Q3 2020 Crombie Real Estate Investment Trust Earnings Call
We'll begin our discussion with comments on Crombie, <unk> overall strategy and outlook Glenn will follow with a development update and a review of Crombie operating fundamentals and results Clinton will discuss our financial results capital allocation and approach to funding and on will conclude with a few final remarks overachieved on.
Thank you Ruth and good day, everyone during.
During the last few years, the world has experienced extraordinary economic and geopolitical and technological disruption as a result of the covert 90 and pandemic recent U.S. election, and accelerating the accelerating pace of technological change including ecommerce.
Growth these turbulent times crombie as a retailer related real has continued a strategy that has delivered stability and growth for the benefit of all of our stakeholders over.
Over the last decade, crombie strategy and strengthened our financial condition grown and optimize the quality of our grocery anchored real estate portfolio and enhanced our relationship with Empire.
We have become a significant developer of major mixed use real estate and major urban markets, and Canada, and we have built and entrepreneurial and talented team of trucks across the country.
We have significantly de risked our business by materially increasing liquidity and the weighted average turned and maturity of our debt.
Increasing our multiple sources of capital as well as taking advantage of low interest rates, we have demonstrated innovative capital recycling and favorable pricing over the last few years, we've provided important organic funding for our investments and Empire related initiatives and importantly, our development pipeline.
As we continue to focus on improving our financial strength. During these uncertain times. We are nevertheless, also focused on prudently growing crombie by generating solid risk adjusted returns from our investments and impart related expansions conversions and industrial properties as well as executing on our development commitments and unlocking significant value by and title.
And major urban market land for future development.
To optimize our relationship with Empire, we have aligned our strategies over the next few years and to capitalize on a wide range of opportunities initiatives and accretive transactions.
We are building exciting new properties across Canada, including our first three vector on mixed use developments, which are poised to create significant AFFO growth and NAV growth of approximately one to $2 per unit in the near term.
Grocery anchored retail continues to be one of the best forms of real estate and Canada and our soldiers anchored core portfolio has proven to be very resilient during the challenges of 2000 Twentys.
Crombie benefits from both the strong and improving covenant of Empire and the lengthy weighted average lease term of approximately 10 years influenced by Empire to remaining lease term of approximately 13 years.
Covenant and term have historically been discounted during times of growth, but during times of crisis like the last nine months. They are highly coveted by all stakeholders properties occupancy is stable with solid growth on lease renewals and active pandemics support for impacted tenants. Thanks to the hard work and diligence of our committed team.
And part has been achieved and great momentum with improved operating and financial performance and market share.
They've recently announced their new three year strategy project Horizon, which focuses on core business expansion and acceleration of their E. Commerce network supporting this momentum is the recent launch of low by Sobi and the greater Toronto area.
Aligning our strategy with Empire enables crombie to expand and diversify our real estate portfolio with solid risk adjusted returns we work closely with Empire with the expectation that we collectively drive high quality, yet defensive growth through strategic and accretive transactions, such as the modernization and expansion and grocery stores store conversions, including.
Fresco discount format, and Western Canada and from Boy in Ontario, accelerating Sobi build at other while on line home grocery home delivery service through investments in the hub and spoke network lantus intense vacations and the unlocking a major urban developments and.
Our value enhancing major development pipeline consists of 34 properties, including two substantially completed developments and five active developments. Many of these sites are strategically located conveniently within walking distance of existing and future trends. The corridors. These major development projects play a key role and our long term strategy of accelerating per unit and.
I have an AFFO growth.
Belmont market in the retail portion of JV Street, having reached substantial completion crombie only has approximately $126 million remaining to invest or 21% of the total estimated cost of the approximately $612 million to complete our first active mixed use major developments. These active projects will have an estimated and.
And Hawaii yield on cost of 6% to 6.5% for crombie share pond.
Upon completion. These five active major the five active development projects will total 545000 square feet of growth commercial leasable area and 961000 square feet of residential rental GLA were 1200 residential units and Vancouver, the GCA Montreal and St. John's.
