Q2 2021 Cominar REIT Earnings Call
Good morning, ladies and gentlemen, and welcome to they've come in on our second quarter 2021 results conference call at this time and no debt all lines are in a listen only mode, but following the presentation. We will conduct a question and answer session and if at any time. During this call you require me. This assistance. Please press star zero for the operator.
And note that the call is being recorded on Thursday August 2021, and I would like to turn the conference over to Sylvain <unk>. Please go ahead.
Thank you.
Good morning, and welcome to today's conference call, where we will be discussing the highlights and financial results for the second quarter of 2021.
The presentation and accompanying this call is posted in both English and French and the conference call section of our website.
In line with our disclosure and principle access to this call is open to financial and other analysts investors and the public and the media.
A question period will be open to financial and all that.
Before I begin I would like to draw everyone's attention and they notice concerning forward looking statements on page 2 on the presentation.
With me today is our CFO on blinded pooled class members of our executive management team Maryon Davis, EVP retail and Chief Development Officer Bell now plenty cash EVP office, and industrial and cheap real estate operations.
For sure and net debt deal so EVP asset management and transactions are also here with us.
On page 3 before diving into the results for the quarter and there will be no update on our strategic review process at this time.
The efforts of the special committee are ongoing.
Cash flow Committee continues to work closely with the management team and you reach financial Advisors National Bank financial and <unk>.
BMO capital markets are.
Our objective remains unchanged that is 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 current trading price.
As previously mentioned, we will communicate in due course with unitholders with required for appropriate.
Now, let's turn to our results for Q2.2021.
On page 4 I wish to highlight our organic growth of 15, 1% and SPP NOI for the quarter together with our 8.9% growth and average net rent a renewed leases year to date and for 2021 with positive spreads and all 3 of our asset classes here.
To date and industrial leads the way with growth of 21, 5%, while office posted a growth of 7.5% and retail and maintained its rate level and 0.9 per se.
For the quarter itself results are even better with growth of 13, 3% for the overall portfolio.
With office up by 7.3%.
Retail up by 5.3% and industrial and by a solid 24.8 per se.
The $1.5 million square feet, and 1.2 million square feet of office and retail space respectively.
Covered by renewals and new leases for 2021, as evidenced and demand for our space remains reasonably strong and it's out of the ordinary and environment.
And $136 million negative fair value adjustments recognized during the quarter brought our leverage to 55, 6% up from 54, 4 and 5% as at the end of the previous quarter.
As at June 30, our liquidity stood at $355 million.
And additional $1.7 billion and unencumbered assets also remained at our disposal at quarter end.
On page 5 our Q2 growth of 15, 1% and SPN and why was primarily driven by our retail and industrial segments.
It's a 54, 4% and 13, 1% increase respectively.
Our office segment experienced a decrease of 4.0%.
Q2 performance for office is explained by the drop and parking revenues and the context of Covid, which we expect to pick up gradually as workers start to flocked back to offices. This fall.
After a deep shock and Q2 of 2020, the second quarter of 2021 and marks our fourth consecutive quarter of improvement and.
And our second quarter back in positive territory.
On page 6 year to date.
Our retail segment is on demand as illustrated by our 17, 4% increase and SP NOI.
While our industrial segment continues to perform well with growth of 9.8%.
Our office segment posted a decrease of 1.7% again driven by lower parking revenues.
Moving on to page 7 and during the past quarter and the impact of variance and the layering effect of containment measures continues to impact the office segment.
However, since June and the province of Quebec, and is apparent and situations evolving favorably and.
And clearer indications for our return to office as are starting to emerge.
With the government recommendation on work from home to be hopefully ease in the coming months.
Government agencies, which occupy 43% of our portfolio has started to announce their plans for their short and medium term.
Government agencies and come back for the first and set the tone announcing that the mass the vast majority of their employees arguably at the office at least 2 days per week, starting in October 2021, well.
While the federal government is expected to follow suit with a similar arrangement.
On a longer term, we believe that these initial steps towards not normalcy will help reestablish the importance of access to and use of offices and.
As the economy recovers and we anticipate that absorption of vacant spaces will be on the rise and occupancy will eventually scale back to pre COVID-19 levels and.
And the short term and the office segment our outlook for the second semester of 2021 is generally 1 of cautious optimism.
