Q1 2020 Earnings Call

May 6, 2020

[music].

Angel: Good day, and welcome to the SmartCentres REIT Q1 2020 conference call. Today's conference is being recorded, and at this time, I would like to turn the conference over to Mr. Peter Forde, President and CEO. Please go ahead, sir.

Ladies and gentlemen, thank you for standing by your conference will be getting up momentarily. So please stay on the line. Thank you.

[music].

Welcome to de SMET centers reached Q1 Twentytwenty Conference call. Today's conference is being recorded and at this time I would like to turn the conference over to Mr., Peter for to President and CEO. Please go ahead Sir.

Operator: Good day, and welcome to the SmartCentres REIT Q1 2020 conference call. Today's conference is being recorded, and at this time, I would like to turn the conference over to Mr. Peter Forde, President and CEO. Please go ahead, sir.

Thank you Okay. Good evening welcome to the Smart centers Q1, 2020 conference call.

Peter Forde: Thank you and good evening. Welcome to the SmartCentres Q1 2020 conference call. Joining me on the call today are Mitch Goldhar, Executive Chairman, Peter Sweeney, Chief Financial Officer, and Rudy Gobin, EVP, Portfolio Management and Investments. The agenda for the call will begin with comments by Mitch and myself, followed by Peter Sweeney, who will talk about our results for the quarter and financial position, and then we will take your questions. Our comments will mostly refer to the first 13 pages and pages 22 and 23 of our supplemental information package and the outlook section of our MD&A, which are posted on our website. I refer you specifically to the cautionary language on pages 2 and 3 of the supplemental material, which also applies to comments any of the speakers make this evening.

Joining me on the call today, our Mitch Gold, our executive Chairman, Peter <unk>, Chief Financial Officer, and where do you go when need be P portfolio management and investments.

The agenda for the call well begin with comments by Mitchell myself, followed by Peter Sweeney.

Who will talk about our results for the quarter.

And financial position and then we will take your questions.

Our comments were mostly refer to the first 13 pages and pages 22, and 23 of our supplemental information package and the outlook section number mdna, which are posted on our website.

I refer you specifically to the cautionary language on page two and three of the supplemental material, which also applies to comment any of the speakers make this evening.

Peter Forde: Our Q1 financial results show a strong start to 2020 flowing from our stable portfolio of predominantly Walmart-anchored shopping centers. Peter Sweeney will comment further in a few minutes. The financial results for the balance of 2020 are being negatively impacted by the COVID-19 pandemic. Our priority during this period of uncertainty is to protect our employees, the communities we serve, our tenants, and our business while doing everything possible to mitigate the financial implications. Our shopping center portfolio is 98% leased at 31 March and remains focused on essential services and value-oriented retail, not fashion, recreational, or entertainment retail. It is well suited for these turbulent conditions.

Our first quarter financial results show strong start to 2020 flowing from are stable portfolio predominantly Walmart anchored shopping centers.

Peter Peter Sweeney will comment further in a few minutes.

The financial results for the balance of 2020.

Our being negatively impacted by the covert 19 pandemic.

Our priority during this period of uncertainty is to protect our employees. The communities, we serve our tenants and our business well doing everything possible to mitigate the financial implications.

Our shopping center portfolio is 98% leased at March 31, and remains focused on essential services and value oriented retail not fashion recreational or entertainment retail.

It is well suited for these turbulent conditions.

Peter Forde: First, the 60% is based on revenue of the REIT's tenant base is comprised of essential services, which continue to operate throughout this crisis, supporting local communities with its everyday groceries, pharmaceuticals, banking, liquor, general merchandise, and other essentials. This 60% is closer to 70% for the non-Greater Toronto markets we have shopping centers in markets where our centers are often the essential service hub of the area. Of course, this essential service list grew again today with Premier Ford's most recent announcement in Ontario. The value-oriented focus of our tenants, including Walmart, which anchors 75% of our properties, representing over 25% of our rental income, is well suited to serving its community during these poor economic conditions, which will no doubt continue beyond the resolution of the pandemic itself.

First is that 60%.

It's based on revenue of the reach tenant base is comprised of essential services, which continued to operate.

Throughout this crisis supporting local communities with its everyday groceries pharmaceuticals banking liquor general merchandise and other essentials.

The 60% is closer to 70% for the non greater Brecken markets, we have shopping centers in.

In markets, where centers are often the essential service how about the area.

And of course, the Central service list grew again today with bring your for its most recent announcement in Ontario.

The value oriented focus of our tenants, including Walmart, which anchor 75% of our properties rempfer representing over 25% of our rental income.

Well suited to serving its community.

During these poor economic conditions, which will no doubt continue beyond the resolution of dependent make itself.

98% of our revenues from shopping centers are open format I eat not enclosed mall space.

Peter Forde: 98% of our revenues from shopping centers are open format, i.e., not enclosed mall space. They're outdoor centers enabling customers to practice physical distancing while completing shopping for their everyday needs. Of course, the strength of the covenants of our strong, stable tenant base, Walmart, Loblaws, Shoppers Drug Mart, Canadian Tire, Sobeys, Dollarama, Rexall, LCBO, Lowe's, Canadian Tire, Home Depot, the five major banks, and more. We recognize the importance of small independent retailers to the Canadian economy. Our rent relief focus to date has been on supporting these non-essential business small independent retailers, representing approximately 6% of our contracted rent, and have offered rent deferrals to over 525 tenants.

Their outdoor centers, enabling customers to practice physical distancing, while completing shopping for their everyday needs.

And of course, the strength of the covenants of our strong stable tenant base, Walmart Loblaws shoppers drug Mart Canadian tire so abuse dollar RAMAR Rexall LCB O lows Canadian tire on home depot.

<unk> major banks and more.

We recognize the importance of small independent retailers to the Canadian economy, our rent relief focus to date has been on supporting these non essential business small independent retailers, representing approximately 6% of our contracted rent.

And have off regret deferrals to over 525 tenants.

Peter Forde: Recently, the federal and provincial governments have announced the Canada Emergency Commercial Rent Assistance, or CECRA program, designed to assist certain tenants such that effectively the tenant bears 25% of the cost, the landlord 25%, and the government 50%. Details of the program have gradually been developed and announced, but it is not yet clear as to which of our tenants will qualify and the mechanics of the relief. With that, I'll turn it over to Mitch.

Recently, the federal and provincial governments have announced the Canadian the Canada emergency commercial rental assistance for Sacroc program designed to assist certain tenants.

Such that effectively the tenant bears 25% of the cost the landlord, 25% and the government 50%.

Details of the program have gradually been developed and announce but it does not yet clear as to which of our tenants will qualify and the mechanics of the relief.

With that I'll turn it over to Mitch.

Thanks.

Mitchell Goldhar: Thanks, Peter. While rent collection in the Q2 will continue to be somewhat challenging, we should start to see some change in trend. We expect to be able to find ways to accommodate tenants with a real need when appropriate and justified, assisting them with the way forward at the conclusion of the pandemic. Rent collected for April improved from the situation outlined in our 21 April press release. There is a new term that seems to be used in describing rent collected in this environment, and I will take the opportunity to use it. That term being expected rent. Expected rent being the amount of contracted rent less the amount of rent deferred, offered, and accepted by tenants.

Mitch Goldhar: Thanks, Peter. While rent collection in the Q2 will continue to be somewhat challenging, we should start to see some change in trend. We expect to be able to find ways to accommodate tenants with a real need when appropriate and justified, assisting them with the way forward at the conclusion of the pandemic. Rent collected for April improved from the situation outlined in our 21 April press release. There is a new term that seems to be used in describing rent collected in this environment, and I will take the opportunity to use it. That term being expected rent. Expected rent being the amount of contracted rent less the amount of rent deferred, offered, and accepted by tenants.

Well then collection.

Second quarter.

Continue we'll continue to be somewhat challenging.

We should start.

And to see some change in trend.

We expect to be able to find ways to comedy tenants.

We all need.

When appropriate and justified.

This thing them.

For the way forward at the conclusion.

Well then collected.

For April and [noise].

In the situation outlined in our April 21st press release.

There's a near term good seems to be.

Years in describing when collectors in this environment and I will.

Take the opportunity.

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The term doing.

Expected rental.

I could run.

The mountain contracted rather less email.

Third.

Offered had accepted by tenants.

Mitchell Goldhar: Excluding the two outlet centers which were closed, we collected 72% of our expected rent in April, or 69% of our contracted rent for the month. We expect to be collecting much of the remaining unpaid amount over time. Peter?

Mitch Goldhar: Excluding the two outlet centers which were closed, we collected 72% of our expected rent in April, or 69% of our contracted rent for the month. We expect to be collecting much of the remaining unpaid amount over time. Peter?

Turning to leverage centers, which were closed.

Hello, good 72% Clarksburg cigarettes neutral.

Or 69%.

Correct.

For the month.

We expect to be collecting.

Much of the remaining I wouldn't read amount overtime.

Yeah.

No I think actually so I won't get Trued up.

Peter Forde: No, I think actually this, so Frank or Mitch.

Mitchell Goldhar: Yeah. I'll continue. Yep.

Mitch Goldhar: Yeah. I'll continue. Yep.

Peter Forde: Yeah.

Mitchell Goldhar: Sorry. Yeah. In the first part of April, we collected 68% of tenants' contracted rents, and by the end of the month, we were at 69%, excluding the outlet centers. In fact, we are still receiving rents related to April. We are experiencing the same level of collection in early May to date and that we did for April and expect this to also grow throughout the month. We expect the stronger national tenants will ultimately pay their April, May rents. If the government program is made available to the smaller independent retailers, we expect the combined overall receipts will end up with this COVID-19 affected period to end up being in the 85% to 90% range.

Mitch Goldhar: Sorry. Yeah. In the first part of April, we collected 68% of tenants' contracted rents, and by the end of the month, we were at 69%, excluding the outlet centers. In fact, we are still receiving rents related to April. We are experiencing the same level of collection in early May to date and that we did for April and expect this to also grow throughout the month. We expect the stronger national tenants will ultimately pay their April, May rents. If the government program is made available to the smaller independent retailers, we expect the combined overall receipts will end up with this COVID-19 affected period to end up being in the 85% to 90% range.

Yeah.

It was part of the paper, we collected 60%.

Other tenants contracted rents and by the end of the month.

We were at 69% Xtremio blood centers.

We were still receiving rents.

Really April.

We are experiencing the same level of collection in early May I believe.

Yeah, we did for April and expect.

So grows throughout the month.

We expect the stronger national tenants that totally either April may rents.

The government program.

As made available from a smaller independent retailers.

When you expect.

Hi, good overall the seats will end up.

I guess.

Overall corporate.

In team affected period.

Went up to 85% to 9% range.

As we move through the second half of your we expect this to go back.

Mitchell Goldhar: As we move through H2 of the year, we expect this to grow back somewhere between that range and our original 98%. Now I'll turn it back over to Peter.

Mitch Goldhar: As we move through H2 of the year, we expect this to grow back somewhere between that range and our original 98%. Now I'll turn it back over to Peter.

Somewhere between that range and our original 90%.

[noise] well turn it back.

Peter.

Peter Forde: Okay, thanks. Thanks. Peter Sweeney will address our strong liquidity position, including cash operating line and undrawn construction financing. I wanted to reinforce the focus right now on operational and general and administrative expenditures. Because most of our properties have operating Walmarts and other essential tenants, a certain standard of scheduled repairs and maintenance must be provided. We are cutting back to a level commensurate with the reduction in non-essential tenant customer traffic. However, optional upgrades and or cosmetic expenditures that are not health and life safety related are being postponed. General and administrative expenses are being monitored and curtailed as appropriate, but without impacting our ability to satisfy demands of current conditions and carry through with our longer term prospective initiatives, which we'll be talking more about. We are investigating participation in any government programs available to assist in maintaining our workforce.

Okay. Thanks. Thanks.

Peter Sweeney will address our strong liquidity position, including cash operating line and Undrawn construction financing.

[laughter], but I wanted to reinforce the focus right now on the operational and general and administrative expenditures.

Because most of our properties have operating walmarts and other.

Others, a central tenants.

A certain standard of scheduled repairs and maintenance must be provided.

We are cutting back to a level commensurate with the reduction in non essential tenet customer traffic.

However, optional upgrades and or 'cause cosmetic expenditures that are not health and life safety related are being postponed.

In general and administrative expenses are being monitored and court curtailed as appropriate.

But without impacting our ability to satisfy demands of current conditions.

And carry through with our longer term perspective initiatives, which we'll be talking more about.

We are investigating participation in any government programs available to sit assist and maintaining our workforce.

One factor coming to play in this cobot environments as is our experience with Penguin pickup.

Peter Forde: One factor coming into play in this COVID environment is our experience with Penguin PickUp. Five years ago, we partnered with Penguin PickUp, now a mature operating business that provides customers with more than just the curbside pickup that is happening every day now. It provides a one-stop pickup location for their online purchases from all sources with a rapidly expanding network of over a hundred locations across Canada. Two years ago, SmartCentres supported Walmart Canada's test and rollout of grocery pickup at our properties and introduced co-branded Walmart Canada Penguin PickUp locations to help expand their reach into areas of downtown Toronto, where access to their grocery offering is limited.

Five years ago, we partnered with Penguin pickup.

Now I'm not sure operating business that provides customers with more than just the curbside pickup that is happening.

Every day you know it provides a one stop pick up location for their online purchases.

From all sources with a rapidly expanding network of over 100 locations across Canada.

Two years ago, Smart Center supported Walmart, Canada test and roll out of grocery pickup at our properties and introduced Cobranded, Walmart, Canada Penguin pickup locations to help expand their reach into areas of downtown Toronto, where access to their grocery offerings is is limited.

Peter Forde: With COVID-19 and the customer desire for safe contactless shopping, our foresight and experience with the above-mentioned initiatives has proven to be a valuable, extremely valuable, and we are using our five years of last mile logistics learning to help more of our retailers establish a curbside pickup option as a natural evolution of Canadian shopping habits. With that, I'll now turn it back again to Mitch.

With covert 19, and the customer desire for safe contactless shopping our foresight and experience with the above mentioned initiatives has proven to be a valuable an extremely valuable.

And we are using our five years of last mile logistics learning to help more of our retailers established a curbside pickup option.

That's a natural evolution of Canadian shopping habits.

And with that I'll now turn it back again to Mitch.

Thanks.

Mitchell Goldhar: Thanks. Now let's talk about our continuing transition to a more diversified REIT. We believe it is in the best interest of the REIT to continue to advance our major developments and our intensification program while monitoring our cash flows. A few general reminders about our development pipeline and capabilities. Most of the development initiatives we are planning are on land we already own, unlocking value supplemented by selected acquisitions with existing or new strategic partners. We use our in-house development team to drive these initiatives, all contributing to enhanced yields and profits over the long term. Remember, this in-house development team developed over 85% of the retail area we own. Plus, many shopping centers owned by our peers were developed by SmartCentres. We know the markets. We have relationships with the municipalities.

Mitch Goldhar: Thanks. Now let's talk about our continuing transition to a more diversified REIT. We believe it is in the best interest of the REIT to continue to advance our major developments and our intensification program while monitoring our cash flows. A few general reminders about our development pipeline and capabilities. Most of the development initiatives we are planning are on land we already own, unlocking value supplemented by selected acquisitions with existing or new strategic partners. We use our in-house development team to drive these initiatives, all contributing to enhanced yields and profits over the long term. Remember, this in-house development team developed over 85% of the retail area we own. Plus, many shopping centers owned by our peers were developed by SmartCentres. We know the markets. We have relationships with the municipalities.

