Q4 2020 Cominar REIT Earnings Call
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Good morning, ladies and gentlemen, and welcome to there could be down from plus more it might be the Ford quire, what each one earnings conference call.
At this time all lines are in listen only mode.
Following the presentation, we will conduct a question and answer session. If at any time during this call. The required immediate assistance. Please press star zero for the operator. This call is being recorded on Wednesday March the third taught each one you won I would now like to turn the conference over to MS. Michele Buck Research. Please go ahead.
Thank you good morning, and welcome to today's conference call, where we will be discussing our financial results and highlights for the fourth quarter of 2020.
The presentation for this call is posted in both English and French in the conference call section of our website.
In line with our disclosure principles access to this call is open to financial analysts investors and the public and the media.
The question period will be open to financial analysts.
Before I begin I would like to draw everyone's attention to the notice concerning forward looking statements on page two of the presentation.
With me today is our CFO Antoine talk why.
Members of our executive management team Maryanne artery per day E V P retail and Chief Development Officer, Dow now ITK, EVP office, and industrial and Chief Real estate operations Officer, and naturally it will show E V. P asset management and transactions are also here.
With us.
Yeah.
COVID-19 had an ongoing negative impact on the operations and the results of day rate.
After a summer of steady improvements the fall brought back an important resurgence of COVID-19 cases, and along with it in the beginning of October our provincial government imposed closures of restaurants, gyms and entertainment venues, while reiterating an emphasis on work from home.
The situation has continued to worsen in mid December work from home became mandatory and one week thereafter, the closure of nonessential retail stores in all regions of our province was declared.
In early January a curfew was introduced curfew, which remains in place.
On February eight non essential retail reopening throughout our province, except for our restaurants, gyms and entertainment venues and Red zone.
Certain matters are now open with limitations.
The construction industry and manufacturing much less much less impacted as they essentially remained open with limitations.
All of these measures were significant and more importantly helpful. As today's COVID-19 cases are down significantly in.
In addition to favoring this downward trend governmental focus is on accelerating vaccination and detection and monitoring of variants.
Overall, Quebec is trending favorably.
Many in improving communities are seeking easing of restrictions, but our provincial government is on record that it wishes to proceed cautiously as vaccination campaigns increased Wow monitoring variants.
The Montreal Central business District is a major contributor to our provincial GDP and this is not lost in our government and Quebec based captains of industry.
As we progress there is more and more discussion and planning around a return in due course, two ways, which are more in line with our prior life.
On page three before diving into the results for the quarter I will briefly comment on our foremost strategic review process initiated on September 15th.
The accuracy of the special committee are ongoing.
Special Committee continues to work closely with the management team and you reach financial Advisors National Bank financial and BMO capital markets.
Our objective to identify review and evaluate a broad range of potential strategic alternatives with a view of closing the gap between what we believe to be our intrinsic value and the current trading price is unchanged. We will communicate in due course with unit holders window required or appropriate.
Now, let's turn to our Q4 2020 results.
On page four during the quarter impacted by COVID-19, we experienced a slight organic decrease of 0.8 per cent and same property NOI.
Notwithstanding this environment for the Euro the year, we recorded seven 4% growth in the average net rent of renewed leases driven by an increase of 18% and industrial and seven 6% in office in.
In retail we recorded a decrease of four three per cent.
Our leverage now stands at 55, 3% up $54 four per cent at the end of Q3, essentially due to write downs for the quarter totaling $152 million on our portfolio.
At year end available liquidity stood at $339 million.
On page five we received to date 95, eight percentage of total invoiced rent for Q4.
Further two agreements signed with tenants 96.6 is contractually expected to be received for Q4.
For the full year 2020 year 97, 2% of total invoice strength has been received.
Again.
Further two agreements with signed tenants 98, 1% as contractually expected to be received.
On page six our Q4 S. P N O I decrease of 0.8% is the sum of opposite streams.
On the one hand S. P N O Y for retail declined by 14.7%, which came from a combination of reduced revenues of $8 four per cent and a decrease in expenses of 2% on.
On the other hand office S. P N O Y increased by eight 5% as a result of the one 2% increase in revenues and a five 8% decrease in expenses.