Decision, making processes from corporate occupiers and remains slow and the ongoing and focus on shorter term renewals suggests that corporate occupiers are delayed and key decisions on long term future office requirements.
And the initial phase, we believe that most businesses for their both their intentions and managing and back to office transition priority evaluated and mid to long term pockets and see.
As previously mentioned office and see NOI was 4% less for the quarter and 1.7% last year to day.
The decrease in SPM and why is mostly related to year on year decrease for in place occupancy and all 3 markets, averaging 1.7% and a reduction and parking revenues for the fifth consecutive quarter, which had a significant negative impact.
However, Q2 provided the first year on year increase and parking revenues since the beginning of Covid and our most traffic driven properties such as glass IDEXX Neo and they've got some fat and Montreal.
We are proactively assessing the best strategy is to increase parking revenues in the post COVID-19 world such as greater flexibility for users and exchange for a more agile and and lucrative pricing structure.
And Montreal office and place occupancy decreased by 3.9% at the beginning of the year.
Mostly related to 3 meaningful departures in our central business district portfolio, which accounted for 140000 square feet and total debt.
Spicy decrease and occupancy S. P. NOI for the second quarter remained essentially stable at 0.2% growth supported by higher rental rates and more favorable and unexpected credit losses.
And the greater Montreal and market, despite negative absorption and second quarter of 2021 and recorded the best performance and past 12 months.
Total sublease and vacant space decreased a first since the beginning of 2020.
This is an early sign and the market is starting to stabilize the direct vacancy rate has also decreased but remains higher than historical levels at 12, 3%.
Leasing activity is also on the rise and it's and is that the highest since Q1 and 2000.22020, sorry also suggesting the market is at a turning point, including the suburban office market.
Where we posted an 8.6 growth for sand growth and net PNY and since the beginning of the year.
Our Quebec city portfolio and remains healthy at $95.4 per cent in place occupancy.
A slight reduction of 1.8% since the beginning of the year.
We see the decrease in in place occupancy is temporary and is mostly related to the lag effect of COVID-19 on the leasing and small office spaces for which we are now seeing an increased level of activity.
Our office portfolio and Ottawa is smaller in size is recovering from a pre COVID-19 departure of a 100000 square feet at 1000, and innovation drive and Canada.
This property is located and healthy technological sector and we have significant re leasing activity and are already leased or in final negotiations for 70000 square feet a day vacated space.
Along with lower and parking revenues and the downtown core we recorded a 21, 6 decrease and SP annualized quarter over quarter, which we expect will gradually recover over the next 12 months and place occupancy improves as a result of our leasing activities and thats parking revenues increase with the reopening of this.
Downtown funds.
And the Ottawa market vacancy continues to rise and Q2, but there are encouraging signs as leasing activities are on the rise.
Overall, and the office segment as at Q2.2021, new leases starting in 2021 stood at 287000 square feet.
In addition, renewals and stood at 1.2 million square feet, resulting in a retention rate of 72% with rental growth of 7.5%.
We have covered 88% of 2020, 1 maturities with new leases and renewals and options.
Okay.
Up to now rental rates and not be materially affected but higher incentive packages are being offered by landlords and its very competitive market.
Our office collection rates remained solid with 98, 9% collected in Q1 and 98, 1% from year to date.
For our 3 markets, Montreal, Quebec City, and Ottawa since the beginning on Covid and until the end of Q2.2021.
Our in place occupancy decreased by only 1.1% and average while those markets have an average last 2.3% of their occupancy.
On page 8 moving on to retail.
And in the face of stringent and Covid related restrictions and then third shutdown in April and May and setting some regions being and Quebec City area lower St. Lawrence Shove data at Ash, and and tie with our retail portfolio demonstrated reasonable resilience and the circumstances.
We remained active on the leasing front with 81% in 2021, Expiries or Approx, approximately 1.2 million square feet on.
Already covered by new leases and renewals at quarter.
During the quarter, we added 75000 square feet of new in place leases for a total of 212000 square feet year to date.
At quarter, and we had and an additional 171000 square feet on new leases scheduled to open over the course of 2021.
Of the 75000 square feet for new leases added in the quarter 30000 square feet related low value, which opened net guarantee does and a 14000 square foot clip and climb as my Shanghai and the entertainment segment.
With respect to the 171000 square feet on new leases to come on stream. Later this year and this includes a 31000 square foot tests on location at 21000 square foot urban planet store.
