Q4 2020 Allied Properties Real Estate Investment Trust Earnings Call
We may in the course of this conference call make forward looking statements about future events or future performance.
These statements by their nature are subject to risks and uncertainties that may cause actual events or results to differ materially.
Including those risks described under the heading risks and uncertainties in our most recently filed annual information form and in our most recent quarterly report.
Material assumptions that underpin any forward looking statements. We make include those assumptions described under forward looking disclaimer in our most recent quarterly report.
To begin despite the disruption caused by the global pandemic, we pursued our mission in 2020 with encouraging short term and long term results.
Most notably we allocated $325 million to strategic acquisitions, and another $252 million to development and value add activity.
In the face of continuing robust capital allocation, we maintained a strong balance sheet metrics by raising a significant amount of capital on.
On favorable terms $700 million in unsecured debentures and $153 million in equity.
So Celia will summarize our financial results as well as discussed on our balance sheet and our short term outlook, Tom will follow with an extensive overview of leasing and operations.
He will provide the development update and I'll finish with our current thinking on the future.
So now over to Cecilia.
Good morning, first our financial results of our portfolio and our user base demonstrated the resilience throughout 2020.
Although our rental revenue was temporarily depressed our stainmaster NOI F F O per unit and a S. F of per unit in the fourth quarter were all up from the comparable quarter last year.
Our fourth quarter was also stronger than our third quarter in each of these metrics.
The same is true of our results on a full year basis, even with the inclusion of $10 million worth of non recurring items in the period. These nonrecurring items consisted of $5 $1 million of abatement provided under the secret of programs.
Provisions on deferrals of $2 $8 million and temporary erosion in our parking revenue.
Second our balance sheet or on a per unit at December 31st was up four 3% from the same time last year, our I S. R. S value increment in the fourth quarter was up $15 million, primarily as a result of rent growth in Toronto, partially offset by continuing softness in cash.
Great.
We finalized our green financing framework, it's been certified by sustained analytics and is available on our website.
Our intention is to have our next bond issuance would be our inaugural Green bond.
This is a reflection of our ongoing commitment and sensitivity to ESG issues.
At the end of the fourth quarter of our net debt to EBITDA was seven four times. Our total debt was 29, 2% of eye of first value and our interest coverage was three four times.
We estimate our development, which have of 13 and a half year weighted average lease term.
The increase our annual EBITDA by approximately $70 million over the next three years now.
Not only will the augment our earnings per unit significantly along with anticipated organic growth it will materially reduce our ratio of net debt to EBITDA and materially increase our interest coverage ratio our two most important debt metrics.
Our pool of unencumbered assets and $6 $5 billion, representing 73 per cent of our investment on the properties, we intend to continue prepaying or repaying mortgages as they come due with the goal of having the majority of our asset base unencumbered. We believe this will give us the.
<unk> and most flexible balance sheet from both the defensive and offensive perspective.
Third our outlook for 2021, we.
We expect low to mid single digit percentage annual growth in F F O per unit.
That's all per unit and the same asset NOI expected.
The expected drivers of our year over a year of growth include a full year contribution of acquisitions completed in 2020.
Economic productivity from the development completion of 425 V shape as well as organic growth, primarily in our Toronto and U D C portfolios.
These contributions are tempered by the expected continuing softness in our Calgary portfolio and previously known non renewals in our Montreal portfolio.
We expect our portfolio and our users to continue exhibiting resiliency through 'twenty and 'twenty one.
I'll now pass the call the Tom for a discussion of our leasing and operating activities.
Thank you Cecilia.
Our leasing teams in Montreal, Toronto, Calgary, and Vancouver performed very well in Q4.
And indeed performed very well over the course of 2020.
All of the completed 258 transactions in the year with 105 transactions being new deals.
That is 105, new tenants to the portfolio.
Over the year, we achieved a healthy 17, 2% year, one base rent increase on space renewed or replaced.
Overall leased area of decreased slightly to just under 93%, but the decrease was not due to the pandemic.
There were four separate reasons first we acquired some buildings early in the year with vacancy.
Second there were a few non renewals, which were known to us.
Third we were partially the leasing two buildings in Montreal and two in Vancouver to prepare for repositioning in 2021.
And fourth we added tell of Sky to the rental portfolio in Q4 and that building of 68% leased.
If we were to make an apples to apples comparison of <unk>.
The stereo would have actually gone up from 2020.
Yeah.
I'll provide an update on leasing activities in our major markets, including an update on our U D. C portfolio, then conclude with some remarks about the sublease market.
Montreal again in Q4 was our most active market with that team completing 38 deals in the quarter.
On a very impressive 130 deals for the year.
While there were no no worthy of transactions in Q4 in terms of size. The team is currently working on on 89000 square foot extension and expansion with an existing tenant and the new lease for 50000 square feet in space that is currently vacant.
I'll provide updates on these two transactions at our next conference call.
In Toronto, we are of 96% leased and concluded the 61000 square foot lease extension mentioned is conditional on the Q3 call. We also relocated and expanded of Fintech tenants for 37000 square feet and relocated and expanded of tech tenants for 26000 square feet on the quarter.
Yeah.
Just subsequent to year end of the team completed a 25000 square foot lease with the law firm for two floors in the high rise portion of the tower at the well, bringing our leased area in the office component of that project to 86%.
This most recent deal was completed at rents above pro forma.
It's worth mentioning that this important transaction involved the trial of leasing team and our most senior leadership.
I would credit are fully engaged in the office fully available and focused attention to winning this deal the tenant had a number of options including renewal.
And we're delighted to have them decide on the wealth.
In Calgary were 81, 7% leased.
With the decrease in leased area largely attributable to adding tell us guide to our rental portfolio.
We are currently negotiating with an existing tenant of the Telus Guy for an additional 26000 square feet.
The amount of space on our Calgary portfolio.
Available sublease declined in Q4.
In Vancouver, we are 92, 8% leased representing a modest decrease in leased area after accounting for some strategic terminations needed for repositioning two separate buildings the.
The Vancouver market remained strong we completed the renewal with a 47000 square foot tenant in Q4 at rates, 18% higher than the in place rents.
The amount of space available for sublease on the Vancouver portfolio also declined in Q4.
Under Tim Lowe's leadership, the Allied leasing team was fully engaged and did a great job staying connected with our tenants and the entire brokerage community through most of unusual year.
For context, the team connected with over 700 individual brokers in our various markets. The one on one virtual presentations.
The team also completed 516 physical tours of space in 2020.