In addition to creating significant NAV and FFO growth as the developments reached substantial completion over the next year, they will increase our presence and Canada's top urban markets and diversify and improve our overall portfolio quality.
Lastly, and most importantly, we remain focused on the health and safety of our tenants our employees and our communities and are committed to delivering value through the execution of our long term strategy. We are incredibly proud of our passionate team and the work. They do the vast majority of our office employees continue to work productively from home.
While our on site teams work very hard to maintain properties that are fully operational clean and most importantly safe. Thank you to all of.
With that ill now turn the call over to Glenn who will provide an update on our developments and our operational highlights.
Thank you Don and good day, everyone. We've improved the quality of our portfolio by developing and acquiring assets and Canada's top markets as well as recycling approximately $800 million from sale of properties, mostly and secondary and tertiary markets to reinvest and Empire related investments and crombie major urban development.
Our defensive grocery anchored portfolio is positioned well and 75% of minimum rent is generated from grocery and pharmacy anchored properties, 68% of minimum rent comes from and comes from a central services tenants and only 8% of minimum rent comes from small business the portfolio we have today.
His strong resilient and improves our positioning for future periods of uncertainty such as what we are experiencing today with COVID-19.
We are happy to say to close to 99% of our properties are open for business and our October rent collection is 96% with steady improvement from prior months are tailored approach to rent relief further strengthened our relationships with tenants of our 286 property portfolio 72 properties representing two.
Hundred 86 tenant applications were filed for the secret program, our defensive and Internet resilient portfolio continues to have minimal exposure to the numerous declarations of store closures CCW applications and or bankruptcies since the onset of the pandemic on.
Avalon Mall in St. John's, Newfoundland and Labrador was initially impacted negatively by the pandemic since the reopening of them on June when provincial government restrictions were lifted performance has improved with 94% of tenants open for business, 75% of rent was collected in October and increase from the 60 per.
And collected in July and traffic counts are running at or ahead of pre covered levels with sales quickly recovering.
Our office portfolio is primarily located and Halifax, Nova Scotia, with a small portion and mountain New Brunswick, both inside the Atlantic bubble. We are very pleased with our 100% rent collection for this segment in the month of October we've experienced a decline and parking revenue due to COVID-19 restrictions and reduce traffic.
And approximately 30% of our office population as we turn to the office after Scotia Square complex and Halifax, which compares very favorably to other major urban markets in Canada.
Properties occupancy is stable and experienced on the a slight decrease in Q3, and 95.3% compared to 95.6% and Q2 due to lease terminations and gionee additions for development spaces, which are proactively being leased new leases and expansions year to date, Inc.
Creased occupancy by 142000 square feet at an average first year rate of $17.32 per square foot, while we experienced a 174000 square feet of year to date net lease expirees vacancies terminations and space adjustments, we ended the quarter with 105000 square feet of committed space.
And at an average first year end of $23.81 per square foot, which will boost future and Hawaii growth during.
During the quarter 172000 square feet of renewals were completed at a 3.9% increase over expiring rental rates year to date. Our renewal program is on schedule as we have renewed 558000 square feet and an increase of 4% over expiring rent retail renewals were so.
Solid with 400000 square feet renewed at rental increases of 4.6%.
As we navigate through these uncharted times, our team is dedicated to ensuring our underlying business fundamentals and core portfolio remain resilient and strong.
Property development is a strategic priority for crombie as it improves net asset value cash flow growth and unit holder value. We are excited to see continuing progress on our active developments and have reached substantial completion of the retail component at day, 80 Street, and Vancouver, and Belmont market in length.
Third near Victoria DC prior to the end of 2020, we expect to reach substantial completion on DT Street residential our first joint venture and residential development and Avalon Mall Phase two we continue to invest in our remaining three projects with Duke in Montreal and of all our per gay CFC also and.
Montreal and Bronto village in the DTA with substantial completion expected for all three in 2021. This is truly a transformational time for crombie as a material amount of development projects reach completion over the next year.
At day, 80 Street and Vancouver, the commercial portion as mentioned on the development has reached substantial completion as the new Safeway store opened in Q2 with Scotia Bank now open and and government liquor stores scheduled to open this quarter subsequent to the quarter. The final C are you space was leased bringing the retail portion to 100% occupancy.