And 30000 square feet of office space with and engineering and.
And 32000 square feet with a value of about 8 b, 1 action on Hulu location and for getting phone location.
And total this represents 383000 square feet for 2021 and in terms of square footage only 3% relates to pure fashion and <unk>.
Evidencing that our leasing activity aligns with our strategy of increasing on a ratio of tenants that are performers and their category and can be seen from represented and lower risk when compared to fashion bags.
Over and above these numbers post quarter, and we signed up and 17000 square foot and not medical clinic, and Bachmann and plan to open in December of 2021 and.
And a 36000 square foot health oriented growth.
And plan to open and spring of 2022.
Finally, we are at least discussions for approximately 30000 square feet with a grocer and 30000 square feet with a recognized Canadian value retailer.
On page 9 our industrial portfolio continue to improve.
Foreign extremely well supported by solid market fundamentals.
There is sustained growth and this sector Q2, 2021, being a 20th consecutive quarter of positive absorption.
Both markets and which we operate continue to show record levels of demand and lower vacancies, which are constant consequently, planning and our favor, allowing us to increase rents and push net asset value.
And Montreal and market currently has 1 and the lowest availability levels and North America with a vacancy rate of 1.4%.
Our portfolio has performed very well and the face of Covid with an increase and in place occupancy of 3.4% year on year, and 13, 4% increase and SP NOI for <unk>.
By growth and both rental rates and occupancy levels, along with a better than expected credit loss environment.
Our committed occupancy and Montreal and currently stand at 97, 3% paving the way to NOI growth for the coming years.
Our retention rate for leases maturing in 2021 stood at 59, 4% with a robust rental growth of 21%.
Over 330000 square feet of leases coming to maturity, we're purposely not reviewed as part of our loose and leasing strategy offset by over then to more than 660000 square feet on new leases was 23% higher rent.
And Quebec City.
Despite the fact that our in place occupancy rate remains stable at 95, 7% since the beginning of the year and portfolio delivered a solid $12, 2% growth and SP NOI during the second quarter, mostly related to increases in rents and a decrease and expected credit losses.
Rental rate growth alright rental rate growth on renewed leases for 2021 and stood at 22% and on.
Our retention rate for our maturing leases stood at 61%.
65000 square feet were not renewed and again largely offset by a 100 and sound 130000 square feet on new leases with rent increases of 17%.
We remain on track with our strategic plan, which prioritizes rent increases and asset value creation at the expense of short term NOI variation as we create tenancy turned on.
And both markets the shortage of land for industrial developments has driven the price of land to new on.
These market conditions, coupled with increasing urban mistake design requirements and higher construction costs are resulting in higher net rents for newly built properties, which are promoted and double digit net minutes.
And these market conditions provide are also providing the ingredients to increase rents and our existing properties.
Tom and <unk> is the largest industrial property owner and a profit per back has 43, 7% of leases expiring by the end of 2024 with rents below market rental rate of below market rates.
Well, we estimate that approximately more than 20%.
This places the REIT and a desirable position to create value through sustained rental growth rental increases and have come to terms.
And on page 10, and we are executing on our intensification strategy and our initial project is the previously announced partnership with top care and local developers cozy and on this call for the development and 500 residential units it sounds cool.
To be completed in 2 phases.
First phase of approximately 360 for doors and split between multi ray as 254% and condos as just 46% and we expect that construction and will be launched around Q1, 2022 and completed by 2023.
The additional residential population and will also bring additional foot traffic to the retail component of Suncor.
On page 11, we are continuing to make progress on our pre development work, including discussions with several municipalities regarding the 10 transit oriented retail property debt.
<unk> had been identified at the offering and densification opportunities with our free cash flow of up to 13300 residential units subject on zoning where indicated on the deck.
And our discussions with municipalities surrounding density and mix. It is usage has generally been well received and the sponsor.
Our strategy will be our execution strategy will be decided on a case by case basis and could range from and sale of air rights and Standalone development partnerships with leading developers like is the case for example.
And we see residential demand has been very strong and the markets where these properties are located.
On the industrial development front, we have made significant progress on our cash and project located on a $1.7 million square foot parcel of land and <unk>.
Okay and.
And at the heart of leather.
Phase 1 was recently revisited by combining the 2 original phases into a 515000 square foot state of the art warehouse.
We are pleased to announce we have signed and we have and executed lease with us and leading retailer and a strong covenants.
