cheapest part of doing the datacenter.
The more expensive part is now to a retrofit it too to become a tier.
Who knows tier for data center, the same as one as DC one.
So the ultimate purchaser and owner of this is taking over that that work. So what we've done as we've got our entire mezz loan and the accrued interest paid today. So we still that five and a half million dollars and accrued interest is now back in our bank account. So the the additional money that we're going to get starting in.
Probably January of next year through through to the end of the summer you could get straight showed its construction is delayed.
That will just come in as as cash when we get it. So there's no interest on it because we don't have at this point, we don't have alone on that project anymore. So it's just the it's a profit calculation. Okay. You look you look at your cost him and we have taken a reserve if there is some cost over runs so.
The net 21 million potentially as a little bit of upside there, but we've tried to be conservative and what we think we're going again.
Okay. So this is simply you've already recognized in fair value.
Interest income pickup going forward as it occurs.
Yes, yes, yes, yes, okay, that's great. Thanks.
Okay. So just just with respect to the market for financing appreciate your comments with respect to the potential unsecured issuance and how you kind of.
Approach.
Hearing that getting refinancing for existing loans is not an issue today, but what's the market like for new requirements to go out there and.
Yet.
$350 million and mortgage financing today was that market like.
Ross you want to answer that I mean, we havent had too many discussions, but we've had we've had discussions with some lenders is because.
We've got started looking we have the potential to add some financing.
Unencumbered assets and that the markets are open.
And that and.
I've received.
Some discussions about from some others. They have tenure money received an offer on.
Property.
And reasonable interest rates and reasonable loan to value of that so it's there. There's there's a few that are cautious today, but the.
I want.
There are still theres still market, there and I believe.
Ill.
The availability to to get financing I don't I'm not concerned at this time I don't see any machines.
So Mike there is the one thing that.
It took me able to a month to figure out I was looking at this loan is secured by $555 million of assets in Alberta, and I was asking the same question you are which is how hard is going to be put mortgages on those 555 million and then Ross. Finally goes we do have $630 million unencumbered assets. The majority of those are in the DTA. So so the.
The the pool of assets that we can put.
Financing on is actually closer to 1.2, so we can pick and choose and lot of those would be Ontario assets high quality.
With the kind of tenants that would be a very very financial so if there were some lenders that may say I don't really want exposure to additional mortgages on Alberta, we don't have to do that so we could we could just shift that the unencumbered pool today.
Albert assets that are.
On that are currently securing that 350 million dollar loan.
Got it Okay and there is a 1.3 times touched on your.
Yes, so that's like here so it's like three.
Like $390 million is what's required on the line of credit today.
Okay perfect.
The four properties held for sales you have and have off and NOI contribution from those assets were in this quarter.
I can get back to you on that Mike I don't have great off the top my head.
Yes, I mean, they're fairly small one of them one of them.
Yes, one of them was 80% occupied in the second one in Edmonton was empty so.
It wouldn't be large and then the two two and B C are fairly small assets between the two of them.
Okay.
Our way for us as detailed there and then just last one for me have you entered into any meaningful discussions with respect to.
So we saw amendments.
Interest insightful.
So.
Again.
Our preference if we can so in the 8% that we're calling deferred actually 3% of that is actually lease extension. So it it will come in the form of free rent so and we've done three of those one in Alberta when in Qubec, one in Ontario. So.
Where we think the rents are below market we could.
Bump bumped them up in Ontario.
Somewhere like Alberta, and these are tenants that are saying our business will do better if we get.
Total month or free rent and we don't know how quickly is going to come back. So we prefer to kick that kicked that can down the road. So we were able to extend the leases in in those three cases.
From the of the 8%, 3% were deferrals and there's still a couple of tenants that were talking about.
And we're trying to figure out which is the better better way to go. So if I'm a fun attended I prefer to give I can extend my lease because I don't want to have this additional rent or additional loan outstanding in the short term.
Okay, and just on those but no no abatements.
So the do we have.
Yes, we're not talking about abatements so.
The only timing.
And again I think this is where we're still theres lot of unknowns around this rent relief program.
Where they have a mortgage and auto mortgage so we're still trying to get all the details out but we're really now into this next phase that we've dealt with what I would call the larger tenants that we happened to.
$50000, a month rent and higher those tenants were down to three or four that we have to talk to.