So now let's talk about a continuing transition to a more diversified to read.

We believe because in the best interest over the read to continue.

To advance our major developments and our intensification program, we're monitoring our cash flows.

Okay.

General reminders about our development pipeline and capabilities.

[laughter] development initiatives, we're planning on.

Our on land, we already own.

Unlocking value supplemented.

Quite selective acquisitions with existing.

And your strategic partners.

We use our in house development team to drive these initiatives.

All contributing to an enhanced yields and profits over the long term.

Remember, even since I guess in house development team developed.

85%.

Yeah, we own.

Yes.

Many shopping centers owned by our peers.

Okay.

I suppose servers.

We know the markets.

We have relationship municipalities.

Mitchell Goldhar: We understand every detail about each and every one of our properties. It is this team of in-house planning experts, developers, engineers, government relations, leasing, environmental, geotech specialists, construction managers, and architects that makes us unique in our sector. This team is actively engaged from home using our technology to connect seamlessly to our office and to the municipalities, which are also set up to operate remotely. Most municipalities are accepting and processing applications electronically and communicating with us through video conferencing, which is very much appreciated by both sides. Applications are in and being worked on for undeveloped lands, as well as for any opportunities that may result from COVID-19. We have developed through turbulent times before, both as a private company and as a public REIT.

Mitch Goldhar: We understand every detail about each and every one of our properties. It is this team of in-house planning experts, developers, engineers, government relations, leasing, environmental, geotech specialists, construction managers, and architects that makes us unique in our sector. This team is actively engaged from home using our technology to connect seamlessly to our office and to the municipalities, which are also set up to operate remotely. Most municipalities are accepting and processing applications electronically and communicating with us through video conferencing, which is very much appreciated by both sides. Applications are in and being worked on for undeveloped lands, as well as for any opportunities that may result from COVID-19. We have developed through turbulent times before, both as a private company and as a public REIT.

We understand every detail about each and every one of our properties.

Yes.

Okay, and I was pretty experts developers engineers government relations leasing and brother mental Geotext specials construction managers are complex that makes us unique in our sector.

And his team is actively engaged from home.

You know technology to connect seamlessly into our office and to the municipalities.

Also set up to operate remotely.

Most municipalities are accepting and processing applications electronically and communicating with us video conferencing.

Which is very much appreciated by both sides.

Occasions or in being worked on for undeveloped land.

Roes for any opportunities that May result.

From 19.

We have developed.

Feeling times before.

Okay.

But he had as opposed to creep up for example, we developed through the early nineties shows.

Mitchell Goldhar: For example, we developed through the early 1990s, the SARS pandemic in the early 2000s, the financial crisis of 2008, and many less famous down periods. The potential intensification and development program continues to grow as we further review our portfolio for opportunities. The number of potential projects and towers to commence construction within the next 5 years is currently estimated to be at 105. 34 of them are underway, comprising some 12.4 million square feet. That's our share of mixed-use space. A breakdown of these projects by asset type is provided in our MD&A. We carefully select our development partners, looking for expertise in these asset classes and with a good cultural fit and complementary skills. I am pleased to report that all new relationships are going extremely well.

Mitch Goldhar: For example, we developed through the early 1990s, the SARS pandemic in the early 2000s, the financial crisis of 2008, and many less famous down periods. The potential intensification and development program continues to grow as we further review our portfolio for opportunities. The number of potential projects and towers to commence construction within the next 5 years is currently estimated to be at 105. 34 of them are underway, comprising some 12.4 million square feet. That's our share of mixed-use space. A breakdown of these projects by asset type is provided in our MD&A. We carefully select our development partners, looking for expertise in these asset classes and with a good cultural fit and complementary skills. I am pleased to report that all new relationships are going extremely well.

How much in the early two thousands.

Enterprises.

So Nate.

And maybe less famous down periods.

[laughter] intensification of development program continues to grow as we've proven review our portfolio for opportunities.

Potential projects and towers to.

Turning to commence construction within the next five years is currently estimated to be a 105.

Four of them are underway.

Pricing, some 12.4 million square feet, that's for sure I've mixed use states.

Breakdown of these projects by asset type is provided interim DNA.

We carefully selected development partners looking for expertise and these asset classes and good cultural.

And complementary skills.

[laughter] new releases from the growing extremely well.

Mitchell Goldhar: Revera, SmartStop, CentreCourt, Groupe Sélection, Jadco, Penguin, and of course, our long-standing relationship with Walmart and Penguin and others. Communication with these partners remains excellent during these challenging times. We continue to move forward with all projects, with all of them. At the same time, we are now in a position to do all of these types of developments with our own in-house team. This additionally makes good partners. As a general reminder across our portfolio of properties, we're seeing none of the additional land value associated with our as-of-right density or potential as-of-right density is reflected in our property IFRS values. Let's look, for example, at the first condominium projects at VMC, Vaughan Metropolitan Center. So Transit City 1, 2, 3, 4, and 5, all of which are under construction, sold out 202,767 units.

Mitch Goldhar: Revera, SmartStop, CentreCourt, Groupe Sélection, Jadco, Penguin, and of course, our long-standing relationship with Walmart and Penguin and others. Communication with these partners remains excellent during these challenging times. We continue to move forward with all projects, with all of them. At the same time, we are now in a position to do all of these types of developments with our own in-house team. This additionally makes good partners. As a general reminder across our portfolio of properties, we're seeing none of the additional land value associated with our as-of-right density or potential as-of-right density is reflected in our property IFRS values. Let's look, for example, at the first condominium projects at VMC, Vaughan Metropolitan Center. So Transit City 1, 2, 3, 4, and 5, all of which are under construction, sold out 202,767 units.

Smartstyle centric or so like so.

Chad Carlson lingering and of course are long standing.

Going forward and backward.

<unk>.

Communication or were these partners or is it really excellent during these challenging times.

We continue to move forward with all told here.

All of it.

At the same time, we're down to position to do all of these types of.

On the sport.

And her team.

[laughter].

Additionally makes good partners.

As a general manager across our footprint for your properties machine learning, how many additional land value associated with her I was afraid density.

Potential as a very density is reflected.

Property I FRS values.

Let's look for example to first condominium projects at Vmc by Metropolitan centers or pension city, 1234, and five all of which are under construction.

200767 units.

Mitchell Goldhar: We chose to partner up a number of years ago on these first towers. We own 25% interest. Many of our other projects we are developing, and we'll describe below, we will be doing on our own. Imagine the numbers at 100%. Imagine the numbers. At 100% interest in the five towers at VMC. VMC is forecast to generate in excess of CAD 360 million profit. In that regard, we still have the ability to build out many times that at VMC alone over the next five to 10 years. To date, we have recognized the increased land value only when we close the sale of an interest in the land with a JV partner, at which time we recognize the uplift and our retained portion as well through an IFRS fair value adjustment.

Mitch Goldhar: We chose to partner up a number of years ago on these first towers. We own 25% interest. Many of our other projects we are developing, and we'll describe below, we will be doing on our own. Imagine the numbers at 100%. Imagine the numbers. At 100% interest in the five towers at VMC. VMC is forecast to generate in excess of CAD 360 million profit. In that regard, we still have the ability to build out many times that at VMC alone over the next five to 10 years. To date, we have recognized the increased land value only when we close the sale of an interest in the land with a JV partner, at which time we recognize the uplift and our retained portion as well through an IFRS fair value adjustment.

Well, we chose to partner up.

Number of years ago.

Our needs first towers.

25, 25% interest.

Many of our other perjured secure developing.

I will describe global.

During our April.

So I imagine remember that 100% Reimagined remembers like 100% interest in the five towers.

And he M.C.

[noise] AMC is forecast to generate in excess of $316 million.

In that regard, we still have the ability to build out many times that had BMC alone over the next five to 10 years.

Great well get recognized.

<unk> increased blend.

When we closed the sale of an interest in the land with the JV partner I would say we recognize the uplift.

And our team to portion.

As well.

The fair value adjustment.

Mitchell Goldhar: As a reminder, when we present development project yields or profits from condo projects, land is included in the cost side of the equation at an estimated market value, and all internal fees and capitalization costs are included in the cost as well, which I understand is not the way others may be presenting these same yields. Pages 22 and 23 of the supplementary information package provide yields and profit expectations from our active projects anticipated from COVID-19. For the most part, there is no significant change. You will notice that for now we have removed a new outlet mall. Some specific project highlights. Transit City condos at VMC. There are five towers, 2,767 units, 100% sold. Three of these towers, 1,741 units, and we have 20% deposits in place.

Mitch Goldhar: As a reminder, when we present development project yields or profits from condo projects, land is included in the cost side of the equation at an estimated market value, and all internal fees and capitalization costs are included in the cost as well, which I understand is not the way others may be presenting these same yields. Pages 22 and 23 of the supplementary information package provide yields and profit expectations from our active projects anticipated from COVID-19. For the most part, there is no significant change. You will notice that for now we have removed a new outlet mall. Some specific project highlights. Transit City condos at VMC. There are five towers, 2,767 units, 100% sold. Three of these towers, 1,741 units, and we have 20% deposits in place.

And as a reminder.

When we present development project deals at profits from condo projects land is included in the cost side of the equation.

At an estimated market value at our internal.

He capitalization costs are including the cost as well.

Understand is not the way others, maybe presenting these same yields.

They just 22 and 23 of the supplementary information package deals and profit.

Expectations.

Two projects anticipated.

Anticipated from code.

[noise] enough part there's no significant change.

No notice.

No we have removed.

Good morning.

[laughter] prototype, let's turn to city corners of the M.C. really hard to hours 3767 units.

2% sold three of these towers 1700 41 units.

20% deposits in place.

Mitchell Goldhar: 2 of these towers, 1,026 units, we have 15% deposits in place. In the case of the last 2, 5%, further deposit is due in Q3 2020 coming up. Construction continues on all 5 towers. Closing in TC 1 and 2 are expected in Q4, maybe even some in Q3, on or ahead of budget. VMC purpose-built residential rentals, 451 units are under construction. One tower, purpose-built residential rental, 171 units in Laval, Quebec, construction complete and occupancy is commenced and almost 50% leased. Self-storage, 50% leased. One self-storage development in Leaside complete, waiting for occupancy permit. 3 others are under construction, paused due to COVID government emergency orders. We expect that they will be permitted to restart very soon.

Mitch Goldhar: 2 of these towers, 1,026 units, we have 15% deposits in place. In the case of the last 2, 5%, further deposit is due in Q3 2020 coming up. Construction continues on all 5 towers. Closing in TC 1 and 2 are expected in Q4, maybe even some in Q3, on or ahead of budget. VMC purpose-built residential rentals, 451 units are under construction. One tower, purpose-built residential rental, 171 units in Laval, Quebec, construction complete and occupancy is commenced and almost 50% leased. Self-storage, 50% leased. One self-storage development in Leaside complete, waiting for occupancy permit. 3 others are under construction, paused due to COVID government emergency orders. We expect that they will be permitted to restart very soon.

He's powers 1000 them 26 units, we are 50% deposits in place.

And in the case since the last two 5%.

Further the present comes through in the third quarter of 2020 coming up.

Construction continues on all five towers.

Thing in T.C., one and two.

In the fourth quarter, maybe even some in the third quarter on or ahead of budget.

See.

I can't see purpose built residential rentals 451 years.

Or under construction.

One tower spoke residential rental I didn't 71 units in the they'll come back construction complete an occupancy has commenced and almost 50% leased.

Self storage, 50% leased.

One self storage development in lease I'd complete.

A waiting for occupancy permit.

Others are under construction pause to call. The government emergency orders expected, we expect that they will be permitted to restart very soon find that means anything persist for 20 minutes sports.

Mitchell Goldhar: Five others are in process of obtaining municipal approvals. In the seniors housing space, first let me clarify with all the troubling COVID information that is in the news. Almost all of it, sad news, relates to long-term care facilities, a business we are not in. With our two partners, we are developing seniors apartments and seniors residence, six with Revera, two with Groupe Sélection. All of these are in the municipal approval stage. As I mentioned earlier, our internal development team has been very active during this time, operating remotely. A few examples. Development of up to 5.3 million sq ft of predominantly residential space in various forms at Highway 407 in Vaughan. We have a three-tower mixed-use phase application that we just put in during the last few weeks.

Mitch Goldhar: Five others are in process of obtaining municipal approvals. In the seniors housing space, first let me clarify with all the troubling COVID information that is in the news. Almost all of it, sad news, relates to long-term care facilities, a business we are not in. With our two partners, we are developing seniors apartments and seniors residence, six with Revera, two with Groupe Sélection. All of these are in the municipal approval stage. As I mentioned earlier, our internal development team has been very active during this time, operating remotely. A few examples. Development of up to 5.3 million sq ft of predominantly residential space in various forms at Highway 407 in Vaughan. We have a three-tower mixed-use phase application that we just put in during the last few weeks.

In seniors housing space.

Let me clarify.

Troubling corporate information.

In the news.

All of it Sad news relates to long term care facilities business, we are not him.

Okay partners, we are developing seniors apartments and seems rather this six.

So look so.

Oh, sorry, I misspoke stage as I mentioned earlier, our account development team has been very active during this time.

Operating remotely from examples.

A matter of up to 5.3 million square feet, a predominantly residential space in various forms and highly 407 in Iran.

The other three tell mixtures phase application that we just put in dream.

Well last.

A few weeks and that of course, it's just read across from the B.M.C.

Mitchell Goldhar: That, of course, is just right across from the VMC. We expect support for that approval. Development up to 5 million sq ft of predominantly residential space in various forms over the long term in Pickering, Ontario, in one of our shopping centers. A two-tower mixed-use phase one application was just submitted in the last few weeks. Development of up to 5.5 million sq ft of predominantly residential space in various forms at Oakville North in Oakville, our shopping center at Dundas and Trafalgar. Two-tower residential phase one underway. The development of up to 3 million sq ft of predominantly residential space in various forms at Westside Mall in Toronto on Eglinton Avenue. Mixed-use single tower planning underway. This is, for all intents and purposes, right in the city.

Mitch Goldhar: That, of course, is just right across from the VMC. We expect support for that approval. Development up to 5 million sq ft of predominantly residential space in various forms over the long term in Pickering, Ontario, in one of our shopping centers. A two-tower mixed-use phase one application was just submitted in the last few weeks. Development of up to 5.5 million sq ft of predominantly residential space in various forms at Oakville North in Oakville, our shopping center at Dundas and Trafalgar. Two-tower residential phase one underway. The development of up to 3 million sq ft of predominantly residential space in various forms at Westside Mall in Toronto on Eglinton Avenue. Mixed-use single tower planning underway. This is, for all intents and purposes, right in the city.

And we we expect support for that approval.

Went up 5 million square feet, probably residential space in various forms.

Long term integrating Ontario.

Waterborne tropics, there's a computer.

Tell a mixed use phase one application was submitted to the last few weeks.

One of them up to 5.5 million square feet of predominantly residential space in various forms at north in old School.

Our shopping center have done Das and Kroger.

Oh, it was essential phase one.

Under underway.

The problem and up to 3 million square feet predominantly residential streets in various forms and Westside mall in Toronto I'd come to an avenue mixture single tower.

Planning underway.

And this is for all intents and purposes right in the city.