We are well positioned to stay connected and have leasing strategies for each asset moving into 'twenty and 'twenty one.
In part due to the efforts in late 2020, where we appear to be off to a great start already this year.
Our urban data center portfolio remains 89, 4% leased with ancillary revenues growth.
I thought it appropriate to comment on the on the subject of some leases, which is currently creating some chatter in the marketplace.
Sub leases are not a problem for us.
Tenants, usually prefer to deal directly with the landlord and almost always want more term.
Most often we end up with the restructured lease and uplifts in rent to market.
We believe much of the space currently offered will be withdrawn from the sublease market is the company's return to the workplace later this year.
Already a quarter of the million square feet has been taken off the market in Toronto as companies have decided they actually need the space. We also believe the direct space will be absorbed at a faster pace in 2021 than 2020 as vaccines will allow the working population confidence to return to normal levels of activity This summer and fall.
<unk>.
Allied product is materially different than the Commoditized office towers, where the bulk of the sublease activity avail.
The availability exists.
50% 56 per cent of the sublease availability of portfolio happens to be in Toronto with existing leases are well below market rates.
We should be able to take advantage of sub leases in our portfolio as they may happen.
With no downside of expected.
I will now turn the call over the hue for an update on the development activities.
Thanks, Tom this quarter has been characterized by solid progress on a number of construction of projects.
While the second wave of Covid has had an impact on manpower out of construction sites. We have worked with our construction teams to try to minimize the impact on overall schedule.
I will begin by giving you an overview of our major projects.
And then follow up with an update on planning activity for our development pipeline.
Construction of activity.
Beginning in Montreal, our team has been focused focusing on the vacant suite upgrades and the upgrade of 400 Atlantic on 700 the LG.
We have been able to make progress on both properties.
We anticipate the project to be completed by the end of the year in the first quarter of 2022, respectively.
In Toronto on Kitchener, our projects have progressed well despite the government restrictions on construction.
Luckily all of our projects all of our major construction projects fit under the exemptions that permit work to continue.
The well has reached the 36th floor of the main office building and will be topped off in early Q1.
We have completed the handover of two of the six transfer of slabs that have allowed us to close on those air to air rights sales.
We anticipate closing on the remaining sales through 2021.
Working with our construction managers, we have been able to minimize the impact of manpower reductions due to COVID-19.
We continue to be committed to maintaining safe sites and meeting our lease obligations.
In Western Canada, we have made solid progress on the Lockheed building restoration and are now well underway and our work on the Boardwalk Revlon building in Edmonton.
Vancouver are partners of West Bank are completing the installation of the envelope of 400 of West Georgia.
Tenants will begin their fit out work in late Q2 and into 2022.
Planning activity.
Our focus this quarter has been to prepare for formal submissions for a number of intensification projects in Toronto and Montreal.
We anticipate making the submissions in late Q1, and early Q2 for Bathurst Street Assembly, the castle of Liberty village and nor of the Lex first expansion.
These potential projects when approved will contribute approximately 500000 square feet of office space to our pipeline of future intensification.
This quarter has seen progress made on all fronts of our development activity.
The impacts of Covid.
At this point, we do not anticipate material changes to the construction schedule of our major projects. We are working proactively with our various teams to address the impacts on manpower that we have seen over the past three months I will now turn the call back from Michael.
Thanks Hugh.
The resilience of our platform.
Coupled with uninterrupted demand for of distinctive urban work space enabled us late in the fourth quarter to increase our annual distribution for the ninth consecutive year.
While speculation about the disruptive impact of working from home continues.
Every indication we have received from our users is that they'll bring their workforce back to the office once the pandemic is over.
For most knowledge based organizations working from home for an extended period of time.
It appears to be materially suboptimal in relation to culture engagement and productivity.
Our job is to continue to anticipate how urban workspaces with the old just as we've done for decades now.
In light of our experience since returning to the office in early July of last year.
Continue to have deep confidence in and commitment to allied strategy of consolidating and intensifying distinctive urban workspace and network dense udc's in Canada's major cities.
Firmly believe that our strategy is underpinned by the most important secular trends in Canadian and global real estate.
I also firmly believe that we have the properties the financial strength, the people and the platform necessary to execute our strategy for the ongoing benefit of our unitholders.
Acquisition activity has never been in the end in itself for Allied.
Rather has always been a means to providing knowledge based organizations with distinctive urban workspace more effectively and more profitably the.
Same is true of our development redevelopment and upgrade activity.
We remain intent on augmenting our urban workspace portfolio on an ongoing basis.
And our U D C portfolio within a three to five year timeframe.
Urban work space in Canada is beginning to trade again following the hiatus during the shutdown and the early stages of the reopening with the most notable trades having occurred in downtown Toronto and downtown Vancouver at low capitalization rates.
I expect meaningful acquisition opportunities to emerge for allied in 2021.
And we will be ready willing and able to take advantage of them, if as and when they do for.
For the kind of workspace, we want the capitalization rates will be largely consistent with those that prevailed before the shutdown.
A last comment or note on ESG.
As you know we made a commitment to submit formally to independent scrutiny with respect to our ESG performance by 2020 the.
On the most important single step was for us to obtain of Gres b.
Assessment and to provide an annual ESG report.
These reports says you know identify strengths and opportunities for improvement at Allied what is most important to my way of thinking at least is that they will assist the board and management in establishing the rational priorities going forward and will provide benchmarks from.
Measuring improvement on a go forward basis.
On December two last year, we published our inaugural environmental social and governance report.
As reported we obtained the GRE SB assessment and received the score of 64.
Which is Nokia ROIC, but which was recognized by GRE SP as quote a strong first year showing.
Close quote we intend to obtain the <unk> assessment and to provide an ESG report on an annual basis going forward.
On December eight last year of Massey Hall announced that we had made of landmark contribution to the mass the whole revitalization project.
This support expands the project's original scope.
The introduces Canada's Premier multi purpose performance facility the Allied music Center, the home of Historic Massey Hall.
This partnership with Massey Hall will enable us to contribute meaningfully to our communities over an extended period of time.
It will also enrich the experience of the many creative organizations and people who use our urban workspace across the country.
Finally, as <unk> mentioned, a moment ago, we published our Green financing framework yesterday. This is another step forward in our ESG journey.
I hope this has been a useful and comprehensive update for you. We'd now be pleased to answer any questions you may have.
Yes, if you'd like to ask a question on today's call. The the star one on your telephone keypad.