Pre leasing is underway on the 330 residential rental units totaling approximately 254000 square feet in two towers with initial tenant move in starting next week.
Our 160000 square foot Belmont market on Vancouver Island recently reached substantial completion with the final phase of the development consisting of three small buildings totaling 23000 square feet coming online in 2021 construction commenced on the first of these three buildings during the second quarter and is expected to be complete.
In Q1 2021, the remaining two buildings are slated to begin construction in 2021 subject to pre leasing success.
Avalon Mall is the only regional mall and all of Newfoundland and Labrador and as the economy continues to stabilize we are pleased to see signs of its dominant performance reemerge with increased traffic counts and climbing sales Newfoundland and Labrador is also and the Atlantic bubble and thus has had a low number of COVID-19 cases relative.
And to the rest and Canada, and a relatively strong return to normal economic and social conditions construction of our expansion area will be completed in Q4 with the Grand reopening scheduled for spring 2021, numerous tenants are in possession of their space preparing to open with some tenants opening prior to Christmas.
And the estimated substantial completion and Q3 2021 for the initial leasing commencing and Q2 2021.
Crombie remains on track with the Montreal, CFC and is expected to be substantially complete with rent commencement and 2021 foundations the steel superstructure and the pre cash building panels are all and place and interior flooring and mezzanine are underway to Allah per Iga empires online grocery home delivery.
Service to be made available in Quebec, and the Ottawa area is expected to launch and early 2022.
Finally, raunchy village and the GTA is 96% tendered with the structure and pre cast complete on both buildings glazing installation is up to level 14 on building a and level nine on building be with interior, finishing work progressing well on the lower residential levels and Soapies grocery stores remained operational throughout the.
Development, but closed on October 21st as it converts to a farmboy the first such Farmboy conversion and our portfolio. These projects increase our presence and the country's top urban markets, while diversifying and improving our overall portfolio quality and income stream.
As our active development approach completion, we continue our work to entitle and additional seven projects across Canada three of these developments or and Vancouver, three and Halifax, and one and Victoria, We continue to make progress to unlock significant land value embedded in our major urban market grocery stores and generate opportunities to.
And you are development program to date.
Two projects have zoning approval two projects have zoning application submitted and three projects or and various stages of design and consultation and with that I will now turn the call over to Clinton, who will highlighter third quarter financial results and discuss our capital and development program funding approach Clinton. Thank.
Thank you Glenn and good day, everyone. During these challenging times Crombie remains and good financial health with a strong and flexible balance sheet, and full liquidity and and ability to prudently allocate and creatively source capital.
We are very pleased with our 95 per cent collection rate and Q3, which improved and 96% on October a steady improvement from a 90% collection right and the second quarter it.
It is no doubt that the pandemic created increased risk, particularly around the collection of tenant receivables.
Bad debt expense and rent abatements of approximately 1.7 million were recorded and the quarter inclusive of amounts relating to the secret program.
On a cash basis same asset NOI decreased by three 4% compared to the third quarter of 2019, excluding COVID-19 related adjustments such as bad debt expense rent abatements and a decline and parking revenue Q3 same asset NOI would have increased by 2.2% and.
Full per unit was 22.
Decreasing from 24 for the same quarter last year or <unk> per ratio was 99, 2% vs. The same quarter last year at $92, 7%.
If a full for the quarter decreased to 27 per unit from 29 per Q3, 2019, and the rest of the full per ratio was 81, 2% vs 77, 8% and the same quarter last year.
The decline and a full <unk> and <unk> is primarily due to the significant increase and bad debt expense rent abatements and parking revenue impact as previously noted ajar.
Justin for the impact of COVID-19 on Crombie is operating performance and from full per unit would be 25.
And that's a flow per unit would be 29.
On per with Q3 2019.
Additionally, we continue to feel the dilutive effects of approximately $500 million and property and distribution dispositions executed and 2019 with the primary reinvestment and these proceeds to major developments with no initial return until completion on developments this year and and 2021.