Industrial S. P NOI increased by four 9% during the quarter.
Further to a two 9% increase in revenues combined with a 0.5 per cent decline in expenses.
Year to date, the adverse impact of COVID-19 contributed to a $5 one per cent decrease of our overall S. P. NOI with retail at negative 21, 5%, while our office and industrial segments recorded positive SPP NOI growth of 4.6 and three 3%.
Respectively.
Moving on to page seven our year end committed occupancy and in place occupancy rates remained above our historical average is at 94 point <unk> 94 per cent and 91, 7% respectively.
The recent decline in committed occupancy was driven by the retail segment, which declined by three 3% since Q4 2019, while the office segments increased by 0.2% and the industrial segment decreased by 0.4% over the same period.
The latter segment the increase being driven in part by our leasing strategy of driving rents upwards.
On page eight we continue to experience positive momentum in our leasing activities over a.
Renewed leases over the year average day, net 7.4% increase compared to rents in place prior to or in yours.
Two of our three segments had positive leasing spreads led by our industrial segment at 18%.
Evidencing the strong momentum in the industrial rental market in Montreal, and Quebec City, followed by office at seven 6%, while we recorded a $4 three per cent decrease in retail.
The office segment performed well in multiple points Firstly office S. P. NOI was up by eight five per cent for the quarter well ahead of budget and $4 six per cent for the year.
Interesting to note off S. S. P. I knew I was up by five 1% for the quarter for the Montreal suburban market eight 4% year over year once again from the Montreal suburban market.
In addition to Montreal in place occupancy rate grew by 4.7% since Q4, 2019, and more particularly by five 2% in the Montreal suburban market over the same period.
Over 120% of the leasable area maturing the Montreal office segments since the beginning of the year. It was renewed or is subject to a new lease.
In addition, approximately 783000 square feet for 83 per cent of the leasable area and maturing in 2020, one with federal or provincial governments has already been renewed or is near completion.
In the quarter, we signed new deals with essence 11, eight for 26500 square feet and Taiwan semiconductors for 17000 square feet.
And we do see a pipeline, although new leasing activity is slower in the context of the pandemic.
Interesting to note an increase in activity around the suburban market for.
For the year, there are 610000 square feet of new deals in line with what we budgeted.
On the renewal front 73 per cent of Expiries were renewed with spreads averaging seven 6% in both cases above budget.
And this renewal window, we are however, seeing tenants renewing for shorter terms as they navigate the unknown.
On the retail front, we added 38, new leases for a total of 415000 square feet in place in 2020, we.
We saw the opening of a 60000 67000 square foot decathlon sporting goods store it sounds like the island December 12.
22000 square foot hard store also opened in November in the former Sears location at some theory yeah.
Moreover, Moreover, sir.
Moreover, at 359000 square feet were signed during the year, which includes 268000 square feet since the beginning of COVID-19.
In Q1 of this year, we also signed a Tesla for an additional 30000 square feet in Quebec City.
These openings are in line with our leasing strategy to move away from more vulnerable retail segments, such as such as fashion other than value fashion.
In the retail segment in our restaurants represented approximately 13% of retail operating revenues and our in most part supported by the Federal program, Canada emergency around subsidies serves.
Cinemas and James represent respectively, approximately 2% and less than 1% of retail operating revenues stay.
Stainless players Cineplex is our most important cinema and they are current on rent as of March one.
On the industrial segment, we recorded a 4.9% growth in SP NOI for Q4, and three three per cent for the year in.
In place occupancy experienced a slight decrease of 90 basis points to 95, 3%, while our committed occupancy also experienced a very slight decline of 40 basis points to 90, 657% that was more than offset by an 18% growth in net rent of renewed leases for the year.
During the year of 108% of the leasable area maturing in 2020 was covered by renewals and new leases.
On page nine we are pleased to announce that we concluded our first partnership with top tier local developers Kashi and difficult for the development of 500 residential units at central by dish.
We expect the first phase of this two phase project to be launched in Q3, 'twenty 'twenty, one and be built by 2023.
The first phase is approximately 364 doors split between condos and multi residential.
We rolled in land as part of our initial equity contribution. This marks the first milestone of our previously announced intensification strategy.