We'll go first to Caitlin burrows with Goldman Sachs.
Yeah.
Hi, Good morning, everyone, maybe if we could just start with leasing activity are renewals on replacements increased nicely in the quarter, but it has been trending down on the trailing 12 month basis.
And occupancy is down but of course of very high levels of you guys went through some of the drivers of that but I was wondering if you have any visibility to reaching a trough of occupancy and if so what that could occur how much lower it might get.
Yeah.
We believe that our occupancy levels will be.
Actually increasing over the course of the year.
As I mentioned on the call earlier occupancy really was related to.
Thus the leasing from space and adding some some buildings that weren't included in the previous year. So in earlier quarters. So.
We're confident that we'll be able to continue leasing and maintain occupancy levels with respect to the.
The increase in rents on space replaced.
Or renewed.
We achieved 17, 2%, which was very close to what we've been achieving in previous quarters for quite a long time.
In this quarter, we actually had some unusual circumstances, mostly on our Calgary portfolio, which which had an effect on those numbers, making up a very modest change to that.
The rents that we achieved in the quarter.
We don't think that that's.
Going to happen in the future at all we think that we'll be able to maintain big rental increases mostly because of lot of the states being renewed happens to be in Toronto, which is our best market.
<unk>.
We're we're confident we'll continue to get bigger.
Big Upticks.
Okay. That's that's helpful.
And then also Michael on you mentioned the near the end of that you thought there could be meaningful acquisition opportunities that emerge in 2021, I guess I was just wondering you.
You mentioned the cap rates could be similar to before but just recognizing that on your cost of equity is higher and your leverage level is relatively higher how would you finance of the possible acquisition and what's the what kind of decisions would come in Tonight and deciding if those acquisitions make financial sense for Allied at this point.
We're fortunate to have a lot of latitude in terms of how we fund acquisitions in the near term the.
Big Governor for US has always been our debt metrics as you know it.
It has also always been suitability to our mission. So the first question. We will ask ourselves is whether the opportunity will enable us to provide distinct of urban workspace more successfully and more profitably. If the answer to that question is yes, then we will be very mode.
<unk> to pursue the acquisition and we will make the decision as to the optimal form of funding.
In the context of the acquisition and what it might represent in terms of short term accretion.
On the one thing that we have available to us in 2021 is the ability to use our balance sheet, a little more aggressively than we have in the past.
And we can do that because we're very confident.
Of the $70 million that will be flowing into our EBITDA.
Starting actually in 2022 and accelerating meaningfully in 2023, so we have a lot of latitude Caitlin and will make each decision based on the circumstances at the relevant time.
If our cost of equity improved we might consider.
Going that route if it didn't and the opportunity was extremely attractive we might consider temporarily.
Lowering our debt metrics.
Go a little higher than normal on a temporary basis. So I think it'll be a decision that we'll have to make at the time under all of the circumstances, but I can assure you of this we will not hesitate to move on to act if appropriate opportunities present themselves.
And the other thing I wanted to signal and want to reiterate is that those opportunities will not be cheap.
Anything we want is expensive period full stop.
We did manage in late 2020 to pick up some very attractive small infill acquisitions.
Not at distressed pricing, but at what I would call pricing, we might not otherwise have been able to secure with respect to larger acquisitions, I don't see that opportunity being.
Being opened to US we will have to pay full value.
And if they fit our focus as I've mentioned.
We have the wherewithal to do it in the.
Readiness to.
To make whatever decision we have to make with respect to the type of funding will use.
Okay great.
Yep.
Thank you.
We'll go next to Fred Rando with <unk> Securities.
Thank you and the good morning, one quick question for Tom I guess, it looks like Allied portfolio.
Outperforms the market in terms of the sublet space.
Going up on your comment on that subject.
What would be your base scenario in terms of the sublet space in 2021 for Toronto, CBD or Toronto core and also for Allied portfolio.
Yes.
Well.
In.
Toronto, It's actually accounts for 56% of all of the sublease space that we have.
And we are.
Under market in those spaces being offered for sublease.
By about 25%, so we expect to.
It will be in a strong position if we're approach with sub leases.
Most of the sub leases Fred are relatively short term.
And most of the tenants that will the interested in those spaces will be coming to us looking for an extension to the term, giving us an opportunity to bring the rents to market.
Okay.
Would you so from your standpoint, or do you think that we reached somewhat of the peak in terms of some of the space or.
Or it will stabilize from here.
It's a good question I think.
We may see a decrease over the course of the year.
The year, because as tenants have already recognized some tenants of already recognized if theyre going to need the space.
And we've taken it off the market already so I'm not sure.
If we're going to see an increase in it.
But we'll probably see a decrease.
Well remember most of the most of the most of the space is being offered for sublease about 75% of them are spaces under 10000 square feet. So there are small tenants who've been sitting at home working from home.
Wanting to throw their space on the sublease market just to see what happens.
They're not getting any takers, they're going to come back and use that space.
Oh, that's great and that's it from me. Thank you.
We'll go next to Jonathan culture with TD Securities.
Thanks, Good morning, just I guess, just sticking on on the sublease space It sounds like.
They can help on how much term roughly is left on the majority of that space.
I believe the weighted average lease term is four years.
Okay.
Or are you.
Just on the mechanics of that.
Near term I guess the tenants work on on sublease thinking of that didn't need approval from you on that.
Try to enter into the longer term leases.
Fair way of looking on it.
Yes, you usually what happens the incoming tenant.
Or the subtenant doesn't usually like the existing weeks they'll want to make some changes don't want to put their stamp on the deal so that they'll come to us to say.
We want to sublease the space, but we need five extra years and we don't want this provision in the deal. So gives us some leverage to say, okay. We will give you the more term and we may modify that provision that you're asking for but in return we need an uptick in rents right now.
That's how it usually works.
Okay.
That's helpful.
Just looking at the outlook.
Outlook for next year on the same asset NOI growth.
How much of that.
It is going to be driven by the U D C portfolio versus the first.
The remainder of the portfolio.
It's it's the essential urban workspace portfolio and UDC really driving the same at the end of line.
For 2020 of mine.
Right, but in Q4, I think it was <unk> 13 per cent or so versus like the <unk>.
Have a per cent.
And the two is that is that sort of of trying to expect going forward or do you expect more balance.
No that wouldn't be the trend going forward it would absolutely be more balance and.
In 2020.
Okay.
And then just lastly on the on the 450 million of.
The development capital.
Roughly how does the pencil out over.