Mitchell Goldhar: The development of up to 1.7 million sq ft of residential space in various forms, including townhomes with Fieldgate. The seniors residence towers with Revera, condominiums, and residential rental buildings at the Vaughan Northwest Shopping Center in Vaughan, Ontario, at Weston Road and Major Mackenzie Drive, just across the highway from the new Mackenzie Health Hospital. The development of up to 1.5 million sq ft of residential space in various forms in Pointe-Claire, Quebec, just west of Montreal, suburb of Montreal. Immediately, phase one and two purpose-built residential rental towers. The development of four high-rise purpose-built residential rental buildings comprising of about approximately 2,000 units with Greenwin in Barrie, Ontario, on the waterfront. The development of high-rise purpose-built residential rental towers on Balliol Street at Yonge and Davisville with Greenwin.

Mitch Goldhar: The development of up to 1.7 million sq ft of residential space in various forms, including townhomes with Fieldgate. The seniors residence towers with Revera, condominiums, and residential rental buildings at the Vaughan Northwest Shopping Center in Vaughan, Ontario, at Weston Road and Major Mackenzie Drive, just across the highway from the new Mackenzie Health Hospital. The development of up to 1.5 million sq ft of residential space in various forms in Pointe-Claire, Quebec, just west of Montreal, suburb of Montreal. Immediately, phase one and two purpose-built residential rental towers. The development of four high-rise purpose-built residential rental buildings comprising of about approximately 2,000 units with Greenwin in Barrie, Ontario, on the waterfront. The development of high-rise purpose-built residential rental towers on Balliol Street at Yonge and Davisville with Greenwin.

Element of up to 1.7 million square feet in for his initial space in various forms including town homes with fuel Kate Senior says administrators.

And condominiums and residential rental buildings at the far North West shopping center in broad, Ontario.

Road and major back.

Hi away from the new.

[music].

Mackenzie that workforce.

Development or up to 1.5 million square feet in residential space in various forms important quarter, Quebec.

Wes.

Montreal.

Separable control immediately.

Phase one into purpose built residential rental towers.

The development every four or four high rise purpose built <unk> residential rental buildings, comprising approximately 2000 units with Greenland, and Barrie, Ontario, and the waterfront.

The development of high rise purpose built residential rental towers on bell oil at young and beautiful.

With that pretty much.

Mitchell Goldhar: The development of up to 1,600 residential units in various forms in Mascouche, Quebec, just outside suburbs of Montreal, on next to one of our shopping centers. The development of a first phase of a 42-unit rental building, which is part of a potential 10-phase master plan in Alliston, Ontario, on a shopping center site. This is just to name a few. As far as I'm concerned, our REIT unit price has really to date only been a function of our historic NOI, and no additional value has been reflected from the deeply embedded value that we are extracting from the development program. Now I will turn it over to Peter Sweeney.

Mitch Goldhar: The development of up to 1,600 residential units in various forms in Mascouche, Quebec, just outside suburbs of Montreal, on next to one of our shopping centers. The development of a first phase of a 42-unit rental building, which is part of a potential 10-phase master plan in Alliston, Ontario, on a shopping center site. This is just to name a few. As far as I'm concerned, our REIT unit price has really to date only been a function of our historic NOI, and no additional value has been reflected from the deeply embedded value that we are extracting from the development program. Now I will turn it over to Peter Sweeney.

But up to 1600 residential units and dairy farms in Middle School, Quebec.

[laughter] upside suburban Montreal.

Through.

One of their shopping centers.

Please.

So he's over 42 unit rental building, which is part of the potential penalties masterplan in Dallas and Ontario.

<unk>.

[noise] shopping center side.

Shifting to name a few inflows I'm concerned our retail prices.

Assuming todays only being function or.

Of our historic at Hawaii, and and noticeable value.

Yeah.

Reflected.

Embedded value for your extracting the development program.

And now I will take over to Peter Freeney.

Thanks, very much Mitch and and good evening everyone.

Peter Sweeney: Thanks very much, Mitch, and good evening, everyone. Our financial results for Q1 2020 reflect the continued strength, stability, and security of our 34 million sq ft, predominantly Walmart-anchored shopping center portfolio. Because of the current environment, we will focus on those operating and financial metrics experienced during the first quarter that underline the stability and security in our portfolio. Accordingly, during the quarter, this portfolio generated the following strong results. Number one, cash flows provided by operating activities, which is a GAAP measure, increased by CAD 23 million or 41% to CAD 79 million from CAD 56 million in the comparable quarter.

Our financial results for the first quarter of 2020 reflect the continued strength.

Ability and security of our 34 million square foot predominantly Walmart anchored shopping center portfolio.

Because of the current environment, we will focus on those operating and financial metrics experienced during the first quarter that underlying this stability and security in our portfolio.

Accordingly during the quarter this portfolio generated the following strong results.

Number one.

Cash flows provided by operating activities, which is a GAAP measure increased by $23 million or 41%.

To $79 million, some $56 million in the comparable quarter.

Peter Sweeney: Number two, funds from operations or FFO, which is a measure of our income generating capacity, increased by CAD 8 million or 8.7% to CAD 96 million from CAD 88 million in the comparable quarter. On a per unit basis, FFO was CAD 0.56, which is CAD 0.04 or 7.7% higher than the comparable quarter last year. Number three, adjusted cash flow from operations or ACFO, which is an indicator of our cash generating ability, increased by CAD 11 million or 13% to CAD 90 million from CAD 79 million in the comparable quarter last year.

Number two.

It's from operations or has that though which is a measure of our income generating capacity increased by $8 million or 8.7% to $96 million from $88 million into comparable quarter.

On a per unit basis.

So what is 56 cents.

Which is four cents or 7.7% tire.

Comparable quarter last year.

Number three.

Adjusted cash flow from operations or eight see Oh, which is an indicator of our cash generating ability increased by $11 million or 13%.

To $90 million from $79 million in the comparable quarter last year, and then finally number for the surplus of AC up all over distributions, which is an empirical measure that identifies our ability to fund unit distributions from actual cash generated by the business.

Peter Sweeney: Then finally, number four, the surplus of ACFO over distributions, which is an empirical measure that identifies our ability to fund unit distributions from actual cash generated by the business, increased by CAD 7 million to CAD 10 million from CAD 3 million in the comparable quarter and reflects a payout ratio of 88.6%, which is a demonstrable improvement over the comparable quarter last year. These continued strong operating metrics are indicative of our portfolio's continued unique ability to demonstrate steady growth and strong cash flow generation. We often speak about our portfolio stability, which is highlighted by our same property NOI growth level, which for the quarter was 0.3%. This is indicative of a high quality portfolio with continued industry-leading occupancy levels, anchored by our core group of tenants led by Walmart. They've permitted us to generate stronger rent collections, as Mr.

<unk> increased by $7 million to $10 million from $3 million in the comparable quarter.

And reflects a payout ratio of 88.6%.

Which is a demonstrable improvement over the comparable quarter last year.

These continued strong operating metrics are indicative of our portfolios continued unique ability to demonstrate steady growth.

And strong cash flow generation.

We often speak about our portfolio stability, which is highlighted by our same property NOI growth level, which for the quarter was <unk>, 0.3%.

This is indicative of a high quality portfolio with continued industry, leading occupancy levels anchored by our core group of 10, it's led by Walmart.

And they permitted us to generate stronger when collections as Mr. Ford and Mr. goal older mentioned earlier in needs uncertain times.

Peter Sweeney: Mr. Forde and Mr. Goldhar mentioned earlier in these uncertain times. These improved quarterly results can be attributed to the following primary factors. Number one, the incremental net operating income or NOI being generated from new tenants at both the KPMG and the PwC towers. Number two, continued increasing net operating income being generated from both the expanded Toronto Premium Outlets and the continuously improving Premium Outlets in Montreal, in addition to recent earn-outs and other developments. Number three, lower interest costs associated with our portfolio of maturing mortgages and unsecured debt continue to provide unsecured fixed-rate refinancing opportunities at lower rates than the outgoing maturing rates. Number four, additional percentage rent, parking revenue, and other miscellaneous revenue. Lastly, number five, lower general and administrative costs. Now let's focus on our balance sheet.

He's improve quality results can be attributed to the following primary factors number one the incremental net operating income or in a one I being generated from new tenants at both the KPMG and the Pwc towers number two.

Continued increasing net operating income being generated from both the expanded Toronto premium outlets.

And the continuously improving premium outlets in Montreal.

In addition to recent earn outs and other developments.

Number three.

Lower interest costs associated with our portfolio of maturing mortgages and unsecured debt.

Continue to provide unsecured fixed rate refinancing opportunities at lower rates and outgoing maturing rates.

Number four additional percentage rent parking revenue and other miscellaneous revenue and lastly, number five lower general and administrative costs.

Now, let's focus on our balance sheet.

Peter Sweeney: As we know, these challenging times will test the balance sheet of most real estate companies. However, for many years now, we have encouraged the capital markets to focus on our commitment to the balance sheet, our unyielding attention to both conservative capital management and liquidity, our discipline in the deployment of capital on acquisitions and developments, and our continued desire to match gearing and similar debt levels to the long-term nature of our assets. This strategic focus on long-term viability and growth will assist us to manage through this current period of uncertainty. In this regard, we note the following highlights relative to the comparable quarter last year. Number one, our unencumbered pool of assets of CAD 5.6 billion has increased by CAD 1.1 billion or 24%. Number two, our debt-to-aggregate assets ratio continues at a very conservative 43.3% level.

As we know these challenging times will test the balance sheets.

Most real estate companies. However for many years now we have encouraged to capital markets to focus and our commitment to the balance sheet.

Yielding attention to both conservative capital management and liquidity.

Our discipline in the deployment of capital on acquisitions and developments and our continues desire to match gearing at similar levels to the long term nature of our assets.

This strategic focus on long term viability and well.

Assist us to manage through this current period of uncertainty.

In this regard we know the following highlights relative to the comparable quarter last year.

Number one.

Our unencumbered pool of assets, a $5.6 billion has increased by $1.1 billion or 24%.

Number two.

Our debt to aggregate assets ratio continues at a very conservative 43.3% level.

Peter Sweeney: Number three, our weighted average interest rate for all debt was 3.4% as compared to 3.7%. Even in this challenged period, we continue to be in a position to attract debt capital at historically low rates for longer terms. Number four, our interest coverage ratio improved further to 4.1 times from 3.8 times, and our adjusted debt to adjusted EBITDA multiple was 8.2 times, both metrics reflecting the business's strong ability to fund its obligations in uncertain times. Lastly, number five. As a result of this ongoing commitment to the balance sheet, in December 2019, we received an upgrade to our credit rating from DBRS to BBB high.

Number three.

Our weighted average interest rate for all debt was 3.4% as compared to 3.7% and even in this challenging period, we continue to be in a position to attract get capital at historically low rates for longer terms.

Now before I.

Our interest coverage ratio improved further to 4.1 time from 3.8 times and our adjusted debt to adjusted EBITDA multiple was 8.2 times.

Both metrics, reflecting the business is strong ability to fund its obligations in uncertain times.

And then lastly number thought.

So with all of its ongoing commitment to the balance sheet in December of 2019, we received an upgrade to our credit rating from DBRS to Triple B high.

Peter Sweeney: Recall that when we embarked upon this strategic initiative over two years ago, approximately two-thirds of our debt was sourced from secured lenders, a metric that has now almost reversed, whereby 64% of the REIT's debt is now sourced in the unsecured market. From a liquidity perspective, as we look to the immediate future and plan through the current environment, in addition to the conservative debt metrics noted above, please also consider the following. Number one, we do not have any maturing debt in Q2 of this year, and only CAD 70 million, that's 70 million, in mortgages maturing later in the year, as well as CAD 250 million in unsecured debentures that come due in December. It's interesting to note that we continue to speak with market participants concerning appropriate repayment alternatives associated with these maturing amounts.

Recall that when we embarked upon the strategic initiative over two years ago.

Accidently, two thirds of our debt the sourced from secured lenders.

A metric that has now almost reversed whereby 64% of the reads debt is now sourced in the unsecured market.

From a liquidity perspective, as we look to the immediate future and plan through the current environment.

In addition to the conservative debt metrics noted above these also consider the following.

Number one.

We do not have any maturing debt in the second quarter up this year and only $70 million that seven zero million dollars in mortgages maturing later in the year.

As well as $250 million, an unsecured debentures that come due in December.

And it's interesting to note that we continue to speak with market participants concerning appropriately payments alternatives associated with these maturing amounts.

Peter Sweeney: Number two, with the support of our board, and as both a conservative and a strategic initiative, and to ensure that we have ample liquidity when and if needed during this period, we recently drew down on CAD 410 million from our operating line. In addition, we have a CAD 250 million undrawn accordion feature that is available to us. Number three, we continue to deploy a strategy that permits construction of any large development project to begin when it has appropriate project financing in place. In this regard, we have ample undrawn amounts available on our construction facility lines to ensure project completion of each of our various development projects.

Number two.

With the support of our board and as both a conservative and his strategic initiative and to ensure that we have ample liquidity when and if needed. During this period. We recently drew down on $410 million from our operating line and in addition, we have a 250 million dollar.

Undrawn accordion feature that is available to us.

Number three we.

We continue to deploy a strategy that permits construction of any large development project began when it has an appropriate project financing in place.

And in this regard we have ample undrawn amounts available on our construction facility lines to ensure project completion of each of our various development projects.

Peter Sweeney: Number four, we continue to receive reverse inquiries and other strong levels of support and interest from participants in the bond market, and the overall costs of issuance have returned to those levels that were in place at the end of 2019. In this regard, we continue to closely monitor these debt capital markets. Lastly, number five, the closings of the first two phases of the Transit City condos are expected to begin in Q3 of this year, and we expect our share of the net proceeds to exceed CAD 60 million. That's 60 million, which will be used to further fortify our liquidity needs both in 2020 and in 2021.

Number four we continue to receive the reverse inquiries and other strong levels of support and interest from participants in the bond market and the overall cost of issuance have returned to those levels that were in place at the end of 2019.

And in this regard we continue to closely monitor these debt capital markets.

And then lastly number five the closing of the first two phases of the transit city condos are expected to begin in Q3 of this year and we expect our share of the net proceeds to exceed $60 million, that's six zero million, which will be first which would be used to further fortify our liquidity.

He needs both in 2020 and in 2021.

Peter Sweeney: Finally, we'd like to take a moment to thank all of our friends in the capital, banking, and financial markets who continue to demonstrate your willingness to offer your assistance to us in these unprecedented times. To our team of professionals who have worked so valiantly at SmartCentres for your tireless effort and sacrifice to get the job done in these most unusual of circumstances, we say thank you. Lastly, to those frontline workers who continue to sacrifice so much on our behalf, never before have so many owed so much to so few, we say thank you. With that, I will turn the call back to our operator, Angel, who will coordinate us in addressing your various questions. Thank you.

And finally, we'd like to take a moment to thank all of our friends in the capital banking and financial markets, who continue to demonstrate your willingness to walk for your assistance to us in these unprecedented times.

And to our team of professionals, who have worked so valiantly.

That's not centers for your tireless effort and sacrifice to get the job done in these most unusual of circumstances, we say thank you.

And then lastly to those frontline workers, who continue to sacrifice so much on our behalf.

Never before have so many owed so much too. So few we say thank you and with that I will turn the call back to our operator, NGL, who will coordinate a us in addressing your various questions. Thank you.

