Q3 2020 Cominar REIT Earnings Call
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I now would like to turn the conference over to Cenveo cassette. Please go ahead Sir.
Yes, you should be good.
Good morning, and welcome to today's conference call, where we will be discussing our financial results and highlights for the third quarter up 2020.
The presentation for this call is posted in both English and French ending conference call section of our website.
In line with our disclosure principal access to this call is open to financial analysts and investors the public and to media.
The question period will be open to financial.
Before I begin I would like to draw everyone's attention to their notice concerning forward looking statements.
Page one of the presentation.
With me today is our CFO twine glass.
Members of our executive management team not hearing aid, we gave you the recount and Chief Development Officer.
No no I didn't catch.
Easy be office, and industrial and cheap and real estate operations officer, and not that easy to show he be asset management and transactions are also here with us.
After the second half of the year started to unfold coated Nike had an ongoing negative impact on the operations and resolve the reed.
After a summer study improvements in encoding 19 reported cases and hospitalizations.
Combined with the relaxation of government imposed confine it measures, including the reopening of shopping mall.
The fall has brought back and importantly, resurgence of cases and along with it.
Post closures at restaurants, Jan and many entertainment out much Sachin said im not [laughter].
Affecting many of our retail clients once again.
During the quarter office workers were also granted access to their offices.
The maximum capacity of 25%.
However on the onset of this second wave work from home. It's described once again.
On page two before diving into the results for the quarter I will briefly comment on the formal strategic review process that we initiated on September 15.
A special committee consisting of four independent trustees led by the <unk> bass.
Chad. This special Committee is working closely with the management team and the reach financial advisers National Bank financial and BMO capital markets.
The objective is to identify review and evaluate a broad range of potential strategic alternatives with all of you are closing the gap between what we believe to be our intrinsic value and current trading price.
Well communicate in due course with unit holders when required where appropriate.
During the quarter two appointments were made at the executive level.
I'm trying to talk walk with confirmed that our CFO prior there too Antoine acting as interim CFO.
We also had the pleasure welcoming netideas show to the executive management team.
As executive Vice President asset management and transactions.
Next I'd has more than 25 years experience in the real estate industry, including 20 solid years that Ivanhoe, Cambridge, where she was responsible for a retail asset management across Canada, and Latin numerous transactions in Canada and internationally.
In this newly created role now do we will be working closely with the naturally teams ever office industrial and retail segments led by now know and many other eight to identify value creation opportunities within the portfolio and enhance our capital allocation process.
Net Kt will also oversee appraisals and transactions.
A rival comes right time, allowing us to continue building on our solid foundation, which contributed to our pre COVID-19 momentum.
Now, let's turn to our Q3 results.
I wish to highlight that we have enhanced our MD any disclosure at cost across our three asset segments, which we trust you will find to be of assistance.
By adding dedicated sections for each of the three assets segment, we intend to display common are not only as a diversified read but also at the summit three scale up on portfolios of office retail and industrial properties.
On page three please let me run you through our Q3 highlights.
During the quarter impacted by COVID-19, we experienced an organic decrease of 8.1% in Sps NOI.
Our leverage remains sequentially stable at 54.4% when compared to 54.5% for Q2.
Despite the turmoil, we enjoyed an 8.8% growth in the average net rent a renewed leases year to date, driven by an increase of 20% in industrial an increase of 7.6% in office and a decrease of 2.1% in retail.
At quarter end liquidity stood at $397 million, which was partially used to post corridor to repay $100 million of unsecured debentures, which matures on November 2nd.
On page four we received to date, 95.6% of total Invoiced ran for Q3, a significant improvement compared to our Q2 collection rate of 89.7% to date, which includes an improvement to 90, 190.1% compared to 77.
10% in retail.
In addition, tenants with whom we entered into agreements always 2% split as to 1.8% coming from ranked referrals and receivable portion is on rent on reduced rents and 0.2% pertaining to the 25% portion of the rent that tank out.
The bulk of our Sacroc still have to pay.
In total 97.6% of total Invoiced right is contractually expected to be received for Q3.
On page five.
