Q1 2021 Cominar REIT Earnings Call
Yeah.
Good morning, ladies and gentlemen, and welcome to the first quarter of <unk>.
This call of this Jive all.
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The question answers.
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The skull as of June.
Yes, Jordan.
Yeah.
I would now like to turn the conference by virtue of Mr. <unk>. Please go ahead.
Thank you and good morning, and welcome to today's conference call, where we will be discussing the highlights and financial results for the first quarter of 2021.
The presentation accompanying this call is posted in both English and French on the conference call section of our website.
In line with our disclosure of principles access to this call is open to the financial analysts investors the public opinion 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 told Glatt members of our executive management team Navient, the rebid day EVP of retail and Chief Development Officer, they'll now by the K EVP office on industrial and achieve real estate operations officer, and net debt EBITDA was so EVP asset management and transaction.
<unk> are also here with us.
2021 is the year of transition and high hopes, but the current pandemic context continues to significantly impact access to and use of the commercial spaces.
The second lockdown and the announcement by the Quebec government just before the year end holidays, which sound from the COVID-19 management perspective.
The further contributed to keep visitors and occupants that day in our shopping centers until fed day.
Hopes of a return to office buildings were dashed with work from home became practically of mandatory essentially for all.
On April one shopping centers on the Quebec City, and we do at <unk>.
Areas had to close once again following a surge in local COVID-19 cases in those areas.
As we speak restaurants gyms and other activities are essentially closed or operating in the very limited basis.
Hence the beginning of 2021 did not provide the anticipated grade of 2020 of the all the weighted but the rollout of vaccination campaigns of class Our province, it's fueling hope that the pandemic will soon be behind us.
As our provincial vaccination campaign progresses with a key 75% target for the end of June.
And together with relief brought by the upcoming end of the school year I am hopeful that the impacted segments of our economy will essentially start reopening of progressive basis early July.
Our provincial vaccination rate currently stands at around 38%.
Despite all of the challenges brought upon the real estate sector with the spend Dennis comment on continues to demonstrate the resilience of its portfolio with the <unk>, 4% increase in the same property NOI compared to the first quarter of 2020, which was practically unaffected by COVID-19 and a solid in the.
Stance has 91 two in place occupancy rate at 93, 3% committed occupancy rate.
On page three before diving into the results for the quarter I will briefly comment on on the formal strategic alternatives review process initiated on September 15 2020.
On the efforts of the special Committee of our ongoing and the Special Committee continues to work closely with the management team on the reach financial Advisors National Bank financial is BMO capital markets.
<unk> to identify review on the evaluate a broad range of potential strategic alternatives with the 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 when required are appropriate.
I know many of you wish for greater visibility, but on this call I will not add of add further color other than to say that our stock is a very active process.
Now, let's turn to our Q1 2021 highlights in the results.
On page four for our Q1 in addition to the organic increase of <unk>, 4% in the same property NOI.
Our leasing efforts allowed us to post an eight 4% growth in the average net rent of renewed leases for the year with positive spreads in all of our asset classes.
Again this quarter industrial leads the way with 18, 3% growth in respect of 2021 expires, while office posted a robust nine 5% growth in retail managed to maintain its range that level with 1% of growth.
The one 3 million square feet, and 1 million square feet office, and retail space, respectively covered by the yields on new leases as evidenced the demand for our space remained strong.
Concurrently the sale of four non strategic assets helped bring our leverage down to 54, 5% from 55, 3% reported at the end of 2020.
Has that March 31, our liquidity position stands at $381 million as of.
At quarter end, our unencumbered assets stood at approximately $2 billion.
On page five of our Q1 growth of 4% in SP NOI was again driven by our industrial non office segments with a six 8% and 0.7% increase in Sps NOI of respectively. While our retail assets that were hardest hit by COVID-19 experienced a decrease in SP NOI of five one.
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After a deep shock in Q2 2020, the first quarter of 2021 marks the third consecutive quarter with the relative improvement.