G&A as percentage of property revenue for Q3 was five 4% or 5 million a decrease of 1 million compared to the same quarter and 2019.
The decrease from Q3 2019 is primarily driven by reduced salaries from the organizational realignment completed and Q2 2020 as well as decreased travel and offices expenses as a result of COVID-19.
Subsequent to the quarter and Crombie had successful issuances of two $150 million unsecured notes proceeds reused depression, and redeem 100 million of unsecured notes do June 1st 2021, and the remainder applied again short term bank debt, leaving our liquidity at approximately $500 million.
The issuance and partial redemption aligned with crombie focused on increase and the weighted average turn to majority of its debt within with an inaugural 10 year offering and harvesting interest rates savings for the lowest coupon rate to date on a seven five year crombie bond offering to 69%.
Crombie remains focused on continuous improvement of the balance sheet, while also retained and the flexibility to pursue strategic growth initiatives.
Approximately 30 formula and the mortgages will mature and the fourth quarter of 2020, and approximately 80% of 2021 mortgages will mature and December 2021, and.
Are unencumbered asset pool remained consistent net approximately 1.5 billion a crombie total assets of four 8 billion our.
Our debt to gross book value on a fair value basis was 49, 8% at the end of Q3 compared to 49.2% for Q2 2021.
And we ended the quarter with debt to trailing 12 month, EBITDA and 934 times vs 9412 times, a Q2 20.
This increase is primarily impacted by COVID-19, and spending on development with no income until project completion.
Crombie remains committed to its long term strategy to effectively allocate capital to accelerate naff and <unk> growth per unit delivering value, while supporting our tenants employees and communities during these difficult times.
I will now turn the call over to dawn for a few close income.
Thank you Clinton and conclusion, our strategy has evolved significantly over the last 10 years as our relationship with Empire evolve strategically and we developed large scale urban developments that scale.
We're very excited at the prospect of completing over $600 million a major mixed use developments and the next year, which we believe will generate approximately one to $2 of NAV per unit as well as significant <unk> growth and time.
We believe this real estate strategy, when combined with our strong financial condition or access to capital and our entrepreneurial talent will generate solid total unitholder returns for our stakeholders for years to come and that concludes our prepared remarks were now happy to answer your questions.
Thank you ladies.
Ladies and gentlemen, if you do have any questions. Please press star followed by one on your Touchtone phone and you will hear eight two or three told prompt acknowledging a yoga class and she would you wish to withdraw and your question simply pass stars followed by two and excusing the speakerphone and we do ask that you. Please lift the handset before pressing and it keeps please.
Go ahead and press Star one now if you have any questions.
And your first question will be from Habiba at RBC capital. Please go ahead.
Okay.
Hi, everyone and good afternoon.
Good afternoon and planning a.
Hey, Donny just with respect to Davey Street can you provide and update on pre leasing Barry what are your thoughts on reaching stabilized levels from and occupancy standpoint, just all itchy with.
The ongoing pandemic.
We're actually very pleased with our.
Beginning stages of the lease up obviously west Bank has a lot of experience and the Vancouver market.
And they have what I consider to be their 18th at Davy Street, So leasing the property and.
And importantly, this 18 recently leased the property down the street and the west vehicles on their own and so very successfully.
Said, it's early stages that day be street and.
We have expected it will take some time without COVID-19.
And with Covid and the current shutdown that exist and Vancouver, obviously, the fewer people are out.
And the markets on a daily basis, but nevertheless, we believe will progressing well. So it's too early to really give you a detailed common common.
Comment Pommy I'd, rather were reported on February and May as we will progress along the track of Lisa.
Sure and.
Understood I guess, maybe just looking at it another way then what will you initially like what with your I guess underwriting in terms of the timeline for to reach stabilized.
Historically, we would've said it would have been six to 12 months.
And importantly.
And we'll make sure everyone is clear we're leasing and our view at above are pro forma number, which we would've said a number of years ago and so we're very comfortable with the with the pro forma the way it stands but it typically would take six to 12 months it may take longer with Covid, but at this point, where again, it's too early to tell.