Angel: Thank you, sir. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question, and we will pause for just a moment to allow everyone an opportunity to signal for questions. One moment, please. Your first question comes from the line of Mike Markidis of Desjardins. Please go ahead.

Operator: Thank you, sir. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question, and we will pause for just a moment to allow everyone an opportunity to signal for questions. One moment, please. Your first question comes from the line of Mike Markidis of Desjardins. Please go ahead.

Thank you, Sir if you'd like to ask a question to signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure immune function. It starts off till are you, saying no to reach our equipment again press star one to ask a question and we will pause for just a moment to a lot when an opportunity to signal for questions. One moment. Please.

And your first question comes from Atlanta that make a marquee doesn't deserve named please go ahead.

Hi, Thanks, everybody.

Peter Forde: Thanks everybody.

Mike Markidis: Thanks everybody. Mitch, you gave some interesting, I guess, interesting outlook in terms of how you expect rent collection to unfold in Q2 and sort of the back half of this year. I'd start off by asking if you have any sense or timeline or forecast as to how your economic occupancy may trend at the same time.

Mike Markidis: Mitch, you gave some interesting, I guess, interesting outlook in terms of how you expect rent collection to unfold in Q2 and sort of the back half of this year. I'd start off by asking if you have any sense or timeline or forecast as to how your economic occupancy may trend at the same time.

Mitch you gave some interesting.

I guess interesting outlook in terms of how you expect rent collection to unfold in second quarter and sort of the back half of this year.

I'd I'd start off by asking if you have any sense or more timeline or forecast as to how your economic occupancy may trend at the same time.

Uh huh.

Mitchell Goldhar: Can you hear me?

Mitch Goldhar: Can you hear me?

Can you hear me.

Mike Markidis: Yep.

Yep.

Mitchell Goldhar: Sorry. Well, not sure exactly what you mean, but would you mean where you think we're gonna sort of level off by the end of the year in terms of occupancy?

Mitch Goldhar: Sorry. Well, not sure exactly what you mean, but would you mean where you think we're gonna sort of level off by the end of the year in terms of occupancy?

Right.

Well I'm not sure exactly what you mean, but Jimmy where you think we're going to sort of level off by the end of year in terms of occupancy.

Mike Markidis: Exactly, yeah.

Exactly yeah.

Mitchell Goldhar: I mean, it's hard to say because, obviously, everybody is looking at the rent collection number and, you know, percentages and so on. It's not, it's a bit, you know, it's turning out to be a bit misleading because we're not collecting from tenants that are strong. I think we and our, you know, pretty much everybody that's not collecting rent from strong tenants is expecting to collect. In fact, we're starting to see some of that happening. I was sort of, you know, talking more to that when I was talking about those numbers. Look, there are a handful of tenants that are not strong or not, you know, as strong.

Mitch Goldhar: I mean, it's hard to say because, obviously, everybody is looking at the rent collection number and, you know, percentages and so on. It's not, it's a bit, you know, it's turning out to be a bit misleading because we're not collecting from tenants that are strong. I think we and our, you know, pretty much everybody that's not collecting rent from strong tenants is expecting to collect. In fact, we're starting to see some of that happening. I was sort of, you know, talking more to that when I was talking about those numbers. Look, there are a handful of tenants that are not strong or not, you know, as strong.

I mean.

It's hard to say, because obviously everybody who is looking at the the rent collection number and percentages and so and but it's not it's a bit it's turning out to be a bit misleading because you know.

Because we're not collecting.

From tenants that are strong so and I think we and are you pretty much everybody. That's not collecting rent from strong tenants is expecting to collect in fact, we're starting to see some.

Some of that happening I'm so.

I was sort of you know talking more about when I was talking about those members.

There are a handful of tenants.

That our dog strong or not.

You are not as strong and their survival will you know kind of.

Mitchell Goldhar: Their survival will, you know, kind of depend on exactly how long this goes and, of course, if there's a program for them. You know, I guess ultimately if, you know, how they do when things come back. Yeah, you can imagine, we've modeled it every which way. I mean, if nothing changes and nobody, you know, there's no casualties, then we'll see ourselves back where we were. That's why I said between 85 and 90, that's our range for when things, you know, all get collected, and if government programs as stated come through. But 98. But we don't know what'll happen with the ones that are not in that calculation.

Mitch Goldhar: Their survival will, you know, kind of depend on exactly how long this goes and, of course, if there's a program for them. You know, I guess ultimately if, you know, how they do when things come back. Yeah, you can imagine, we've modeled it every which way. I mean, if nothing changes and nobody, you know, there's no casualties, then we'll see ourselves back where we were. That's why I said between 85 and 90, that's our range for when things, you know, all get collected, and if government programs as stated come through. But 98. But we don't know what'll happen with the ones that are not in that calculation.

It depends on exactly how long this goes and then of course, if there's a program for them and and.

I guess ultimately if your hobby, how they do when things come back. So yeah. We've modeled it every you can imagine we modeled every every which way so.

I mean, if nothing changes and nobody nobody there's no casualties, then we'll see ourselves back where we were and that's why I said between 85 and I'd, that's our range for when things.

Get collected.

And if government programs as stated come through.

But and ideas, but we don't know what will happen with the ones that.

That are not in that calculation.

Mitchell Goldhar: Now, if there are some bankruptcies along the way, that doesn't mean that we won't get any rent from them. I mean, very often it does result in retail. It very often results in pruning of locations and reopening. Reopening can actually mean reopening with a, you know, new, improved concept and obviously stronger company. It does result in, you know, some vacancies and lost revenue. It's not of the COVID, you know, wildest dreams, kind of, you know, orders of magnitude. It's kind of more normal course stuff that might get accelerated as a result of the COVID. That's kind of embedded in the range. Sorry for the long answer, but hopefully that helps.

Mitch Goldhar: Now, if there are some bankruptcies along the way, that doesn't mean that we won't get any rent from them. I mean, very often it does result in retail. It very often results in pruning of locations and reopening. Reopening can actually mean reopening with a, you know, new, improved concept and obviously stronger company. It does result in, you know, some vacancies and lost revenue. It's not of the COVID, you know, wildest dreams, kind of, you know, orders of magnitude. It's kind of more normal course stuff that might get accelerated as a result of the COVID. That's kind of embedded in the range. Sorry for the long answer, but hopefully that helps.

If there are some bankruptcies.

Along the way that doesn't mean that we won't get.

80 rent from them I mean very often.

It does result in.

In <unk> in retail.

After the result, and pruning of locations and reopening and reopening could actually mean.

Reopening with the a you know new improved concept that obviously stronger company, but it does result in.

Some.

Vacancies or loss revenue, but it's not of the <unk> you know wildest dreams I'm kind of you know.

As a magnitude it's kind of more normal course stuff it might get accelerated as a result of the corporate but that's kind of embedded in the range, so sort of long answer, but hopefully that helps.

Mike Markidis: Yeah, that is helpful. Thank you. Maybe just for Peter, I think you mentioned that you have construction financing in place for the stuff that's actually actively under construction. Is that correct?

Yeah that is helpful. Thank you and maybe just for Peter I think you mentioned that you have construction financing in place for the stuff that's actually active we under construction I was I correct.

That's correct Michael.

Peter Sweeney: That's correct, Michael.

Mike Markidis: Okay. Just curious, are there any projects that will get or planning to get underway, throughout the rest of this year? If so, how is the market for development financing, today? Is that still something that's available to you?

Okay and I'm.

Just curious are there any projects that will get our planning to get underway a throughout the rest of this year and if so how is the market for developing financing.

Today is that still something that's available to you.

Peter Sweeney: Well, it's a two-part question, so maybe Mitch and Peter can answer the first part as far as projects starting this year, and maybe I'll take the second part of the question as far as the market for project financing.

Well, it's a two part question. So maybe mention Peter can answer the first part as far as projects starting this year and maybe I'll take the second part of the question as far as the market for a project financing.

Mitchell Goldhar: Yeah, just on the first part, I mean, we will proceed where, you know, every box is checked twice, including financing. I'm sure the lenders will also be wanting, you know, every box checked twice. We do anticipate that we will start some projects that are sound. But if they're not and they're not, we all feel right, we won't start them. We're not starting without project financing. We're not starting with a belt and suspenders and a crane. I do foresee us starting some projects with all those boxes checked.

Just.

Mitch Goldhar: Yeah, just on the first part, I mean, we will proceed where, you know, every box is checked twice, including financing. I'm sure the lenders will also be wanting, you know, every box checked twice. We do anticipate that we will start some projects that are sound. But if they're not and they're not, we all feel right, we won't start them. We're not starting without project financing. We're not starting with a belt and suspenders and a crane. I do foresee us starting some projects with all those boxes checked.

The <unk>.

But I mean, we will proceed where you know every every box.

Chuck twice.

Including financing.

And I'm sure. The lenders are will also be watching every box check twice so.

We do anticipate there we will start some some projects, but are there a sound, but if they're Dod and without a real flow right. We watch that from a website <unk> public finance they were not starting with your belt and suspenders you had a claim.

But [noise].

Perceive that we could.

I don't foresee us starting from purchase with all those boxes.

Michael its Peter just to follow along on niches comment we at least our fortunate.

Peter Sweeney: Michael, it's Peter. Just to follow along on Mitch's comment. We at least are fortunate to be in what I would describe as the enviable position where we have a number of lenders who we're working very closely with in establishing several new construction facilities. The simple answer from a market perspective is that construction financing for us is very much available. It's more than competitively priced. Notwithstanding that rates have gone up since, you know, this initiative took place 6 or 7 weeks ago. We've seen the spreads on some of our facilities increase, and that's disappointing. However, on an overall basis, given that the bond rates and BA rates have declined, there are some savings in that regard.

To be in what I would describe as the enviable position, where we have a number of lenders.

We are we're working very closely with in establishing.

Several new construction facilities and so the simple answer from from a market perspective is that construction financing for us is very much available.

And it's more than competitively priced notwithstanding that rates.

Rates have gone up since you know this initiative took place a six or seven weeks ago, we've seen.

The spreads on some of our facilities increase and that's disappointing however on an overall basis given that the bond rates and be a rates have declined a there were some savings in that regard, but to maybe to get back to your question. We certainly do see an ample supply of available credit for construction financing.

Peter Sweeney: To maybe get back to your question, we certainly do see an ample supply of available credit for construction financing.

Mitchell Goldhar: Okay. No new projects unless there's specific project level financing and that market is open and available. That's it for me. Thank you.

Mitch Goldhar: Okay. No new projects unless there's specific project level financing and that market is open and available. That's it for me. Thank you.

Okay. So so no new projects unless there's specific project level financing and that market is open available. That's a that's it for me I guess.

Peter Sweeney: Yeah.

And once again, ladies and gentlemen, if you have a question. Please press star one well now take our next question from a Sam Damiani of TD Securities. Please go ahead.

Angel: Once again, ladies and gentlemen, if you have a question, please press star one. We will now take our next question from Sam Damiani of TD Securities. Please go ahead.

Operator: Once again, ladies and gentlemen, if you have a question, please press star one. We will now take our next question from Sam Damiani of TD Securities. Please go ahead.

Thanks, Good evening I may have missed if somebody a trip protocol, but I just I just heard the you did draw on the a 40 million dollar line, what's the cash in the bank at the end of March what was the reason for doing that as their me an immediate use it for proceeds for for most of that a cash.

Sam Damiani: Thanks, and good evening. I may have missed some of the first part of the call. I just heard that you did draw on the CAD 400 million line with the cash in the bank at the end of March. What was the reason for doing that? Is there an immediate use of proceeds for most of that cash?

Sam It's Peter.

Peter Sweeney: Sam, it's Peter. In simple terms, as I think I mentioned, we did it as a sort of a strategic initiative to ensure that we had more than ample liquidity to be able to accommodate the needs of the business over you know the next 6 to 8 months. As far as having a specific use for it currently, we don't have a particular or specific use per se. Certainly, you know, as we would expect, it will be used in part at least to accommodate the needs of the business as we go through the next several months.

So in.

Simple terms as I think I mentioned, we did it as a sort of his strategic.

Initiatives to ensure that we had more than ample liquidity.

To be able to accommodate the needs of the business.

Over the next a six to eight months, so as far as having a specific to use for currently we don't have a particular or specific use per se.

But certainly you know as we would expect.

It will be used in part at least to accommodate the needs of the business as we go through the next several months.

So basically the revenue shortfalls from tenants that tends deferring what payments at the moment to look sort of the main.

Sam Damiani: Basically, the revenue shortfalls from tenants deferring rent payments at the moment? Is that the sort of the main-

Peter Sweeney: I mean, let's make sure, and I wanna make sure everybody on the call understand that we don't anticipate or we're not forecasting the quantum of the rent deferrals from our tenants to even come remotely close to the amount that we've drawn on the line. As I mentioned, this initiative or reason to drawing the line was done strategically in an effort to take a very conservative approach to managing the business. You know, the amounts that we foresee the business requiring, at least for now, and I think Mitch mentioned, you know, we've gone through a plethora of various sensitivities on expectations in collections.

Yeah, but don't I mean, let's make sure and I mean, I want to make sure everybody on the call understand that we don't anticipate or we're not forecasting.

The quantum of the rent deferrals from our tenants to even come remotely close to the amount that we drawn in line or as I mentioned. This this initiative or reason drawing the line was done strategically in an effort to be to take a very conservative conservative approach.

To managing the business the amounts that we foresee the business requiring at least for now and I think Mitch mentioned, you know weve gone through.

A plethora of various sensitivities on expectations in collections and given those various sensitivities that that had been prepared.

Peter Sweeney: Given those various sensitivities that have been prepared, it's unrealistic to think that, you know, we would ever need the full amount, at least for now, on what's been drawn. Again, it's more of a defensive measure to ensure that there's more than ample liquidity required or, sorry, available, as we move forward.

Unreal unrealistic to think that we would ever need.

The full amount at least for now on on what's been drawn so it again, it's more of a defensive measures to ensure that there's more than ample liquidity required or sorry available as we move forward.

Sam Damiani: Okay. Just on the rent collections, I certainly don't wanna belabor the point, but I just wanna be clear because the presentation of the information is a little bit different from some of the reads. Did you collect the same amount of rent in April as you press released a couple weeks ago, or was it, you know, up by a percent or two? Just trying to be clear.

Good.

And just still my recollections it'll certainly the one of the labor to point, but I just want to be clear because the presentation of information is a little bit different.

Oh from some of the Reid.

So did you collect the same amount of rent in April as you press released a couple of weeks ago or was it you know up 5% to to try to be clear.

Mitchell Goldhar: April has gone up by 1% or 2%, to use your words.

Mitch Goldhar: April has gone up by 1% or 2%, to use your words.

April has gone up 5% or true.

He was your words.

Okay.

Sam Damiani: Okay. Just finally, any. Sorry.

Yeah, Hey, just finally any sort of I do want to point out.

Mitchell Goldhar: I do wanna point out that it may go up some more actually, April. I mean, we got a note today from a major defaulter, who's sworn that they're going to pay April's rent. I mean, you know, we don't calculate until it's happened. But we do anticipate April's rent to still go up. And we haven't factored in any of the deals that the government are offering to small business. I mean, correct me if I'm wrong, Rudy, I think that represents about CAD 6 million. I can't remember how many it is a year. There's a lot of our small tenants.