In terms of other developments in the industrial segment, we are in pre leasing and are seeking to launch at 200000 square foot building at our true really bad land and let out.
The legal market is tight and we are very very much like this site, we expect to have greater visibility for you in future quarters.
Antoine will now discuss our financial results. Thank you sit at al Good morning, everyone.
On page 10, if we look at our expected credit losses were recorded we recorded for this quarter, 30% less than the amount, which we recorded for the previous quarter.
Our total expected credit losses amounted to $5 6 million or $3 four per cent of bursting revenues compared to $8 million or 49% of operating revenues in the previous quarter.
On page 11 on a per unit basis, that's the true.
Adjusted for the quarter was 27 sets a decrease of 10% from Q4 2019, and if two cents from Q3 2021.
We believe that we are well above our estimate of overall street consensus of <unk> 24 cents.
He has a full adjusted for the quarter was 23 and.
An increase of one cents from Q4, 2019, and a price sense from Q3 2020.
Our <unk> payout ratio decreased to 37 five per cent for the quarter and 218, 83% from 2020.
I would like to add a few words about the shoes program from which we benefited and the way we took it into accounts in our financial statements.
So we received a total of $4 $8 million that was taken into accounts in Q4 of which $1 2 million is passed on to our tenants and $3 6 million is a net positive for coming on.
This $3 6 million breaks down as $1 3 million, taking into accounts and our G&A and a bit more than $2 2 million in our S. P N O I.
The $3 6 million net positive for coming or is for the entire year and breaks down in terms of time line as 0.2 million for Q4, and $3 4 million for Q2 and Q3 from buying.
This is why our <unk> adjusted calculation page 78 of our annual report presents an adjustment of $3 4 million for the fourth quarter and none for the year so to sum it up or if it's true for the quotes are takes into accounts the $3 6 million while our.
Adjusted only takes into accounts <unk> 2 million from the shoes.
Our <unk> and our adjusted.
Adjusted for the year both include $3 6 million from the suits.
For the quarter. These $3 6 million adjustment is partially offset by non recurring expenses of $1 4 million related to the strategy review.
Moving on to page 12, we estimate that COVID-19 had a negative impact on our <unk> of approximately $6 million during Q4 and up approximately 36 million for the year in 2020, we lost a minimum of 24 million in revenues due to the pandemic and additional expenses of 12.
<unk> million dollars further impacted our performance.
The latter were mostly composed of estimated credit losses related to COVID-19 of $31 million offset by $19 million of maintenance energy and other savings related to cost efficiency and to the innovation of our properties due to the pandemic.
Similarly, our NOI and therefore experienced an approximate $36 million or <unk> 20 per unit decreased year over year due to the pandemic.
Moving onto page 13 during the year. The REIT has written down $481 million of the value of its assets due to new prevailing operating in market assumptions impacting value, which amounts to 7% of the Q4 2019 value.
Our retail assets were most affected with a $415 million write down or 17, 4% of the Q4 2019 value.
Oh, she's assets were written down by $189 million, while industrial assets, so theyre value increased by $123 million.
On page 14, we highlight the two thirds of the overall write down of $307 million came from our enclosed mall portfolio, representing a 20% decrease with respect to their year end 2019 value. The rest of our retail portfolio experienced the value of decrease of $108 million or <unk>.
<unk> per cent.
Moving on to page 15, the 10% decline of Q4 as adjusted compared to Q4 2019 was was mostly driven by the retail segment, which experienced an 18% decrease inertia from.
She said before was four 6% lower in Q4 2020 compared to the same quarter last year industrial as a true on the other hand came in 22% higher than Q4 2019 value.
<unk> in our corporate segment, which is essentially composed of G&A and interest expenses is explained by a decrease of indebtedness at the corporate level due to dispositions in 2019 and a decrease in the average interest rate.
Year over year, our blended interest rates decreased by 30 bps to 376% year over year to 10, 6% total adjusted decline was mostly explained by the sharp decrease in our flow for our retail segment of 34%.
Office, and industrial assets, who were more stable industrial increasing by three 5% and you'll see us decreasing by one 6% when compared to 2019.