Our first quarter back in positive territory.
Now moving on to page six I will highlight some of the key milestones that have driven this quarter's performance in our office portfolio.
Previously mentioned net office SP NOI was up by <unk>, 7% for the quarter.
In Montreal of the Central business District was impacted the most in Q1 2021, particularly due to the loss of parking revenues, but remains healthy with the 91, 6% in place occupancy rate and a weighted average lease term of five five years.
Our properties on the Montreal suburbs performed well with the substantial 18% growth in SP NOI versus the first quarter of 2020 more precisely in Montreal at least another output on the commencement of the major leases totaling 230000 square feet.
On a comparative basis, our suburban in place the occupancy rate increased by five 1% to 86, 7% three 3% ahead of the Montreal Office, Montreal suburban office market.
On this note pre COVID-19, the Montreal suburban office market, we're starting to benefit from the spillover from the low vacancy.
Downtown market.
Post COVID-19, we anticipate that many organizations will consider a transition from work to home to work near home solutions adopting of hub and spoke occupancy strategy, while maintaining the head office in the central business Court.
This context, it is favorable and we hope to capture new leasing opportunities, that's 50%, 57% of our office vacancy resides in the suburbs.
Where we have seen a 13% improvement over the last year.
The Quebec city portfolio remains very solid and resilient the.
<unk> P&C rate has remained stable during the pandemic, both committed and in place being at 97% and despite the decrease in parking revenues SP NOI growth was 7% compared to Q1 2020.
The two 5% decrease in SP NOI in the Ottawa is due to lower parking revenues in the downtown core and a one 9% decrease in the average in place occupancy rate. Following the expiry of a 60000 square foot leased interest at 1000 innovation drive in Canada for which we have <unk>.
<unk> re leasing activity as we speak.
And both the Quebec City in Ottawa are solid government tenant base, representing nearly 50% of our tenancy continues to provide stable income.
Also in all three markets our operations teams have been successful in controlling operating expenses on an optimal level of as evidenced by the six 5% decrease in the same property operating expenses this quarter.
Overall, our office in place occupancy rate remains stable relatively stable up slightly by 2% from the year ago.
We are currently not seeing a major impact on non fixed rates and has achieved a uplift of nine 5% on rent renewals. So far this year.
On page seven despite facing some of the most stringent COVID-19 related restrictions our retail portfolio demonstrated sustained resilience throughout the pandemic. We have remained active on the leasing front with 67% of 2021, Expiries, which is approximately the named square feet.
Already covered by new leases, our renewals as at March 31.
During the quarter, we added 165000 square feet of new leases in place.
We also have an additional 131000 square feet of new leases scheduled to open over the course of 2021.
Of the 165000 square feet of new leases in place 67000 square feet relate to the day cash flow and talking about 49000 square feet, where value fashion, such as the 19000 square foot winters, which opened net capital St jobs and.
And a 30000 square foot <unk>, which opened again the data on both located in the former Sears spaces.
In addition, we added a 14000 square foot Clifton climate my sharply in the.
Our entertainment segment, and a 16000 square foot.
Titian at from that both on the personal care segment.
All of these new leases in place in terms of the square footage.
Of represent only 3% to pure fashion evidenced that our recent activity aligns with our strategy of increasing our ratio of tenants better performance in which our performance in this category and it can be seem to represent a lower risk to the fashion banners.
With respect to the 131000 square feet. The come on stream. This includes a 31000 square foot textile location.
In Quebec City, a 21000 square foot urban planet location, and a 31000 square foot.
The office Engineering office furniture.
Over and above these numbers, we have approximately 90000 square feet of grocery space under advanced discussions and this week, we just signed a 17000 square foot medical clinic.
On page eight not surprisingly the industrial sector has kept its strong performance with same property NOI, increasing by six eight percentage of the quarter compared to last year and growth of 18, 3% and the net rent of renewed leases so far.
In this context of strong demand, we are seeking to maximize the range.