The Q3, ASP NOI decreased 8.1% was largely driven by a 28.3% decline in SP annualized for retail which came from the combination of reduced revenues of 5.1%.
Increased expenses due to COVID-19, 19.6% essentially expected credit losses for which $8 million was added in the quarter.
Okay, SSP I know why increased by 3% as a result of a 1.6% increase in revenue metric mitigated by a 6.1% decrease in expenses.
Industrial espionage NOI increased by 3.3% during the quarter.
There are 280.8% decline in revenues, partially offset by a 7.6% decline in expenses.
Year to date, the adverse impact of co that 19 contributed to a 6.5% decrease of our over all.
SP annualized.
Retail at negative 23.9%.
With our office and industrial segments recording positive ESP annualized growth.
3.3% and 2.7% respectively.
Moving on to page six our committed occupancy and in place occupancy rates remain slightly above our historical averages.
The recent decline in committed occupancy was driven by the retail segment declining by 3.2% since Q4 2019.
While the office segment remained stable, increasing by 0.1% and the industrial segment decreased by 0.8% over the same period driven in part by our leasing strategy of driving right.
On page seven we continue to experience overall positive momentum in our leasing activity.
Renewed leases over the nine months of the year averaged a net 8.8% increase compared to rents in place prior to radios.
Two of our three segments had positive leasing spreads leasing led by our industrial segment at 20% evidencing the strong momentum of the industrial rental market in our markets followed by office at 7.6%, while we recorded a 2.1% decrease in retail.
The office segment performed well in multiple points, Firstly office SP I knew I was up by 9.5% for the first nine months of the year for the match gout sufferers.
In addition, the in place occupancy rate grew by 4.7% in the Munchau profit segment.
Since Q4, 2019 and by 3.7% in the Montreal suburban office sector over the same period.
Over 120% of the leasable area maturing and as much on office segment since the beginning of the year was renewed or is subject to a new lease.
In addition.
Proximately 865000 square feet or 73% of the leasable area maturing in 2021 with federal or provincial government has already been renewed for engineered completion.
On the retail front noteworthy the opening of a 48000 square foot mix growth.
Grocery store and National company, and the opening of a 36000 square foot Ida grocery store at properly.
So our 67 square foot sports human sporting goods store located at some that now that closed subsequent to quarter. As a result of the bankruptcy courts rapidly replaced by a decathlon sporting goods stores scheduled to open in mid December.
The shopping these openings are completely in line with our leasing strategy to move away from vulnerable retail segments.
On the industrial front, we recorded a 3.3% growth in SP annualized for Q3, and 2.7% year to date.
In place occupancy remains stable at 94.6%.
Wow committed occupancy grew to 96.3% with a 20% growth in net rank of renewed leases for the first nine months of the year.
Year to date close to 90% of leasable area maturing in 2020, which covered by renewals and new leases.
Antoine will now discuss our financial results. Thank you Tim good.
Good morning, everyone.
On page nine and if you look at our expected credit losses were recorded for this quarter less than half the amount that we recorded for the previous quarter.
No expected credit losses amounted to $8 million or 44.9% of underwriting revenue compared to $18 million or 11.3% of operating revenues in the previous quarter.
On page 10 on a per unit basis.
Adjusted for the quarter was 25 cents.
Three the 13% from Q3 2019.
Six cents from Q2 2020.
Yes, if we adjusted for the quarter was 18 cents.
Freed up 18% from Q3 2019.
Six cents from Q2 2020.
In both cases, we believe that we are above our estimate of overall street consensus.
Our debt our adjusted.
Adjusted payout ratio decreased to 70.6% compared to 85.7% in Q3 2019.
Moving on to page 11, we estimate that could be 19 had a negative impact on our AFFO of approximately $12 million during Q3.
Our revenue were hampered by $6 million due to the economic.
Additional expenses of $8 billion, mostly composed of estimated credit losses were offset by $2 million of maintenance and energy savings related to the integration of our properties due to the pending image.
Resulting in net increase of expenses of $6 million.
Ultimately, our annualized and FX, who experienced an approximate $12 million or six cents per unit decreased due to the appendage.
Moving on to page 12 for the first time, we presented view per segment of arc Hiftwo MTF.