The residual estimated corporate segments evil favorably compared to last year due to the same reasons explained earlier largest from here.
Moving on to page 16.
Page illustrates our debenture and mortgage debt maturities as of December 31.
As of today, our liquidity stands at $339 million.
Moving onto page 17 during Q4 2020, our debt ratio increased slightly to 55, 3% compared to 54, 4% from Q3.
Leverage remains higher than at the end of 2019 as a consequence of the material negative fair value adjustment on our investment properties taken this year.
Our debt to EBITDA ratio remains stable at 11, three times, our unencumbered asset pool stood at $2 billion, representing 176 times, our unsecured indebtedness stable from last quarter.
As shown on page 18 of our pool of unencumbered assets is diversified within the three segments almost in the same proportions as the entire coming out portfolio.
Moving onto page 19 investments in Q4, 2020, and capital expenditures and leasing costs and lease hold improvements totaled $40 million up 3% from the same period last year for the year Capex stands at a $129 million down 4% from last year.
Including investment in development activities capital expenditures in Q4, 2020 totaled $42 million stable when compared to Q4 last year total.
Total capex for the year stood at $144 million down 8% from last year slightly below our target for the year of approximately $150 million.
I will now pass it back to <unk> for concluding remarks.
Thank you Antoine on behalf of management I would like to take this opportunity to thank all of our employees as well as our trustees for their contribution in the backdrop of these extraordinary times.
On a personal note my renewed thoughts go to families, which has been personally affected by this cruel end of it.
During this time with personal and corporate behaviors have a major impact on overall well being.
I'm proud of the way we add comment are responded to the COVID-19 crisis. Since inception, we took care of our employees and of our clients by ensuring safest sanitary protocols and being proactive in exercising leadership.
We also supported numerous clients by granting financial assistance when we considered it to be in the highest mutual interest.
I look at this as an investment in our most important assets together with our human capital.
I also wish to thank our governments for their continued open dialogue and solution oriented support in an environment, where it matters and needs we're far from static.
I will now turn the mic over to Anna for the question period open to financial analysts.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session.
A question. Please press the star from slides one on you touched on selling you will hear three don't from technology annoying questions questions will be taken in the order received should you wish you withdraw your request. Please press the star followed by the true if youre using a speakerphone. Please lift the handset before pressing any key.
One moment please before your first question.
Your first question comes from Jonathan <unk> with TD Securities.
Jonathan Please go ahead.
Thank you good morning.
Good morning, John.
First first question.
I noticed you removed.
Some assets from from the held for sale.
Category, how should we think about acquisitions dispositions for 2021, and how that impacts your your leverage targets.
And yes, we did remove we did bring back that one more chunky asset and into our or our asset base.
That opportunity may come back as we emerge from Covid and people reenter the downtown car and so we'll see how we progress with that and that's an asset in the other hand, we have.
Very much like ourselves.
No very good value in proximity to our ramp so.
That would be an evolving situation over further quarters.
In terms of.
Other initiatives, we have out there we are currently on the street with one Dan O'connor. So we are working with our brokers. There. So we'll see how that progresses over over the next quarter or so and I think our dispositions that we continuously look at.
Outside of the Sarcomere continues from looking at the portfolio to see which assets, we can or should be moving off up. So that's a fluid situation, but we are looking John and saying that further asset sales to de lever.
Okay. So should we is there is there any sort of target for 2021.
I'd, rather just because of that that one asset is very chunky. So I mean, it can go either way so I'd rather not on this call not give you a target maybe on our next Q1 call will have a target of greater visibility and a target for you, but all of this to say is that we are looking at further asset sales to de lever.
Okay.
Fair enough and then just just.
Switching gears the operations side.
Office.
They had very good results.
Ed in your prepared remarks that it was due to decreases in expenses was there was there anything onetime in there or.
Have you been able to make your.
Changes made that'll keep expenses lower going forward.
No no.
There's you know essentially are we you know we've reduced our expenses based on the actual occupancy of of the premises. So you know we will readjust as people reintegrate. So we're being very diligent and careful in and and you know and in sync with the actual occupancy and.
The needs of our tenants.
So long.
Alright.
Sure.
Yes, yes, there is a little bit of Susan.