Got it and we open up we opened our door and the poor first tenant moves and on Monday, [laughter] Israelis and also important to know.
Good news.
Just maybe switching gears and what.
Okay.
I can't hear.
Bobby.
And the last trip on me.
Mr. <unk> it looks like your line I'm sorry your line his name disconnected.
And while we wait for him to reconnect we will go to the next question, which is from Sam Damiani at TD. Please go ahead.
Thank you good afternoon and everyone.
Hi.
It's great to see the development pipeline progressive along the way in recent years.
With the with costs largely intact and the one to $2 of NAV guidance one on.
On a per cent and talked along the way. So so you are just great to see and Walter and everybody.
Thank you so as these projects do reach completion as you say as meaningful amount over the next next year. So.
Do you expect to have another one or two meaningful major projects and that active buckets of within the next 12 months and and.
And and deal.
To feed that sort of continual sort of staggering of completions and in the future years, and and what's projects might the what those day.
And sorry, Sam.
We have always said the goal of the company is to get to consistency at scale and our development program and we continue to work hard on that.
Clearly and most importantly is working on the Soviets to unlock these developments sites that are really tied up with longterm leases on.
And grocery stores and that occupy large land parcels and the middle of major cities. So it's a unique advantage development takes time. So we're working on seven developments at this at this point in time and on the entitlement of those land parcels at this time organically, we don't have I'll call. It on approval of the next one until probably early.
Mid 2021.
And then even without approval really won't be fully committed to it until probably late 21. So we have our spending to complete as I think we said and our and our prepared remarks, which is about another $125 million and 2021, but I don't expect much more in terms of spending next year on development, although it and 2022, what we will.
Hopefully approving will they'll start setting the stage for additional spending and 2022. It is important that we want to preserve our balance sheet and preserve our liquidity and during this second wave of Covid. So we're cautious when we look at those commitments, but so at this stage. We don't have any we are working hard on them and.
And importantly, we.
And we plan to continue to do more it's just that we don't have any at this time so and.
Addition to that I will say that the entitled the process by on Lockheed and the lab and also creates capital sources. So with stock price is trading off the way. They have an addition to offer offering us opportunities for significant growth. They also offer us opportunities to fund future development and so we will be considering both as we move forward and.
Part of it will be dependent on the.
And the nature of each project and and those local micro markets and it will also depend on the capital market situation and and where we are in terms of funding.
Fund availability, so we're being very cautious on all fronts at this point.
That's great and you've touched on my next question, which is which is dispositions. We've seen we've seen the market open up for for shopping center transactions particular for the most stable product out there, which crombie owns is there a desire and and.
Expectations of pursuing that Avenue to as you say keep keep the liquidity and leverage within your target range and the neutral.
Yeah, we've got it and for grocery anchored strips or grocery stores. There is a big market as we said I think on our last call, we've had and coming inquiries about purchasing either 100 per cent or partial interest.
Shares and grocery stores or grocery anchored strips of over $1 billion.
So lots of interest we've chosen not to do that we don't need the capital we did a good equity raise on January we did a good bond offering and October so quite comfortable with where we are in terms of liquidity.
But I think over time, if the share prices stay on this and a significant discount to Nab and we will I will call it dabble with.
Some dispositions and you've got to a small amount, but just continuously funding I don't think will be large transactions and the near term because we just don't need the capital and and we don't it's very hard to grow our business by selling assets. So we'd like to continue the growth of crombie and and.
And we're about to start recognize and don't forget getting a lot of cash flow coming in from our development. So the completions are a big deal over the next 12 months, So real quick Susie asking about that starting to pay off.
Truly.
And that makes sense and my last question and then I'll turn it back is just on the on the new governments rent subsidy program serves how.
And how do you contrasted or compare it to assess.
Do you expect it to result, and meaningfully higher overall, a on collections for the <unk> going forward.
And it is a great question, it's Glenn it's early days, the first reading and the legislation has taken place there's been some information circulated on sort of the bands for support based on how much disaffection businesses have had in terms of lost revenue.
