Q3 2020 Artis Real Estate Investment Trust Earnings Call
[music].
Good afternoon, ladies and gentlemen, my name is Sylvia and I will be your conference operator today.
This time I would like to welcome everyone to honor suites third quarter 2020 conference call.
All lines have been placed on mute to prevent any background noise.
After the speakers remarks, there will be a question and answer session.
If you would like to ask a question during this time simply.
Ask star followed by one on your telephone keypad and if you would like to withdraw your question. Please press Star then the number two.
Today's discussion May include forward looking statements, which include statements that are not statements of historical fact and statements regarding artist suites future financial performance and its execution of initiatives to deliver unit holder value.
Such statements are based on managements assumptions and beliefs.
These forward looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please.
Please see our recent public filings for a discussion of these risk factors, we're trying to do it and the annual and quarterly filings, which can be found on our streets website and on SEDAR. Thank you.
And I would like to turn the meeting over to Mr. Ahmann Martin. Please go ahead Sir.
Okay. Thank you moderator and good day, everyone welcome to our Q3 2020 conference call.
Hi, My name is on a mark in some the shield artist suite literally on these calls is getting great chefs.
They are easy field investments.
So mark it's easy to have U.S. operations and Jackie Terry.
Yes Connie.
Thanks for joining US no I I was in the past I'll ask Jim to review, our financial highlights and then I'll wrap up with some market commentary and then open the line for questions.
I had to jump.
Thanks, Robert and good afternoon, everyone.
So these strange times continues.
Second wave of covert is hitting all countries with more restrictions in government mandated shutdowns.
Despite that however artist continues to see good results from operations.
In our opinion, we have completed an excellent quarter. Despite the presence of good.
Iran collections have been strong and less for our tenants are weathering the storm quite well.
I just did not participate in the secret program proposed by the federal government.
We have been working with our tenants as needed to provide red deferrals and in some cases, we have provided rent abatements in exchange for an early renewal or longer term on the lease.
Federal government has recently announced new rent relief.
Graham for tenants with the aid coming directly to the tenant not involving the rent reduction by the landlord.
Yeah. This is a major improvement in the program and we will work with our tenants is necessary to help them access this program.
[noise] into September or rents receivable were down to approximately $8 million from 12 million at the end of June.
As a further $5.5 million that we've agreed to defer under deferral agreements with our tenants and what we feel the majority will ultimately be collected we did book a reserve of approximately $2.1 million against these balances.
Which we feel is adequate to cover any potential re rent defaults.
Our accounts receivable collection rates during Q3 were over 97%.
I've been over 98% for the month of October.
Our leasing activity continues to be strong with over 600000 square feet of new leases commencing in the quarter and a weighted average increase of over 6%.
Interesting fact is that the number is almost the same roughly 600000 square feet.
[music].
No. She did during the quarter and the average increase of that was 5.4%, which we feel very good given the impact of Cowen.
On the commercial rent market.
You'll recall going back to 2018 at the Reed announced the planned series of new initiatives to surface value for the Reed.
Opinion, we've now virtually completed that series of plans initiatives.
And we've set ourselves a new series of initiatives, including a further $550 million of asset sales with the proceeds targeted mainly for debt reduction.
This program is already well underway.
In addition, we've announced a plan to spin off our Canadian retail properties into a separate entity.
We believe this plan.
Which is aimed at reducing the diversified nature of artists as portfolio, it's still a potentially effective strategy.
However, as announced in our press release, given the recent proxy fight initiated by one of our unitholders. The board has determined to delay the Unitholder me.
Related to the spin off until a later date.
Oh.
Based on our Q3 analyzed the rate is 50.5% weighted in Canada 49.5 in the U.S. almost half and half.
As we continue to move forward. However, we expect the majority of future asset sales will likely be in Canada, and we expect this ratio to swings such that greater than 50% of our income will come from assets in the United States.