Mitch Goldhar: I do wanna point out that it may go up some more actually, April. I mean, we got a note today from a major defaulter, who's sworn that they're going to pay April's rent. I mean, you know, we don't calculate until it's happened. But we do anticipate April's rent to still go up. And we haven't factored in any of the deals that the government are offering to small business. I mean, correct me if I'm wrong, Rudy, I think that represents about CAD 6 million. I can't remember how many it is a year. There's a lot of our small tenants.

Let me go up smaller actually.

April.

I mean, we got we got no we ought to know we got it we got to no today from a.

Major defaulter.

Through strong that they're going to.

Hey, pros rent I mean, you know, we don't calculate until it's too.

I mean in happened, but so we do we do anticipate april's rent to.

Just to go up and.

And we haven't factored in any of the deals.

That the government are offering to small business.

I mean, I'm correct me, if I'm wrong, maybe I think that represents about.

Is it a 6 million I can remember how many chooses a year, but there's a lot of our small tenants doesn't make up a huge percentage of our business, but it's still a lot of money.

Mitchell Goldhar: It doesn't make up a huge percentage of our business, but it's still a lot of money. That if we were to apply for it and it was all else equal, everything else being equal, we would collect 75% of that, whereas right now we deferred them all. You know, obviously, you know, it was an unknown a month ago exactly how to treat that. In that number, that range that I gave you, we used it as 75%, 75% of the small tenant, just to reiterate that. We expect May to be the same, and I know we all, you know, everybody was wondering what was gonna happen in May. May seems to be trending.

Mitch Goldhar: It doesn't make up a huge percentage of our business, but it's still a lot of money. That if we were to apply for it and it was all else equal, everything else being equal, we would collect 75% of that, whereas right now we deferred them all. You know, obviously, you know, it was an unknown a month ago exactly how to treat that. In that number, that range that I gave you, we used it as 75%, 75% of the small tenant, just to reiterate that. We expect May to be the same, and I know we all, you know, everybody was wondering what was gonna happen in May. May seems to be trending.

But if we were to apply for it and there was so and all other equal everything else equal we would collect a 75% of that whereas right now we deferred them all.

And you know obviously.

It was an unknown a month ago exactly how to how to treat that in that.

<unk> range that I gave you we use that as 75%.

75% of the small tenants just through you just to reiterate that.

So and we expect me to be the same and I know we all you know everybody was I was wondering what was going to happening in me, but me seems to be trending.

Mitchell Goldhar: You know, everything seems to be almost identical to starting off to the beginning of May, similar to the beginning of April, with one exception, and maybe we're seeing there might be two exceptions. I don't wanna go into those level of detail right now. We expect May to be sort of similar to April, the way April panned out, the way April turned out, and maybe even a little better.

One.

Mitch Goldhar: You know, everything seems to be almost identical to starting off to the beginning of May, similar to the beginning of April, with one exception, and maybe we're seeing there might be two exceptions. I don't wanna go into those level of detail right now. We expect May to be sort of similar to April, the way April panned out, the way April turned out, and maybe even a little better.

Everything everything seems to be almost identical to starting off to the beginning of may similar to the beginning of April.

With one exception and maybe we're seeking might be two exceptions, but.

But I don't want to go into those level of detail right now, but we.

We expect me to be sort of similar to April through April panned out where you pull turned out and maybe even a little better.

Sam Damiani: Okay. That's helpful. And just finally, what's your best visibility on the trend in occupancy for Q2 at this stage?

Okay. That's helpful.

Just finally.

Do you have any they like what's your best visibility on all the trend in occupancy for the second quarter at this at this stage.

Mitchell Goldhar: I mean, occupancy as defined as, you know, open or, I mean, just in terms of, like, actually legally have a leasehold interest? I mean, you know, I guess leasehold interest, we had 90 going. You know, legally, technically, we legally technically have 98%, I guess, occupied, but I don't think that's what you mean because we have a lot of defaulting tenants, which we have not terminated, but we have set up such that we have the right to terminate. You know, we are, you know, obviously monitoring and evaluating the pros and cons of that every day. I mean, 60% of our space right off the bat is open, because they're essential services as defined by most all the provinces.

Mitch Goldhar: I mean, occupancy as defined as, you know, open or, I mean, just in terms of, like, actually legally have a leasehold interest? I mean, you know, I guess leasehold interest, we had 90 going. You know, legally, technically, we legally technically have 98%, I guess, occupied, but I don't think that's what you mean because we have a lot of defaulting tenants, which we have not terminated, but we have set up such that we have the right to terminate. You know, we are, you know, obviously monitoring and evaluating the pros and cons of that every day. I mean, 60% of our space right off the bat is open, because they're essential services as defined by most all the provinces.

I mean occupancy as defined as you know open or I mean, just in terms of like actual legally have leasehold interest.

I mean.

Yeah.

I guess leasehold interest.

And going.

Really technically we have.

You know, we legally technically have 98%.

Occupied but I don't think that's what you mean, because we have a lot of defaulting tenants.

Which we have got terminated.

We have set up such that we have the right to terminate.

And you know we are obviously monitoring and evaluating the pros and cons about every day.

But I mean, 60% of our space write off for bad is.

But because they are essential services as defined by by the problem by most all the provinces.

Mitchell Goldhar: Yeah, I mean, I'm not sure if I answered your question, but those are-

And so yeah, I mean, I'm not sure if I answer your question, but.

Mitch Goldhar: Yeah, I mean, I'm not sure if I answered your question, but those are-

Sam Damiani: No, that's helpful. I was thinking more on a committed basis, you know, if you're 98% today, is there expected to be slippages just because of the lack of, you know, ability to get leasing transaction completed as efficiently as it was three months ago?

There was no. That's helpful. I was taking more of our committed basis you know if you're if you're 90%. Today is there is there are expected to be slippage just because of the lack of.

Well the ability to get get leasing transaction completed as efficiently as it was three months ago.

Mitchell Goldhar: Yeah. You gotta figure there's gonna be slippage. I mean, you know, we don't have anything specific that's imminent. But sure, of course, now that I've said that, tomorrow, you know, somebody will announce some slippage. You gotta figure there's gonna be some slippage and there's probably gonna be some slippage just anyway. This might have induced some of it, but we don't have any. We're not aware of anything that's about to happen. The ones that are the most fragile, we are going to try and help as much as possible. In terms of where are we gonna end up, I mean, you know, if we gotta sort of just pick a number, we haven't picked a number.

Mitch Goldhar: Yeah. You gotta figure there's gonna be slippage. I mean, you know, we don't have anything specific that's imminent. But sure, of course, now that I've said that, tomorrow, you know, somebody will announce some slippage. You gotta figure there's gonna be some slippage and there's probably gonna be some slippage just anyway. This might have induced some of it, but we don't have any. We're not aware of anything that's about to happen. The ones that are the most fragile, we are going to try and help as much as possible. In terms of where are we gonna end up, I mean, you know, if we gotta sort of just pick a number, we haven't picked a number.

You got a figure there's going to try to figure is gonna be slippage I mean.

We don't have specific we don't have anything specific is imminent, but sure of course now that I've said that tomorrow.

Somebody will announce some slippage but.

But you Gotta figured it was gonna be some slippage and there's probably going to be some slippage just anyway. Despite of induced some of it but we don't have any where we're not aware of anything is about to happen and the ones that are the most fragile.

We are going to try and help as much as possible.

But in terms of where are we going to end up I mean, you know if we got a sort of just to pick a number we haven't we haven't picked a number but whatever it is.

Mitchell Goldhar: Whatever it is, you know, it's very workable for us both from the point of view of financially, and from the point of view of taking the opportunity. Because, you know, thankfully we are dealing with well-located real estate. It's not like we're embedded in some deeply, you know, wasteland of industrial business park somewhere, and it's all fungible. This stuff is not fungible. Obviously we'll be trying to turn any setback into an advance, and it plays right into our development program. I guess I didn't mention the fact that, you know, these defaults do open up opportunities for us to accelerate certain things. I don't think people really in the public markets fully appreciate how much development or certainly land use amendments are worth.

Mitch Goldhar: Whatever it is, you know, it's very workable for us both from the point of view of financially, and from the point of view of taking the opportunity. Because, you know, thankfully we are dealing with well-located real estate. It's not like we're embedded in some deeply, you know, wasteland of industrial business park somewhere, and it's all fungible. This stuff is not fungible. Obviously we'll be trying to turn any setback into an advance, and it plays right into our development program. I guess I didn't mention the fact that, you know, these defaults do open up opportunities for us to accelerate certain things. I don't think people really in the public markets fully appreciate how much development or certainly land use amendments are worth.

It's it's it's very workable.

From for US both from the point of view financially.

And from the point of view of teaching the opportunity because.

Thankfully, we are dealing with we are dealing with well located.

Real estate, it's not like we are embedded in some deeply dose in video we slant of industrial.

Business Park somewhere and it's all fungible just stuff is not fungible. So obviously will be try to turn any set back into an advance and plays right into our development regimen I guess I didn't mention the fact that you know these defaults do open up opportunities for us to accelerate certain things.

You know I don't think people really in the public markets fully appreciate how much development or certainly land use amendments are worth but you know you don't see a lot of public lead treated pure development companies. Because you know there's a lot there, making too much money to be public to be honest with you in most developers don't really have an interesting that but it is.

Mitchell Goldhar: You know, you don't see a lot of publicly traded pure development companies because, you know, there's a lot. They're making too much money to be public, to be honest with you, and most developers don't have an interest in that. It is a very lucrative end of the business and we will be using, you know, some of these, you know, what you call slippage or any other situations to seize upon them if they in fact will play into or in the service of our more, you know, long-term vision of any site. I will also point out in default, a lot of tenants will have given up rights, even though they may end up paying, they may have given up rights that they had over the site from various points of view.

Mitch Goldhar: You know, you don't see a lot of publicly traded pure development companies because, you know, there's a lot. They're making too much money to be public, to be honest with you, and most developers don't have an interest in that. It is a very lucrative end of the business and we will be using, you know, some of these, you know, what you call slippage or any other situations to seize upon them if they in fact will play into or in the service of our more, you know, long-term vision of any site. I will also point out in default, a lot of tenants will have given up rights, even though they may end up paying, they may have given up rights that they had over the site from various points of view.

Very lucrative into the business and we will be using.

You know some of these you know what's called slippage or any other situations to.

Seize upon them if they in fact will play into your into service of our of our more Ah you know long term vision of any site and I'd also point out in default a lot attendance will have given up right. Even though they may end up paying they may have given up rights that they had over the side from various points of view.

Mitchell Goldhar: That's not even to talk about municipalities', you know, motivation to generate economic activity and their openness and willingness and whatnot, even sympathetic to, you know, what's happened with this period of time on retailers and retail owners, retail real estate owners in terms of land use amendments. It's not all what just meets the naked eye. Yes, on the surface there probably will be some slippage, but nothing that's gonna, you know, it's not gonna rock our world. We'll deal with it.

And that's not even to talk about municipalities, you know motivation to generate a economic activity and their openness and willingness and whatnot, even sympathetic to you know what's happened with ER with this period of time on on retailers and regional owners, a retail real estate owners.

Mitch Goldhar: That's not even to talk about municipalities', you know, motivation to generate economic activity and their openness and willingness and whatnot, even sympathetic to, you know, what's happened with this period of time on retailers and retail owners, retail real estate owners in terms of land use amendments. It's not all what just meets the naked eye. Yes, on the surface there probably will be some slippage, but nothing that's gonna, you know, it's not gonna rock our world. We'll deal with it.

In terms of land use amendment. So it's not all would just meets the or the naked eye. So yes on the surface there probably will be some slippage, but nothing that's going to you know, it's not going to rocker world will do well deal with UBS.

Thank you very much.

Sam Damiani: Thank you very much.

And well take our next question from Janney My BMO capital markets. Please go ahead.

Angel: We'll take our next question from Jenny Ma of BMO Capital Markets. Please go ahead.

Operator: We'll take our next question from Jenny Ma of BMO Capital Markets. Please go ahead.

Jenny Ma: Thanks. Good evening, everyone. This question is probably for Peter Sweeney, but I'm trying to reconcile the cash drawdown. If you could give us just a little bit more color sort of around the thinking, because I'm just wondering if this was done sort of in the depths of the market downturn. You had made some comments about the unsecured market opening up at rates that were similar to what we saw at year-end. With that development, does it change your view on this? I recognize, you know, we're talking five-year terms versus just the draw on the facility. I guess since the improvement in the credit markets gives you more assurance that the credit will be there if you need it and not to actually hold on to all that cash.

Thanks, Good evening everyone.

Discussions Piper Peter Sweeney, but I'm I'm trying to reconcile the cash try down.

I thought that more colors turned around to thinking because I'm. Just wondering if this was done sort of in the depth subs.

The market downturn and you had made some comments about the unsecured market opening up rates that were similar to what we thought yearend. So with that development does it change your view on this and I recognize you know we're talking five year terms versus just the drama facility, but I guess that the improvement net credit market gives you more assurance that.

The credit won't be there if you need it and not actually hold onto all that Josh.

Oh, it's it's a good question Jenny and I think the simple answer is and I'm certainly not trying to be call. Your kids, but the simple answer is it's for us at least it's too early to say.

Mitchell Goldhar: It's a good question, Jenny, and I think the simple answer is, and I'm certainly not trying to be coy or cute, but the simple answer is it's, for us at least, it's too early to say. You know, we did draw the funds on our line just before the end of the quarter when, as you say, we were sort of in the depths of uncertainty vis-à-vis the financial markets. Since then, at least in the bond market, there has been a continuous improvement and further clarity of that market opening up. As I mentioned, our 10-year rate today would actually be lower, a little lower than what we were able to secure money for back in December.

Mitch Goldhar: It's a good question, Jenny, and I think the simple answer is, and I'm certainly not trying to be coy or cute, but the simple answer is it's, for us at least, it's too early to say. You know, we did draw the funds on our line just before the end of the quarter when, as you say, we were sort of in the depths of uncertainty vis-à-vis the financial markets. Since then, at least in the bond market, there has been a continuous improvement and further clarity of that market opening up. As I mentioned, our 10-year rate today would actually be lower, a little lower than what we were able to secure money for back in December.

You know we did draw the funds on her line just before the end of the quarter. When as you say, we were sort of in the depths of uncertainty vis-a-vis the financial markets.

And since then at least in the bond market. There has been a continuous improvement in certain further clarity of they have that market opening up and as I mentioned, our 10 year rate today would actually be lower a little lower than what we were able to secure money for back in December and he said that however.

Mitchell Goldhar: Having said that, however, you know, our board wanted us to be both conservative and strategic in how we ventured into this pandemic period. In that regard, you know, we established a group of different measurements and initiatives that we thought would be appropriate to roll out to ensure that coming through this, we were fortified in both financial and operational from both an operational and financial perspective.

Mitch Goldhar: Having said that, however, you know, our board wanted us to be both conservative and strategic in how we ventured into this pandemic period. In that regard, you know, we established a group of different measurements and initiatives that we thought would be appropriate to roll out to ensure that coming through this, we were fortified in both financial and operational from both an operational and financial perspective.

Our board or wanted us to be both conservative and strategic.

And how we ventured into this pandemic period.

And in that regard you know we establish.

We established a a group of different measurements and initiatives that we thought would be appropriate.

To roll out to ensure that coming through this we were quantified in both financial and operational from both an operation and financial perspective.