Beginning at the beginning of construction as planned for the first quarter of 2022 with site Prep work plan to proceed and in the third quarter of 2021.
And unexpected delivery for end of 2020.2.
And on plan and will now discuss our financial results. Thank you sit around and.
Good morning, everyone on page 12 on a per unit basis, our air flow came in at 25.
On an adjusted basis.
For 27 cents.
7 cents from Q2.2020 and in line with our Q1.2021 and street consensus of <unk> 27 for this quarter.
For sake of clarity just on consideration of $3.4 million between F. It for and if it for adjusted breaks down as the $200 million of consulting fees and expense on the strategic review and a zero $49 million of retroactive adjustment on mortgages interest that are both added back.
Our interest expense presented in our Q2 financials is this over city by zero point and $9 million. It is the right amount of zone on a year to date basis.
So for sake of clarity on it.
Adjusted EBITDA for the quarter includes a $3.9 million positive impact consisting of 2 elements first a partial reversal of fourth quarter credit loss provisions and the amount of $2.2 million and second $1.7 million received and the context of early departures and in the context of the <unk>.
And then for our previous bankruptcy.
E S S for.
And the closer also on an adjusted EBITDA were 18.
Once again at 5 cents from Q2, 2020 and down <unk> <unk> from the first quarter of 2021.
Our <unk> payout ratio amounted to 56, 3% for the quarter.
On page 13 during the quarter for the REIT has recent down a $136 million of the value of its assets due to new prevailing operating and market assumptions impacting value, which amounts to $2.1 per cent of the Q1.2021 value.
Our retail assets were most affected with a $279 million breakdown for <unk>.
And $14.1 per cent of the Q1.2021.
Officer said were written down by $86 million or 3.5%, while industrial assets. So theyre value increased by $228 million or 11, 6% increase from last quarter.
For the office and retail portfolio for changes in value was driven by changes and our parenting assumptions much more than changes in cap rates for these countries.
This included changes and the vacancy absorption period adjustments and the market rents and the first years and changes and bad debt provision for.
For the industrial portfolio the increase in value is mainly due to yield compression combined with significant rental growth.
And finally in our book value that agenda searches are for.
As I said the value of reach at $218 per square foods retailer sits at $182 per square foot and industrial assets.
And 40 for Philadelphia, a square foot.
On page 14, and if we look at our expected credit losses were recorded for this quarter, 1 from the $1 million or 0.7% operating revenues coming from the retail segment and was favorably impacted by the partial reversal of first quarter provision of $2.2 million of expected.
Credit losses.
As each quarter since Q3, 2020 included reversal from prior quarters, we have put together and the speech, which genes are comparing the expected credit losses reported in our disclosures and the actual situation for each quarter net of any kind of reversal.
In other words, we wanted to give you the real picture without the noise around other quarter adjustments and the trend is clear after a peak in Q2.2020 expected credit losses have been lending to and area of $3 million to $4 million per quarter or around 2% of operating revenue.
Also we have been consistently conservative when taking expected credit losses.
Since the beginning of dependent and niche actual figures after the reversal consideration for each quarter, which lowered our reported free cash.
Regarding our collection rate is stood at 96.3 per cent for the second quarter, including amounts to be collected from government agencies compared to 94, 7% and the first quarter of 2021. After the same number of days for figure. The since then increased to 98, 1%.
Moving on to page 15.
Page illustrates our financing maturities as of June the third share.
During the quarter, we closed a new credit facility agreement to replace the $400 million facility maturing in July.
This transaction was completed with a unanimous support from state and Canadian Banks Trust.
And participating in our bank syndicate.
The new credit facility consists of for $250 million and secured credit facility with a 1 year term and priced at a spread of 270 <unk> over the 8 and 8.
$150 million secure credit facility with a 2 year term and priced at a spread of 250 bps overview.
On page 16 on during Q2.2021, our debt ratio was increased to 55, 6% compared for $54.5 per cent for Q1.2021 as a result of the fair value write down taken this quarter.
And at June the third share our liquidity stands at $355 million of which $12 million is cash and the rest are available and there are credit facility.
Moving on to page 17 on.
Our pool of unencumbered assets is diversified within the 3 segments and proportionate and similar to the entire coming apart for you and stands at a healthy level of $1.7 billion at the end of the second quarter.