But it's really that large group of smaller tenants now that we're going to start to grind down into an a. So when we look at rent abatements I think it would come in the form of our 25% contribution on selected tenants. If we're getting the rent and again the way I would look at that is.
If we think that tends to have trouble paying rent that all getting getting 75% of the rent.
For three months, while we figure out what to do with their space and can we release. It it was probably the way to go but as of today, we we have not granted one incentive abatement and.
The only time, we will do that is if we think.
We would use this rent relief program.
Got it set so that 3% you basically sort of care would just give me free rent going actually management will talk on another three months or whatever the terminals to the end of yours.
Well no we're not saying that no. So the way the rent relief program works is they pay 25%. The government gives you a roof.
Forgivable loan of to 50%. So you actually take a write off of 25% of their rent for those three months.
No I get that I, just talking about the same person. He said you extended leases for pulls I'll tell you went back to that one yes. So those ones. So we as to we extended.
Three or four years on the things with steps in the rent the one in sorry, the one in Alberta, we think that tenant probably is already a little bit above market. So you're just locking in a lease for a longer period of time with the.
CPI, 2% increases in the renter or something like that for a few more years. So we think thats a good case, so I like the best on what we're trying to do is break it up so the bucket of what would be in deferred rent wouldn't be.
Just continue to grow and grow so it's it's not a big number overall anyway. Once you add up all the deferred rent that we've given for April may and likely to have to do for for June or July the only is unknown heres.
We'll take a month by month is what is June but it looked like what is July what is August like we just don't know rate, but most of our tenants have been able to operate Paul along so hopefully with loosening up you will just make it easier for them to do that.
Okay. That's great. Thank you.
Okay.
Thank you.
The following question is from toward Mclean of BMO capital markets. Please go ahead.
Yes.
Good morning.
I'm just curious do you have it do you have a target for what percentage of the portfolio at least E commerce tenants in the next three to five years.
I think had if you look at that.
So we don't we just go go we're opportunistic so whichever Ted it is going to pay the ice Brent what I do think Troy, it's going to where we get back to the acquisition.
We clearly had a strategy of dealing with larger single tenant buildings.
But after this kind of exercise really focusing on the industries that they're in.
We will be another more important criteria in underwriting real estate, so first and foremost will still probably be opportunistic and make sure that the building that we're buying is physically good it's located well and it's always adaptable to ecommerce and I think we've we've we've thrown off to a target I think when you lot of it is distribution other warehouse, they're kind of doing.
That light manufacturing Assembly now, but we we put a an assessment of 83% of our portfolio has some ability to be at fulfillment Center E. Commerce. There's just some that are a little bit heavier manufacturing and that sort of thing, but I really do this was.
Bill I.
In terms of small base stuff picturing, how hard our life would be and if we were still some at one with 3000 tenants.
Because the.
Thats, where more of the discussions are happening so I think it's more.
Understanding industry. So we don't have a target per se, but I do think the underlying industries that they're in and a credit quality of tenants. Obviously going forward is going to be more valuable than it has been in the past, but we start with good real estate in good locations.
Clearly the smaller multi based off one of them, which is for sale in Edmonton.
If we could sell those overtime that would make sense for us as well just continue to.
Purify the portfolio to the larger larger tenants, but I do think we're I made the phrase its.
Just in case, but we're definitely hearing lots of early discussion whether its pharmaceutical distribution companies, saying.
Taking proposals to the government to start to.
Create warehousing facilities for those whether its PPS or other critical goods and services that you require during panic times in it so I think theres going to be more E commerce people shopping online.
Which we are seeing incoming calls from those type of tenants already.
But I do think there's also a second phase of this CBR Easton some studies in the us and down there could be like hundreds of millions of square square feet.
Additional space required to meet some of those demands so if that trickle down into Canada, theres definitely going to be a requirement for.
Whether it's just pure storage of goods materials for even some increased manufacturing of these types of products are goods and even like pharmaceuticals, I think the ones that.
Outside just the normal one there was a big strain. So I think there's going to be a whole review of supply chain and.
How how much this just in time thing can backfired when when supply chains are interrupted.
So it's going to be interesting.
You've talked in the past about having development jvs.
Doing more value add you mentioned thats on hold but do you think after what's happening right now, it's harder to it's easier or harder to get a partner than it was before.
I think in some cases it might be easier because I think capital is going to be a little bit more selective in terms of what they do and what potential risks they might be.
Able to able or willing to willing to take so I think in some markets, maybe Montreal, there might be more of an opportunity to go in with the with partners there.