Over the next couple of years.
It's very much front end weighted.
Lastly, the.
<unk> 50, and <unk> expected in 2021, and then most of the balance in 2022 with very little of beyond that.
Okay.
Is it from me thanks.
Oh.
We'll go next to the journey Moss with BMO capital markets.
Thank you and good morning.
Just wanted to revisit the acquisitions that you were talking about my call I wanted to clarify if I understand it correctly are you, saying that a lot of the opportunities we're expecting from smaller properties as opposed to larger properties that like like I said somehow like the LG you didn't quite of team did I understand that correctly.
No what I meant to say and perhaps I wasn't clear.
We actually were successful in the latter part of 2020 in securing a number of small infill acquisitions.
I think have very meaningful long term potential for the business.
What I anticipate in 2021.
Would perhaps the more a few more of those going forward, but what I am anticipating.
The more meaningfully is larger transactions.
On.
In the Montreal, Toronto, and Vancouver markets.
That that would be more akin to a.
On the landing in terms of scale.
And we will be very motivated to pursue those transactions. If indeed, they arise and we expect to have to pay for them as we did.
In 2019.
So what I meant to suggest or telegraph is our expectation.
That.
Larger opportunities will be available to us in 2021, and if they are we'll certainly be willing.
Motivated enable to pursue them.
Okay. So it sounds like.
It's probably weighted towards the mid to late 2021 is that fair.
If they do come to pass.
The one thing about acquisitions that you can honestly never predict is when theyre going to arise.
It could happen tomorrow, there is nothing in our sights as we sit here today.
But literally given our experience over 18 years, now and the opportunity could arise tomorrow or we could be looking.
Into nothing this well into December so we just have no way of predicting that.
Just have a strong sense based on what I'm hearing from others in the marketplace that.
Transactions of some consequence are likely to come to the market over the course of 2021 I'm hopeful that happens, but there is no assurance that it will but my.
My sense is it will and if it does.
And those opportunities fit our investment and operating focus will be all over them.
Okay, Great and the second related question I'm wondering if you're seeing any distress in the market probably on the smaller side or the.
We haven't seen much of that given what's gone on Alaska.
Sadly no.
It feels much like the it.
Feels much like the global financial crisis to me I remember, saying to investors then that the good news is there is no distress and the bad news is there is no distress and that was actually reasonably accurate then and certainly as accurate now I will say this though.
No.
The smaller acquisitions that we saw over the course of 2020 and would expect to see over the course of 2021.
Our acquisitions from vendors, who are not in distress.
But are more motivated to sell.
Then they would normally be there, they're generally vendors, who have a meaningful accrue gain in their assets, who are not real estate professionals.
But obviously very shrewd business people.
And to conclude that the disruption.
Going on around them makes it more in their interest to monetize their gain.
Rather than to wait for more game.
On an <unk> basis, so I would characterize the smaller transactions we did.
In 2020 of that way.
So people that are strong not in distress, but more motivated.
By virtue of the disruption caused by the pandemic than they would have been.
The pre pandemic. The best example of that in my mind are the three Fabulous assets, we acquired on John Street.
We've.
The <unk> that ROE for years and years with interest.
And the expressed interest.
For years and years.
No takers.
The same people or a few of the same people became much more receptive late.
In 2020, and they initiated the process of that resulted in those transactions not huge allocations of capital, but long term assets that we would not of expected to be able to get our hands on pre pandemic. So we love those and that is the one maybe benefit on the acquisition.
Of the business from the pandemic.
But they are relatively small in terms of aggregate allocation of capital, but I think there is significant going forward hopefully we will see more of those but nobody's nobody's over Levered <unk>.
Nobody's underwater to the mortgage nobody's in any kind of distress at least that we can discern or at least anyone that owns the kind of assets we're interested in.
Theres just no distress there even in Calgary Okay.
No distress.
Okay, I want to move to the renewal and the leasing rate. So it was mentioned that ticked down of back in 2020 versus 2019, just wondering if there was a.
Tilt towards the direction the retention rates on the door or just less activity from re leasing up but they are really driven by one or the other strongly.
Just to understand the question Jenny what kicked down or what ticked down are you referring to.
Thank you very much of the diesel rates the 78 per cent.
Yes.
It's down from sort of the mid 80 range that allied has been trending up the last few years, So I'm wondering with the wise.
Of the adoption and the attention of renewals or just less activity on the leasing side that resulted in the takedown in 2020.
Well, Tom might have a better specific sense than I do but my sense from my perspective is we had more non renewals in 2020 than we did in 2019 that we knew about pre pandemic and they were non renewables.
It resulted from the fact that the tenants had outgrown the space and we couldnt accommodate them we hate that.
But it's the the one thing we can't defend against.
There are two in particular, Tom, but I'm thinking of that.
The tenant loved the building had a good relationship with allied but needed more space and we simply couldnt provided either in that building or anywhere else in the portfolio on my right completely correct.
And the Big Influencer was there were there were.
Six renewals in Calgary, the took place that we're coming off of long term deals. So these would have been rents that were quite high on the Calgary market has changed dramatically. So we ended up taking less rent.
So that had a big impact on the.
Those numbers that would be the the rent growth in the Q4 that seven 3% or whatever it is was largely driven to the low level.
Relative to Q3, Q2, and Q1 by those Calgary transactions and then the the lower renewal rate if you will.
We're basically Toronto non renewals that occurred because we.
We simply couldn't accommodate the growth of those tenants and as I say, that's that's one thing we hate more than anything and one of the reasons that growth.
Our asset base.
It is important to us because we hate not to be able to accommodate the tenant that is growing.
And who is well disposed to our type of space and to us as the as an operator, but.
That's what.
Brought the renewal rate down a touch in 2020.
And it does have okay great.
A couple of modeling related question just on the capitalized interest it looks like it went up by a million sequentially. So I'm wondering what drove that job with the.
The increase of the borrowing base that was something else and whether or not that is expected to be carried forward into the next couple of quarters.
The hi, Danielle Cecilia.
Residential inventory.
Needs to be included when you are trying to recalculate the capitalized interest.
Can walk you through it offline, but the information as of note six of the financial statements. So if you include that with the part of the balance and apply our weighted average cost of debt it won't get you within the.
On a range for the quarter.
Sure that's very helpful.
One last question on the Quebec subsidy for C crop was that the catch up on the one half of the level of pushing back the way subsidizing.
How much of the facts, that's right, okay, and how much of AD.
The same store.