Well the asset class basis were 45.6% weighted in office.
19.2% weighted in retail.
35.2% in industrial.
Specifically on retail you may recall retail was only 17.2% of Q2, however, part of that spending was due to a fairly large bad debt provision recorded in Q2 on the retail tenant rents receivable.
You will have noted may have noted that weve added some new disclosure on our mdna breaking out a lot of our metrics by asset class.
The fullest disclosure is helpful to both the marketplace.
And to our analysts as investors continue to review our results in valuations.
[noise] during Q3, we've completed two projects, we had under development both of which are 100% leased.
As of September Thirtyth, we really only had one project left I actively under development, which.
Which is our forties story.
As an actual project in when a bank.
As detailed in our Mdna. We also have several development projects in the planning stages, where construction has not actively started over they are proceeding well and we would expect.
At least one or two of those to start during Q4 or Q1 is 2021.
Our balance sheet reflects a slight improvement in our debt to GPV with the ratio now at 51.9% this quarter compared to 52.5% last quarter and 52.3% a year end.
We did collect a fairly substantial mortgage receivable right at the end of the quarter.
So that did not get applied to the debt, but did on October 1st.
So.
We expect further improvement in Q4, when you factor in that mortgage receivable collection plus some asset sales that are currently under an international contract.
Artist does have a fairly significant portion of our debt maturing within the next 12 months, including roughly $503 million of mortgage debt. In addition to an unsecured debenture of 250 million.
Some of that debt, we've been deliberately keeping short term as it relates to assets that we plan to sell and we'll probably continue to do that with some of it we don't anticipate any difficulty in refinancing the rest of it on longer term assets.
Roughly $32 million or that gets repaid anyway, just from typical principal repayments during the next year.
Oh and funds are available on our line of credit.
If needed for any refinancing.
Our NOI line this quarter was 71.0 million compared to 70.2 last quarter. So [noise].
Chris again.
With the increase in annualized combined with lower interest rates and lower debt costs, our AFFO for the quarter up to 50.8 million from 49.4 million last quarter.
On a per unit basis AFFO came in at 37 cents this quarter.
[noise] last quarter and 34 cents in the compare to last year.
Again as we did in Q2, we've added disclosure breaking out our AFFO for each asset class.
Using that percentage of in Hawaii as a method of allocation.
So on that math, it's 17 cents from our office portfolio 13 cents from Ari.
Industrial portfolio and seven cents from the retail portfolio.
Hey, AFFO for the quarter was 27 cents.
25 cents in Q3 of 19.
Our payout ratios are very conservative, 37.8% of ethical and 51.9%.
That's all.
On a same property basis. The results Unfortunately were negative this quarter, 1.2%.
One of the largest factors in the drop is actually the parking revenue in the Western Canadian office sector.
And it's just cancel parking while they work from home during covert.
Industrial segment continues to show the strongest performance in both countries with 2.3% growth in Canada, and 0.7% growth in the U.S.
On a fair value basis, we as required under I first value our properties at fair value.
And valuations a little challenging in the current market due to covance.
However, we did have additional external appraisals done during the quarter and there's certainly no hard evidence indicates that cap rates or discount rates, where market rents have moved substantially.
You may recall, we recorded a fairly substantial reduction in value at the end of Q1.
And for both Q2 and now Q3, we did not feel anything significant adjustments were warranted and the net fair value adjustment was very nominal this quarter.
So given that fair value of properties we.
We can now calculate the net asset value for trust unit.
And our calculations just using equity on our balance sheet.
Yes, the equity held by our preferred unit holders and divided by the number of common units outstanding at the end of the quarter.
And on that basis.
The net asset value or NAV per unit was 15 35, this quarter compared to 15 40 last quarter.
I said declines I'm.
I'm going to say, mainly due to FX, which on a standalone basis would have decreased NAV by 23 cents at.
An offsetting this is a gain of approximately 18 says.