The 30% total assets grew adjusted decline was mostly explained by the sharp decrease in fuel for our retail segment compared to Q3 2019.
Our fees in industrial is the food were down 2.2% and 4.6% respectively from Q3 2019.
The residual estimated coverings segment evil the February compared to last year due to the commission of lower Gn expenses and a reduction in the interest rate charge year over year, our blended interest rate has indeed reduced by 32 beeps to 3.8%.
Moving onto page 13 during the quarter, we refinanced a total of $80 million of existing mortgages for a seven year there against a portfolio of seven seas properties located in Montreal and in cubic city I loan to value of 65% and a coupon of 3.7%.
We also extended the $240 million guidance from Mark age for a one year three years at a rate of 3.08%.
It is worth mentioning that this extension is on an interest only basis, reducing our cash out for one year by $7 million.
At quarter end Ali to quit our liquidity stood at $397 million.
$5 million of cash and $392 million of availability under our unsecured credit facility.
Moving onto page 14, the space.
Page illustrates our debenture in mortgage debt maturities as at September 30th.
Since then we repaid from our unsecured credit facility the $100 million of series, three and security ventures, which matured earlier this week.
As of today, our liquidity stands at around $300 million.
To put things into perspective, we have $206 million of mortgage and venture debt coming to maturity between today and year end 2021.
Moving on to page 15 during Q3 2020, our debt ratio remains stable at 54.4% compared to 54.5% for Q2.
Our leverage remains higher than at the end of 2019 as a consequence of the significant $330 million negative fair value adjustments on our investment properties taken in Q2 this year.
Our debt to EBITDA ratio experienced a slight increase at 11.4 times.
Our unencumbered asset pool stood at $2 billion, representing 1.7, Q1 side, our unsecured indebtedness stable from last quarter.
As shown on page 16, ARPU of unencumbered assets diversified within the three segments almost in the same proportions as the entire coming up portfolio.
Moving on to page 17 investments in Q3 in capital expenditures, leading cause and lease hold improvements totaled $34 million up 7.6% from the same period last year.
For the year to date Capex stands at $87.1 million down 8.5% from the same period last year.
Leading investments in development activities capital expenditures in Q3 totaled $35.8 million down 18% from Q3 2019.
Year to date total capex stood at $102.8 million down 11% from the same period last year.
Our target for the year remains at approximately approximately $150 million.
I will now pass it back to silver for the concluding remarks, and thank you and on behalf of management I would like to take this opportunity to thank all of our employees as well as our trustees for their significant contributions in the backdrop of these extraordinary times.
I will now turn the Mike already Cindy for the question period, hoping to financial.
Messy Mr., Joseph ladies and gentlemen.
Question. Please press star followed by one on it does come phone you will hear a suite tone from acknowledging your request.
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And your first question will be from London.
Clarington. Please go ahead.
Thanks, and good morning.
Two quick questions from me personally first what would be the portfolio strategy at this stage and.
Does it align with the mandate of the special Committee.
Sorry can you repeat your question Frank mission ceramic.
Record.
No no no ours. So I was just wondering what would be the portfolio strategy at this stage and how does it align with the demand data the special Committee.
Okay.
In terms of the three asset classes, we are pursuing the same strategy. We had before we are firm believers in the industrial segment and we have very very good portfolio.
Which we think we can do a lot of things for you to continue driving.
Value around that the rent increases and we're going to be looking at different ways of maybe redeveloping parts of that portfolio and weve been scheduling lease maturities to see if we can add greater density opportunities to that portfolio and some of the industrial segment is remains at the heart of our go forward plan.
On the retail side were very still very anchored on developing.
JV relationships to bring.
Density to certain retail centers for example, the most advanced discussions we have currently involved by this which is probably about 500 doors. So we'll hopefully have an announcement to make a more formal announcement to make in respect of central Florida next Q call.
We are continuing to look at at Densification opportunities in advance discussions around national today.
And I don't know if you picked up on it this last week, but we had some very interesting years and Rockland.
There is a PC which is.
Then the positive by the city, which provides significant density opportunities for Rockland. So the go forward strategy on retail.
