Q4 2021 Choice Properties Real Estate Investment Trust Earnings Call
Welcome to the choice properties real estate investment trusts fourth quarter 2021 earnings conference call.
Please be advised that today's conference is being recorded.
I will now hand, the conference over to your first speaker today doors Bond Senior Vice President General Counsel and Secretary. Please go ahead.
Thank you good morning.
Welcome to choice properties, Q4, 2021 conference call.
And here this morning.
President and Chief Executive Officer.
Chief Financial Officer.
Neurotic executive Vice President leasing and operations.
Before we begin today's call I'd like to remark.
Mind, you that kind of thing.
Operating performance.
And then responding to your questions. We may make forward looking statements.
Choice properties.
Strategies to achieve those objectives.
Statements with respect to management's beliefs.
And pension outlook.
And similar statements concerning anticipated future events circumstances performance or exceptions that are in our history.
Cool.
These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from the conclusion.
Steve.
Additional information on the material risk that can impact our financial results and estimates.
Those that were made in applying in making these statements.
Can be found in the recently filed Q4, 2021 financial statements and management discussion and analysis, which are available on our website and on SEDAR I will now turn the call over to rail.
Doris and good morning, everyone. Thank you for taking the time to join our fourth quarter Conference call.
We are pleased with our solid financial results for the quarter, demonstrating that business model stable tenant base and disciplined approach to financial management continue to position as well.
Additionally, we continue to advance our development pipeline and execute on our capital recycling initiatives, which provides us with exceptional opportunities to add high quality real estate and drive net asset value growth at the top.
Turning to the full year 2021 was a year of resilience.
And we are proud of our accomplishments. In addition to our strong performance, we reinforced our commitment to sustainability and made significant advancements in our environmental social and governance programs to maximize our impact we have focused our ESG strategy on two pillars.
Fighting climate change and addressing social equity. In addition, we committed to sell emission targets that are in line with current climate Science in November we integrated sustainable bond at each of our business with the release of our Green financing framework and the completion of an overall green bond offering.
Joining me on todays call is an erratic who will provide an update on our strong operational results and then Mary Ann Bell Potter, who will provide an update on our solid financial results. I will then provide an update on our transaction activity and our development programs Anna over to you.
Thank you Ralph and good morning, everyone.
As Ron mentioned, we are pleased with our operational results for the quarter and continue to see positive signs across the portfolio.
Although renewed operating restrictions were implemented in late 2021 due to the emergence of the army crime area. We are seeing positive leasing momentum most notably in our retail and industrial segment.
Our approximately 45 million square foot retail portfolio, which consists of open air centers with necessity based tenants.
Continues to deliver stable results.
Canadian retail performance in 2021.
As well as other macro factors indicate that we have turned the corner in the economic recovery.
Retail sales for 2021 are up 8% compared to pre COVID-19 levels in 2019, leading to a positive outlook for 2022.
Our retail occupancy increased slightly from the prior quarter at 115000 square feet of new deals commenced in the quarter and 410000 square feet of renewals were completed at rack three 9% above expiring rents, resulting in tenant retention of 89%.
Yeah.
Our neighborhood centers continue to perform exceptionally well at the height of the pandemic, we saw few tenant closures and steady demand.
What we are seeing now are a variety of tenants actively looking to open new locations with discount quick serve restaurants off price fashion home furnishing pharmacies pet stores and fitness operators being the most active.
We are also seeing strong demand in our power centers in the in the quarter, we completed several new deals like home furnishing fashion and discount retailers.
Industrial fundamentals are strong and this segment will provide growth going forward as the supply demand imbalance in most markets for distribution and logistic warehouses continues to drive record high rental rates.
The GTA market availability rate remained at 0.9% unchanged from the third quarter, while national availability dropped to one 8% an all time historic low.
Our portfolio occupancy increased 40 basis points in the quarter, finishing at 98% occupied.
We are seeing improved leasing conditions in Calgary in Halifax, having completed 75000 square feet of new lease deal and these markets are.
Our western Canadian portfolio is 95, 6% leased outperforming the market.
We anticipate the Calgary will continue to tighten as it is a key distribution hub and is benefiting from the growth in logistics tenants as well as improved economic certainty fueling demand for spaces 10000 square feet and anchor.