Our income for the quarter being in excess of our distribution.
Oh, okay.
[noise] [noise] area.
Where does ended the quarter with approximately $48 million of cash on hand, and $423 million Undrawn on our line of credit.
Based on what we know today, we feel we have more than adequate liquidity. It is through the remainder of the covert crisis.
Look forward to more normal times.
And last but certainly not least I'm pleased to highlight that we've announced a distribution increase of 3% commencing with the distribution that will be paid in January 2021.
That completes the financial review for now I'm happy to answer any questions later, but I'll pass it back darman for some more discussion first keepsakes everyone.
Thanks, Jim as a whole as we all know is this has been a a volatile interest president of Europe, but as it applies to artist there where it really is behind US Oh. This is clearly performing very well this year.
We continue to make good progress in all key strategic fronts and are delivering strong performance metrics for our unit holders.
Our rental increases.
44 per unit, along with solid numbers a rent collections are good and continue to improve and watch for more monthly updates from us on that front as well. So we're in great shape and of course, we just printed an excellent quarter. We have every reason to believe we'll deliver a great Q4, as well and ending a strong and look out for in connection with optimism.
Looking ahead, and given our very conservative payout ratio and the progress we've made on our strategic initiatives debt reduction will continue to be a top priority for us as mentioned, we're confident of our ability to reduce our debt to JBT has a 45% range.
By the end of the second half of next year.
Satisfied of course that as we improve our debt metric.
Price multiple will improve as well in fondly remembering that was only in the first quarter. This year I understand you know we were trading over $13.
And we think that's that that contract prices is achievable in short order as well as we continue to improve our metrics demonstrate progress on all of our strategic shrunk.
No as Jim mentioned falling floating interest rates are a natural boost to our earnings which we think is structural and will remain with us long term lower for longer is clearly the new met mantra our normal for interest rates.
It is our view that liquidity and availability of credit will continue to improve as we get to the other side of this pandemic and all of this of course, it will be good for real estate and read valuation.
[noise], probably disposition program progressed very large increase Q3 third quarter looking ahead for this year, we anticipate selling by selling I mean close their unconditional.
$300 million by year end with another 250 to 300 million by summer next year. So 550 to 609 by by the summer of next year.
But most of it done this year and again at prices consistent with the IRS NAV, a $15 to 35 cents.
And again used for debt reduction and improvement of our liquidity.
Yes.
[laughter] Judy.
It's important to note of course that other financial metrics improve.
Our portfolio of properties, we're continuing to improve our office and retail waiting I'm, sorry, we continued to reduce our office and retail weighted and increasing our ownership of industrial properties, we're streamlining and high grading our portfolio as well as reducing number secondary markets. When I mean, essentially a private equity model that we're implementing today.
Maximize unit holder value.
At the office and retail markets or have been challenging this year, but on balance our overall portfolio is performing well interesting to know them all the office markets our decision.
Trauma went up in Calgary, Vancouver, Madison, Minneapolis, Denver, Phoenix, It's Madison in Minneapolis that of the brink of positive absorption numbers in terms of the markets themselves.
But a new paradigm is upon us in terms of office and retail even industrial I mentioned this at our age you have.
Excuse me again.
Well, what a different oddity of pandemic make.
In terms of office, while we will see more work from home up immediately.
Maybe not so much the we'll see more created because creativity not as productivity lies in payment matters. We believe that there will always be need for office space of course however.
However, we do expect that office tenants, what bothers Telemark will settle down to but I wanted to work from home days per week, we expect office tends to need more space per employee and therefore, we expect the demand for suburban office space to increase versus CBD and in our case as you are aware about 75% of our property office property.
Suburban 25%.
CBD terms of reach all of this the paradigm shift is at retail and an accelerated manner. This year online shopping is potentially peaked during this locked down.
But as we moved to other salad pandemic equilibrium between online and in person shopping should be achieved in a way it's good to get that not only with so to speak.