Were like they were very flexible, we're very happy with our relationship with Cooper were there they'll probably help us with some of our existing development sites along with the stuff that they're doing there in the planning stages. Since the first two buildings are going so well the planning stages for another two which is of another 400000 square feet. So yes, no I think that.
Element is not going to show months of much of a pause I really do think.
Predictor in Ontario, and GTK and even in Montreal availability was getting very very tight. So I was surprised that we haven't seen more more development, but right now that's just not the time, but I think once once the world is back moving a little bit freer I think.
It will take long to start to want to ramp that up.
Up again.
[music].
The 2021 lease renewals last year you early renewed.
Tenants that was.
Seem to be priority.
We'll look at leasing at the end of year and in 2021 would you want to hold off on doing leasing things you want.
Because maybe wouldn't get the Rentlinx that you would have gotten six weeks ago. How do you think about that is if you want to how you want a lot that up are you maximize the right.
Well, I think and will be different strategies for different markets. I would go 24 months in Alberta, and anything I can try to lock up I would lock up sooner than later.
Cronto is where you look on a case by case basis.
I would be like if I didnt say I'd be happy to take if we're going from 550 foot is going to seven five or 750 rate.
Okay, we'll take 750 today just to.
To get that one done.
Really want to see more visibility to the extent of our there's 2% and how it turns out and if we see some stability there.
Yes, there's probably a few places where we draw the line in the sand.
We Didnt commented on our leasing a couple of these lease last renewals.
Steve example of that Troy and so the one was coming due in October November.
He was moving from.
550, and I think we started him at 725 going to $8.
Maybe you would have said, let's try to push that guy too.
An $8 rent or whatever so potentially are giving up little bit, but thats 45000 saw a 45% increase Montreal, we just did a.
An 18 month renewable because that tenants going to need more space.
We bumped that went up 22%. So theres, it's really goes down to a case by case bases and one operating doesn't show up on our lease expiry, which I wanted to mentioned we have a tenure lease.
The GTN 250000 square foot tenants paying 520 in that rent resets to market in November so.
We'll see but that lease would be a mid seven so again, it's it's a little always tell us probably feeling like I want to be a little bit conservative and try to lock up more risk than that not right now, but that may change in a couple of months, but this has been hard times going through that so right now, it's really about risk mitigation and.
When we switch the switch the offense again, maybe we'll we'll think differently in two or three months from now.
And then just on acquisitions, what would you have to see that kind of get back on.
On the acquisition front.
Obviously, the lock down would probably have to be.
The over but do you want to make sure we're not heading into a deeper recession, you want to get confirmation on pricing. What are you looking forward to kind of get back on offense.
Well, where we are.
We've got ample liquidity.
The handle any.
Short term issues in the portfolio, but we don't have.
Expansive amounts of liquidity to do a large acquisition program. If we did do any kind of growth I think it's when you talked to a first would be expansions and developments because we know the yields on those are going to be higher than what we've consciously possibly get in the acquisition market, but it really goes to starting to look at our unit pricing.
What point would you be willing to consider raising equity. So our lack of lack last equity raises had 12 90 last year. So I.
I don't even over a $10 today. So we're still we're still away a little ways away from that so.
It's we're not going to be aggressive.
Until the.
Theres a lot more stability in the pricing of equity as well.
And then just finally.
Montreal portfolio, what would you expect to be the mark to market potential on that portfolio.
Where we are in place rents versus market right now do you think.
It's always the question I never want to answer because they see I always answer by saying, we don't know until you deal with that one tenant what do you need what amount of T. You're going to do but it's 658 were rents front there are a little behind where they are in GCA, but you can get eight eight and $9 rents on.
New developments there.
So it's not as wide as what it isn't trundle, but.
Like I said, you can do deals 750 to 850 in Montreal. So so theres. There's some micro but then you have to look at our portfolio and each space and some of its not a dollar space but.
It's still has a decent amount of upside there so.
Im not going to throw a percentage.
Thank you should answer.
That's good color. Thank you I'll turn it back okay. Thanks.
Thank you.
The following question is from Matt corner MBS. Please go ahead.
Hi, guys.
Hi, Good morning, Marni, Matt Good morning, just a quick follow up on Montreal for the same property NOI growth in Q1 was a little over and it looked like occupancy was fairly stable at almost full.
There anything in particular that would have driven that figure.