The decrease from $2 billion in the previous quarter is accounted for by the fact that a tranche of the hunter and $50 million of the per.
Previous unsecured credit facility was converted into a secured credit facility and Encumbering at the same time properties with a total value of $259 million.
On page 18 and <unk>.
<unk> investment in development activities capital expenditures in Q2 totaled $24 million down 6% for Q2.2020.
For the year to date, Capex, including development totaled $49 million down 26% from the same period last year.
Looking ahead, we foresee spending in 2021 with a total of about $160 million, excluding excluding capitalized interest of which about $15 million dedicated to development.
The maintenance Capex spending that is used in our <unk>.
For calculation is expected to reach $25 million and 2021.
And also in the <unk>.
Calculation the provision for leasing costs will be around $30 million this year.
I will now pass it back to C zone for concluding remarks.
Thank you on clients on behalf of management I would like to take this opportunity and thank our employees as well as our trustees for their significant contribution and the backdrop of these extraordinary times.
And I'll now turn the mic over to the operator for the question periods open to financial analysts.
Thank you ladies and gentlemen, if you do have a question. Please press star followed by 1 on your Touchtone phone and you will then hear a sweet home prompt acknowledging your request and if you would like to withdraw your question simply press star followed by 2.
Using a speakerphone and we do ask that you. Please lift the handset before pressing and it keeps please go ahead and press Star 1 now if you have any questions.
And your first question will be from Jonathan Culture TB. Please go ahead.
Thanks.
Good morning, good morning.
And John.
Yes for the first question just on the lease termination income and you guys recorded this quarter what was what was that in relation to them and what are the.
Prospects for releasing that space.
Okay.
So there the lease termination was mostly from the from the retail from the retail segment, a little bit also and the office but for.
80% of that was and the retail segment.
Correct. So it came from.
And termination of.
And then starbuck locations mainly.
And those kinds of spaces are and you know very well located and smaller spaces. So they will be very easy to relief and I would say that at this point 50 per cent of those spaces are under serious discussion and some like glass and actually over here have at least resigned for opening this year.
No.
And a similar.
Similar rents that is.
Sorry, just to throw out of that in the and the $1.7 million that includes zero book Zero point $6 million received from the previous Big Bank Levy.
From there it's T. So so she's on.
And that's a new departure deferred this quarter and this is.
Just something and additional revenue that we received bids for something that was announced in the previous quarters.
Okay, and Tom and desperate Karabakh, David C location, and our small locations, mainly located in center core and locations within those malls. So a lot of square footage of that bankruptcy is already really just I would say 60% of it.
Okay and then that's it.
And the rents would be similar to what Starbucks per se.
Correct.
Okay, and then secondly, just on the retail write down this quarter I was little surprised by the timing of it at this point and the pandemic when everything is starting to open and and.
Especially given the positive leasing update that you. Just you guys. Just gave can you maybe give US is there are there any specific assets and their debt.
And that were written down or maybe a little bit more color.
I mean you have.
And in the appraisal and we're out there is always a day or a lag and that and getting the actual reflection and the value. So as of last year, where the adjustments for maybe a bit more focus and then on adjusting yields. This year are we needed to find you really assessed for what's happening to see housing we're gonna adjusted cash flow. So this is why you see.
And maybe a bit more of an adjustment on the cash flow side.
And making it a bit of a more important debt.
And on retail, but are now and you basically feel confident that we are at the proper and that's all in terms of our future cash flow for our retail properties. So I wouldn't say that it's more of a lagged and anything thats fully agree with you we are feeling the improvement and the market.
Okay and so.
This should hopefully be the last quarter with any great jobs and and retail.
Most likely.
Okay, and then just lastly on and on the central uplift.
Development can you can you maybe give us.
And some parameters around expected cost and and your return expectations.
Yeah.
And our expected cost Jonathan are at 338 per square foot and.
And or return is planned to be for the condo.
<unk> per meter at a 12, 1% and that will be largely compensated by the.
Multi residential portion which will be at 38% a return.
And the market and the area of <unk>.
And that's all you know all around 10 companies is.
Improving every quarter and all of our projected rent and predicted sales price per square foot has been revised upwards.
Okay, sorry, so you're you're looking for 38% sort of yield on your your cost on the apartments.
And 38% IRR and 12.1 on the condos and your question is probably going to be well why aren't you just basically and doing only multi residential but the question is that a successful development and multi residential involves both for.