The tenant base and strategically plan the lifecycle of our assets. For example, we are currently reducing our exposure to the edge of came in and fitness sectors of our flex portfolio and increasing our exposure to distribution and logistics.
Some of our tenants were unable to weather the pandemic, which enables us to solidify our portfolio with stronger and more resilient tenants at higher rental rates due to increasing demand in this sector.
In both the Montreal, and Quebec City markets are all of our overall in place occupancy rates have remained relatively stable at 95% 96% respectively.
Keeping occupancy at these optimal levels is the direct result of our strategy as we strive to increase rates in for both tenancy turnovers to realized rent uplift with the new tenancies.
Our Montreal portfolio generated 9% SP NOI growth is the result of significant net increase of negotiated in the past few years and our expense optimization efforts.
Rents are increasing at a fast pace and the greater Montreal market as it started shortage of available spaces.
Have the tone the set another record year with about 2%.
Of the one 7 million square feet of leases maturing in 2021 800000 have already been renewed with an average net rate increase of 29% with an additional 100000 150000 square feet in final stages of negotiation.
Thus, we have approximately 80% of our planned renewals already covered.
At signature by the end of Q1.
The Q, the Quebec City industrial portfolio.
Performed relatively well with that SP NOI growth of six.
The 6% rental growth on the new leases was seven 3% in the achieved 10% spreads on new leases completed in the first quarter of 2021, which will impact our bottom line in years to come the.
We expect NOI growth and of course upcoming quarters as we capture the best opportunities and ranked conversion and the favorable rental the environment with only a 2% market vacancy level.
In both markets, we expect the demand for industrial space will keep increasing propelled by advances in ecommerce re shoring of manufacturing activities increases in distribution inventory levels growth and <unk> last mile logistics food storage and acceleration of investments in life Sciences.
On page nine of the previously announced partnership with top tier local developers closure of difficult for the development of 500, new residential units of Suncor Palace.
It is well on its way we expect the <unk>.
First phase to be launched in Q3, 2021 and be completed by 2023.
The first phase is for approximately 364 doors split between condos and multi res.
On page 10 in the industrial segment, we are on pre leasing discussions.
Well advanced in that clearly the <unk> project in Laval.
And we are Envisaging trying new launch phases wanted to concurrently with demand for this site.
On <unk>, we will now discuss our financial results.
Good morning, everyone.
On page 11, if we look at our expected credit losses were recorded for this quarter of $2 $5 million or 1% of operating revenues coming mostly from the retail segment.
With three 9% of retail operating revenues and was favorably impacted by the reversal in the amount of $3 9 million of expected credit losses from prior quarters.
Compares to $5 $6 million of three 4% of operating revenues recorded in the previous quarter.
Regarding our collection rate it's true.
Net 94, 7% for the first quarter, including amounts to be collected from government agencies.
Worthy of mention is the fact that on the same number of this first quarter basis. Our Q1 2021 is slightly better than the previous quarter, which was 94, 2%. After the same number of days and which stands at 98, 1% as of today.
On page 12 on a per unit basis, our <unk> came in at 28.
On a net adjusted basis <unk> was <unk> 27 stable.
The stable from Q1 2020 in Q4, 2020 and above street consensus of <unk> 25 for this quarter.
For sake of clarity the adjustment calculation breakdown as the $2 $7 million settlement received from Sears, Canada that is the duties and $1 $4 million of consulting fees spent on the strategic alternatives review that is added back also particularly the clarity.
On an adjusted basis for the quarter includes the positive impact of the reversal of prior quarter's credit loss provision in the amount of $3 9 million early termination fees in the retail on a few sectors in the amount of $1 6 million on expense recoveries from last year in the amount of <unk> 8 million.
DSO for the quarter also on an adjusted basis was 20 once the gain stable from Q1, 2020 and down <unk> <unk> from the last quarter of 2020, and which will mostly incurred the low maintenance capex.
Because we didn't spend meet the new capex in Q4, but because of the amounts take any of the prior quarters in our <unk> calculation already covered the amount of effectively spent in Q4 2020.