We do point out that not all retail is bad retail.
Open Air service sector strip malls needs based retailer, we feel will always be in demand.
Dropping principle has to be done person and in a way. It's kinda retail is I came to showcase industrial and that's the kind of retail that artist community has a showcase industrial as you know is a very good asset class not all he tells Badri telestar, there's still good opportunities in retail.
Sales of industrial long industrials come up again as a winner again. This pandemic. We generally speaking we will see demand for industrial space.
Increased.
And in our case the artist has what.
We own about $2 billion of industrial topic about a billion on each side of the border.
Okay, all performing well that has a very good track record continues to deliver solid organic growth.
And I'll give industrial development pipeline is also on track to deliver excellent results.
As I mentioned before stay tuned for more good news on this front as we move to expand or industrial development by banking institutional joint venture partners.
Not having enough to make an upfront yet yet, but we do have signed a comprehensive letter of intent.
Global institutional.
I think that that's focuses only on real estate that's.
To develop an $80 million cascading dollars industry.
Industrial development in Phoenix.
Trading paper on the JV and as we get in that is completed which is the target before the end of this year and we'll give you more color on that but it's a good validation and this is a fund that manages over $1 billion of realistic worldwide is a good validation of our management team I know I got industrial development platform and our expertise.
So we're looking forward to that.
That JV and many more in your head.
So again some key takeaways.
For this quarter and beyond you know artist will delivered very good results. This year, we are poised to be one of just a few weeks that will have to increase its after full per unit in 2020, and next year will be better than this year.
We feel that I just to be sure I can 3% as both modest and prudent and it sets the stage for multiple annual distribution hikes in the years ahead [noise].
Also in terms of return of capital.
Watch for artist to keep its NCR be active in a prudent manner during the months and years ahead as well and it's not just about a select accretive use of capital is very accretive of course it at these prices, but about tax planning for our unit holders as well, we do always have to keep all aspects of the capital markets.
As a finance and I guess perspective.
Income tax planning and there's recapture of depreciation was Catholic and all these things have to take into account when you execute on the sales program, we can't just push a button and say self.
We've got to do it and methodical and well planned manner and that's what we are doing and we look at our five year model can you feel are models, very conservative and and and the distribution hikes that we're talking about and the MPSV that where I will discuss you are very reasonable and very prudent and a very much affordable and matter of fact Pos.
We can do even more so.
So again Argus is not your typical diversified need anymore. This is important and this is because of a lot of hard work and a part of the board and me.
Didn't happen overnight, but during the past two years, we've made very good progress in streamlining and improving our portfolio.
Asset class and geography and.
And we'll continue to do so as we saw non core retail and office properties between now and next summer.
And in the quarters ahead.
As Jim mentioned, we get about a hub we did a lot of leasing was last quarter. I mean, that's a typical quarter for us we're working very hard we did over 700000 square feet of leasing 305 leases 35 were new leases, which are always challenging and then 70, Oh there were reduced renewal.
And it's got a diversified portfolio, we make the point that being diversified is not easy to do and not everybody has that experience to manage a diversified portfolio of three different asset class real estate at the portfolio level and even at the capital markets level at the board level, it's not that easy to do.
Look at the charts, we feel we've got a great track record of doing that and would that right key magnet can do it you can't just push a button and say well change the magnitude we can't just push a button to change. The board has there isn't that much expertise out there that can manage a diversified portfolio.
No in the way we manage it.
So anyway, so we feel we're in good shape.
I'm not sure that that does complete my part of this report I know, we trust that you find as Jim mentioned, a new mdna format, even more informative and useful and laggan value in August.
Looking ahead as the man always saying.
We continue to work hard to keep our buildings full was bringing the rents up to market consistently streamlining and improving our portfolio and to be clear the integrity of our balance sheet, our earnings go north and implementing our strategic initiatives.