I mean broadly speaking if you look at the at the portfolio I mean, the three segments.
The reported.
S. P. NOI was minus <unk>, 8% actually this includes the <unk> for the entire year. So if we if we took a lean to account the juice for the quarter, we would've been broadly at minus three 2%. So you can assume that the shoes had an impact of a bit more than the two.
Percents positively on the on the simple.
S P N O I.
This quarter, but.
It also means on the flip side, that's a the SG&A we published in the previous quarters was sort of artificially down because new shoes was computed into that.
Okay fair enough.
As soon as being sort of equal in the three segments or more heavily weighted towards retail.
There is a stronger from their issue for four four retail though.
Okay. Thanks, that's helpful I'll turn it back.
Thank you.
The following question from my side with Scotiabank Mario Please go ahead.
Hi, good morning.
This morning.
I just wanted to touch on the school's credit losses for the quarter. So two part question about first of all it looks like.
Loss reserve for industrial increased from four.
What percentage of revenue in Q3 with Q.
Q4 can you walk us through kind of what happened there.
A bit of color in terms of how that relative.
John.
Yes, well actually those are.
For those tenants, we didnt to grant the same type of relief as we granted for retail our retail tenants.
As a week or a weaker tenants and industrial segments. If it's on a property where the range is quite low.
Yes.
It's actually an opportunity in the longer run so that's the way that's the way for.
Firstly, we looked at it.
And if we look at those tenants for which we recorded our expected credit losses for the quarter. So from a quarter, it's $1 $4 million for the industrial segment.
You have 65% coming from tenants occupying premises and failure to 25000 square feet 76 tenants with clear heights, and failure or equal to 24 feet and 87 per cent of the students from multi tenant properties. The reason I mentioned those are those metrics is because in all cases it is not the ideal tenants that.
We want to have the the where we want the puts are the industrial segments are going are going going forward. So we would rather see this as an opportunity to.
222 to have less exposure to such a such tenants.
Understood and then how close would you say are used to your optimal industrial book.
Yeah.
Well in terms of demand just in Montreal, we have basically just under our general discussion pipeline, we have about one 5 million square feet under under discussion Montreal market remains very tight so what Antoine described is really it.
Underpinning our leasing strategy of upgrading our tenant base and driving rental rates and credit covenants.
Going through Covid, we also looked at which segments of the our industrial client base, where it correctly more exposed to didn't react.
With great resiliency during our during the crisis.
Commendation of actors and we then go back to prior quarters, we've been pretty successful and back filling space pretty quickly. So I would say a couple of months of breakage and.
I guess, no 90 day and look at it there's a greater demand for greater surface area. So.
That's one area, where there's a shortage in Montreal right now.
They can add color.
Yeah sure so what Antoine and so they have set obviously as you know are spot.
Spot on with regards to our to the industrial market.
As you know the market is extremely tight and to Antoine points are those tenants that are in the sectors of the economy that went through a more difficulties. During the pandemic are those that are typically are having a hard time meeting the market.
Demand for the current are the current market. So our asking rates are in this and this and this market. So we are as you know you may have seen in the document that we circulated for.
For new transactions on.
Spaces that become vacant the spread is actually in the 38% to 40% range.
Compared to a 18% to 20% for renewables. So those those are tenants that are having more difficulty as Antoine said is actually an opportunity for us to.
You know to increase our revenues and NOI is moving forward.
Got it and just Oh that's.
Serena.
4% this quarter.
It's 6% this quarter, how do you how do you see that playing out from the first half of this year and onwards.
Trying to understand what the repositioning opportunity in terms of the change.
Real quick relative to where you are today.
The three 6% our highest Q1 Q2 are playing.
In terms of Ah I mean, the we cant we cant hold to vacate spaces really the you know the answer to your question as far as the market goes.
As soon as space becomes available it is leased before it becomes vacant the demand is so you know we're so is so high and the vacancy is a it's just you know a overhang around 2% are in and the GMA I'm talking about Montreal, it's either.
Tighter in Quebec City.
We have unfortunately to release quite fast so they mentioned two months, sometimes that that's really the the time that it takes to reinstall the new tenant because it's leased before it becomes a weekend.