We are cautiously optimistic and especially with the potential there for a fairly substantial second wave on on one hand, we've been maybe critical at the delay and getting Crs and place because secreted expire at the end of September here, we are six weeks later.
But our view is the program will be quite helpful. It's still unclear whether it might be a bit broader and its application. Then secret was so there may be some tenants that were ineligible for secret that may be eligible for this and as you know from a landlord point of view.
Doesn't appear that there is a 25% cost and back there is not a 25% cost to the landlord is there was with secrets. So.
All things considered we're very optimistic for the program still don't have full visibility intuit's application, but I think anything that supports tenants through this difficult time can only be good for our ongoing rent collection, which is we said and our comments were quite satisfied to be at 96% for October and we believe we're on a steady trajectory back to <unk>.
Normal assuming we don't have any major second wave and the Crs program will only only help that.
Fantastic I'll turn it back thank you.
Thanks, Sam thank.
Thank you we now return to Pommy birth. Please go ahead.
Oh, sorry.
Sorry about that Walcott welcome back. Thank you I think my and my phone has been infected.
Just maybe looking at occupancy.
Holding up fairly well and I guess, all things considered and it.
At the other properties and rustic Canada segment slipped a bit more than I guess and back down or other markets and that is that really maybe.
And maybe Avalon mall or or other areas are you able to speak to what's driving net.
Sure absolutely barmy, it would be Avalon would be would be impacting impacting that and the rest of Canada segment, but just to give you a bit of a little.
It'll extra data and if you look at our occupancy it slipped by depending on committed vs. Economic 30 to 40, beeps and because of that which is bringing some additional GLA on actually at Avalon that is currently vacant. So that's the development space, where 90% occupied or 90 per cent least I should say for the.
The expansion wing, so we brought on some additional.
Square footage and to GLA. So that was 10 beeps of impact on vacancy because that's not currently least.
Also and other 10 beeps, we had one.
Least that we just executed in new Brunswick first base that when vacant in queue too and that's 10, beep, so and queue for that space will be lease. So we've been very successful and looking at that 30 to 40 be change and occupancy 10, Beefs is just all kinds of leasing and we're bullish on getting Avalon least and that other day.
Being done and the other day to point that I'm pleased about is we've had only 22 leases across our entire portfolio only 22 leases have been disaffected by cc double way and of those 22 leases only for where it is claimed he only four locations. We're closed the other 18 remained other words the tenants.
Obviously with difficulties, but wanting to be and our senators as they come through <unk> 18 of those 22 will remain so we're quite confident with our occupancy. We're pleased at 105000 square feet and the committed category one of those deals actually the brick opens next week and Saint John's, Newfoundland and Labrador 46, 5000 square foot.
Store first brick store, Newfoundland really excited about that leon's came out with the results. The other day fantastic results. So it's great and announced today actually a Newfoundland five guys burgers small deal, but five guys is coming Devil on mall and it's a big buzz over there that that tendency is coming to the Newfoundland and Labrador so occupied.
And see overall is quite quite solid.
Oh, that's great to hear and thanks for the color Glenn just.
I guess, along the same lines, what can you say with respect to two rents leasing in terms of new space.
Renewal spreads are CDB homey and fairly steady.
But.
G a sense that.
Tenants with respect and new space and looking for maybe some form of.
Larger inducements or any color you can provide they're small.
Sure we don't have a huge dataset to provide because our occupancies quite strong, but a couple of points.
One thing we are seeing which is interesting is the tenants that are more aggressive now and growing their business are the strong covenant and tenants. So the leasing that we're doing for example, this new Brunswick deal I mentioned and that was 10 beeps of our occupancy the strong investment grade covenant and taking the place of a weaker covenant that vacated so on.
The rental side I think we're going to be fine I do think it's a market that might be generally speaking and sort of a buyer's market or attendance market, but on our grocery anchored centers not the case.
It's very clear that grocery anchored centers have only emerged as a stronger retail vehicle through the pandemic and the attraction and traffic or other day provide to this year you tenants continues to be very positive. So I don't see any risk of rate's going anywhere, but same or higher.
But I think and in some places some markets there could be.