It was 700000 that we received from the Quebec government on Q4, so we netted the five eight that we abated in Q2 and Q3 with the 700 subsidy in Q4 for a net abatement of five one year.
Okay and that would be all of it right you won't come back right of course.
Correct no more expected.
Yes.
Okay. Thank you everyone I'll pass it back.
We'll go next to Brad Sturges with Raymond James.
All of your line is open you may be on mute.
Yes, Brad you might be on mute.
Hello can you hear me.
Yep.
Sorry about that.
What.
I guess based on your discussions with your your tenants. So far what is the base case assumption that they're using in terms of the more.
Some return to the office of that.
Kind of back half of 2021, depending on the the vaccine rollout or how is that the.
All of those discussions going on right now.
Well I would characterize it this way.
In the fourth quarter.
People were really uncertain as to when the pandemic would be over.
And they were really uncertain as to what over meant.
On.
With the advent of the vaccine.
And I think the.
The.
Slow, but steady progress.
In the distribution end.
I guess introduction of the vaccine to the populations around the world.
That confidence has been growing.
No.
There is still uncertainty on the part of our users as to win.
They will be comfortable coming back I think of lot of people are thinking in terms of summer.
Or some time.
On that but I wouldn't.
Suggests that a great number of the office users in our portfolio of who have.
Stayed away.
Have really decided definitively on that regard yet there are a number of users who never went home.
You will ourselves included to.
To some degree.
But with respect to those who did go home in a very big an emphatic way.
I think they are still watching.
And haven't yet committed.
To themselves, let alone anyone else when there'll be returning.
Maintain constant communication.
Not.
Not so much to force people to return.
The decision that's entirely up to them, but to be ready for them when.
When they do return so if.
If we had to evaluate today, it's I'm not expecting to see of heavy flow into the buildings beyond the.
Of the people who are already here.
At least until the second quarter on <unk>.
Certainly not expecting anything of consequence in the first quarter.
And the head of that would you expect.
The answer being are touring activity to ramp up ahead of that maybe late Q1 of it in the Q2. If there is a plan to return or or make decisions on on office requirements kind of in the.
Q2, Q2 of Q3.
Leasing activity has been ramping up since the.
Really late second quarter of 2020 and Hasnt.
And hasnt slowed for Allied one bit as Tom mentioned, we did 258 transactions in 2020, that's a staggering number of transactions of 105.
<unk> new tenants to the portfolio.
Leasing has been ramping up.
Sure.
Discernably and steadily in our portfolio since about June of 2020, and it hasnt abated one bit for us.
And maybe just my last question is.
Going back to the sublease discussion of the per segment is it still in terms of your exposure still mainly media advertising companies of you're seeing any change in terms of.
Financial services companies in the sublease the space.
So the.
The market.
Haven't seen any change and as you know we have very little exposure to the financial services sector.
Great. Thank you.
No problem.
We'll go next to Mike Mccarthy with <unk>.
Hi, everyone. Thank you.
Sorry for beating the dead.
Of course very positive is the more interesting questions.
Some of the sublease space.
So as long as four years per Toronto on it's a 25% mark to market.
The notice of Mark to market would be for the entire pool.
I think it's 18, 8%.
Okay. Thank you.
And then that's a pretty precise guests.
Okay.
Thank you.
Maybe the safety.
Nine.
Sure.
And then just any direct deals done in the past couple of quarters or.
You just mentioned that historically.
I'm just kind of.
Okay.
Say that again.
I'm just curious from the past couple of quarters, you've actually done some direct deals on the space.
The expansion just purely on addition to the sublease space as a net in terms of the pieces of it.
We've done many direct deals, but just just to be clear. Mike are you asking have we done direct deals on sublease space is that the question last couple of quarters, yet on your releasing activities no no no we haven't.
We haven't been fair enough.
Alright, I'll leave that one alone.
I think you saw the 400 Atlantic transferred to the.
Property under development pool, and Michael if I remember correctly, you mentioned two properties of Montreal with the might be in one.
And then two more in Vancouver, I was wondering if you can give us a little bit more color in terms of the extent of the.
The leasing that's going to continue there and one of those will be transferred to part of it all.
Well I think Tom mentioned, the day leasing and so I'll, let him identify the properties.
All known to us they're not one of the 700, <unk>, where we're repositioning.
That building and the other one is <unk> pro in Montreal.
Where we're making way for larger floor plates to be available from the marketplace and similarly in Vancouver, There's two buildings $3 42, and 375 water, where we are doing the same thing, we're making way to accommodate larger tenants to the building.
The building.
So will the scope of those projects should be the same as boardwalk bogey than the 400 of Atlanta consensus of necessity.
The transfer is going to be something of itself no.
There just <unk>.
Minor modifications physically to the buildings.
Whereas 400.
There's a lot of a lot of working being done there, but these are.
Small physical leasing issues.
Okay great.
Well I think in terms of the acquisition of opportunity that you may see unfolding in 2021 of I think you talked about it in terms of the quantum of the scale of the transactions from similar to Atlanta.
From a I guess carriage.
Characteristics point of view is it more of a typical class type.
Typhoons.
The JV set or do you expect it might be more of the conventional 700 EOG.
Gotcha.
I actually think both are possible.
There could be.
700, LG like transaction.
But there could also be transactions more akin to the landing so I'm actually expecting them to fall.
Sort of within that spectrum.
And.
And as I say I have no idea of which will present itself first store with more certainty.
But I would think it would fall within that entire range.
Or that entire opportunity set that we now consider appropriate for allied.
Okay and just from the from the 700 deals the transaction is Toronto market that would appeal to you on that basis or is it more of Montreal phenomenon, where there isn't some of that it's likely one of them.
Really good question and it really is more of Montreal phenomenon in Montreal. The way, we think of the Montreal is the upgrade market and Toronto is the development market. So I'm not aware of assets in Toronto that we would look upon the way we did 700 <unk> in Montreal and one of the <unk>.
Things that made the 700 <unk> so appealing to US in addition to it.
Base building attributes was the fact that there is no new supply being created in that market or at least no new supply of consequence and.
That's very clearly not the case in Toronto.
So I I'd be a little more low to try and compete.
With the new building technology in Toronto.
Then I am in Montreal.
Uh huh.
Okay.
The questions.
Just to make sure that instead of a square.
It was the 700000 net positive for us in terms of that.
The vessel.
So that's the race.
The government support keynotes see growth in Q4 of them this quarter.
Correct.
So and then also in other than many of our thousands of dollars.