Peter Sweeney: The simple answer is we haven't thought yet about repaying this notwithstanding the improvement of the markets. There's still perhaps a few chapters left in this COVID-19 pandemic that have not been written yet that none of us can predict. For you know anybody who's been through, as Mitch mentioned and Peter mentioned earlier, this company's been through lots of different challenging periods over the last almost 30 years. The one thing you know coming through these periods is that there will be things that will surprise you. By taking this strategic move or initiative as we did, we're at least hoping that we can mitigate or diminish perhaps any potential surprises that we haven't factored into our planning.

And so the simple answer is we haven't thought yet about.

Although repaying this and notwithstanding the proven in the markets and there's still perhaps a few chapters left in this coal bid 19 pandemic that has not been written yet.

That none of us can predict and so for anybody who has been through as Mitch mentioned and Peter mentioned earlier. This company has been true lots of different challenging periods over the last almost 30 years and the one thing you know coming through these periods is that there will be things that will surprise.

And by taking this strategic move or initiative as we did where at least hoping.

That we can mitigate or diminish perhaps any potential surprises that we haven't factored in into our planning.

Okay. That's that's a good ER I answer I'm, just wondering I guess in that sense.

Jenny Ma: Okay. That's a good answer. I'm just wondering, I guess in that sense, would it be fair to expect that this cash will be outstanding for the balance of the year regardless of how the credit markets shape up then?

Would it be fair to expect that this cash will be outstanding for the balance of the year, regardless of how the credit markets shape up then.

Peter Sweeney: Yeah, I don't think we'd make such a strong statement. I think it would likely be an expectation that we'll monitor this almost on a weekly basis to see and to be able to make that kind of prediction, at least at this point, I think is almost impossible. We'll see. Again, I'm not trying to be coy or avoid your question at all. I'm just saying for now, we're unsure. When you're unsure in situations like this, you do what you think is appropriate to safeguard the business, to safeguard the viability of the business, and to put yourself in a position, as I think we've done, to accommodate any of the unexpected or unknown needs that might come our way over, you know, over the remaining months of the year. We'll see.

Yeah, I don't think we make such a strong statement I think it it would likely be an expectation that we'll we'll monitor this almost on a weekly basis to see incidental to make that kind of prediction.

At least at this point I think there's almost impossible.

So we'll see in it and again I'm not trying to be choir avoid your question at all I'm, just saying for now we're unsure and when you are unsure in situations. Like this you do what you think is appropriate to safeguard the business to safeguard the viability of the business and to put yourself in a position as I think we've done.

To accommodate any of the unexpected or I know needs that might come our way over you know over the remaining months of the year. So we'll see that's that's really the the simple answer.

Peter Sweeney: That's really the simple answer.

Jenny Ma: Okay. Thank you. Wanted to ask about Reitmans. Have you heard anything from them directly about what their intentions may be, and whether or not maybe you have a view towards them looking at certain labels that they might reconfigure or rationalize, or sort of any color you have on the Reitmans story?

Okay. Thank you.

What I ask about reductions have you heard anything some them directly about how about their intention maybe and whether or not maybe yeah that you towards.

Looking at certain labels that they might.

We can figure or rationalize or sort of any color you have on the beekman sorry.

It was at Reed minerals themselves indicated some vulnerability. So obviously, yeah, we often take that seriously.

Mitchell Goldhar: Look at Reitmans has themselves indicated some vulnerability. Obviously, yeah, we all have to take that seriously. No, they have not, you know, we have no additional, you know, information, you know, that would, you know, be able to determine, you know, what their, I guess, future is in the various banners. They've been, you know, forthright with us, and, you know, so you kind of have to wait and see, partly to see if they qualify for any of the government programs that are being proposed, I mean, being discussed to be ultimately proposed or brought forward for large or non-essential retailers.

Mitch Goldhar: Look at Reitmans has themselves indicated some vulnerability. Obviously, yeah, we all have to take that seriously. No, they have not, you know, we have no additional, you know, information, you know, that would, you know, be able to determine, you know, what their, I guess, future is in the various banners. They've been, you know, forthright with us, and, you know, so you kind of have to wait and see, partly to see if they qualify for any of the government programs that are being proposed, I mean, being discussed to be ultimately proposed or brought forward for large or non-essential retailers.

But no they have not you know we have no additional.

No.

Information that would.

We are able to determine what.

What are.

Yes, future exhibitors matters, but.

Maybe.

That being.

Forthright with us and Ah.

So you kind of have to wait and see partly to see if they qualify for friends of the government programs that are being proposed.

Being proposed semi being discussed the ultimately proposal or brought forward for larger noticed central retailers.

Mitchell Goldhar: Yeah, I mean, look at if any large retailer, large in terms of number of units like that, you know, doesn't make it, we will just, you know, have to deal with it. We got a big exposure to Reitmans, and we will be doing everything to help them that we think is reasonable. You know, we'll be certainly, you know, cheering them on to get it together, in terms of coming out of this, you know, hitting, you know, with the ground running. If anyone, you know, any exposure like that doesn't make it, as I said earlier, we will just deal with it. We will start with releasing and/or repositioning of that space.

Mitch Goldhar: Yeah, I mean, look at if any large retailer, large in terms of number of units like that, you know, doesn't make it, we will just, you know, have to deal with it. We got a big exposure to Reitmans, and we will be doing everything to help them that we think is reasonable. You know, we'll be certainly, you know, cheering them on to get it together, in terms of coming out of this, you know, hitting, you know, with the ground running. If anyone, you know, any exposure like that doesn't make it, as I said earlier, we will just deal with it. We will start with releasing and/or repositioning of that space.

I mean look at if any large retailer large in terms of number of units like that.

Doesn't make it.

We will just have to deal with it we got a big exposure to two or two reed minerals, and we will be doing everything to help them that we think is reasonable.

And you know you certainly cheering them on to go together in terms of coming out of this you know.

In the ground running.

If anyone.

You know any exposure like that.

Doesn't make it.

It earlier, we will just a we will deal with it we will start releasing and or repositioning of that space and are the ones that we see that fall into that category. You know we don't want it.

Mitchell Goldhar: The ones that we see that fall into that category, you know, we don't want it. You know, we're not happy about it, but you know, we'll deal with it. It's not gonna you know cripple us or anything. You know, we'll lease it up or redevelop it in you know, a reasonable period of time.

Mitch Goldhar: The ones that we see that fall into that category, you know, we don't want it. You know, we're not happy about it, but you know, we'll deal with it. It's not gonna you know cripple us or anything. You know, we'll lease it up or redevelop it in you know, a reasonable period of time.

Yeah, we're not happy about it but but a you know we're we'll deal with it had spoken to.

It's kind of yeah.

<unk> plus or anything and.

And you know a wheel.

Well, we set up for redevelop Adam and a reasonable period of time.

Can you comment on whether or not they paid back on its all night.

Jenny Ma: Can you comment on whether or not they paid rent in April and May?

You know, we Uh huh.

Mitchell Goldhar: You know, we out of respect at the moment for the discussions that are going on with all, you know, our tenants, basically, we've chosen not to, you know, discuss specific tenants, you know, at this time. I think some people have, and so you probably know through other sources maybe about some of them. No, we're choosing to just deal with that for now, you know, directly with our, you know, with our tenants.

Mitch Goldhar: You know, we out of respect at the moment for the discussions that are going on with all, you know, our tenants, basically, we've chosen not to, you know, discuss specific tenants, you know, at this time. I think some people have, and so you probably know through other sources maybe about some of them. No, we're choosing to just deal with that for now, you know, directly with our, you know, with our tenants.

Out of respect at the moment for the discussions that are going on with Oh.

Or tenants basically a we've chosen not to.

Discuss specific tenants.

You know at this time I think some of some of some people have and so you probably.

No.

Other sources may be a but some of them but.

But no we were.

We're choosing to treat just deal with that for now.

[noise] directly with her.

You know with her on her tenants.

Sure that's fine.

Jenny Ma: Sure. That's fine. Well, I guess maybe I'll ask about another example that is public in terms of the Gap not having paid rent in April and now saying that they're looking to open a number of stores by the end of May. I'm just wondering from the landlord's perspective, sort of what the mechanics of that are in terms of if they're not paying April rent and they decide to pay May, you know, do you say to them, you can't open the store until, you know, you're current on your rent? Or, you know, do you leave that discussion for another time just given the current circumstances? Like, how do you reconcile that situation?

I guess, maybe I'll ask about another example of that it public in terms on the gap I'm not having paid back in April I, now, saying that they're looking to open a number of stores by the end of May I'm, just like when the landlords perspective sort of what that the mechanics of that are in terms that they're not paying April radnets I'd pay me yeah.

Do you say to them.

Can't opened the door and close you know your current on your rent or you'd be that discussion for another time, just given the current circumstances like how does how do you reconcile that situation.

Mitchell Goldhar: You know, it's a good question because the answer is it depends. I think every landlord would say the same thing. I think you would say the same thing if you were in our shoes or if you had a tenant in anything that you might own. It just depends. Each one is unique. In fact, it's partly a good thing because it gives landlords an opportunity to discuss the lease in totality because they're in default. We need to come to terms. Landlords, you know, do have rights. At the same time, we're not in the business of creating vacancies. You know, we're in the business of collecting rent.

Mitch Goldhar: You know, it's a good question because the answer is it depends. I think every landlord would say the same thing. I think you would say the same thing if you were in our shoes or if you had a tenant in anything that you might own. It just depends. Each one is unique. In fact, it's partly a good thing because it gives landlords an opportunity to discuss the lease in totality because they're in default. We need to come to terms. Landlords, you know, do have rights. At the same time, we're not in the business of creating vacancies. You know, we're in the business of collecting rent.

Good question because.

You know it through the answers it depends what I think every level or would stay the same thing.

I think you would say the same thing if you were if you were in our in our shoes or if you had attended and if anything that you might view it just depends and so.

Each one is a is unique.

In fact, since it's it's probably a good thing because it does landlords that opportunity too.

To discuss the at least in totality because they're in default.

So we need to come to terms and dealers do you have rights.

I went out in the business of creating vacancies.

We're in the business of collecting rent so.

Mitchell Goldhar: It's a balance between the benefits and costs of, you know, of whatever they can, you know, whatever they're prepared to do and whatever we're prepared to do, except keeping in mind where we're headed. I mean, most of our real estate we see as having, you know, higher and better uses. We obviously would like to get there collecting as much rent along the way, you know, in its current and historic form. We'll be weighing all those things. Each and every one depends on which center they're in, where they are in the center, and what they're proposed to be, what they're prepared to pay, and what other terms in the lease. It's very interesting.

Mitch Goldhar: It's a balance between the benefits and costs of, you know, of whatever they can, you know, whatever they're prepared to do and whatever we're prepared to do, except keeping in mind where we're headed. I mean, most of our real estate we see as having, you know, higher and better uses. We obviously would like to get there collecting as much rent along the way, you know, in its current and historic form. We'll be weighing all those things. Each and every one depends on which center they're in, where they are in the center, and what they're proposed to be, what they're prepared to pay, and what other terms in the lease. It's very interesting.

It's about between the benefits in costs of Oh.

Or whatever they can you or whatever whatever they're prepared to do whatever they do except keeping in mind, where we're headed I mean, most of our most of our real estate, we see as having you know how you're in better uses but we obviously would like to get there dropping as much rent along the way you know its its creditors perform.

So we'll be weighing all those things through each and every one depends on which centers are in where they are in the center and.

And and what their proposed to deal with your prepared.

And our other terms the middle East so.

It's very interesting. It's obviously this is all about first a pandemic.

Mitchell Goldhar: It's obviously this is all of our first pandemic. We are, you know, working our way. You know, we have had to do these things in the past, but not with so many tenants at once. We've all done it, you know, before. Yeah, it'll all come, it'll all become clearer, Jenny, in the next, you know, month or two. You know, some of this stuff will, you know, will start to happen and be crystallized and, you know, it's just in the middle of it right now, so we don't know.

Mitch Goldhar: It's obviously this is all of our first pandemic. We are, you know, working our way. You know, we have had to do these things in the past, but not with so many tenants at once. We've all done it, you know, before. Yeah, it'll all come, it'll all become clearer, Jenny, in the next, you know, month or two. You know, some of this stuff will, you know, will start to happen and be crystallized and, you know, it's just in the middle of it right now, so we don't know.

So.

We are a meal work our way yeah, we have had to do these things in the past, but not with so many tenants at lunch.

But all done it before so.

You're welcome you all become clearer Jenny and the next a year over the next month or two.

From other stuff will you'll start to happen and and because life and.

In the middle of it right now so we don't know.

Jenny Ma: Okay. That's fair. Just my last question on in terms of rent deposits, I haven't had a chance to look through everything, so I'm not sure if you disclosed it. Just a general question on commercial rent deposits. Like how does it really work in terms of the amount you collect? Do you collect it from everybody? And is it sort of like a last month rent situation with residential tenants? Anything that you could help us with in terms of providing color on that?

Okay. That's fair and then just my last question on in terms of rent deposits I haven't had a chance to everything I'm not sure if you disclosed yet but.

Just a general question on commercial bank deposits like how does it really works in terms of.

The amount and get collapse, you quite different everybody and is it sort of like a lot much men's situational presidential tenant.

Thing that you could help besides plenty collapse.

Mitchell Goldhar: You know, like, internal growth. The stronger the tenant, you know, the lower your internal growth is gonna be, but you're gonna collect more of your rent. The same thing is true with deposits. The stronger the tenant, the less deposits. I think we have about CAD 14 million in deposits. They are actually related mostly to last month or security deposits. The fewer smaller independent retailers you have. Well, let's put it this way. The more sort of independent retailers you have, that's where you take the bigger security deposit, the last month rent.

Mitch Goldhar: You know, like, internal growth. The stronger the tenant, you know, the lower your internal growth is gonna be, but you're gonna collect more of your rent. The same thing is true with deposits. The stronger the tenant, the less deposits. I think we have about CAD 14 million in deposits. They are actually related mostly to last month or security deposits. The fewer smaller independent retailers you have. Well, let's put it this way. The more sort of independent retailers you have, that's where you take the bigger security deposit, the last month rent.

You know what like like.

You know internal growth like.

So yeah.

Trogele, we try to the tenants.

The lower your internal growth is gonna be but you're going to collect more of your rent.

And same thing is true with deposit who's trying to the tenants are less deposits I think we have a 14.

A million dollars in deposits and they are actually related mostly to last month or security deposits.

And so the fewer smaller independent retailers, yeah, that's industry the more the more sort of independent retailers you have that for you takes a bigger security frozen last one for Antero you might even get you know you might even get a letter of credit for.

Mitchell Goldhar: You know, you might even get a letter of credit for a full year's rent if it's somebody you put up money for and they're not strong, but you wanted to, you know, you wanted to bet on them and, I mean, and, you know, you might even have a full year's letter of credit for rent. But those are generally related to the smaller, more independent. You know, like, you know, you don't need to. Generally speaking, you know, I'm not gonna ask Walmart for their last month's rent and or, you know, Loblaws or, you know, those tenants, they just don't. It's just not industry standard.

Mitch Goldhar: You know, you might even get a letter of credit for a full year's rent if it's somebody you put up money for and they're not strong, but you wanted to, you know, you wanted to bet on them and, I mean, and, you know, you might even have a full year's letter of credit for rent. But those are generally related to the smaller, more independent. You know, like, you know, you don't need to. Generally speaking, you know, I'm not gonna ask Walmart for their last month's rent and or, you know, Loblaws or, you know, those tenants, they just don't. It's just not industry standard.

Five years rent if it's somebody you put up money for and they're not strong a much one or two.

And we wanted to bet on them and.