More of a tenants market for getting better rent, but our data points. So far are quite encouraging and as you mentioned the 4% bumped in renewal rates overall is pretty good in a tough year.
I think you would've predicted through the pandemic that renewal rents would estate positive, but they have on the retail side there for six per overall portfolio, there plus four year to date and we're very satisfied with that.
Thanks, very much I will all turn it back.
Thanks Barbara.
Thank you, ladies and gentlemen, as a reminder, if you do have any questions. Please press star followed by one on and Touchtone phone and your next question will be from and Kim and National Bank. Please go ahead.
Hi, good afternoon everybody.
<unk> on a follow up from a pattern these questions on and separate project and Vancouver.
Good to hear that sounds like it just kind of going on track looking at the leasing I see you guys are offering six months of grocery credits, which is something new could you provide some color about just how that works and and sort of.
The trash and was seen with potential tiny and some on how it's been received.
It's again early days, it's and innovative program, the West Bank, and obviously crombie and Silvius of work together on there is clearly a strategic benefit on the leasing of the residential to having a grocery store downstairs and vice versa. We've all known for very long time and so this is a it's a small thing, but it's an important.
Thing hopefully for.
For residential lease up and time and it's a program that were.
Having a look at and and we'll see what the outcomes are as to whether it's something that we that unfolded.
Future projects, which almost all of our major mixed use projects have a grocery store at the ground floor and residential above so hopefully hopefully it is it works and and.
And we have good take up but at this stage again is too early.
Okay that makes that makes a lot of sense for future product projects and and I know this is early given that.
Residents haven't moved and yet, but do you have any insight into how the safeway entering that.
Did you ever project has been performing going and kind of going well as empire happy with that and do you have any metrics that you could share on.
And change and performance.
Nowhere.
It's certainly not something we're going to share on a detailed store by store basis. They have a very competitive market. There are understanding. Nevertheless is that it's open strong and opened I'll call. It ahead of pro forma but it's.
It's something that we're.
To get early stages, they've only opened a short while ago and.
But it's so far so good and.
And that's a great piece of dirt.
And the grocery store there for a long time the store is prototypical.
Store for that type of market and so obviously is going to meet the market a lot better than the older store was for there for a long time and so we're we're quite optimistic about.
It being very successful and so far soapies as indicated they're very pleased with it. So that's really all I can tell you I can't give you data Unfortunately, yes, and I thought I.
Stan.
And then just my last question is are there any further discussion with Empire and.
In terms of where and when the western catalog CFC.
We'll we'll be sorry.
You know where and constant discussion again, we're working on a three year plan with <unk> and Empire too.
Develop over time across the country, and really looking and picking or spots.
Importantly, Soapies and Empire announced project Horizon couple of months ago, and part of that was call it and acceleration of their ecommerce home delivery platform Yokado and <unk>.
Per Iga will allow per soapies platform, including two distribution centers and Western Canada, and we're actively working with them and hopefully that will be part of one or hopefully both of those deceased cfc's and so but at this point, we don't have any.
And anything to offer the market and we will certainly let them.
Announcements and due course and they're on their own timeframe and we're very excited we continue to work not only on the cfc's, but it's a hub and spoke network importantly, which as we've said before include that only be 300, or 400000 square foot Tfc's, which do we think there'll be four across the country and there will also be spokes, which are 15 to 30000 square foot.
Small distribution centers with a breakdown and the large trucks into cube vans and deliver it to people's homes and.
And so as an example or center and Montreal has.
The hub and it has spokes that we're looking at and Otto on Quebec City, as an example, which would be indicative of what they would do and.
Around Toronto, and and around and to either and any of the major centers that they choose and western Canada, So and will participate and those and they can take the form of being a small industrial facility or they can be a portion of an existing store that's going to be.
And cut down and sighed, let's say 60000 square feet reduced by 20000 per a spoke and and maintaining a 40000 square foot store, which will be optimized from the market. So all of those types of scenarios I think they're very exciting for us and allow us to build out that retail related industrial part of our portfolio very well over time.
Okay, great. Thanks, a lot I'll turn it back and.
Okay greater.