Our $6 6 million square foot, Ontario, part office, or sorry, Ontario portfolio sits at full occupancy.
While we had limited industrial maturities in a quarter, we are optimistic in our ability to capitalize on strong market fundamentals to continue to grow rents.
We have several large blocks of distribution space expiring in 2022 that will give us the opportunity to do just that our industrial occupancy and NOI will decline in 2022, as we released several large blocks to new tenants. These new lease deals will be completed at significantly higher rents.
<unk> and higher industrial NOI in 'twenty two 'twenty three.
For example, we have completed a new 113000 square foot lease deal in the GTA with the incoming tenants lease rate exceeding that of the outgoing tenant by $7.25 per square foot, which is 120% increase over the expiring tenants right.
Office leasing momentum improved in Q4 with more tour activity and a reduction in sublease spaces as tenants that delayed space planning decisions due to Covid began re entering the market.
With office vacancy rates, increasing across most markets in Q4, and downtown Toronto, where our largest assets are located market vacancy dropped 20 basis points in the quarter to nine 7% and sublease availability dropped even further.
Occupancy in our $3 6 million square foot office portfolio declined from $88 seven to 88, 2% due to limited leasing activity, taking effect in the quarter and 18000 square feet of negative absorption in Halifax and Montreal.
That said, we did see a lift in renewal spreads of approximately 4.5% on the deals that were completed in the quarter.
Yes.
Starting in the starting this fall we have seen a marked increase in tour activity with more new tenants looking to transact and existing tenants expressing a desire to expand small and midsized tenants. We're most active as their space utilization did not change as compared to larger tenants.
During the quarter, we completed expansions or for office tenants and five new deals in Calgary totaling 26000 square feet at our own share taking effect in future periods.
Overall, our operating results in the fourth quarter and for the year were strong, reflecting the strength and resilience of our portfolio. We are confident that the operating decisions and investments. We have made will continue to deliver strong results looking ahead.
I'll pass the call over to Mario to discuss our financial performance.
And good morning, everyone.
The fourth quarter reflects our ongoing ability to deliver solid financial results.
This is evident in our financial performance and by our rent collections, which were over 99% for the year, while bad debt expense was 750000 for the quarter, our lowest provision during the pandemic.
Our reported funds from operations for the fourth quarter was $174 $7 million or $24 <unk> per unit.
Included in <unk> are certain nonrecurring items, which effectively net each other out but they include a $1 $5 million early redemption premium for our series one unsecured debenture that would have matured in the first quarter of 2022.
And $1.3 million of higher G&A costs, primarily driven by a head office lease termination payment.
This was offset by income of $2 6 million as it related to lease termination and other revenue adjustments.
Compared to prior year, our ethanol for the quarter increased $3 $3 million, primarily due to contractual rent steps in our retail portfolio.
<unk> occupancy and rental rate lifts in our industrial portfolio and a decline in bad debt expense of $1 $5 million.
On a per unit dilutive basis, our Q part of the poll was $24 <unk> up one 3% compared to the fourth quarter of 2020.
Our period end occupancy remained strong increasing slightly to 97, 1% compared to 97% last quarter with retail at a strong 97, 5% industrial at 98% and office at 88, 2%.
We had approximately 800000 square feet of lease expires in the quarter of which renewed 734000 square feet for a retention ratio of 84% and leasing spreads in these renewals were three 3%.
We also completed a further 201000 square feet of new leasing, resulting in overall positive absorption of 56000 square feet for the quarter.
See massive cash NOI increased by two 6% compared with the fourth quarter of 2020 by asset class retail increased by two 6% while industrial increased by five 5%. These increases reflect improvements in rent collections contractual rent steps and the retail portfolio and positive fundamentals in the industrial portfolio.
Office same asset cash NOI decreased three 7%, primarily due to vacancies in Ontario, and Alberta, partially offset by a reduction in bad debt expense.
When excluding bad debt expense total semester cash NOI increased by 2%. We're pleased that we've been able to maintain stable occupancy and consistent method results for five consecutive quarters.
Our business continues to be supported by our industry, leading balance sheet that provides us with flexibility in the broader market volatility.
We reported a total increase to our net asset value of $153 million or one 7%, marking the sixth consecutive quarter, we've recognized macros.