And staying on the path of continuous improvement and that's an important path as I said it doesn't happen overnight and the result was the results. We delivered this year as an example of that that objective to stay on that path of continuous improvement all that is an utmost importance to us.
So I'll turn the Mike over the moderator now to answer questions. I asked the question, but before I do I just want to make the point that I think we all know that obviously didn't really stages of an activist campaign is that's what I could call. It a lot of focus like the questions on this call to focus an artist.
On the good week that we are the great quarter the results from the operational and and anything to do with artist not on the activist campaign has lot of days ahead of an idea to have us for doing that to do that so if you hear me say the word activism activist or sandpiper.
That doesn't mean that I want to talk about [laughter], so with that and with that I'll now, let the lottery moderator tecogen fill questions. Thank you, Sir ladies and gentlemen, if you do have a question at this time. Please press star followed by one on your Touchtone phone.
We'll hear a suite tome prompt acknowledging your request and should you decide to withdraw your question you'll need to press star followed by two and if you are using a speakerphone you will need to lift the handset before pressing any Keith. Please go ahead and press Star one now if you have a question.
And your first question will be from the M. 10 at <unk> Securities. Please go ahead.
Thank you and good afternoon I was just wondering if you give us a little bit more color specifically regarding your just your general outlook in terms of the Canadian office segment.
Naturally depends on how long the implication of Colgate are going to Las especially now that we're in the middle of the second wave and perhaps even getting some subsequent ways. So given this extended period of uncertainty I know you briefly mentioned the overall thoughts, but I was just wondering if you can update that employers are going to reimagine their.
Office space going forward.
Yes, that's a good question. We all of US are are hopeful that and we believe we're seeing a little better than that and that more space required from complied and tenants got it has got a delivery lease more space. This is one of the reasons that there could be a push more demand for it.
Suburban office versus a downtown.
The rental rates if that has ended the day, they do matter and the pending which city or in 90 day commute each way plus 30 day 30 minute commute minimum to get your office spaces at all the way that you experienced.
It was so there really is still uncertain times with the office market there won't be a paradigm shift for sure. Upon us there will be more work from home.
We don't know yet I think long term everybody wants to be downtown.
And being an office space with with Edmonton and work collaboratively with with their teammates he went there called employees.
For now I think we're seeing negative absorption as an entrepreneur on what a bad Calgary and Vancouver, even.
We should.
A lot of somebody can take place, especially troubling that we should expect that to continue I mean, we I thought by this time, we'd be under this pandemic thing, but were not and that I think that we should expect next year to be a slow year as well and you should not expect positive absorption anyway, potentially even more subleasing before things get back to normal but.
By no means my one I would say in the urban.
Urban living is dead or the downtown is that they'll always be demand for office space is there just isn't as always will be but.
But out more space per plane will be needed I believe suburban office work will become more popular it could become the next big thing.
No the space at a cheaper rate than the apartment building closer.
To the socket sales in the schools, where the kids are and even to the US apart is the laws in your your support system on that matter.
It's not.
Not very scientific on everything that I've said, but I, but that's that's that's assessing right now it's early days still I'm loving County is 100% believer that office space will always be what does demand will always be with us.
It will be a shift in the nature of the demand.
Thank you and similarly.
Can you give us some.
More details about the market conditions and Minnesota.
Talk about your views there I'm on board.
Yes, I mean, just then slight to absorption here.
Let's have this in Minnesota in Minneapolis, <unk>, Paul market as well as well as as as Madison and now in fairness I believe most of that was suburban enrollment decline and down downtown.
In those markets, but they've outperformed most markets.
In North America, and that's just because it's been disruptive here, we tend to put the pens down instead went up at least in the space. We were hanging in there with two short term renewals and when we get to understand this pandemic will start making making decisions again asset. So that's that's a tough year.
Your win in our case in our office properties are performing okay, they're still not good enough, it's just that with.