I mean, and you might even have a four years letter of credit for rent.

But those are generally related to the smaller more independent or like are you hearing is generally speaking you know.

Your.

I'm not going to ask warmer for the last month's rent.

And and or Loblaws or.

Those tenants they just don't they don't it's just about industry standard.

Mitchell Goldhar: Yeah, if they default, you get their deposits, but you don't, you know, that's the last resort. You know, generally speaking, you wanna work out deals with everybody. The beauty is that we are in the time business, and we can, you know, we are in a very specific moment in time. It is temporal. We can, you know, work with time to help out most tenants and not necessarily have to, you know, end up taking their deposit and creating a vacancy. If we did, we have up to CAD 14 million of those.

Mitch Goldhar: Yeah, if they default, you get their deposits, but you don't, you know, that's the last resort. You know, generally speaking, you wanna work out deals with everybody. The beauty is that we are in the time business, and we can, you know, we are in a very specific moment in time. It is temporal. We can, you know, work with time to help out most tenants and not necessarily have to, you know, end up taking their deposit and creating a vacancy. If we did, we have up to CAD 14 million of those.

Yeah, I'd say default you get to deposits, but you don't you know you know that's the last resort.

Oh I'm generally speaking you want to work or deals with everybody and beauty is that we knew we are in the time of business and we can you know we are in a period [noise].

At the moment in time it is temporal and so we can you know we can work with time to help us most tenants.

Not necessarily have to you know.

Taking their deposit and creating a vacancy.

But if you did we have a $14 million with those.

Okay, great. Thank you and I'll turn it back.

Jenny Ma: Okay, great. Thank you. I'll turn it back.

And we'll take our next question from Towell East a national Bank of Nova Scotia. Please go ahead.

Angel: We'll take our next question from Tal Woolley of National Bank Financial. Please go ahead.

Tal Woolley: We'll take our next question from Tal Woolley of National Bank Financial. Please go ahead.

[laughter] National bank or nothing like enough doses.

Tal Woolley: National Bank Financial. Sorry. If you look at in your supplemental on page 16, you've got your sort of gross rent exposures by retail category. I'm just wondering, like, if you know where that sits now, like, is. Are you guys happy where that mix is right now? Or, you know, I'm just wondering how your thinking is changing going forward. Like, you know, should we expect to see those exposures shift overall?

They're good though.

If you look at <unk> in your supplemental on page 16, you got your sort of red.

Exposures by retail category.

I'm just wondering like you know where that sits now like is are you guys happy where that mix is right now or you know just wondering how you're thinking is changing going forward like.

You would should we expect to see those exposures.

[noise] Cicero, but I mean.

Mitchell Goldhar: I'll answer this one as well. I mean, we are happy with our mix. I mean, look, we're a value. We set out and continue to sort of own price. Just like Walmart owns price in retail, we sort of own value and price in retail centers. We have very low average rents. We're probably the lowest in terms of average rent in our industry. We probably have the lowest coverage on our properties. We probably have the lowest amount of enclosed mall square footage. This is all part of the way of saying the same thing. We like all of those things, and we don't really want to change it other than the fact that we are, you know, very development intensification-minded and have been for the last five years.

Mitch Goldhar: I'll answer this one as well. I mean, we are happy with our mix. I mean, look, we're a value. We set out and continue to sort of own price. Just like Walmart owns price in retail, we sort of own value and price in retail centers. We have very low average rents. We're probably the lowest in terms of average rent in our industry. We probably have the lowest coverage on our properties. We probably have the lowest amount of enclosed mall square footage. This is all part of the way of saying the same thing. We like all of those things, and we don't really want to change it other than the fact that we are, you know, very development intensification-minded and have been for the last five years.

We are happy with our mix I mean.

[laughter].

We were value. We we we said I was just.

And continue to sort of home price just like while you a Walmart owns price and retail we sort of on value in pricing.

Retail centers, we have very low average rents were probably the lowest in terms of average rent.

In our industry.

And we probably have the lowest coverage auto properties.

Probably of the lowest amount of me Cosmo square footage.

Oh part of way of saying the same thing and we like all of those things and we don't really want to change it other than the fact that we are you know very.

Very development intensification minded and have being for the last five years.

Mitchell Goldhar: It takes a long time to get those things airborne. Yes, there's always gonna be, you know, it's Darwin, there's always gonna be some weakness and weak links. Maybe there's some places where we have a huge center, and we ended up with categories that are not our bread and butter. We will be generally speaking, shrinking the overall retail square footage in our portfolio continuously, on net, and have been. You know, obviously we'll wanna keep the strongest wherever possible. Generally speaking, we do like the value-oriented space, and of course it includes banks and it includes, you know, restaurants and includes lots of things that are complementary to it.

Mitch Goldhar: It takes a long time to get those things airborne. Yes, there's always gonna be, you know, it's Darwin, there's always gonna be some weakness and weak links. Maybe there's some places where we have a huge center, and we ended up with categories that are not our bread and butter. We will be generally speaking, shrinking the overall retail square footage in our portfolio continuously, on net, and have been. You know, obviously we'll wanna keep the strongest wherever possible. Generally speaking, we do like the value-oriented space, and of course it includes banks and it includes, you know, restaurants and includes lots of things that are complementary to it.

Excellent time to get those things airborne, so, yes, where there's always going to be you know its darwin, there's always going to be some weakness and LNR weaklings, maybe there's some places where we have a huge center.

And we ended up its categories that are not our bread and [laughter] I'm so were.

Well I mean generally speaking fricking overall retail square footage our portfolio continuously I didn't want item and have been and obviously you really want to keep the strongest.

Wherever possible [laughter], but.

But generally speaking we do like the value oriented space and I'm of course, it includes bang for their crews restaurants under those sorts of things complementary to it.

Mitchell Goldhar: Our bread and butter is to cater to sort of all Canadians in terms of their budget and their income and their family structure. With a few exceptions, I'd say we're pretty happy, and we don't see ourselves doing an about-face. The only about-face is that we wanna shrink our retail in general, and we want to increase the other categories, the other sectors.

Mitch Goldhar: Our bread and butter is to cater to sort of all Canadians in terms of their budget and their income and their family structure. With a few exceptions, I'd say we're pretty happy, and we don't see ourselves doing an about-face. The only about-face is that we wanna shrink our retail in general, and we want to increase the other categories, the other sectors.

And butter is to cater to three all Canadians in terms of their their their budgeting their income and their family structure and [noise].

It's a pretty happy and we don't see ourselves to forget about phase.

Cases that we want to shrink.

Our retail in general.

And we want to increase.

Other categories the other other sectors.

On the new leasing side you guys. What you said you got it got a good Mitch and sort of value retail.

Tal Woolley: On the new leasing side, you know, you guys, like you said, you've got a good niche in sort of value retail. Do you have any like, you know, given your long history in the market, like in sort of periods like this where the market gets disrupted, do you have a sense of like, is trying to do new leasing for value retailers, is that easier or harder, like the same, like versus a market where things are, you know, really strong? Like, do you have any sort of history that you can draw on to give some idea?

You have any like you know given your hands. It you know give me a long history and the market like.

In that sort of periods like that's where the market gets disrupted.

My sense of like is trying to do you need leasing for value retailers with that.

Your heart or like the same like versus a market where things are you know really strong like do you have any kind of history. There you can go on to go.

Mitchell Goldhar: Yeah. I'd say that the trend is. It's funny when things are hot and there's more money flowing, we see. First of all, I should start by saying everybody shops at Walmart just like they shop, everybody shops at blah blahs. There's no point in trying to define that demographic because the same person who shops at Holt Renfrew shops at Walmart. Yeah, I mean, Walmart in Canada is not, you know, the same as Walmart in certain other countries. Walmart in Canada is the general merchandiser, the discount general merchandiser, and the department store all in one, along with the grocery store. Walmart is used to operating and winning in markets that are fiercely competitive, much more so than Canada.

Mitch Goldhar: Yeah. I'd say that the trend is. It's funny when things are hot and there's more money flowing, we see. First of all, I should start by saying everybody shops at Walmart just like they shop, everybody shops at blah blahs. There's no point in trying to define that demographic because the same person who shops at Holt Renfrew shops at Walmart. Yeah, I mean, Walmart in Canada is not, you know, the same as Walmart in certain other countries. Walmart in Canada is the general merchandiser, the discount general merchandiser, and the department store all in one, along with the grocery store. Walmart is used to operating and winning in markets that are fiercely competitive, much more so than Canada.

But the trend is.

It's funny when things are hot and there's more money flowing.

[music].

The other thing everybody shops at Walmart.

Okay, so everybody trucks.

There's no point in and try to define that Democratic because same person who shops at Olin for shops are Walmart.

And.

And Oh, Yeah, I remembered in Canada is not.

Same as Robert and certain other countries warmer than Canada is the.

General merchandise or the discount general merchandise or the department store all in one.

For store.

And warmer.

Operating winning in markets that are firstly competitive much more so than Canada, and that's not to say that in food, we don't have some fantastic.

Mitchell Goldhar: That's not to say that in food we don't have some fantastic and fantastically competitive retailers. In general merchandise, there's nobody that touches them and consumables and so on. Still on groceries, they're the largest grocer in the world. I think most people possibly know that. In tough times, of course, people spend less, but more people go. The people who go there less frequently go there more frequently. Generally speaking, everybody's average checkout is lower. This is what we found over the last, you know, 30 years is that, when things are piping hot, the bread-and-butter customer spends more and, the wealthier end of the spectrum goes there less frequently, but still go.

Mitch Goldhar: That's not to say that in food we don't have some fantastic and fantastically competitive retailers. In general merchandise, there's nobody that touches them and consumables and so on. Still on groceries, they're the largest grocer in the world. I think most people possibly know that. In tough times, of course, people spend less, but more people go. The people who go there less frequently go there more frequently. Generally speaking, everybody's average checkout is lower. This is what we found over the last, you know, 30 years is that, when things are piping hot, the bread-and-butter customer spends more and, the wealthier end of the spectrum goes there less frequently, but still go.

The competitive resource, but in general merchandise, there's nobody that touches them and consumables and so on.

But school.

And on groceries, they're the largest grocer in the world.

[noise] probably noted.

Even in tough times course spend less but more people.

I'm going to in that frequently go there more frequently and generally speaking to everybody.

Sure code is lower.

We found over the last 30 years is that.

When things are piping hot.

The bread and butter customer spends more and a v. The wealthier end of the spectrum goes there less frequently.

But still go and sometimes wealthier go more often and the bulk of the market and less than it ever Chicago.

Mitchell Goldhar: In tough times, the wealthier go more often and the bulk of the market spend less on an average checkout. For Canada, you know, the value-oriented is very well, I think, well very well suited, very much aligned with the Canadian reality. That's sort of just one of the things that swings. It sort of ends up being a six of one, half dozen of the other. That's what we have found over 30 years. When I started out, I wondered that myself, by the way.

Mitch Goldhar: In tough times, the wealthier go more often and the bulk of the market spend less on an average checkout. For Canada, you know, the value-oriented is very well, I think, well very well suited, very much aligned with the Canadian reality. That's sort of just one of the things that swings. It sort of ends up being a six of one, half dozen of the other. That's what we have found over 30 years. When I started out, I wondered that myself, by the way.

Canada.

Oh, you already do very well I think [noise].

Very well suited pretty much in line with Canadian reality and that sort of just one of the things that swings that sort of ends up being fixed went after the other that's where we have found over 40 years and I when I started out I wondered that myself by the way.

And that Peter you made reference to 60 million I believe.

Tal Woolley: Then Peter, you had made reference to CAD 60 million, I believe, in cash flow from condo gains this year. That is both the gains and the capital coming back to you. It's not just the gains.

Hi, so from a condo games. This year that is both the gains and the capital coming back to you. It's not just the games.

No like tell what I did say was that we expected 2020 and 2021 on a combined basis.

Peter Sweeney: No. Like, Tal, what I did say was that we expected 2020 and 2021 on a combined basis, where from TC 1, 2, and 3, we would receive approximately CAD 60 million of profit. That's in excess of our capital coming back, so to speak. That is allocated between 2020 and 2021, Tal. The expected net proceeds for 2020 at this point would approximate about CAD 36 million of the CAD 60 million, give or take. That's at least for now, that's where the expectations are.

Well from TC, one two and three we would receive approximately $60 million.

Profit that's in excess of our capital coming back so to speak.

That is that is allocated between 20 and 21 tell the expected net proceeds for Twentytwenty at this point.

Would approximate about 36 million of the 660 million give or take so that's at least for now that's where the expectations are.

Not just lastly.

Tal Woolley: Now, just lastly, you know, just a question about the accounting for as these relief programs come down. You know, one of the difference between you guys doing your own deferral is that you're still gonna be booking the revenue within FFO. If you participate in these programs, like the haircut that you have to take on the rent, that would get reflected in FFO, correct?

So you know we've had just a question about the accounting for.

These are these relief programs come down.

You know one of the difference between you guys doing your own deferral is that you still book, you're still gonna be booking a revenue within MISO.

But if you participate in these programs.

Like the a haircut that you have to take on the Red Dot Dot would get reflected in AFFO correct.

Yeah. It's a good question. The simple answer is for now there are so many unanswered questions tell associated with that any of these.

Peter Sweeney: You know, it's a good question. The simple answer is, for now, there are so many unanswered questions, Tal, associated with any of these.

Peter Sweeney: Programs, and it's too early to say.

Programs that it's too early to say, but.

Peter Sweeney: Okay.

Peter Sweeney: You know, I think it's fair to say that we would expect to the extent that we participate in one of those programs, and we would have to absorb some of that there would be an expected impact to FFO. How it gets distributed over what timeframe remains to be seen, and we're trying to work out that detail, i.e., does it get reflected in the current year? Does it get reflected as a pickup over the remaining term of the lease? In some cases, I think as Mitch mentioned earlier, you know, we have an opportunity now to extend some leases, given the negotiations that are going on.

Okay. I think it's it's fair to say that we would expect to the extent the we participate in.

One of those programs and we would have to absorb some of that that there would be an expected impact to EPS, though how it gets distributed over what timeframe remains to be seen and we're trying to work out.

He Dell I eat does it get reflected in the current year does it get reflected as a pick up over the remaining trimming the lease and in some cases I think as Mitch mentioned earlier, we have an opportunity now to extend some leases or given the negotiations that are going on so we may have an opportunity as well too you know perhaps it.

Mitchell Goldhar: We may have an opportunity as well to, you know, perhaps, take some of these potential discounts and apply them over what would otherwise be an extended or what should be viewed as an extended period. At least for now, that's the thinking. How it actually impacts the 2020 FFO or financial results for now is, frankly unknown. As I said, there's still a number of other questions associated with these programs that us and every other major landlord in the country are trying to get certain details and a further understanding of. We'll be able, I think, to come back to you with a little more clarity, at some point down the road, but for now it's still early days.

Mitch Goldhar: We may have an opportunity as well to, you know, perhaps, take some of these potential discounts and apply them over what would otherwise be an extended or what should be viewed as an extended period. At least for now, that's the thinking. How it actually impacts the 2020 FFO or financial results for now is, frankly unknown. As I said, there's still a number of other questions associated with these programs that us and every other major landlord in the country are trying to get certain details and a further understanding of. We'll be able, I think, to come back to you with a little more clarity, at some point down the road, but for now it's still early days.

Take some of these potential discounts and apply them over what would otherwise be an extended or we should be viewed as an extended period.