Thank you next question will be from Howard lay on at Veritas. Please go ahead.
Thank you.
I want to discuss the bad debt right off from this quarter and they'll think it's monitoring and significantly from Q too and thank you only took about a million dollars.
Can you say whether that.
Whether most of that we're all on that is.
<unk> or and abatements, I would tennessee crowd or isn't it.
Additionally, expect a credit losses and I saw you break that down for the year to day I just wanted to know for the quarter.
Okay expense, Howard and Clinton and I think I can get into college, primarily secret.
Okay, Okay, great I can see Craig expired within two degrees, though so and you had some debt so.
Okay No net.
Expense.
And.
And the bad debt and that you took in queue to furniture for those.
Negotiator meant debating and and expanded credit losses, how much of that and actually we were able to to collect.
You can't reverse and I guess, but how much were you able to collect from that $8 million you took and.
And right now.
Yeah.
I think he and look at that debt differently, Howard and it's really an estimate at a point in time lacks last June and our estimate of what we felt was a provision for the loans for doubtful accounts and we did the same thing and quarter size I don't want to get into the details of that other than the same her comfortable and whether prevision at the end of the quarter.
Okay No net.
And time, and then just on the 4% renewable them.
Can you maybe give some color and about.
If the removal if you noticed stronger renewals meeting with your larger tenants are smaller wins or and went to kind of all across the board.
How are and it was pretty balanced we continue to have great balance by geography.
And buys size of of renewal, we we have a reasonable number of renewables at our flat, we keep sort of anecdotal status of how many renewals are flat, how many renewals or at a lower range from new renewables are positive good indication of sort of the general health and the marketplace and.
And while there were a number of renewals that we're done at a flat rents there were other renewals done that and 10% lifts or higher so I would say, it's it's a good healthy balance the beauty of Crombie of course as with such long lease term, we don't have a huge can be from each year.
A renewal risk of renewal turnover, but across the country I would say it's been just a good healthy balance whether it's a grocery store renewal or whether it's C. R. U R. Even office like office has been extraordinary for us and will be <unk>.
Excited too.
We can improve our occupants in the office side and we've had a lot of renewables are weighted average lease term and our office product right. Now is probably the longest it's been in a long time and it's really good renewal work there.
As you know our overall four 6% per retail or office renewal rate is slightly lower to average out at four but we've done a lot of renewals and the office space, which which are typically.
Either government deals or a private sector deals, but and.
And we just actually and.
And the last short while I have done a lease that will improve our occupancy and Halifax by approximately 40000 square feet. Early next year at least has just been consummated so both renewals and new leasing activity very well balanced and we're very satisfied.
And that's that's great and.
And and on the topic of renewables and leases I guess, the the lease terms remaining these terms for more discretionary and tan like the theaters and and.
And the gym based on your disclosures day and look pretty long. So is there not much coming up do for.
And the rest of this year and next year.
For those tenant and I don't believe so in fact is part of our discussions with some of those specific tenants.
Some of those poor up tenants, particularly fitness and film part of our discussions have been to get term extensions and certain locations as part of being a good citizen a good landlord to to help them through the pandemic.
We don't have any.
Civic significant renewal risk.
And the coming short term at least and next couple of years and but through the process of supporting those specific types of tenants, we have been able to get an extension of our of our weighted average lease term.
Okay, No and that's that's great and and and last my last question is about the the credit rating.
Obviously, you're on a very too much tied to to Empire, but.
Any recent discussions with them and <unk> and and any any and she'll movement there.
Clinton again, we have constant conversations with their rating agencies and we're very happy with the relation we have today and obviously, but.
Okay, Alright sounds good thanks, guys out and then turn it back on.
Thank you once again, ladies and gentlemen, and if you do have any questions. At this time. Please phaistos followed by one on you touched on the phone.
And currently we have no other questions I just do it so I would like to turn the call back over to Miss Martin. Please go ahead.
Thank you for your time today, and we look forward to obtaining you on our progress on our queue for call and then and yeah.
Thanks, everybody.
Thank you.
Thank you ladies and gentlemen, this does indeed concludes the conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines have a good weekend.
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