Our greatest are in terms of dropping has jumped up and Allied was retail first then office and industrial was positive.
But we see that sounds coming out of this and being an onshore portfolio being pretty good shape, all things considered to have used to be the market conditions.
Great perfect and just lots of very quickly. So just regarding the retail spin off other than the party that was mentioned in the press release I was just wondering what kind of feedback you've received from other stakeholders. So far on this initiative since the announcement in September.
And what the current action plan and timeline here.
So I think the press release is clear on the action planner I'm. When we first reviewed this retail spin off it cannot was about a 120 day process, we had to financial advisors working with us and recommending it unanimous board support and and you know we we are still in the month of September we got nothing.
Positive feedback not getting you know something about you said you do find don't bother with the spin off and nobody criticize it.
But then you know enacted this has come up to disagree.
And and I'm not sure if was oxygen is opportunistic or not but we're doing it said, we're not jamming there's doubt anybody's throat and we won't we set our MGM was well disclose that weird countervailing and causing this spin off of we always said it would be up to the unit holders would take it to unit holders from two of our vote, we do it in a tax efficient manner and that's because.
That tends not jamming it done anybody want because it's tax efficient and fully Democratic yes. The re it requires a two thirds vote of approval from the preferred and the common not 50.1%.
And look at me here and because of that and because of that.
That is one of the factors that maybe Keith can sit and say well maybe we'll just we'll just put this at the aside right now and again very elastic two thirds two thirds of the of the of the of the course, but let's put that aside right now we firmly believe in it.
And we'll deal with another day.
Just focus on the border acquisition.
But for now I think about the retail spin off is that empirical data speaks for a very good idea and one thing I'm disappointed then.
His activity.
Hey come out and not having a better idea just say no status quo sell now okay. There's two questions. When you say when somebody such as cell retail there's two questions to ask one is to whom and others to what Christ.
And then what it but then the third thing is what about the income tax consequences. When you've got to think of all aspect most of our investors are retail investors that taxable investors.
Nontaxable GPM and Axis Fund, maybe you don't care you only get paid on the on the top line, but.
But but this but we look at all aspects and we're very careful to do is right. When you look at the way were trade look at the affable breakup by asset class.
We're clearly not getting any value at all for retail and we know you spin off a small cap reach I'll read it it's not necessarily going to trade law and trade below NAV and some people say well trade like an orphan while there's a lot of the lot orphans out that's big orphanage UK tons of retail each trading below NAV right. Non office was trading below NAV, we didn't get a brilliant idea still a very.
Good ideas just stole the retail spin off it's tax efficient and you get something that you get a you tell you that in your hand, and if you're at taxable Investor you can sell the units you get all of your non taxable your sustaining and watched the retail rig celadon, it's probably at a lab, which is higher than the trading price and give you back a good return of capital you deployed.
There's so much optionality there.
And again as I said the diversified it is hard to run a diversified with an excellent value proposition every all diversify with your candor accident value proposition I think but you want maximum value why did the math right now you're not a value track now to get all of that how do you get all this value trap to get the full now the $50 or 35 cents or nine Guy I think.
Outside the box you can't just say will shelter taxes or this or that you've got to think outside the box and you got to look at what is working and what isn't working.
Pure play that is working they're getting better price multiples than we are and so that's why we went that direction and I still think retail spin offs. There is a great idea it moves forward.
To just being an office industrial retail, which we can you can spin off again or would be privatized I do we get such a better price multiple was asked industrial without the retail and the retail week at whatever price, we get it's more than we're getting now.
So thanks for mentioning that [laughter] quest that I answered a lot of the long answer then I thought it was [laughter].
That's great. Thank you for your comment that I'll leave it there.
Thanks.
Thank you.
A reminder, ladies and gentlemen, if you do have any questions. Please press star followed by one on your Touchtone phone and.
And your next question will be from Jonathan culture at TD Securities. Please go ahead.