Sure.
This quarter.
Yes, I mean, I guess, if you wanted to look at it that way yes.
Okay.
And then I think you had.
I would point of view.
The roughly $5 million.
Most of this quarter or if that's an indication of the demand.
None of that will be repaid in the first quarter is that the force the commencement of repayments because I don't think you've given the color before was the diversity of opinion.
Of those back yet.
That the reason we had version to that Mike is because of that repayment is is really coming directly from the emergency rent subsidy.
So we havent made any representation with respect to what I might call ordinary repayment.
We actually know that that $2 million will be paid to us early in 2021 under the emergency rent subsidy and indeed at least half of it is in our pocket Oh I guess Cecilia says all of it's in our pocket today. So when it comes to something as certain of.
Is the government paying up we're prepared to.
In a way essentially netted against the deferral. So in our mind I think the net deferral in.
In Q4 was with something like $3 $5 million of silver.
But we Didnt, we felt it was important to route to report the actual deferrals.
Indeed, we did defer that.
That receipt.
But that $2 million of that deferral I guess has already been paid off in the monies in our bank accounts and the in fairness to the government, we should acknowledge that while the paperwork is cumbersome.
We've worked closely with our tenants to assist them.
Because it is very much in our interest to do so.
And the government has been very prompt to pay once the paperwork is.
<unk> and submitted.
We noticed that on cetera, the payment was stunningly expeditious for a government.
On the same is true on the on the rent subsidies, so I think thats worth acknowledging.
The government really has been intent on providing support to these businesses.
And I think is to be commended for having done that.
Okay. Thank you it sounds like it's kind of the positive effects.
Just lastly, sealy on the ethical Outback for Telus Guy I think.
For the last couple of quarters now transferred it to.
On the rental pool, and I understand that there's still some spend in the activity that stuff on there.
How should that line of all of the year.
The forecast.
One of them different demographically or do you expect the subject that's on board.
Sorry, what pace of you're looking at.
Lots of things are up a full reconciliation of their seats.
Notional interest capitalization on the JV.
Oh.
Most of capitalized interest of oil drop off.
Lately.
As occupancy takes place over 'twenty and 'twenty one.
And with more of the gradual slope as opposed to it the waterfall.
Okay.
Thank you very much.
No problem.
We'll go next to Matt <unk>.
With National Bank financial.
I guess a quick follow up on.
Mikes questioning there with regards to the impacts of Covid in the quarter. So.
So the 500000 you took in terms of the provision.
There were no abatements of rent during the quarter were there.
No no abatements in Q4.
And I know you had provided some information and clearly I think this relates to the 2 million that you've now received but I think you had collected 70% of October rent at the time of the Q3 reporting for tenants that were subject to CCAR did that trail off and then ultimately youre getting back of the funds in Q1.
We should think about it.
If I understand the question.
The second kind of ended on September 30th.
So whatever implications for us the.
That arose from Sekera hit our statements in the second and third quarter. There are perhaps some tenants who transitioned from.
Let's call it separate tenants to the deferral of payments, but it's a small amount.
Most of our deferral of tenants have been deferral throughout this.
Yes.
Disruption, let's say.
And the good thing is almost every sector tenants qualified for the emergency rent subsidy and even tenants who didn't qualify.
For sacra appear to qualify to some extent for the rent subsidy.
So there is no whatever deferral, we're reporting in aggregate.
Would represent the total deferral, we've provided in the year and whatever provision we've taken in relation to that which I think it's two 7% of $2 8 million would relate to those deferrals.
On.
Going forward, but the.
There is no like the sector tenants didn't all of the sudden go into default at the end of the secret program in fact.
I don't think any of them have we may have helped some of them a little bit more in Q4, and we may be prepared to help them in Q1 and two of this year, but probably more importantly, the emergency rent subsidy has really taken over.
We're circa ended and it's taken over in a way that didnt require us to abate any rent.
Which of course it.
It's very helpful to us.
But the.
Is that correct tenants the sacra tenant base didn't fall off a cliff at the end of the second program that's for sure.
No fair enough I, just didn't know what the government. The there was a bit of a delay in terms of guidance of receiving those funds so kind of beat.
Average pay rent for Q4 may have been an issue, but it sounds like not.
Much of an issue.
And we would effectively have bridge them through that on on that so that's why.
$2 million of that we bridged instead of another tenant yes, we bridged them over the quarter end and we are prepared to continue to bridge people.
In relation to known emergency rent subsidy receipts, because our experience is the government doesn't pay up and does do so pretty promptly.
Okay, no that makes sense and then on parking sequentially it improved.
I assume the either there was an anomaly on December 19, or Theres, some seasonable seasonal uptick in parking revenue in Q4, but it looks like year over year parking was still down 1 million of enough I mean, not surprising considering the state of the band I think we were in.
But can you comment on on parking I mean, obviously once we are back open presumably that comes back and.
And people may not want to take public transit to the makeup may actually be some pressures there, but just thoughts in terms of your forecasting for parking in 2021.
We we were seeing it recover in Q3 and even in Q4.
I think then the if I can call. It the second shutdown has probably.
Put some pressure on that recovery and I would expect that to continue through the first couple of quarters in 2021 and begin to recover in Q3, and Q4, and we would have factored that into our internal forecasting.
Okay.
Makes sense.
And you mentioned on the I guess facility you were talking about the Telus Guy.
And the residential.
There can you can you speak to how that lease up is going obviously of the stunning product just interest and how it's performing relative to pro forma.
Sure.
And here it is.
Performing according to our revised predictions that we made last summer when we started to do the lease up so we still anticipate that it'll take a couple of years.
Phil.
Reaches stabilized NOI.
Okay.
The last one with regards to the the leasing and I understand that we're going to get a little bit more clarity next quarter in Montreal.
But the better either of those the two in Cta multimedia knowing that there was some expected turnover there.
We.
Yes that turnover is is again built into our internal forecast, Tom and the <unk>.
Tim low and the Montreal team are very much on top of that and Tom has been.
Encouraged by the level of activity our listing brokers have generated already long ahead of the actual.
Expiry dates so I think not to put words in your mouth, Tom, but I think we're pretty comfortable with that the.
The level of activity has been.
Surprising Lehigh.
So we're very encouraged.
Sure.
Okay.
Good to hear and it's good to see the.
Montreal, they seem to be a little bit more.
The proactive in returning to the office, thanks, guys Thats It from me.
Okay.
We'll go next to Howard Leung with Veritas investment research.