For the first quarter of 2021, our EBITDA fiscal payout ratio stood at 45%.
Moving on to page 13 of these page illustrates our financing maturities as of March 31.
Subsequent to the quarter, we closed the new credit facility of agreements to replete the $400 million facility maturing in July.
This new credit facility was completed with the unanimous support of the seven Canadian banks that have been participating in our bank syndicate.
The new credit facility consists of the $250 million unsecured credit facility with the one year term and priced at a spread of 275 bps over the years and of <unk>.
The $150 million secured credit facility with the two year term and priced at a spread of 250 bps overview.
On page 14 during Q1 2021, our debt ratio was reduced to 54, 5% compared to 55, 3% at Q4.
Notably due to the disposition of four non strategy and encumbered assets during the quarter.
Our leverage remains higher than Q1 2020, as a consequence of the negative fair value adjustments on our investment properties taken in 2020.
As at March 31, our liquidity stood at $381 million of which $20 million is cash and the rest of available under our credit facility.
Moving on to page 15 of our pool of unencumbered assets is diversified within the three segments almost in the same proportions of the entire coming up portfolio and remains at a healthy level of $2 billion at the end of the first quarter.
On page 16 investments in Q1, 2021, capex, leaving and lease hold improvements totaled $25 million down 27% from the same period last year.
Including investment in development activities capital expenditures in Q1 total of $27 million.
The 39% to Q1 2020.
This includes $2 million of capitalized interest.
Looking ahead, we foresee spending from 2021, the total of about $170 million, excluding capitalized interest of <unk>.
Which $30 million dedicated to development.
The maintenance Capex spending that is used in our <unk> calculation is expected to reach $25 million in 2021.
Also in the year.
Calculation the provision for legal costs will be around $30 million this year.
Ali the recognition of leases on the street land basis in the EA.
If we calculation should be the negative adjustments of about $2 5 million for the year.
I will now pass it back the seasonal for concluding remarks.
Yes, thank you on client.
Turning to page 17 on the ESG front, we are proud to have been awarded the priority of certification by women and governance for our gender diversity of commitment and results on.
On behalf of management I would like to take this opportunity to thank all of our employees as well as of our trustees for their contribution in the backdrop of these extraordinary times.
I'll now turn the mic over time as part of the question period open to financial analysts.
Thank you, ladies and gentlemen, who are we now begin the question answer session.
Should you have any questions. Please press star followed by one on your debt still fell on you.
You will hear three of them from the closure of your request on your questions will be both.
Should you wish of decline from the polling process. Please press star followed by <unk>.
We're using a speaker phone please leave through handset before pressing adt's one moment for your first question. Your first question comes from Jonathan <unk> with TD. Jonathan. Please go ahead.
Thanks, Good morning.
Good morning, gentlemen, Hi, Jeff.
For the first question in Savannah.
Probably not really going to talk about this but just on the strategic review.
Can we assume that the cost would be about 1 million of the half of quarter going forward.
Okay.
All of that.
On <unk> comment but of the it depends on the duration of the process I'm not going to comment on the duration of the process I can tell you what we have in the quarter.
And the process is active but we are.
We are hopefully coming towards the end of the process I'll put it balance.
So on an active process in the coming towards the end of it.
Okay.
Okay.
I guess sort of related but the.
The review does that impact.
Anything you want to do in terms of running the business of I'm really thinking here. If you wanted to do something.
With the CN property are you are you sort of hands tied right now or could you go ahead and do something.
We are looking at all of alternative Jonathan So as we speak we have.
Our hands are not tied in the way, which we can.
We could proceed depending on what what the conclusion of the process is we can proceed on on CN or not.
Okay.
Just.
Two others from from me what one just on on.
On the office, you spoke a little bit about hub and spoke model.
Have you seen evidence of of that happening from tenants tenants asking about.
Leases like that.
Bill now.
Non.
Specifically in terms of actual deals however.
We do have conversation with tenants that are looking for.