So at least for now those are the that's the thinking how would actually impacts the 20 20-F O or financial results for now is frankly unknown and as I said, there's still a number of other questions associated with these programs that us in every other major landlord in the country Archer.

Turning to get certain details and a further understanding of so we'll be able I think to come back you with a little more clarity at some point down the road, but for now that's it's it's still early days.

Tal Woolley: Okay, perfect. Thanks, gentlemen.

Okay perfect. Thanks, gentlemen.

Mitchell Goldhar: Okay.

Mitch Goldhar: Okay.

Right.

And we will take our final question nothing on upcoming beer RBC capital markets. Please go ahead.

Angel: We will take our final question from the line of Pammi Bir of RBC Capital Markets. Please go ahead.

Operator: We will take our final question from the line of Pammi Bir of RBC Capital Markets. Please go ahead.

Thanks, and a higher everyone.

Pammi Bir: Thanks, hi, everyone. You know, just in the past, when there's been closures from, you know, apparel retailers and restaurants, can you just comment on the types of tenants that have helped backfill that space over the last few years and whether that source of demand, you know, do you see that source continuing going forward?

In the past years, when he's been close years from apparel retailers and restaurants can you just comment on the types of tenants that have helped backfill that stage over the last few years.

And whether that source of demand do you see that source continuing going forward.

Mitchell Goldhar: Yeah, I mean, I think it will be tougher this time if there's, you know, bankruptcies, failures, you know, large bankruptcies and failures, and within what I was referring to, the ones that are, you know, on the margins, than it has been in the past. Interestingly enough, I mean, especially in Canada, where we do have much fewer square feet per capita than in most other countries and certainly in the US, good retail locations have been resilient. The good retailers are always looking at new concepts or looking for additional space or expanding. I do, though, think just intuitively, gut says it'll be a little bit slower. In the past, you know, it's always been when somebody's busting, somebody's booming.

I mean.

Mitch Goldhar: Yeah, I mean, I think it will be tougher this time if there's, you know, bankruptcies, failures, you know, large bankruptcies and failures, and within what I was referring to, the ones that are, you know, on the margins, than it has been in the past. Interestingly enough, I mean, especially in Canada, where we do have much fewer square feet per capita than in most other countries and certainly in the US, good retail locations have been resilient. The good retailers are always looking at new concepts or looking for additional space or expanding. I do, though, think just intuitively, gut says it'll be a little bit slower. In the past, you know, it's always been when somebody's busting, somebody's booming.

I think I think it will be tougher.

This time if there's.

If there's a.

You know.

Bankruptcy failures.

You know large bigger season failures and and within what I was referring to the ones that are you know err on the margins.

Than it has been in the past.

So.

But interestingly enough I mean, especially in Canada, where we do have much fewer square feet per capita than in most other countries Im certainly in the U.S.

Good retail locations have been resilient. Good retailers are always looking at new concepts are looking for additional space or expanding.

I do think just intuitively I got says it will be a little bit slower in the past you know it's always been.

When somebody is buying somebody is booming and.

Mitchell Goldhar: You know, TJX, you know, was booming when, you know, I don't know, when the certain other categories, I don't want to name names, were not doing well. A lot of it just, you know, continues to move while the square footage per capita continues to shrink in Canada because we're not the only ones shrinking retail, and nobody's building new retail for all intents and purposes. You know. But I do think it will take longer to lease it up, whatever vacancies come out of, you know, this particular, you know, event.

Mitch Goldhar: You know, TJX, you know, was booming when, you know, I don't know, when the certain other categories, I don't want to name names, were not doing well. A lot of it just, you know, continues to move while the square footage per capita continues to shrink in Canada because we're not the only ones shrinking retail, and nobody's building new retail for all intents and purposes. You know. But I do think it will take longer to lease it up, whatever vacancies come out of, you know, this particular, you know, event.

Pgx you know it was booming when.

Oh I don't know win win is there another Tigers I want to new names, we're not doing well and so a lot of it just continues to move well the square free for Cabot continues to shrink in Canada, because we're not the only once a shrinking retail and nobody's building, new retail for all intents and purposes. So.

You know, but I think it will take longer lease up whatever vacancies come out of a you know.

This this particular.

And.

Mitchell Goldhar: Having said that though, I do think that there will be the silver lining is that in a number of cases, the redevelopability of that, of those spaces to alternate uses, I think will be quicker in terms of getting approvals, and will be more lucrative ultimately than re-leasing them. There'll be exceptions and there'll be lots of spaces that'll sit around empty for a prolonged period of time. Ultimately, I think the benefits of all this will, like that, the opportunities develop if you can do it and you have good locations will outweigh the cost. I do think there will be some vacancies that'll take a lot longer to lease up at the end of this one. Yep.

Mitch Goldhar: Having said that though, I do think that there will be the silver lining is that in a number of cases, the redevelopability of that, of those spaces to alternate uses, I think will be quicker in terms of getting approvals, and will be more lucrative ultimately than re-leasing them. There'll be exceptions and there'll be lots of spaces that'll sit around empty for a prolonged period of time. Ultimately, I think the benefits of all this will, like that, the opportunities develop if you can do it and you have good locations will outweigh the cost. I do think there will be some vacancies that'll take a lot longer to lease up at the end of this one. Yep.

Having said that though I think that there would be the this for silver lining is that in a number of cases the responsibility of that some of those.

Cases.

To alternative.

I think we'll be quicker in terms of getting approvals.

And will be more lucrative ultimately.

Releasing them.

But there will be the exceptions and they'll be let's face it little bit around empty for a prolonged period of time, but ultimately I think the benefits of all this stuff like that the opportunities develop if you can do it and you have <unk> locations.

The cost.

Thank you will be some somebody currencies it'll take a lot when we put together this one.

Got it just one last one.

Pammi Bir: Got it. Just one last one. You know, I realize obviously it's early days, but you know, as we kind of work through this pandemic, you know, have you seen any new sources of demand for space at your centers?

I realize it's early days, but as we kind of work through these pandemic I'm happy to have you seen any new sources.

And for space at your centers.

Mitchell Goldhar: We've seen retailers calling up about their renewals, and renewing or negotiating, commencing their negotiations for renewals. You know, it's, I mean, you know, everybody needs to factor in both sides of this equation. It is not like a one-way thing, because for example, I mean, with deferrals and other negotiations, it could result in, you know, renewals. Not just the renewals I was just referring to, but renewals that aren't even due, that aren't even up. I mean, I'm sure you would do the same that if, you know, if a tenant needed some accommodation in a handful of locations that you have, you would say, "Okay, that's fine. But I, you know, you have three years left on your lease.

We've seen a retailers calling about the renewals.

Mitch Goldhar: We've seen retailers calling up about their renewals, and renewing or negotiating, commencing their negotiations for renewals. You know, it's, I mean, you know, everybody needs to factor in both sides of this equation. It is not like a one-way thing, because for example, I mean, with deferrals and other negotiations, it could result in, you know, renewals. Not just the renewals I was just referring to, but renewals that aren't even due, that aren't even up. I mean, I'm sure you would do the same that if, you know, if a tenant needed some accommodation in a handful of locations that you have, you would say, "Okay, that's fine. But I, you know, you have three years left on your lease.

And renewing or negotiating commencing or season for renewals.

You know, it's I mean, you you everybody needs the factory. Besides this equation news not isn't on like a one way.

Thing because for example, I mean with deferrals and other negotiations could result in you know.

No.

Not just for renewals I was referring to but renewals that aren't even do that aren't even up.

I mean I'm sure you would do the same that if.

You know if a tenant and needed.

Some accommodation in a handful locations that you have.

You would say, okay, that's fine, but I agree.

Mitchell Goldhar: It's not time to renew, but we'd like you to exercise your first five-year renewal." So we have seen that in the medium term will result in fewer less turnover and longer average lease terms. Some tenants who have their renewal up now are. But in terms of calling up and saying, "You know, your vacancy over there in, you know, wherever, We'd be interested in talking about that." Not a lot of that going on. As you can imagine, everybody's you know just certainly the last month everybody was just hunkering down in a way for the worst potential scenario. The ones that we were already negotiating, the ones that were going on, nobody's really wanted to walk away from those.

Mitch Goldhar: It's not time to renew, but we'd like you to exercise your first five-year renewal." So we have seen that in the medium term will result in fewer less turnover and longer average lease terms. Some tenants who have their renewal up now are. But in terms of calling up and saying, "You know, your vacancy over there in, you know, wherever, We'd be interested in talking about that." Not a lot of that going on. As you can imagine, everybody's you know just certainly the last month everybody was just hunkering down in a way for the worst potential scenario. The ones that we were already negotiating, the ones that were going on, nobody's really wanted to walk away from those.

There's left on your leases my time to renew or would they can expose your first part of your renewal.

And.

Scene that.

The medium term will result in.

Let's turn over and longer average lease term and some tenants have.

Hi, there.

No up there are.

Calling up Im saying.

You know [noise].

Your vacancy over there and you know whenever wherever.

We'd be interested in I'm talking about that.

A lot about going on.

And everybody is you know just certainly the last month or just.

Hunkering down and away for worse.

Potential scenario and but the ones.

Feeding the ones, we were going on Nobody's really wanted to walk away from those.

Mitchell Goldhar: Those negotiations have just sort of been put on pause and everybody's keeping everybody warm. It's hard to say. It's probably more or less what you'd expect. Now that things are a little bit more clear, I'm not saying they're good, but they're a little more clear. People are starting to, you know, talk about the things that we were talking about before all this happened. I don't know, Rudy, if you want to add anything to that.

Mitch Goldhar: Those negotiations have just sort of been put on pause and everybody's keeping everybody warm. It's hard to say. It's probably more or less what you'd expect. Now that things are a little bit more clear, I'm not saying they're good, but they're a little more clear. People are starting to, you know, talk about the things that we were talking about before all this happened. I don't know, Rudy, if you want to add anything to that.

So just sort of being put on pause and everybody's keeping everybody warm.

It's really more or less what you'd expect.

And and now that things are Oh.

But more.

I'm, not saying, they're good but a little more.

People are starting to.

Talk about things that we were talking with for all this happened. So I don't know Rudy if you Wanna add anything to that.

Image I'd say I'd say a lot of what was happening it's exactly what you just described a lot of what was happening before the Christmas and entity early part of the new year was already happening with some of the retailers who didn't want certain locations were already talking to us about not wanting locations in certain locations. They were in and we were already.

Rudy Gobin: No, Mitch, I'd say a lot of what was happening. It's exactly what you just described. A lot of what was happening before Christmas and into the early part of the new year was already happening with some of the retailers who didn't want certain locations were already talking to us about not wanting locations in certain locations they were in. We were already talking to the likes of, you know, service, food, medical, and ethnic grocers, Farm Boy, and dollar stores. Like, we were already in the midst of all of those discussions in the first sort of two to three months of this year. You know, TJX expansions into the combos, you know, the Winners HomeSense and health foods.

Talking to the likes of the you know a service in food and and and medical and and ethnic Grocers and farm boys and dollar stores like we were already in the midst of all of those discussions in the first sort of two to three months of this year you know I'm TJX expansions into the combo is you know the winners.

Sense and health food all of those conversations have just been pause and nobody's come back to US and said, we don't want to do those so we're still we're still we still have all all of those alive everything is just right now pause so yeah.

Rudy Gobin: All of those conversations have just been paused, and nobody has come back to us and said, "We don't wanna do those." We're still. We still have all of those alive. Everything's just right now paused.

Mitchell Goldhar: Yeah. They haven't said they don't want them, that's for sure. That's pretty interesting. I don't wanna make this all seem like, oh, you know, everything is, you know, roses 'cause obviously it's not. You know, there are some examples. I mean, we were about to start construction on something where the tenant is like, you know, you know, just asking us to start construction of their new unit in a particular market. You know, solid tenant, a solid company. And in Aurora, I don't think it's necessarily a REIT site, but just however indicative it may be, you know, a Farm Boy with a TJX and some other retail, you know, is all set and ready to go.

Mitch Goldhar: Yeah. They haven't said they don't want them, that's for sure. That's pretty interesting. I don't wanna make this all seem like, oh, you know, everything is, you know, roses 'cause obviously it's not. You know, there are some examples. I mean, we were about to start construction on something where the tenant is like, you know, you know, just asking us to start construction of their new unit in a particular market. You know, solid tenant, a solid company. And in Aurora, I don't think it's necessarily a REIT site, but just however indicative it may be, you know, a Farm Boy with a TJX and some other retail, you know, is all set and ready to go.

In one of them that's for sure and that's pretty interesting, but I don't want to paying such or I don't want to make this so in my career you know everything is you know.

It was because obviously, it's not but [noise].

Some examples I mean.

We were about started construction on something where the tenant is you know.

Just [laughter] backing us to start construction of a new unit in a particular market [laughter].

So all the tenant but from a company.

And.

Probably a read side, but just sort of are indicative of maybe you know a far more TJX and some other retail yeah. It was set and ready to go.

Mitchell Goldhar: They all, you know, call up about, you know, "When are we getting our unit?" Now we paused it because we wanted, like everybody else, to see what we're dealing with. You know, we're talking about short timeframes here in real estate. Real estate operates in geological timeframes. A month to us is like, you know, an hour in real life. I mean, you know, it's nothing to pause for a month. No, they want it, and we're the ones who are saying, "Let's just hold tight." A little of that sort of thing.

Mitch Goldhar: They all, you know, call up about, you know, "When are we getting our unit?" Now we paused it because we wanted, like everybody else, to see what we're dealing with. You know, we're talking about short timeframes here in real estate. Real estate operates in geological timeframes. A month to us is like, you know, an hour in real life. I mean, you know, it's nothing to pause for a month. No, they want it, and we're the ones who are saying, "Let's just hold tight." A little of that sort of thing.

And Oh, Yeah ill call up about you know when we give me a unit no reposted, because we want to like everybody else, one and see what we're dealing with.

But.

We're talking about for time pressure I really do fit operate from geological timeframe.

For a month.

Like [laughter] or is like an hour in real life. So I mean.

It's nothing to pause for a month, but nobody wanted and I remember one for thing what's the.

Oh paycheck.

Mitchell Goldhar: It's not a great amount of data points there, but you know, there's lots more to it than you know, there's a lot more to it than you might think.

Mitch Goldhar: It's not a great amount of data points there, but you know, there's lots more to it than you know, there's a lot more to it than you might think.

Things started agreed amount of data points there but.

But you know.

This is much more to it then.

But then you might think.

Thanks very much.

Rudy Gobin: Thanks very much.

And there are no further questions at this time and I'd like to hand, it back over to Mr. Ford for any additional or closing remarks.

Angel: There are no further questions at this time. I would now like to hand it back over to Mr. Ford for any additional or closing remarks.

Operator: There are no further questions at this time. I would now like to hand it back over to Mr. Ford for any additional or closing remarks.

Peter Forde: No, I appreciate that. Again, I wanna thank you all for taking the time to participate in our Q1 call and just say, please stay safe. Good night.

Oh I appreciate that and again I want to thank you all for taking the time to participate in our first quarter call and just say a please stay safe.

Good night.

Angel: This concludes today's call. We thank you for your participation. You may now disconnect your lines, and have a wonderful day, everyone.

And this concludes today's call. We thank you for your participation you may now disconnect your lines and have a wonderful day everyone.

Operator: This concludes today's call. We thank you for your participation. You may now disconnect your lines, and have a wonderful day, everyone.

[music].

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