Ross is going to answer that question because asked them that yes.
Yes, so theres too.
Onetime nonrecurring.
Non non recoverable expenses.
Yes, the quarter and that so given the size of the portfolio.
Impacted if you if you back those out you're back to just under 2% same property NOI growth.
In the quarter. So it's just a onetime items.
Some.
Well landmark cost repairs Matt.
Yes so.
On a smaller portfolio.
Good luck harder than that.
The portfolio, yes, I mean, the contractual rental bumps in Montreal like 1.8% on average obviously, it's not going to be every year exactly the same number and.
Yes.
The rollover profile has been lighter than the other markets that we're in so there is not not as much of moving to the rents from where they are two to market.
Okay that makes sense.
But it's very very stable I mean as you saw in the in the collections we.
It's primarily a little bit we got 100% of April and without even having to ask and.
We're very high on on on May as well, so again that portfolio it'll take has a single small tend or local tenants. So.
That's that's turned out to be a very nice.
Placed to have some safety in our portfolio.
And you mentioned that technically March was the beginning.
Cobot, but you didn't take any allowance for doubtful accounts in Q1 would you have for.
Yes, we did actually good good accounting question I think it was like 250 to 250000, there's a couple of tenants that run some repayment plans and.
We had a very solid quarter.
But we didnt, we didnt want to have any kind of cumulating effect of that so we we went through with a very fine tooth comb on our air and took a $250000.
Right. So yes, so everything else, we're very comfortable with.
We will.
We're going to keep looking at that on a month to month basis, because I think for this tenant base of this 2% to 3% as we work work our way through there.
You know anything that we're not collecting or we can't use the government program will probably be making allowances as we go through for that as well.
Okay, and then you guys have historically been very nimble with regards to releasing space, but.
Presumably you'd expect to see a little bit of an increase in transitory. They can see this year.
Stuff works its way through the system.
Yes.
He said I think it's all in this category these small local and.
I'm not going to I know, there probably listening or leasing people they take price.
Making things.
Well go better than I think from Boston, our standpoint, the way we're thinking about it.
Our issues around this 2% to 3%.
But even if you if you forecasted.
Two or 3% vacancy from now to the ended the year.
Our overall your yearly results are still fine for us.
But I know our teams going to perform so it's going to be can we get this tenant open we put a month to month tenant in there like a fedex that's better quality tenant.
Can we use the rent relief program so.
Im hoping we're going to be pleasantly surprised as we work through there, but yes, if our occupancy today is 99%.
Can I see it at some point dipping down to 90 697, this year, probably more probably 97 lose a couple of percent but.
Hopefully that won't happen, but it's possible.
Okay perfect Thats, good color stay safe and healthy guys. Okay. Thank you.
Thank you.
The following question is from Mt. Logan of RBC capital markets. Please go ahead.
Thank you and good morning.
Morning.
Just following up on some of the market rent questions wondering if you could provide any commentary on where you see in place rents versus market rents in your other Ontario Boston.
Other Ontario, yes, it's a bit of of mix Buck I guess in there you've got a property up and Barry We've got one down in London.
Thats, a small base stuff in the.
In Ottawa.
For the most part we're not looking at when I look at that I would say, we're kind of half market and when we break down.
When we broke down the total the in place market rents are in place rents on that other Ontario is slightly higher than than our DTA anyway. So that's probably like 675, so I would I wouldn't say that theres.
Significant upside that rent, so, saying thats around market is probably a reasonable assumption.
And you broke the in place rents by market in your slide that could you just policy in place rents for the overall portfolio.
Sorry.
Sorry.
We got through we got three in place rents rates that were drama.
Just the aggregate for the entire portfolio. If you blend to note I'm sure we could do the math.
Just to add on them and yep, Okay. That's fair 731.
731.
And maybe just changing gears here on the leasing from what you guys had a really productive 2019 and early part of the 20 pointing.
We look at the lease renewals that are set to come online in the balance of this year.
You gave us the incremental rent that is associated with those leases.
The incremental rent so so frankly ballpark like 600000 square feet, you're trying to say what is the in place rent or or just what the differences and so if we have rents of 730 and they will update dollars. What's the what's the rent contribution that it's going to come in and.
We'll go next six months nine months site.
The strength I am still and I understand the rental bumps or the.
Trying to quantify the rental bumps in dollars for the balance of the year that are yet to come on line.