Off of.
Island, if I talk about the Montreal, mostly.
Off Island solutions for their employees that are living in the suburbs. So that's something that is under discussion right now with a few tens of Jeff.
Okay, and then do you have.
You guys did obviously, a really good job on on retention of the office and office in the quarter.
Was that.
What was the average lease term in the in the quarter or year to date, however of rehab of the stats.
While the very the.
The average would be the same as what we currently have I would say about five and a half years. If you. If you do the average we've had 10 year renewals we've had.
For the year renewals for obvious reasons, some people want to have the short term.
Horizon in order to figure out how theyre going to organize the space. The good news is as you said.
Of the renewals are going strong and people, leaving and the necessity and.
The use of office for their future, so that's very encouraging and positive.
If I can add on now we had a significant government tenants.
The Neal base on the government has been when they renew estate they've been moving.
Long term duration of the average things of that our government tenant fees are.
Very very long term.
On certain segments of the private sector people are being on a bit more cautious than having shorter lease terms debt average correctly. So it shows the importance of our government tenants.
Okay for sure and then just lastly on some tropical lists.
Do you guys have a cost expectation than expected development.
Phase one well its about 364, if we hit the five.
Units are doors and.
Hard cost of cost in that happening.
The higher cost for phase one the Jonathan are $80 9 million flow.
The $248 per square foot that includes hard cost GC top GAAP.
Phase II 436 units of $46 1 million.
Okay, so thats outside of 100%.
Yes.
Yes.
Well, we're only where we're only talking Faisal on right now.
As to costs suggest that the next because of the damage. So the.
The peso on cost of available on this.
Okay, and 100% contribution of 100% contribution so.
So of $40 million to you guys, Yeah correct. Okay. Thanks, I'll turn it back.
Yes.
Thank you. Your next question comes from Mario <unk> with Scotiabank Mario. Please go ahead.
Alright, Thank you and the good morning.
I wanted to stick to the office segment, it looks like occupancy points of occupancy came down from two.
270 basis points quarter over quarter Q1 versus Q4.
I think innovation was mentioned 60000 square feet. So that's about 50 basis points of it just want to give more color in terms of the remainder of the decline whether it was expected and what the.
The expectations on that for year end occupancy.
Now another important number would be 80000 square feet of counting deck in Montreal, which is just close to the Bell Canada facility off net non violent so that's another driver.
So the essential I think the two key parts of it really.
Innovation and for which we have significant leasing activity and cash <unk> was just came out recently on where we have some leases less net for Canada, but we have the sensitivity.
What was the.
The rationale for the departure of on the 80000 square feet.
So in both cases these were lease expiries for which we were aware of the tenants we're leaving on.
Unfortunately, the end of the lease hits.
Precisely when the pandemic.
The pandemic started and we added a very strong pipeline both from the case of <unk>.
And while in the case of <unk>.
The category, we actually had at least negotiate it and.
For obvious reasons debt.
<unk> put on pause and in the case of the innovation, we have started marketing the the spa.
Based on was to become vacant which it is now and we have about 150000 square feet of active discussions to replace in the 60000 square foot of vacancy the.
The cannot of space, where they are.
A prime tenant and.
In the tech sector.
The carry Derek space, where the occupied the top tenancy by the city of entry of a couple of years. They were going back in the part D side, whether or not the stay there.
And go back into the integrated either the space they have elsewhere. So.
We actually came to the negotiation and at the last moment, they decided to the call.
With the start.
Okay and on 97% how do you envision that.
Moving over the course of the year.
97%.
On the 97% for all of 90% of color.
So that the with the activity that we have now.
That too to my forecast is that I'm going to be at the same level at the end of the year, So between 90 and 92% of.
The in place occupancy.
Right, Okay, maybe maybe some more questions on for the retail and industrial and the.
The quarter of 95% from 96, 8% respectively.
The goes to grab the tubing.
The end of the year.
We expect to grow.
Both by one point.
The committed at 91, five and $87 seven as far as the impact of the concern.