Okay sounds good day, most of those numbers definitely saw impressive just maybe switching to retail.
The reserve per 11, 8% in Q3 to five for Q4.
I guess, despite the secondary lockdown emerging.
Strong quarter typically speaking.
Are there any adjustments to the Q4 number.
So that's part of it.
How do you see that corporates.
From a time.
'twenty one.
Okay, Yes in terms of the.
For the for the.
Do you expected credit losses.
Yeah.
What we took.
I have you just spent actually a.
Thrilled the portfolio not necessarily not necessarily through the retail segment, specifically, but I know that most of it comes from the retail, but I would say that when we published $8 $1 million. This.
This quarter.
Uh huh.
Necessary when we when we published a $556 million of expected credit losses for the quarter.
That include.
A reversion of $2 $5 million for the previous quarter. So in other words, if we look at the expected credit losses for the three quarters, we published $18 million for Q2 8 million for Q3, $5 6 million for Q4, but.
After taking into accounts the the reversion that we took in provisions.
They should've looked at that weight Q2, $16 4 million Q3, $7 3 million in Q4 eight one.
$1 million. So there is the difference between the $5 six we published in the $8 1 million I mentioned is comes from over provisioning.
In Q3.
And I would just comment also on the.
The GAAP between the seven three for adjusted our expected credit losses for Q3 and eight one for Q4, it increased by $800000 and it's a it's notably accounted for by the fact that the crop program are indeed, and we entered into the <unk> program.
Which are in Quebec at least is less favorable than the than in our.
Other provinces so.
There was a there was a kind of a negative impact for us on that.
And on your question. Your second part of your question Mario I think what's important to look at it.
Retail essentially.
<unk> was shut down end of December around December 24, which is far from ideal going into Christmas sales season.
Net reopened on February eight so there when you look at Q1, you will see.
Non impacted through the retail segment, just not our portfolio, but just generally speaking, Quebec because of that.
When we look at where retail is trending now what was important for me as we are executing on our strategy we brought down our.
Prior calls and in our Investor Day, we said, we'd be reducing our fashion exposure other than value fashion, we brought that down by 5%. This year. So that's pretty impressive and when I look out and be very very careful in giving you sort of like a pipeline number of what we're looking at and this is under discussion and it may go either way, but it's I think.
It's healthy just to comment on it with the cautionary principle.
We have about 260000 square feet of retail under discussion here.
And what's impressive is about $40 45 per cent of that is in the grocery segment. So not the type of fashion you know moving off fashion that type of segment. We wanted to ban our grocer at medical we have another close to 20000 square feet. So we are really executing on that strategy. We also have another.
50000 square feet on your discussion.
Under and expansion category.
With a very very good credit clients and that's on two locations. So we're seeing now at Q1, we will have a bit of a bite concerning the performance just because of the shutdown, but we look at the backdrop of what would what we're seeing in our discussions with our clients where now we're seeing healthy healthy movement.
Going forward I don't know if you'd like to maybe talk about foot traffic conversion since February eight.
Yes Hum.
When described the strategy really really well.
The reopening on February eight where you know very busy for at the first week.
And we're seeing a very similar pattern that in the aftermath of the first week. So he has a decrease in traffic, which will be in the vicinity of 18% to 20%, which was the same after your first wave, but our retailers in general are experiencing good sales because the conversion rates are very high people go into shop.
So we expect that Q1 will be similar to the aftermath of Q.
Our Q2, so negative traffic by 17% to 20%, but negative sales index.
Three per cent range.
With wide variation between categories and are if all goes well with the vaccination pandemic and all of that Q2 should be yeah, sometimes.
What we saw scenario in Quebec at least as a a very concerted effort on our part as a small owners and a leading retailers too with an open dialogue with the government around where retail is that and the importance of keeping retail open as we move forward notwithstanding what happens with variance and so on.
So I think that the dialogue has been very very good and the government gets at retail has to stay open and we're making a huge effort to keep sanitary measures in place. So it's really a collective effort here.
Got it and then maybe when it comes to the outlook.
Retail discretion.
Your revenue on the retail side coming from restaurants.
So theres two school book or there's one school of thought themselves.
Thus far during the crisis.