In part around Densification and continue to play with the tenant mix and save money on rates and a great great job of moving away from the more vulnerable asset classes. We we started that treat coded app and the recent signings we have in the grocery side are extremely positive and we are more to come in the future quarters.
On and we're making very good progress on Sears and fruit on the office side and.
So it's a very interesting for us is with the the pandemic as broad as a a resurgence in the popularity of suburban office. So we are.
We're trying to do the best we can and with the opportunities ahead of us in suburban office portfolio.
That's sort of like the ordinary course run go forward strategy in terms of the process at France, and we are looking at all alternatives and we have nothing to communicate at this stage, we will communicate to unit holders when when the time is right, but we will be looking on a parallel basis at all of them.
Try to get some games.
Okay. That's.
Thats, great and again in the light of the mandate of the Special Committee is it fair to say that after all in the current context should or could represent an opportunity.
To better understand.
Understand the potential gas outside and to possibly consider keeping up and find the right. The right JV partner to execute on the project.
Gas on time, it remains a probably the most cherished asset that comment on one which has been noticed.
Per asset basis, the most unrealized value, we're not recording any density value for gas attack.
And currently the asset is effected in the sense that you know the central business District is.
Pretty much shutdown dementia parking revenues are not present.
We have a whole in food court revenue, there which is not.
Abnormal circumstances.
But there remains very keen interest in much Alan on density some very good asset and add enough for assets that you shouldn't be rushing into something around that asset. We have look at the right time, the right window to hit the value of it.
And at the same time, we have a lease maturity and as time goes on the day, there's less and less terminus CN lease you have to really match both both perspectives.
Hello.
So I guess on the context of the special Committee everything is on the table in terms of gas on that is that fair.
Correct correct.
Perfect. Thank you that's it for me.
Thank you next question will be from Jonathan culture of TD Securities. Please go ahead.
Okay.
Good morning, and thank.
Thanks for the extra disclosure it is very helpful.
First question I think.
Well last quarter on the your property.
Property held for sale I think you said you'd be able to identify for the Q3 call.
Just wondering where you stand on where you stand on that.
Okay, the property, which we talked about prior quarter we.
It's currently the initiative is currently on hold for Kobe reasons. The the buyer is a strategic buyer and it it definitely wants to acquire the asset itself. It's.
Its financing sources are governmental and and the government wishes to just to be careful and prudent in.
In terms of.
Financing and these types of initiatives during a the Kodak environment. So that initiative is currently on pause until we work our way through the decoded issues in the downtown core in Malaysia, but it's still very much of interest on the table to the buyer.
Okay. So it is still sitting there obviously in the assets held for sale.
And would that be most of the 231 that looks like.
Like most of it.
And well you know Jonathan will revisit the issue at year end to see where we're at with as I mentioned the buyer, it's very very interesting and.
Fans on government financing and so we'll see where we are at that time and we'll make the decision we keep it as held for sale revenue back into our books. So we'll just wait and see.
Okay Cool and then obviously.
[music].
Yes, so obviously, if something were to happen there the kind of.
Q1, Q2 next year, yes.
Yes, and Thats something were to happen naturally the let's say the initiative is skewed up due diligence is all done so.
It's ready to ready to try to develop this just it just depends on the source of financing.
Okay, just sticking with with office I guess how much.
How much of your office spaces on the sublease market right now we've got a number that you guys have.
Yes, roughly.
And the office sector, it's about.
The 115000 square feet. So it's not.
Not were marginally higher than what we typically experience for our portfolio of our size. So.
Not much pressure so far.
We're still early in the game right.
Thank God, we're not seeing any abnormal percolates either on a sublet or lease termination discussions.
Okay and then.
On the suburban demand that you are talking about are you seeing more are you doing more tours are you seeing like significantly more demand or or is that just something you expect to pick up.
Let down.
Chime in on that much on yeah, Hi, Jonathan.
Interestingly you know over the past few months, we've heard a lot about.
The hub and spoke concept.
And there.
There was a lot of talk about it but in the recent weeks, we've actually had.
Real cases, where.
Existing tenants in our in our downtown portfolio.
And asked us to to look into.
Establishing.