And.
And as you know day multi residential goes much quicker and condo and you don't have pre sale. So it does improve development profit.
Okay. Thanks, I'll I'll turn it back.
Thank you once again, ladies and gentlemen, if you do have any questions. Please press star followed by 1 on your Touchtone phone.
And your next question will be from Mario sorry at Scotiabank.
Hi, Mark and Mark.
Good morning, everyone.
Just a couple on the same oriented jonathan's questions with respect to a fair value.
For a write down on them and retail I didn't want and maybe.
And I ask a similar question broke and you also start for the.
Smaller $86 million fair value loss for this quarter and know.
How comfortable are you that we won't see a simple or kind of gradual erosion and that fair value for 222, and the office category and.
And I guess for wood underpinned our confidence about right yes.
We don't expect any additional fair value losses, what underpins our confidence.
Yes.
I mean to start with I'm going to say to you and the lag impact is always there like again and specialty for the office and why it can be and are better positioned to assess what's going to be a long term impact versus just a current shot and.
I would say that the way we approach the office, but for mostly on increasing leasing Capex average.
And did I Miss what were seeing that so this is this is how the impact is mostly focused on and and.
Again, we do feel pretty comfortable that and we are good.
And our values and on top of increasingly seeing Capex. We've also assumed I think on a longer downtime period between the leasing and <unk>.
And with what we're receiving from the leasing market and that.
Okay.
And meaningful adjustments and kind of just kind of Richard you're on cap rates for at this stage.
I'll turn it on it.
Alright, Okay, and then just sticking to the office part for them, So bad and I think he mentioned picking back up and it's coming back 2 days a week starting on October do you know what that plan is to increase that to 5 days, a week and I guess somewhat related.
Howard government type discussions focused these days with respect to be about at square footage required over time.
I think the government is.
Proceeding cautiously and women with managing.
Apart from home Doctor offices, and just trying to get people to transition back emotionally and physically.
And I haven't had discussions with them on on that now over the more than 2 days I think they're starting to sort of get the pulse of that and.
They are there.
And there had to have given indications, however that the and the <unk>.
And at least Montreal and and.
The office segment as a core driver and provincial and GDP.
They are very sensitive and getting people back into offices and Montreal.
And I expect that number will trend up as we go on.
In terms of us base.
And.
And interesting because during COVID-19 and they've had.
And taking more space for Apple.
They haven't been putting backstage per se, but they've taken more space from us.
Erica.
Oh.
Great.
Maybe just shifting quickly to our capital allocation.
Can you comment on what the $45 million of held for sale are sitting on the books and then maybe any incremental update on the prior targeted $200 million office off itself to the proposed strategic buyer.
And yes.
1 which is held for sale as Wednesday, and O'connor. So we we have it.
And call it and we have and under contract with a closing day flash mechanisms to be finalized but.
And it is tied up and at a price, which generates a hefty profit from that.
Yes.
And the and.
The other property, you're referring to on the strategic buyer still has an interest and announced and unexpectedly.
And any movement on that until and.
And activity and <unk>.
Starts and the downtown core and Montreal and meaningful manner.
And your and then and get day and.
A basis to compare where values are at.
And the element there is we know that buyer really wants it for me.
On the day buyer is trying to measure now.
Higher price expectation.
And reflective of the.
And the market and there is no not giving the market time.
Got it Okay, and then maybe for Antoine.
And I noted the unencumbered pool was down about 300 million quarter over quarter and Q2.
How much of that would've been a related for fair value losses versus arranging mortgages on the properties to boost liquidity and.
And how do you think about your 355 million dollar and liquidity today, how does that compare to where you want to be given the transaction market what youre seeing today, yes.
Yes.
The decrease and the unencumbered pool for us.
About 3 or $300 million comes mainly from.
The fact that tweet and convert $259 million with the new secured facility that replaces our previous unsecured facility and the <unk>.
For $40 million.
And <unk>.
Right Zone is.
And to lead and the 136 million total write down the portfolio for about 36.
And 36, and Jen pertains to the unencumbered pool.
Okay and then just.
And like how do you how do you feel about the liquidity today.
And 350 for us.
Yeah. So today, we have $355 million and the and the next the next.
And that comes to maturity is a $200 million.
Coming at the end of the.
And the year.
For which we can draw on on.
On our unsecured credit facility.