I think Mario it's interesting is wildly the gave you.
The numbers on how we break down the 131000 square feet to the come on stream in 2021.
On the categories of very well aligned with our strategy.
Kudos to.
Of our team, but what's also not in those numbers as we are in advanced discussions on 90000 square feet.
From relocation.
And we just signed this week.
Members.
And medical clinic at 19000 square feet of glaucoma.
70, <unk> that's correct that's correct.
So there is good activity on the retail side.
And that has to be added to that that stream going forward.
And our Sears were pretty good shape too.
Okay sounds good.
Just maybe on coming to the bad debt expense, if we take out the reversals of about five 6% of revenue.
The quarter higher than in Q4.
On again, the Q4 of 20 reversals were also quite high so when you look out into Q2 and I would imagine the.
Subsequent lockdown Muddies the picture of a little bit. However, when you look out the Q2 Q3 of this year, what's your sense in terms of the visibility on where that percentage of revenue provision.
The panel.
Okay.
Give you the on time and gave you some greater color about as we see in each of the three classes, we see of declining throughout the year, so and thats, reflecting the the pickup in the in the.
And merchants from the the Lockdowns, Okay. It's on plan.
Yes.
I think it is.
The good thing to look at the.
The actual numbers, excluding all these the revisions because this quarter.
If we add back of the reversion actually we had $6 $4 million. If you look if you look at those figures excluding reversal for Q3 and Q4 last year.
Were respectively of seven 3 million and $4 $2 million. So let's put it this way it went slightly up this quarter, but essentially due to the closing of <unk>.
Of molds and the.
Of some reagents, which was which was not the case.
In Q4, but we are so.
Higher but we are like on the average of what was the which was the.
The scene in the Q3 and Q4.
Yes, totally concur with the with the funeral side.
Say that our expectation is that it is going to be declining for the.
The rest of the year.
Okay. Okay, and then just on the same property NOI.
It was reported up 4%, but included about five 6% decline in operating costs you have done a very good job not only during the pandemic, but prior to the pandemic in terms of.
Optimizing cost structure.
Stabilized environment and hopefully that's relatively soon.
Much further downward pressure on operating costs do you see within the portfolio.
Not that much because.
As the as we reopen the premises our operating costs.
Scalade up a bit and the key here is the managing of ramp up of the cost is tiny the opening of the expenditures if you wish with the the entry of occupants.
It's going to be a very fine line to walk on our part but in terms of that operating cost.
The.
Take the the bulk of that was done pre.
Pre COVID-19.
So now we're really in a in the management structure accumulation of managing down the management of operating costs as we ramp up.
Okay. My last question just pertains to liquidity.
It was up over 40 million quarter over quarter. So it's about 381.
What are the good level.
For you in terms of thresholds of going forward I know what are the assets held for sale.
Zero at quarter end. So just curious in terms of where you want to keep that liquidity and how you see the.
Financial leverage kind of decelerating.
You go quantum of peace.
Okay with regards to liquidity. Additionally, we wanted to stay high.
At the level of higher or equal to $200 million.
Plus we have as of today none of them.
<unk> assets.
Polio of $2 billion. So this one is not immediate liquidity, but it's available potential liquidity.
All the more so because we have.
We are of very strong an encumbered assets.
<unk>, which will lead the leaves us room to maneuver if we want to if we want to tap that.
The alternative.
Having said that in the future of the way we are.
Our liquidity is by rolling the mortgages, but also by resorting to the to the unsecured debentures of the market.
On an opportunistic way.
And with regards to leverage as you mentioned.
If we just rule of rollout the debt leverage will remain stable.
We we will decrease.
The decrease is twofold first buy.
By way of dispositions and secondly in the longer run through through the us getting back to a better level in the longer range.
We are targeting sort of target of one of them to euro two years or three years on sort of a target debt to grow sparked the value and debt to EBITDA.
Goodbye.
That will be just as we speak this morning, no that'll come out of our strategic alternatives review process.