To survive going forward and the other school of thought would be that book.
Service program in place until June 21, well that's true.
Really helpful.
So well see offered through 'twenty, one in terms of what the health of the tenants.
Where do you fall within that spectrum, well I think I believe when.
When we look at that that question I think you got to come back to our strategy you've been moving off the tenants who are more dependent on financial assistance and the tendency we were concentrating on these are very resilient and vibrant tenants. So.
When we look at our portfolio going forward, where the stress pain of Covid in the first wave should not be as present as we migrate new types of tenants and quality tenants in our base right. So that's how we look at it and we'd be a lot more resilient yeah and in terms of I go back to the first wave when we we assessed all of our tenants.
Categorized into different risk categories.
And right now we're I think in Quebec were left with a good good pocket out very strong retailers, but you can still habits from retailer and if that retailers shut down that retailers can have a problems I go back to my comment that as mall owners, we as owners and leading retailers haven't opened.
Dialogue with the government there in tune in retail is a chunky part of our GDP in Quebec. After construction. The government gets it we have to keep retail open going forward and there the equality for it becomes very very vocal so all things being said, we should be in a good spot going forward.
Got it Okay. My last question just on the operational side last year you provided guidance.
Thanks for all of two to three per cent given.
Given the state of the World today, it's clear understandable line.
Guidance items.
I guess from me.
Sure.
Things like parking revenue.
But notwithstanding the strategic review that's going on I was just hoping you might be able to provide.
Some broader base color or unexpected.
Fuel spreads.
2021 by asset class with the portfolio.
Yeah, I think we will be able to give you I'm not going to come back to guidance in the pure sense of the term and next quarter. We should give you more visibility coming out of Q1 on that because we are we are reassessing everything in terms of what happened on closures, especially in retail so we'll be a lot crisper on that issue and trends going.
Florida should have somehow some hopefully some greater visibility on the chart. So well it'll be I think it's more of a next quarter ratio.
Okay. That's it from me.
Thank you Luke.
Thank you. Your next question comes from Tami beer with RBC.
Your line is now open.
Yeah.
Thanks, everyone.
Just with respect to the Suez can you just maybe clarify what was the amount that you recorded that you received in Q4 that related to Q4, meaning not Q2 and Q3 and then is the expectation that you will continue to receive additional amounts perhaps through the first half of this year.
Okay.
Hi, So we received 0.2 million.
But we are to receive <unk> 2 million for Q4, because those amounts I mean, the $4 8 million in total for the year by the way has not been received yet it's part of our receivables but.
But we didn't.
EBITDA yet.
Cash so 0.2 is just attributable to.
The fourth quarter.
And with regards to our 2021 well we are we are doing the calculation on our side.
And that we.
We expect it to be more in line with our with Q4 than a true.
Q3, because the wait was computed it was not.
It was not the same calculation.
It was kind of a complicated.
The calculation methodology to determine what amounts we were eligible to.
But I don't expect much actually.
In 2021.
Got it.
Helpful. Thanks Antoine.
Just maybe switching gears can you talk a little bit about the <unk>.
Office leasing environment.
How it differs between your downtown portfolio and interest.
Brendan the suburban markets that you're in.
In terms of non.
Maybe I'll help but maybe talk to one or two questions at Mario had maybe I can tie in with that.
Trend, but.
Now when we look at Montreal office, we have about one 1 million square feet under discussions and discussions can be preliminary to more advanced that's just general inquiry types.
And that's split now basically a 600000 central business district, and 500000 net.
Suburban.
The the central business District number and I think what you got to read into it because it's it you can see it as being bizarre from your perspective, given the fact that my child non time core is closed but what's happening is people are coming off leases have an opportunity in this market to upgrade their premises.
So it's that's the I think what's underpinning the central business district interest and suburban.
It's performed pretty well in the numbers. We gave you so far under the under the pandemic and so I think now in terms of trends going in the office segment look at S. P. NOI way the other the other variable we have in there is we have our parking revenue we have a very substantial revenue base under par.
Okay.
And the quicker we get back into the downtown core and more helpful that parking contribution will be.
There is and I go back to an earlier comment I made during the script.