For that and also we also have the ability to and potential liquidity throughout our unencumbered asset pool, and we still have room for maneuver with and then covered assets.
The ratio.
So we could and we could explore that route but also we could finance from properties that are for.
A low loan to value, which could create and liquidity without jeopardizing the unencumbered asset ratio.
And lastly, I mean on the on and opportunities.
This weekend also.
Of resort to a new.
And.
And uhm.
Unsecured debentures.
Okay, Okay, great and my last question just on the development pipeline.
And you've continued to list out 13000 trimmed the doors across 10 projects I'm just curious if you've analyzed kind of the estimated.
Buildable per square foot value and.
And the market price and the market place today, assuming falls on your receipt across those projects and whether any of that value has been recorded and you're right for us from the properties up already hard for zoning rights.
We have not recorded any value and.
Ifr S.
And so far and we.
We do have.
And evaluation on a per project basis on the Bill the Bill per square once we are in a full rights situation.
So this is where we are at this point.
So if I look at the full rates, there's about call. It 30 for 4200 doors and the 13.300 for our crossword as for Roche or can you give us any sense of what kind of book value per buildable square foot might be on combos.
Well I mean as far as the full rights are concerned and you were accounting for.
Gas on pause you know is part of that and our balance as part of that and haul as part of that so.
I won't comment on this call and on gas on time, because we had and initiatives.
And that we want us to crystallize the value of gas on that.
We started from a bid process side and I don't want to give an indication of value on gas on that team and development rights for <unk>.
Pre COVID-19.
Escalating.
And Montreal.
And then as I mentioned and there there's been a few transactions right now for that everyone's waiting for the market to pick up.
And in terms of the the sequencing of projects and on the 1 we referred to as a management team and they are more focused on.
A couple of vendors get and he does and we've been focused on.
And nice sharply and Rosslyn both of those municipalities have municipal elections, which are ongoing and so we're sort of and a pause until the elections turn but.
And the projects are extremely well received and be more and less settled on on.
On the density at least for Rocklin, and my shop and for the election and so.
And those are the more I guess.
And Morris no active ones that we're focused on.
Got it is there any is there any indication about land values have come down during the pandemic.
And not to lose me not in fact that it's a <unk>.
Moving upward.
And you were talking about residential rents right.
Thanks, Jeff for Us here.
Sure.
Okay.
Okay. That's great. Thank you for the.
All right.
And welcome.
Next question will be from Mike Mark Yudof at Deutsche Bank. Please go ahead.
Okay perfect. Thank you.
Just following up on Mario's question with regards to the full rights and the potential value I understand you don't want on <unk>.
Fairly highlight on for curious since you have cohorts for some.
Alright, and Mike can you compete against you faded out on that on your <unk>.
Question I apologize yeah.
Yeah, I'm sorry, just following up on Mario's question with regards to the full rights that you have.
For 200 units and I understand your sensitivity with respect to identifying what those values on pacifically, but maybe if you could just comment on that.
Philosophy of not actually including that and you're on your book value.
Today.
We have not included.
And we just to be very cautious about it because.
For example at CN, we have a very good idea of where rent and.
And we have a good idea where condos per square foot to put our and Montreal and you do have a variable return construction costs and this environment and.
And at.
With <unk> and then it depends on the nature of the projects and these are facing on the project around the new year's and the mix of condos and multi mode.
And you can have a number which vary and we we just we just felt on this on a conservative just to wait and see until we have a more specific projects in Canada.
But we have to do very.
Very ample projects, which have different return.
And in terms of.
And on the others.
And we and.
Same thing, we got it yet and revenue keep and interest sale of air rights and.
And how we wish to execute on our strategy and.
And we're as I mentioned net.
And those types of discussions are slightly impacted timelines, given the elections and <unk> and.
Sure.
It is non gay and.
And Rockwood and so.
And in due course, we will and media.
And certain properties when we.
And we did.
And it did and do believe we adjusted some advice on claims.
Last year and by a small number around.
And around.
1 particular part of the land.
But we and when we feel that it is a absolute certainty we will we will add and number 2 our base otherwise we risk rate.
Cautious about.
Okay.
Thank you.
And my my final question would just be on the right.
110 O'connor.
Could you comment on the cap rate on in place and are stabilized.
If there's a differential between the stabilized cap rate would be the first part and then second without identifying the buyer could you at least comment on fire type. Thank you.