Satellite offices on the north shore in the South shore and this is in addition to the space that they occupy downtown that they have no intention to to let go so the.
What this and its very preliminary.
We said last quarter, it's early days.
You know it's it's.
So early days, but now we're actually seeing people with.
To your point organizing visits to see how they could establish satellite offices.
And also possibly.
Possibly some.
Short term.
As is already built have.
Spaces that are vacant that they can use to.
To give you a four changes to their employees to have a what is now called the war near home solution. So there is the work from home is starting to.
To impact people in there.
Personal lives people are starting to.
To Miss the.
The opportunity to go to an office environment.
Albeit once in a while so so that is more and more.
And please yes.
The other interesting point I just on a suburban office side is.
We've been getting a lot more than sort of inbound investment policy on on the portfolio itself, which I think bodes well with industry completes the interest the general mood in the general environment around suburban office said.
Okay and then one last quick one for me the office NOI.
I noticed that in.
Polluted a 1 million dollar construction management fee.
Is that so that a one time thing or would you say, it's at one time, but we know it's part of our new revenue base, we do have a recurring.
Very polished fee based around project management fees, which is slightly less on a recurring basis and $1 million.
We do have a recurring element in our corridors.
And then the one time in there like kind of one time since the railway highway market chunky situation is today.
Scoreboard on in Montreal at least of which is a a.
Majors quad.
It was a single occupancy cost so thats why we have a you have a recurring element to our to our fees.
In a quarter to quarter.
Okay. Thanks, I'll turn it back.
Thanks, Jeff.
Thank you next question is from Mike Mckee. This additional bank. Please go ahead.
Hi, good morning.
Just wanted to touch on on on how you guys are looking at your.
Sacroc slowed or small business exposure.
I think the positive side is that if I'm understanding your tables quickly in the guidance dropping sentiments on the disclosure it's very helpful.
It looks like you most of your tenants.
That we're getting Sacroc there was very very few that actually didnt pay their 25% to seven asset statements.
Correct, yes.
Okay. So I guess, we're still waiting for final details on the new rent subsidy.
As we progress through what may or may not be more challenging.
Good quarter terms with winter season coming upon us.
Ill.
Just thinking about that like do you get a sense that small tenants.
Expecting that serves will will.
However, the proportion of that then yes.
Well I think and I think.
The answer is yes, I mean, my understanding of the program and as it stands currently is that subject to a part.
Parliamentary approval.
The various parties and program, where does that put in place will run into June.
The mechanics are still being worked out I think one day on the good side of things for us and there.
Theres less have call. It can you comment on management time required to program will be administered by revenue and a our tenants directly.
The challenge for us will be to ensure that if a payment is made under sars to a tenant that that that rent payment finds its way to add.
And we are.
Through different lobby groups in direct discussions with.
Program officials, we are trying to work out the path on how we establish that for example, if a tenant it makes a claim for October.
Such forward by the tenants as far as loss amount is rental obligations and so come November when the tenant mix to claim it or what.
After establish for example that the October rent was paid so there were trying to pick and place mechanisms, which in short rent payments, but we think that program could be very very good and perhaps more adapted to the REO I guess that pain, where certain clients.
Our daily.
Thanks.
What I was getting more and more difficult to manage or justify probably politically because a basis of calculating the allowance for the prior period losses had has had improve their financial situation. So this program I think we'll be better aligned with the needs of those clients who are are suffering.
Okay.
Factoring in time for us.
Yes, so thats that is the good part and I guess, how does the second was Brady I want to say I don't want to say discussion. So that it was a very cut and dry decision I guess, you decided adequately qualified they got there now you're sort of no longer involved in the process and our job is to make sure that it's getting there, but the mechanics of the program are there but.
If you're not if you don't start to see that as we progress forward. We'll gain that you will then step in again started increasing deferral. There how are your purchase of course, that's going forward sorry, what was the tail part of your question I couldn't hear you.
Yes, I know I just I'm just curious like how you guys will be thinking about potentially expanding deferrals to tenants.
Yeah.
We we think that no answers, it's going to happen first and also where you were looking at it much more optimistically and.
Theres been a.
Is there a different segment how that many on the they give her color on it but if you set aside.