Our growth was driven by fair value gains on our investment properties of $109 million, mainly attributed to strong demand fundamentals for industrial properties.
We also continued to improve both our leverage ratios and our liquidity profile from a quarter.
Our leverage was 41% at the end of the fourth quarter, an improvement of two 6% compared to 2020.
Our debt to EBITDA declined to seven two times compared to the reported seven six times in the fourth quarter of 2020.
Normalizing for excess cash from the timing of transaction activity in both years debt to EBITDA declined to seven one times compared to $7 three in the fourth quarter of 2020.
From liquidity perspective, we have approximately $1 6 billion in available cash comprised of $1 5 billion of available credit on our line and $125 million in cash and cash equivalents.
This was further supported by approximately $12 8 billion of unencumbered properties.
As Rob mentioned, we successfully completed our inaugural Green bond offering in the fourth quarter issuing $350 million of unsecured debentures for a five year term bearing interest at 2.46% per annum.
Proceeds from this offering were used to improve our debt maturity profile by early redeeming, our $300 million March 'twenty, 'twenty debenture and repaying our credit facility.
The pricing on this transaction is a testament to our strong credit with the spread representing the lowest five year Canadian reached that on record pricing.
Pricing also reflected a seven basis point greenhill relative to where our bonds are trading on the secondary prior to launch.
In addition to strengthening our debt profile, we continue to prevail broke quality of our portfolio through capital recycling capital recycling late in the quarter, we successfully and Opportunistically sold $230 million of income producing properties deemed non strategic to our core portfolio, while acquiring $40 million of properties for the year, we divested $330 million of properties.
And reinvested the proceeds into $240 million of high quality properties with either stronger fundamentals or development potential.
Rail will provide more color on the Q Park transaction shortly.
In addition to acquisitions, we could even add high quality properties through our development program.
We end the year with development spending totaling 135 million completions for the year roughly double this number at $255 million.
Adding 428, adding 420000 square feet of GLA to our portfolio and 324 residential units at the Brixton and Liberty helps in trials.
So overall, we are pleased with our quarterly and annual performance, we continued to deliver stable and resilient operating results, while driving net asset value through development and capital recycling all of this supported by a conservative and flexible balance sheet.
I'll now turn the call over to rail to address our development and investment activities.
You bet.
Looking back at 2021, we've made significant progress on both a development program and transaction activities.
We completed approximately $570 million in total transactions and meaningfully advanced industrial development pipeline and future residential pipelines journey here, we completed and transferred 10 projects at a total investment cost of approximately 250 million delivering 145000 square.
Feet of commercial space and 394 residential units.
Turning to the quarter, we completed $46 million of acquisitions and $230 million of dispositions on the acquisitions front. We completed the purchase of $5 50, Eglinton Avenue from a third party. This high performing shoppers drug Mart is located in a desirable Midtown note of Toronto, providing excellent.
Long term redevelopment potential adjacent to a future transit station on the Eglinton LRT line.
We also closed on the banded from loblaw of a standalone grocery store in Guelph, one of the fastest growing cities in Ontario.
Finally, we continue to assemble land with a future industrial development potential at our Calvin sought any approximately 16 acres to the 300 net acres acquired during Q1. This was completed and attractive pricing for eight consistent with our original acquisition a development partner is.
Currently working through the rezoning approval process with the town of Calvin to commit a total of approximately 5 million square feet of industrial space.
As Barry mentioned, we remained active on the disposition front and during the quarter Opportunistically sold approximately $230 million of non core assets and under utilized left these dispositions speak to the demand from investors for assets and we successfully transacted on the assets.
Pricing above our book value on each of them.
On the industrial front, we capitalized on the market by selling our portfolio.
Five older generation assets for 45 million in Calgary with operational challenges and on the retail side, we sold six assets across the country with total proceeds of approximately $172 million.
On the development front during the quarter, we transferred two residential projects to income producing properties, including Liberty House in the third and final phase of the Brixton for total development cost of approximately $108 million.
Liberty House is at the entrance to Liberty village and he is now 30% leased and we expect stabilization by the second quarter of 2023.
Brookfield is located in downtown Toronto, and the Dufferin and Queenie intersection and he is approximately 75% leased and we expect stabilization in the second half of this year.
Sequentially the quarter, we purchased a development partnership in each of these assets, increasing our total ownership to 50%.