For stuff that we havent done from nearly all the stuff that we haven't done or the stuff that we've done [laughter] through the stuff that you've already done okay.
So I thought you were going to what's going to happen on the 600000 square feet them going I.
I think it's good but haven't done it yet so well I know you've already done, yes, I think it spread pretty evenly throughout the year, So, yes, actually Paul or not.
I can.
Get back you would.
I think thats, one that brought that going to go way and do some calculations again, because we've had.
Fairly maintained.
Yes, and then yes.
There is a big one that 250000.
Square feet that doesn't start till November so it's going to have minimal impact on 2020, but obviously.
That would be probably another half a million dollar contribution of that one lease alone for 2021. So yes. So Ross can go through.
But more of a detailed.
Question.
I'll get back to on average.
It would be great there Ross and maybe just changing gears in terms of your contractual rent increases are you guys still passing those along this year or there is taking any sort of a pause.
No no. That's that's that's our standard protocol and our standard lease and its negotiable. So.
We try to get on an average between two and three.
As much as we get twos and threes some of them roll off I think the overall, we're still around that 1.71 0.8 on an entire entire portfolio. So now tenants like that that gradual increase and it's a way to ease them into to higher higher rental rates. So that program hasn't changed and again some of the things.
That werent didnt seem important.
During the first seven years that became really important.
The vast majority of our tenants pay electronically and that's why.
This early in the month, we already know who's paid and who has unpaid so.
We've got a very efficient payment system. So.
Let's now we know why we were doing it for the last seven years.
Last question can you before I turn it back just on some of you committed leasing can you remind us of the GL a set to come online in the balance and this year.
Yes.
The next.
The results are currently good new leasing.
It's a little over 1 million square feet.
Are you talking nodes are vacancy new leasing said to come online in the balance of the year.
The committed space.
And again, we never liked it because we also know that there's some guys that are going to burn off and probably.
Do that so I had mentioned.
100000 square feet in Alberta that you know.
Thats, whether the occupancy went at quarter end, it's up a little bit today. There is still another one that starts a 35000 square feet starts June 1st.
Yes, we know Theres, a 44000 square foot tenet in.
In Q2, that's probably not going to renew we just had a six month short term deal there so.
We're not seeing Theres nothing that we know today, that's telling us that occupancy is going to change dramatically. So.
Until we work through this 2% to 3% if some extra vacancies created from that but when we just look at the leasing that we have done to get us to around 99%.
And stuff, that's falling off we didnt mention.
The good news, which is Humber line is are only Ontario, it's been vacant for two years, because we were trying to build these loading dock doors. We finally got the ability for but we're putting the doors and when the construction stop the good news. There is we had to deal with a tenant at 525.
And that because we couldn't deliver the space and time that deals now known and Boyd and the new new tenants that were talking to around $8. So on that so we could lease that that space hopefully we'll get leased.
In the second half of this year as well so so.
Like I said until we work through this 2% to 3% of issues of tenants paying we don't know how thats going to pick the vacancy, but just looking at the leasing that we've done and what we expect to on the lease Expirees, we don't see dramatic changes in the occupancy from that exercise.
Appreciate the color Thats all from me. Thank you.
Thanks, Matt.
Thank you.
There are no further questions registered at this time I'll turn the meeting back over to Mr. Doug.
Thank you operator.
And thanks, everyone for your time interest. This morning later this morning, we will calling our 2019 unitholders meeting.
Tenthirty Eastern time, it will be a virtual meeting details of how to access the meeting are available on our press release issued in mid April and available on our website and SEDAR again. Thank you. This morning for joining us.
And if you have any follow up questions give us a call thank very much and goodbye.
Thank you.
Brands has now ended please disconnect your lines at this time, we thank you for your participation.
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FIFA.
Note that this conference call has ended please disconnect your lines at this time. Thank you.
Okay.
Okay.
Okay got Cushing with funding.
[music].
Okay.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Okay opinion.
Okay cushy with pending.
[music].
And fifth before.
Note that this conference call has ended please disconnect your lines at this time. Thank you.
If anything up to.
I mean.
She was pending.
[music].
[music].
FIFA.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Okay opinion.
Okay, that's kind of meaning.
Consumer spending.
[music].
Okay fair enough FIFA.
This conference call has ended.
Given that your line at this time thank you.
Okay opinion.
Okay.
[music].
And our consumer spending.
[music].
I mean since before.
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
If anything that's going to.
I mean.
She would funding.
[music].