Hi, Good afternoon first question just on the asset dispositions could mean, maybe especially the two large ones. So called core portfolio and shoppers Delta can you maybe give a little bit of color on then.
In terms of who who looked at.
Ours were well Walt.
[music].
Yeah, I'll, let can weigh in here, yeah for sure and I can't say the name to the park. It is but I can say in terms of who's looking at all of our I guess physicians right now it's kind of a mess so larger fund managers private individuals and family office, so kind of a little bit of a mix and so.
Tom Corrick, specifically looked at by multiple buyer, we didnt have it listed but timing that we achieved a great value that really does have some future density I said, there's an apartment.
Sounds like that could be developed there were in the final stages of approval on that I anticipate that will be approved early next year.
Thing with Delta Delta shoppers it hasn't entity as well I do think that the purchase their plans to just continue to operate it as a retail center on maybe kind of a land play and future development potential.
Okay, and Concord was that's a stabilized 5% cap rate sort of full building.
More of a actual in place kind of going forward next 12 months.
Okay.
In terms of now that you're deferring the retail spin off and you're still looking to sell.
A fairly large number of assets next year, well, you well, you sort of feel or that more towards retail asset sales now.
Change in plan there.
No you're right it will be a combination of retail and more office.
And it took a year ago, you know before this pandemic came upon us we shifted the paradigm and while we do that we thought we could sell down all our reach on a three year period.
We don't think that anymore, we don't want to give it away right, but we could we really can't continue to sell some retail.
And and improve our balance sheet and improve our improve our portfolio streamlined our portfolio normal cells, some office as well and we're growing industrial.
Okay, and then just on the on the developments were parked eight nine D. and London Ridge, where they were they fully and then what were they in a lot of quarter.
RK 90 was Lyndon Ridge is not.
When.
How much of the quarter once again.
[noise] when turning that leverage is taken occupancy in some way and I'm, sorry, I'm not sure what.
When the rent actually commence but I'm guessing it was maybe September two years okay.
Okay.
Okay.
And then the bad debt recovery here, you've got though that was included Q3 correct.
Correct.
Okay that is it for me I will turn it back thanks.
Thank you next question will be from Mt. Logan at RBC capital markets. Please go ahead.
Thank you and good morning.
Hi, Matt.
When we think about some of your asset sales you had mentioned there be tax consequences or potential tax consequences.
If the resold oldest assets today in a hypothetical what would they be like how much could we see in terms of value erosion through tax leakage.
I can give you my asset the cuts that.
Because I'm not a two day [laughter] look I mean, he said he's ever give me a warning letter gold sales against up in the public domain.
That's an all in Philly matter, if we sold all of our assets that are now of a $15.35.
Is that that would be equivalent to selling to sign read a $9. A unit for example, if it makes it just a killer app.
We asked is why when we conducted a strategic review that you want to do a unit based transaction that was the whole goal if artist.
The pandemic had not come we wouldn't be having this conference call today, possibly that we've got close to a strategic transaction or the whole wheat lender would have been a unibased transaction tax a tax efficient.
For the unit holders.
So so thats. It so yeah, it's not that simple dosing push a button and sell but as I said there is a risk of an active is not being aligned with the unitholder, especially when the actresses in middle and as partway through halfway through at a five year fun.
The the more as time goes by and a five year fund less at the GP, an axis fund is aligned with ours unit holders or even their own LP unit holders and then and as I said the promote structure. The komatsu based on top line not bottom based on bottom line. That's another not a misalignment with artists unitholders.
Hi, most of our investors alike, we know the retail investors. The taxable loss you have your audits units an entre count that's different.
That's different and then you can plan accordingly.
Soften funded pension fund that's different but for most of our investors and in our case.
Non taxable.