We also recently received permits on our industrial development in South Surrey BC.
This new generation logistics facility will target LEED silver certification.
It is also tenda with the contract already mobilized on sought when complete the center will add approximately 350000 square feet, So outgrowing industrial portfolio.
Looking ahead, we have 11 projects representing over $10 5 million square feet in different stages of the rezoning and planning process. We believe we have one of the best long term development pipelines in the REIT space that will drive significant long term net asset value appreciation.
With that I would like to turn the call back to the operator for questions.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby, while we compile the Q&A roster.
Your first question is from Sam.
Damian Nani with TD Securities.
Thanks, and good morning, everyone.
Just wanted to start off on the.
Yes, what you ended off on rail which is the Val.
Value of these.
Significant sites the choices had for years.
Most of the near where it used to mass transit.
How are you thinking about the fair valuing of those of those properties.
Today versus a few years ago with how are you thinking you should think about how that might be booked for the next couple of years.
Sure I'll take that one I guess standards. There are two ways I mean, right now in our financials.
They're they're valued at just at their income producing capability today.
We tend to value our properties or increase their values based on milestones that we have visibility.
And so right now I think there there's probably.
There's value there, but it's just not reflected in our financials.
And at the advance.
To pursue construction as we pursue.
As you prefer leasing you'll see that pop in I guess Blue multiple example of where there's a store right now and as we as we advance that and as we have.
Sure.
More I guess validation of the value.
And we'll see that come through our financial statements.
Is that something you think might occur within the next one to two years based on your framework that you kind of got it right now.
I think it will happen gradually salmon there will be milestones of leap next year so wildly.
You don't get that pump anymore or are you going to is going to be gradual over the life of the development.
Okay.
Yeah.
Real just on the disposition activity I Wonder if you could just.
I guess going into a little bit of detail on the rationale for a for a couple of days.
The properties that were sold including the retail and the industrial load to calibrate.
Yes.
So with all of the industrial the industrial.
Was older generation industrial not typical industrial and from our point of view. It had leasing challenges didn't have the writeoff door's access et cetera, and in fact some of the tenants were typical.
<unk> users.
On the retail side truthfully, we always look to to clean up or sell.
Assets in our portfolio.
We view as non strategic.
As an example, we sold a large power center in Quebec City.
That had tenants that we view may be at longer term risk. So are we able to recycle that capital into better long term.
Gross assets such as the industrial base rent about this year.
Okay last one from me would just be on the other two residential properties that were completed last year and you increase your ownership Stakes is there anything you could share with us in terms of the pricing on those increased stakes.
Relative to cost or where how it was determined.
We look at them.
It was done it was it was a negotiated process that in a fair market value.
You know it was purchased at between $901000, a foot which would translate to.
Around three and a half cap rate.
And I don't remember exact cost per foot, Sam, but I think our cost per foot was closer to between 6% and $700 all in.
But I don't remember the exact number off add that remember we started these we started these projects about three years ago. So we did benefit obviously from locking in pricing.
Great. Thank you that's it for me I'll turn it back.
Yeah.
Your next question is from semi aside with CIBC.
Thanks, Good morning.
Just wanted to touch on the two residential assets that got moved to income produced in the quarter.
And if there was any NOI contribution from those and if not how do you see that stabilizing.
There would have been something that was very small I think.
In the quarter, but as Ralph said.
Okay.
Britt can stabilize this year.
Liberty House next year.
So so there will be NOI, but again, given that and given the size of the projects relative portfolio I think right now we won't have that meaningful impact until then.
Yes.
Okay.
And then just moving onto our rent collections, obviously very strong, but just the portion that's been deferred and outstanding when do you expect to recover that if its going to be within 2022 words anything spilling over into 'twenty three.
Hi, Sam yet the majority of our deferral agreements with tenants are with repayment over 2022 like that would be the vast majority I would say like 90, 590% and then there are some with very large credit worthy tenants that we did agree to extend.
The deferral into 'twenty 'twenty, three but again those would only be with with our very large tenants.
Yes.
Okay.
Thanks, and I know you mentioned that you're seeing an improvement on the orca side in terms of activity can you touch on what you're seeing in terms of rents and lease terms that you have these dialogues are with tenants.
Yeah.