Okay.
Thank you for color.
Thank you.
Thank you.
Our next question comes from <unk> with RBC.
Please go ahead.
Thanks and.
Good morning.
Just I'm just thinking about from a disposition standpoint.
Did see a mall.
Great. Thank you just outside of Montreal last quarter can you comment on whether youre seeing any activity pick up in terms of the appetite for retail in your markets.
Well the the what we're seeing in terms of a day.
Data coming from the brokers and just speaking to investors is there's an.
An increase in interest for retail, which is grocery anchored grocery dominator of with pharma. So there is there is an interest around that.
And I won't elevated necessarily to the ranks of interest similar to industrial but its a much mark mark interest than there was in the past.
And in terms of.
The overall interest of our enclosed malls on retail I think is just a wait and see approach to see how.
How the retail base.
Emergence from the from COVID-19 and the number of Cc that the lay workouts, which are pretty much behind us right. Now so I think the the cleansing of that marketplace has.
Has the.
Has occurred and.
The other component, which impacts values as the all the as the.
The density of intensification opportunities around those assets and so as these discussions mature. It will also have an impact on volume.
The interest.
Got it just maybe one more from me just coming back I guess.
Along the same lines with respect to the office market.
You did have that transaction last quarter, I think which was shelved for downtown Montreal on the office property there.
One of any further updates on that potential for that property of any change and then secondly, just from a broader standpoint again, the same question as to whether Youre seeing.
Some appetite for from Montreal or even.
All of our Quebec the office assets.
Okay.
The AD the asset I believe you're referring to is that $200 million and range of asset which was.
It helps for under assets held for sale on the prior of prior quarters.
The acquirer of potential acquirer of that asset as a strategic acquirer, who remains extremely interested.
And the assets and who is dependent on government funding.
For that acquisition so.
The discussions are ongoing but at the same time and there is little benchmarking if you wish in this marketplace for.
The value of that type of strategic asset that is not an asset, which we wish to sell other than our term. Okay. So we are in no rush to sell it and we will only sell it if we get on price.
Thats still thats, where that that opportunity the lives.
In terms of.
Ottawa we have.
We have a building, which is then under auction and we're in the final stages of that auction for 110, Oconnor, which is the vacant building.
Which has been vacant 200000 square foot, which has been vacant since November 2019.
And that is more of a redevelopment play and the.
The very confident with that process and we are looking at numbers above our internal value. So we're in the profit zone, which is good for us.
In terms of the Ottawa generally.
There is interest given the now the government has asked.
I stepped up and.
<unk> been a very good tenant net.
What's good about our portfolio is the the.
The weighting, which we have with government tenancies and so there is interest around that and at the same time. These are good buildings for us which contribute.
There are buildings.
Now they can get to know where we had of short term lease for a very chunky building, which we're in the process of extending out so that may be something we will look at Dolby. So if we do some pruning around the auto while it would be more on I think on a select basis from the time be.
And Quebec City. We currently don't have any I couldnt answer the question because we currently don't have any assets on the.
The more significant office properties, which.
We are willing on one can move off of and once again there.
A very high profile on it that the government tenancy, there which have been very stable.
On the Quebec City area the.
A few office properties, we had concerns with the work more in the sector and the moved up from a couple of years ago.
We were more front ended up on our pruning of the city, but we Havent, Quebec City of Appeals.
It appeals to us and not only has been entertaining discussions on smaller type of the colleagues at retail slash Chad.
Office assets.
We may move on certain assets of that nature, but they are not our core assets.
That is that's great color thanks of that.
Okay.
Thank you, ladies and gentlemen, as a fine. The reminder, should you have any questions. Please press star one.
It appears there are no further questions at this job you May proceed.
Well, thank you everyone and I look forward to talking to you very soon and that are upcoming.
AGM.
Thank you have a nice day. Thank you.
Okay.
Ladies and gentlemen, this concludes your conference call for today. Thank you for participating and ask could you. Please disconnect your lines.