Restaurants and entertainment.
Once again being severely impacted by it.
In the current and closures and under.
Come back at health directives.
Retailers have been progressing in SEC robot brought to their balance sheet or their working capital.
Some of the Delhi to reduce net debt to move forward and they have been clearing moving their inventory rebuilding our margins. So I think we're seeing some progression.
Especially the categories.
Where it was required and we do have a.
Good chunk of our recount base, which is not that type of financial assistance dependent I mean grocers are doing very well pharma is doing very well and we have a lot of retailers, who are performing well for England sporting goods, you know hobby oriented type of use in Oregon.
Well as you know we must say that you know in the more vulnerable factor other than restaurants tins and entertainment.
On the mid fashion sector has restructured themselves in a large part as you know are getting much stronger.
There.
And their balance sheet that they were free.
And so we are confident that negative argument program will come through you know I think our Fred F. article about that.
Basically how it's going to be articulated, but we're a lot less excels at this point.
In our categories other than the ones that are shut down.
That may require some help from our partner the government program doesn't come soon.
Okay, Yeah, and I think that you gave some really good stats just on the traffic being down 19% or people being down 19%.
I think the decrease was 3% in terms of overall sales is that because that's like saying exactly all encompassing for every retail property excluding garrison draw on like.
Yes. They are is it and is it time for all tenants now if you can come back on excess neon in class in that city enact that it's also some suffering from the office situation where at minus eight in terms of sales.
Sales, but we wanted to put some focus on our enclosed mall.
That that south end multi instead are at a minus three to conversion rates and retailer is much higher than it's ever been I think Mike's question within overall, excluding the two nephews assets. The answer is yes.
Yes, we're all encompassing for all of our problems all time does not add select assets none of them are only come around mix here.
I didn't realize.
Comprehensive data set that's excellent okay.
And I guess just last one for me here.
Hi, I'm point, I think I heard you say 150 non stop the Capex just given that you guys are at 90 million year to date seems like a very big.
Revenue for Q is that still accurate and that's what's driving it.
Like $50000 to go for the year, yes, exactly it's about 50 million by the end by the end of this year.
Okay and that too early to tell where you might be thinking for next year.
We would probably be around the same run rate well yeah for next year, We said, we would be between $115 million to $175 million.
We're going to try to get our goal is to bring as close as we can.
Okay Hi.
Yeah.
Picking up more than another time ill turn it back. Thank you go from.
Thank you.
A reminder, ladies and gentlemen, if you do have any questions. Please press star followed by one on your Touchtone phone and your next question will be from RBC.
RBC capital markets. Please go ahead.
Thanks, and good morning.
Apologies if I maybe miss this in your opening remarks can you maybe provide an update on the expected impact from retail bankruptcies and closures announced to date.
Yes.
Hi, Yes, so you know in our bankruptcy and to date the financial impact is $6.5 million.
We had 138.
Or that went under restructuring action.
Into the.
Q2, and Q3 corridor and out of those 138, we have 33 close Rs, which corresponds to about 160000 square feet. So we weren't able to retain and lot of the tenants that went under a restructuring and so far this is where we are.
And if you look at it.
Yes, I mean, if you want to look at it on that kind of a run rate basis as for the impact on the on next year.
Very good comparing a pre pre bankruptcy scenario would be to.
This bankruptcy scenario as we know it.
The impact is about $12 million.
In terms of run rate on an annual basis and that's that for revenue.
Got it yes, that's that's actually helpful and.
Nice to see that.
Scott the exposure is less.
Thats. It obviously, the total amount announced closures or bankruptcies just for that from an occupancy standpoint in retail I'm curious just how you see that I guess trending overall over the next six months, we certainly have the.
Q1, coming up which may lead to some additional announcements or closures. So just maybe if you can share some conversations that you might be having with some of your tenants and what they're looking for.
And then overall.
Basis, I've known industrial that you don't see industrial market remains very very tight.
So any movement there.
On the office side and the retail side on Medtech will probably slip a point.
And.
Expect probably this.
In place to slip about on a parallel basis something similar on the slide.
Going from today to end of Q1, 2021 will probably slip about 1%.