Thanks, Good morning.
Just wanted to.
Follow up on some of the occupancy index.
On 'twenty one forecast questions.
First name asset NOI.
I guess aside from the.
The economic occupancy.
Vijay and compete of buildings.
Are you forecasting.
Occupancy for the SMB.
The portfolio or is that mainly driven by the rent growth.
Part of the yields.
It would be mostly driven by by rent growth.
Okay.
That's helpful and then and then just.
Im just hearing a trend of I guess smaller spaces.
Those under 10000 square feet.
It seems to be.
Independent of growth out of them or existing tenants are.
Maybe there are some some of them except the leasing done are you seeing the profile of the band.
Without the pandemic shift towards maybe the larger spaces.
Is there.
Havent seen potential tenants ship more day, I, just kind of wondered about that.
I would say the mix is more or less of the same.
Think that the.
There is a shift in size requirements.
At all.
In Montreal, we ended up doing.
130 transactions in the year.
That's been a very really active market and it was a mix of sizes of lot of small deals.
But I don't think that theres going to be of change in size requirements.
Going forward.
Right.
Thanks.
Alright.
Sorry, one of the things we may be seeing.
Really we'll emphasize may is the expansion in the type of tenants or user interested in the kind of space. We operate appears to be expanding and that was evident pre pandemic I have to say, but it appears to be.
Continuing on.
And most notable in our minds in that regard as the deal with the law firm that Tom mentioned at the well.
For about 25000 square feet I don't believe we've ever had a large.
Law firm requirement.
In our portfolio anywhere in the country I, certainly cant think of.
If we have and I think that's significant and consistent with what we've been seeing on the part of professional services firms.
Including firms is exalted as Deloitte.
Who are looking at the kind of space we provide.
Whereas perhaps five years ago.
It would have been unthinkable for them to do so so that that change.
Certainly doesn't appear to have been arrested by the pandemic.
And I don't know if I could conclude that it's been accelerated by the pandemic, but its still happening.
Of interest there.
There was a law firm that we have on John Street in Toronto.
Doubled in size.
In 2020.
They went from nine to 18000 square feet.
I'm not sure of that means there is a trend, but there's two examples of professional services firms.
<unk>.
Making the commitment to our kind of product.
And the address that.
It is encouraging to us.
And that's why these transactions are far more meaningful to us than than nearly the square footage they represent.
Right, Yeah, it sounds like the shift.
From a certain class of tenants too. So that's good to know thanks. Thanks, so much.
We'll go next to Dean Wilkinson with CIBC.
Thanks, Good morning, everyone and apologies for taking over an hour.
No problem.
Michael you.
You mentioned anything Allied wants to buy is going to be expensive.
That's a given the.
The flip side of that is that has probably never been cheaper and can you talk a little about what youre seeing in the debt markets relative to the stance of the debt rolling over the next couple of years and and even within the context of of those green bonds, but even though those may be.
Given that Youre thats never been cheaper.
That's more than the countervailing force against that and and it might not impact.
So the coverage ratios from that perspective.
I'm inclined to answer by saying, yes, yes, yes, and yes.
Yes.
The debt market is astounding.
US and has been for some time and clearly to our peers in the industry in the sector as well.
There was a very interesting analysis done.
By one of your peers in the industry comparing how the debt markets.
Have treated allied paper in comparison to how the equity capital markets have treated allied units.
Yes.
The GAAP is faster for allied than any other entity.
Any other public real estate issuer in the country now on one hand, that's appalling to me.
And shame on the equity capital markets on the other hand, it's signals opportunity and the clearer sense of the term and.
Obviously, we're going to try to avail ourselves of the very favorable valuation of our paper that appears to be.
The prevailing in the debt capital markets.
And we will we have been striving to do that for some time and we're going to continue to strive to do that and.
I think the other thing I would say is we are prepared temporarily to allow our debt to EBITDA.
To go up from.
Its current level.
A because the cost of debt is so attractive and b, because we know our debt to EBITDA. The ratios are going to come under wonderful downward pressure in 2022 and 2023. So so.
Yes, yes, yes, yes, and yes.
The equity markets will eventually get it right.
That's it from me thanks.
Thank you.
Sure.
We'll go next to <unk> with RBC capital markets.
Thanks, and good morning, I'll try to keep these quick.
Just in terms of the comments around just in terms of the commentary on leasing.
Can you provide some sort of color on maybe what tenants are seeking in terms of the changes to the lease terms.
In terms of renewals of our new leasing duration more flexibility in the leases are you seeing any of that of this nature.
None of their consistently looking for long terms.
Got it.
In terms of and then just lastly, just on.
Coming back to the the law from leads at the well.
Curious what were some of the factors that drilled in two of the property relative to I think they are existing space that he said they have an option to renew on.
I think they were attracted to the amenities that are going to exist at the well.
It gives them on opportunity too.
Refresh store space, where they're renovating internally.
Well I think that they were attracted to.
A brand new building, that's going to have the probably the best amenity package in the city.
Yes, especially from a neighborhood perspective, and there is no question pardon me.
That that particular tenant.
Made the decision they made.
Because they believed it would help them attract motivate and retain the kind of talented young men and women may need going forward. So what we loved about the transaction was it's a law firm, which isn't unusual use for us in our portfolio number two they had made the clear decision.
That in order to succeed they needed to operate from collective workspace.
And number three they were persuaded that at the end of the day.
Their ability to attract motivate and retain talent.
Would be enhanced by locating at the well there is there is no question in my mind that that is what motivated them at the end of the day.
Sure.
Go ahead of their run very helpful. I guess.
So volume.
No no sorry nothing.
No actually I think.
Many of the lead into my next question.
On the I'm not sure if you have any sense of what the rents would've compared between what they're really even versus what they're getting at the world.
I would think.
The gross rents are a little bit lower at the world because they have the benefit of the <unk> grant in the first 10 years of their lease term at the well, but otherwise I think they are probably be parity.
Between.
Between the rents.
Where they are and the rents that they will be paying out per well.
Got it thanks, very much I'll turn it back.
Yeah.
Okay.
We'll go next to Mario <unk> with Scotiabank.
Alright.
Thank you.
The time zone.
Thats typically what sort of some of it on the call now.
Up to the.
Two quick ones here.
The more closer to the two questions on the public space and kind of the questions.
It will probably Michael you mentioned that's.
So first on the public face of Morgan Palmar went on a current answer with the.
The investment.
Got it.
Yeah.