Yeah. So I mean once I know on her is an empty building now and you basically only have a smaller and retailer tenants 99 point something percent vacant so and it's a simple up every development. So there really is no point up on.
On a cap rate would be completely irrelevant.
Sure Bob.
And you may be a change on fees.
The and attacks.
And it has the potential.
And just wanted to accompany the conversion to residential just curious yes.
Yes, it could be residential zoning and okay.
And just from biotech.
And your type would be a leading real estate organization.
Leading real estate organization Canadian based.
Let's say and I can tell you more and I am.
And Mike I'm under content channel Okay.
Okay.
For the organization and an organization, which is extremely well known.
Okay. Thank you very much and.
The development and guess.
Ted.
Just to tack follow on there and tag on net and that on these comments as an organization and adds a lot of expertise and redevelopment.
Thank you.
Thank you.
As a reminder, ladies and gentlemen, if you are now Melissa and would like to ask a question. Please press star followed by 1 on your Touchtone phone and you can withdraw your question by pressing star 2.
Next question will be from from ISI had at CIBC. Please go ahead.
Thanks, Good morning.
Just a question on organic growth. So obviously compatibility is a little debt, but do you have a sense of what same property growth would've been excluding the.
The COVID-19 impacts from the comparable quarter.
Yes, so I mean.
And by answering your question I would look at what we had this quarter.
And to 11th.
And I have to 11th and mind first expected credit losses, which amounted to $3.3 million for the quarter. If you issued and net of the reversal of previous quarter.
And parking revenues, but I would say, we're 50% of.
Pre COVID-19 environment, So if you sum that up.
You are.
Somewhere in the $5.5 million.
On a regular basis and a pre COVID-19 environment. They were expected create trust and thats not a debt level. So I would I would say that the total COVID-19 impacts would therefore be about $5 million for the for for the quarter.
Oh hi.
Coming from a parking revenues and the other half from our.
Expected credit losses.
Okay.
And then just to go back to the fair value of updates on on retail and you don't want that you are basically adjusting cash flow assumptions.
And so are you just non building and any.
Recovery assumptions at all on basically assuming a continuation of the current for breast conditions.
No I would not say I mean, there'll be some recovery there has been and shot that needs to be recovered and it is and there I would just say that it had been a tone down on what our standard our lease up assumptions would have been 2 or 3 years ago and the retail world. So.
There is a bit of a recovery for sure.
Yeah.
Okay.
And then just sticking to.
Retail and I'll.
Comment on the goal of just shifting the mix from discretionary to more national and need space.
And obviously depend on the cash chain things, but how are you tracking in terms of you know our goals to increase that exposure and more towards Sn.
The central tenets.
If it's shifting to more essential tenants, but also from IL 2 more resilient type of uses for.
Putting goods.
Bookstores.
A full change of the mix and every quarter. We're looking at what we have and what we have coming up and we're monitoring the percentage of each of those.
On category and the mid fashion categories.
And the category.
We have less exposure to and from an initial start up 33%, we are down to 19% and that category and we will explore probably around 15, but with solid players. So we will we have started and we will continue to have a revenue line and then and NOI that's much more.
For resilience and what it was 2 or 3 years ago.
And as you can see with the new leasing activity, we're definitely for.
Full speed ahead.
And that leasing mode.
Alright, and then he noted that there was some I guess large format retailers, which are delaying opening today, what do you think they need to see to.
Proceed with the next steps.
I'm sorry for my I didn't it.
And it broke up I didn't hear your question.
Just wondering about the standard option on your large format retailers and I.
And I guess they have delayed the opening.
And what are you hearing from them in terms of what do they need to proceed with leasing up.
You mean, the openings that were delayed because of the shutdown and Oh, we're recovering from this we're back to normal activity at this point, we're talking about a delay of.
And maybe 1 or 2 months and the construction schedule. So it's a very short term impact and our and leasing activity. At this point is is there.
And moving upwards the more of those categories you bring in the mall the more on the same type of categories are looking at going into your malls. So it's a it's a it's.
And a positive effect.
Okay, great. Thank you.
Yes.
Thank you and.
At this time Mr. <unk>, we have no other questions. Please proceed.
Okay. Thank you very much Cindy and I wish to thank all of you for participating in this call with us and I wish you all and very nice day. Thank you.
Thank you Tim.
Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time and ask that you. Please disconnect your lines.
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