There is more and more talk by government and by leaders of industry of the importance of Repopulating, our downtown core to the Montreal, and Quebec economy. So I would say, it's really a moving target. That's why there's a lot of pressure right now and vaccination and keeping a lid on variance and in Quebec to go back same time lag.
Here This is where all hell broke loose for us because we had our spring break so theres, a very prudent and cautious perspective to spring break this year.
So the quicker we get back to the downtown core I think you'll you'll see some some adjustments in our revenue was especially around part D.
Got it. Thank you. So then just I guess thinking about.
2021 is real.
Whereas we reopened our capex and leasing costs were down last year, but as we reopen what are your thoughts on how that will trend.
In 2021, and then as well if you can just provide any color on the overall development spending outlook.
Yeah, well day development spending outlook I'll, let maryann and he can give some color, but we know where we are in the Martin day now we're in the market on gorilla beds. So we are in discussions with a potential tenants who are trying to tie that up at a good price point for us.
So I think that could be a sort of a box 10 development number which we hopefully if we tie this up he can give you the real detail.
The matrix on an ex comp because we're in that type of discussion.
In terms of general Capex, Antoine we'd be pretty much in line with that.
What we have this year, that's why we're trying to to maintain yes, we have approximately $150 million excluding developments.
<unk> projected for Capex this year.
With a small portion of that for our industrial of $25 million of about $16 million for office and the the differences with <unk>.
So for our retail.
Got it just one last one from me I guess, if you could maybe just provide an update.
I'm not sure if it's in the materials, yet, but your overall exposure to some of the bankruptcies in retail than had been announced thus far in terms of the revenue exposure and then I just wanted to clarify that you know it has all of that.
Your your net operating income meeting have all of those closures and I guess that that's already been taken for for 2020 meeting again.
Yeah.
Okay, well for the for the closures.
In Q4.
Bankruptcies in retail.
Amounted to $2 7 million in our.
There are segments throughout.
Throughout the year for 2020, the impact of bankruptcies was $9 $3 million from a retail standpoint are all that's taken into accounts.
In our expected credit losses, so so so so no surprise.
Further down the road on that and if we look at them.
The amount on a run rate basis that we are losing in terms of a revenue when compared to the beginning of last.
Last year due to all these bankruptcies the run rate loss amounted to $13 million approximately for the retail.
Thanks, very much I will let I'll turn it back.
Thank you.
A following question from Mike Martinez with dish out, though Mike. Please go ahead.
Alright, Thank you and good morning, everybody.
So then you seem to have good visibility on your leasing program in terms of renewals for the office segment in 2021, I think a large portion of that is government related.
What can we expect for based on what you've seen so far with the spreads on renewal and office be similar to what you were able to achieve in 2020 are higher or lower.
Yeah.
So now I'll give you the trends that are on we're talking renewals here, so right right over the spread what we are seeing is Ah.
As tenants.
Protecting space I can use that as an expression, let's see how things play out.
In the world.
So if you had attended an option for five years, but that would be coming back and saying well whenever you for three years, so there's a bit of pressure on the wall.
But and that helps them as France, I'll, let that line.
Yeah. Thank you Susanne, we're doing well on the spreads are for very simple reason that are you know.
Typically an office lease as you know would be a five to 10 years. So you know those leases that are expiring were negotiated five to 10 years ago. So there is no. Unfortunately, too obviously readjust the the rent to to market. So far this year the transactions that we've completed the the spread is that.
Nine 5% and are based on our projections on the deals that we're working on we are looking at 7% for for the year in 2021.
Okay. So very similar to what you did last year that's true.
Okay, and I think most other questions have been answered just quickly I don't know if I missed this but on the JV that you've done now.
But spotless.
What's your equity interest in that project.
It's a 50% from Mike.
50 per cent.
Okay. That's it from me thanks very much.
Thanks.
Thank you, ladies and gentlemen, as a final reminder, should you have a question. Please press star one.
[noise] Yeah no further questions at this time Mr. <unk> you May proceed.
Thank you Anna and I once again, thank you for taking part in this conference call and I wish all of you a very nice day, and we'll talk to you for Q1.
Okay.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and we ask that you disconnect your lines.
Yeah.