Net debt moving on.
It sounds to me like the journey I'll open the book.
Comfortable about the broader market today.
Today than at the during the Q3 call.
The statement.
The simple driver behind that the we're closer to keep them coming back into the office today relative to three months of the euro or is there something else there.
Moving to that degree of confidence.
Okay.
I'm, sorry, I could not hear the question I think the question is what accounts for the difference in total.
Of the sublease space in Q4 relative to Q3, when we were a little more uncertain.
Im not sure if we were sounding more concerned in Q3 Mario.
We probably just werent.
<unk> ourselves.
On properly I mean sublet spaces optically.
Problematic.
In any office market as you know, but in our portfolio. It has always rebounded to our benefit over time and I think.
Recognizing that the bulk of this is actually in Toronto.
It makes us probably more confident than ever that that however, this unfolds it will unfold to our benefit over time.
And with a high degree of certainty. So I don't think anything has changed although Tom's comments about the fact that some sublease space has been pulled off the market in the interim.
I think is noteworthy it was people reflects of lead through it on the market and probably thought hey, if somebody comes along and grabs it Hallelujah.
And then so it could be those people.
Or are they might've thought hey, we're going to work from home forever.
And <unk>.
As reality set in either way they might have taken that off the market.
We do feel now just as I think I mentioned in Q3, we know the tenants in each of the spaces in our Toronto portfolio, who are sub leasing space.
And their motivation is not because they plan to work from home going forward. Their motivation is their top lines are under pressure and have been.
Under pressure for a while.
One is the media group.
Not a great place to be right now, especially print media.
Another couple of AD agencies again still viable businesses.
But AD agencies have had their top lines conventional AD agencies have had their top lines under pressure for quite a while now.
So.
I don't think I don't think we are more or less confident now about.
About our sublease space than we were.
<unk>.
And we've seen it go down in Calgary, and Vancouver, which actually to me is much more important.
Toronto Sublease space has never bothered us and we've never had anything but good outcomes from it.
I thought we had the express.
No concern at the <unk>.
Sub leases in Q3 it.
It hasnt been a threat to us before and we don't expect it to be.
But there hasn't been any change in the mood.
Okay. That's helpful. And then just to clarify the 250000 square feet that you referred to that's the bar Toronto market of the pool of dollars portfolio of Toronto, Yes, Yes, yes, it does meal.
Okay.
Right and the second.
Clarification question just from Dr. Michael will comment that you made the.
And the discussions with tenants the fuel you feel like the food can we come back into the office.
What kind of grounded.
On the expectation of that kind of coming back into the office or the expectation of tenants are going to continue to keep the existing footprints with the hubs.
Some of it.
Too early to.
The accrued on that.
I think the working premise would be that that people are going to maintain the footprints they have and not contract or expand but it is too early to assert that definitively.
Lots of users are evaluating their needs.
In light of what they've learned and in light of what they expect to transpire in the future and I don't think we have enough.
Data yet from our actual users.
To conclude.
Even tentatively.
Where that May go over the next 12 to 24 months.
But we are very confident based on ongoing discussions which have continued.
The really since Q3 and into 2021 now.
Net.
The.
Users, we've spoke to will be bringing their workforce back to the office when the pandemic is over.
How at what pace.
To what extent long term.
We don't have enough data yet to make any kind of meaningful.
Conclusion, although it does appear to us.
That.
Most of the users we serve are not contemplating having significant components of their workforce working from home.
But again.
At the end of the day.
It's how reality unfolds and how people behave that will actually tell us where the market is going talk is cheap whether it's my talk in favor of people returning or some other clowns.
The proposition with respect to working from home.
But people do that really matters.
And that's what we're trying to gauge and we don't have enough data yet to make definitive conclusions as to what's going to happen.
Over the longer term with respect to how our tenant base is going to use their space.
Im reasonably confident about it but.
It will be much more confident as tenants begin to return.
And as they begin to use their space on a full time basis again.
On a little bit of color Mario is I mentioned the tenant in one of our Montreal portfolio of who is.
Looking at expanding.
And they are.
Looking at taking about another 20000 square feet of space.
What they've said to us is <unk>.
<unk> had a.
On office that had people densely packed intuit they.
They want to make.
Available more meeting room space in the future, allowing people to spread out just a little bit. So this is the tenant that's been super successful right through the pandemic and the saying we want more space for our employees.
And we're not going to have them jammed into the same space.
We may see some of that.
Early days.
Yes.
The which at some point of time.
My last question the growth.
Then in the Pentagon, it's about a year now.
One of the question marks freezing allied coming into this pandemic of child.
The smaller kind of in terms of the size fare during an economic crisis.
So just on on that front I'm curious to hear.
Totality since the pandemic started the how many of the business.
The business streams of the portfolio.
Okay.
Truly negligible Mario.
On the office tenant base has held up extraordinarily well of small medium and large.
The organizations small medium and large requirements just as we experienced during the global financial crisis, almost all of the stress has been quite understandably felt by the retail component of our tenant base and we've had very minimal failure there so far.
The part certainly because we've been prepared to work with some of the users in whom we have confidence.
And with whom we have relationships, but there I mean, the I can think of one example, only in the office component of the tenant base, which was a a smaller co working entity not spaces spaces has been awesome throughout but a very small co worker.
Entity in our portfolio, where we basically allowed them to give back.
On a small locations aggregating.
15000 square feet and retained to others and they would have failed had we not on that that's the only instance, I can think of.
Where.
Any significant amount of space was was shall we say surrendered to us with our with our cooperation and I don't believe there have been any.
Bankruptcies within the office tenant base, certainly not any one of of any consequence whatsoever.
So it's.
It has followed exactly the path. We we went on or went down in the global financial crisis. There too there was minimal stress in our office tenant base and all of the stress was felt.
By the retail component of the tenant base.
And the stress that that they experience then was nowhere near as dramatic as the stress that's being experienced by our tenant base now, but interestingly the tenants than we.
We're nowhere near as established.
In their space and in our portfolio as they are now.
So so far there's been negligible failure in our tenant base as a result of the pandemic and I mean negligible.
We thank you for the color.
No trouble.
And at this time there are no further questions.
Thank you Jennifer and thanks to each of you for participating in our conference call. We look forward to keeping you apprised of our progress going forward.
If in the interim you have any questions all of us can be reached by telephone where in the office and we're hard at work. Thanks very much on have a great day.
This does concludes today's conference we thank you for your participation.
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Sure.
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Yeah.
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