Yes, we see that we started to see like a stabilization.
And then get to towards the year end of 2021 a pickup.
There are some retail segments that are very active in the value fashion kind of category and.
And hobby and sporting goods. So we do have a lot of square feet in negotiations with those tenants for 2021 openings at this point.
Thanks set so that's helpful I guess.
Just sticking maybe with retail for a minute.
What do you have a rough sense of what percentage of the retail leases.
Our running on a percentage rent basis at this stage.
Uh huh.
I will have to get back to you with that number.
Exactly through on plan.
It is definitely not the majority of our fashion leases that are under percentage, but I have to see overall, what the number is.
Got it okay.
Okay, and just maybe a year it looks like from a bad and Jeff just to get a precision yet on those percentage numbers that we worked out.
In you know all of those trucks.
Structured deal have floors first of all as you know our base you know obviously on the sales performance of the tenant. So we obviously try to get the floor as close as possible to what you know the old structure of rent with going So you know overall when you look into it you know on the I total.
Basis.
The difference in amount is not as large as people tend to expect we'll get back to you on that.
Got it.
Just maybe coming to the bad debts.
That you booked in the quarter I think there was a it looks like there was a reversal of about 2 million that related to Q2, just two questions just want to clarify that one that that reversal was cash.
He collected in cash and then secondly.
Yes.
Q2 was tracking somewhere around $18 million in Q3 down to eight.
Yes, do you sort of expect to see this trend either stabilize near Q2 levels or continue to head lower over the next couple of quarters.
Okay. I mean, yes, you nailed it right I mean, there is a bit less than $2 million. That's a that's a it was a kind of reversed versus previous quarter. So its kind of previous quarters should have been 60 million instead of 18 million and actually to answer your question.
Just because when we.
When we assess that amount we twoq for Q2, we took a really conservative assumptions and some some agreements about rent reductions and the.
And stuff like that were being negotiated the value essentially by money off of it and it turns out that she managed to get to get to their deals than the speed at the at the time. So so that's a that's that's the main reason for a for a reversal.
Don't forget that in Q2, I mean, the resale was shut down for a for some time, which was not the case in Q3 and as long as in Q4, we don't see closures as we did in the in Q2, we would rather expected to be in line with Q3 than a than the than.
Two.
Thanks, Thanks Central on that so thats helpful. I guess, just one last one for me on the office property that is held for sale can you just remind us was that a marketed process and.
If this transaction were not to go three grocery with their perhaps the other buyers that.
Interest.
The was a strategic buyer, who approached us, whereas a real need for the property and.
The price was compelling for us to.
Embark in discussions with them.
As to if the transaction with that party does not proceed when we go to market on it we'd have to look at the market context and once.
Once again Thats, a property, which is in proximity to run stations Great group.
Ratification profit in Macau.
At College revenue so for US it's just a good property. So we don't know yet Tommy but we're in the process was one where we were approached by.
A strategic buyer.
Thanks, very much. So then I will turn it back.
Thank you once again, ladies and gentlemen. This you do have a question. Please press star followed by one on your Touchtone phone.
Next question will be from Mike Mckee does that help.
Please go ahead.
Hi, Thanks, just a follow up on the asset sale program.
Are you just given the strategic review now are you on hold with respect to any potential transactions right now until that process concludes or could we see high I think you mentioned, specifically getting more calls under suburban office. Yeah. We've had a desire the paradigm of Intel or are you on hold for the time being I guess the question no I think that process and we're lucky.
At all alternatives and I know that that includes declare assets and so we that's part and parcel of the exercise we're going through.
Let's see the best use of.
That process in terms of recycling capital that could be initiatives. There. So thats what were analyzing currently so.
You know, there's active discussions rather than multiple.
Right, but I guess is there a view that you need to concur.
Conclude the process before moving on that or could you actually move on specific thousand sales before the process.
I can't comment on that at this stage.
Thanks, so much.
Thank you and at this time, because we have no other questions registered please proceed.
Okay, well, thank you very much and I wish to thank you once again for participating on the call with us and I wish you good health and talk to you next quarter. Thank you.
Thank you ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do such a please disconnect your lines.
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