[laughter] I'm watching that I'm always looked at that that that's at the after tax results of all of our transactions and to your point, Matt It's really not value erosion from the tax it would just impact if you sold all your assets you would have let's say 15 35 in cash to distribute to unitholders.
We're just affect the portion of that 15 35, that's taxable when you get it back from the company.
Now do you sell the units not just capital gains of young not recapture that's the difference right and recapture is a big thing the longer we own our properties.
Fair enough, maybe just changing gears during the quarter, you put out a press release, which.
The outcome of the strategic review.
With over 100 investors that were reached out to them come back to the table.
Given what had been very solid operating results year over the last two quarters.
So I mean I mean, the answer is yes. Some on the ongoing dialogue does does it has taken place to date and and interestingly a continuous.
But there's been nothing much more we can say on that front.
Okay.
And changing gears in terms of your plan retail spend no.
Would it be fair to say that has been put on pause indefinitely and if so what really are your top three strategic initiatives over the next 12 months and simply debt repayment door. How do we think about the balance between de leveraging and PNC I'd be and anything else you might have.
Your parents.
Yeah, we'll stay the course on the Texas, it's interesting, but even activists when when it was not long ago. They are saying that the arm and you're doing a good job artists is doing all the right things and as I forgot to say that in a press release.
But.
Well, let's say the cost so it's quite clear what we're doing.
Suicide. Another 559, a coffee is a good chunk of that will be done by Christmas came down a debt to 45%.
We know what our earnings profile looks like you got some good office leasing kicking in in Q4 and Q1.
As well.
And so we're in good shape and a 3% distribution it into a model that's very much a very prudent and very affordable at this point in time and it's the right thing to do to reward our investors and because of that.
What what they've gone to what we've all experienced in the past year that NIM then Shelby is a great thing because of our unit price wed not very accretive, but also it's a way of us sheltered capital gain when we dispose of Krave.
Have you run out of Calgary office, probably to sell will be hit the capital gains not just capture on depreciation and at least the LCR. These the way to sell into capital gains.
The recapture to deal with it.
On the depreciation.
So when a good pace right now we've got good plywood moving forward I wish we're not spending off of each other novogratz shrinking the 10th anniversary, making select office as well and it's and it's all in all that makes us a better increases are waiting and industrial.
Prove our earnings and improve our balance sheet and it's got to sooner or later it improve our price multiple as well. So we feel good about where we are without a doubt.
And with the leasing that Youve got a on the horizon together with the improving rent collections do you think we can see a return to positive same property NOI growth.
2021.
It'll happen has happened after nor do we will touch the bottom this year, we got retail right.
Yeah for sure.
Thanks, Dan then Disney has assigned watched as right as the thing is I think if I look now for us and we'll get we'll get back to that five years. So progress. It was a 709 consecutive quarters. We had a positive seen probably in like look we're proud of that and now we've just had two consecutive negative but you know it's a 100 year pandemic, we'll get through this.
Numbers will improve including the same property numbers for sure.
But suffice it to say with all the work that you're doing at least the outlook is for generally stable.
Results in the near term.
Yes stable assets stable.
Sure as I believe you'll see AFFO per unit improvement, but stable.
And improving it says it's again, it's a pandemic, we're not expecting a lot a spike in earnings in a spike in our same property.
No we're in very good shape.
And as I said, where we see ourselves and you have to maintain good earnings after one per unit while.
Paying down debt.
Well, we appreciate the color that's all from me I'll turn the call back. Thank you.
Thank you.
Once again, ladies and gentlemen, if you do have any questions. At this time. Please press star followed by one on your Touchtone phone.
Thank you and at this time I would like to turn the call back over to Mr. Martin.
Oh, Thank you very much moderate and everybody on the call I. Appreciate your interest we hope everybody has a good Friday again, we feel very good about our results in about our outlook, we look forward to many engaged.
With all of our investors in the weeks and months ahead. Thank you very much.
Thank you Sir.
Ladies and gentlemen, this does conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your line.
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