After holding up very well.
We recorded it.
Spreads on office trends this quarter were four 5% and we aren't really seeing.
You know a marked drop in grants and theyre still rental rate growth relative to you know.
Deals that were entered into five years ago.
So I think rents are holding up there very well and then in terms of.
The activity, we're seeing good activity as I said from smaller and midsized tenants, particularly.
Yes.
Okay. Thanks, that's it for me thank you.
Okay.
Your next question is from Himanshu Gupta with Scotiabank.
Thank you and good morning.
So in industrial portfolio, you're expecting some reduction in occupancy.
But all of the expiry is come due in 2022, and then all of US can see recovery next year. So how should we think about D. C metro down the white goods in 2022 in the segment.
Hey, you mentioned yet.
So right now again I said, you know things are very positive.
Absent the.
The industrial vacancies like we would normally we'd be we'd be expecting CNS and NOI growth.
Slightly over 2%.
But because of those vacancies them.
It'll be probably close to one and a half overall, but we expect retail to be at around to the industrial because of those vacancies will be.
Probably flat or slightly negative.
As Ana said when those leases renewed at Randstad.
The 80% to 100% higher so the following year I think the seeds are planted really for strong stronger NOI growth, okay close to that two two and a half but next year.
Sure.
Got it so the big recovery in the industrial would be 2023, and probably 2022 would be a bit muted and then you also mentioned the deal at 2%.
If I look at the retail occupancy, it's still slightly below pizza and they'll make levels. So are you are you baking in some occupancy gains as well in your 2%.
All right.
It is slightly yes, what we see so we were about 97 and a half our retails there right now.
And we see a bit of occupancy gain.
And they get back on the office side, but.
The most positive thing is that we're seeing some rental rate growth again and.
And that's really.
That'll be the driver of NOI growth.
Got it okay. That's helpful. Thank you.
And then just sticking to the industrial side.
I mean, if I look at the iPhone as Cascade industrial portfolio as Margaret like FIFO Sweet tea catch it and when do you think there is scope for the cap it to come down, especially in the context of the recent transactions have shown to the market.
Yes, yes, we do I mean, we've had we've been writing it up every quarter because.
<unk> for the process internally, we try to be disciplined have third party data in every quarter Theres new data has information on rents and there's new information on transactions.
And we do think there is.
There is value there both in the stabilized industrial and especially in the development.
The development lending part.
Okay.
Then again your industrial you sold those.
Non coal generation assets in Calgary by $45 million are there more of these do you think will be eligible for capital recycling this year.
I'm not sure. If this year you mentioned there are a few assets, but nothing material that we view as non core.
Got it Okay, and then sticking to capital recycling and.
The question is capital allocation I mean, yes.
Are we likely to see more distribution in general to support the development of the industrial activity and that's been the playbook so far.
I mean, I prefer to keep the leverage at different levels or do kept moving chunky.
Yes, I mean.
We've.
We sold I would say the last three years probably.
Over 11 billion immediately north of 1 billion. So we really believe that.
This is just part of your.
Business model is.
There's always opportunities.
To be able to take money out of certain properties and get into other properties. So so I think it is going to be there right now we've been really just reinvesting into asset and we're sitting our balance sheet up so we have to get into the mixed users.
We're not going to put stress on our balance sheet. So so right now our our leverage adjusted for cash at seven one times and we think that will give us a lot of buffer to the next phase of our adult program. So we will be selling assets from Hollywood stuff, great quality and not necessarily paying down debt.
Got it okay. Thank you.
And my last question is on the residential development I'm looking at Mount Pleasant religion form 10.
Development yields like mid haul I T.
Ah, but slightly lower than the Liberty household.
So are you beginning to see any cost pressures or construction costs when the escalating on any any color there.
No we're not we're not expecting any real cost pressures on that development. The reason, it's slightly lower than the others. In fact, a condo component that is small the condo sales outperformed our original pro forma so just this quarter, we actually broke out the components of condo.
The income component.
And then finally, what is bringing down the yield a little bit is we've we elected to do some affordable units.
Just from a long term perspective, we're very bullish on the property is right adjacent to our go station and as there's still a significant development spread.
And is that a requirement from the city or in Oklahoma public perspective to include some affordable component or is it something youre doing on your voluntary basis.
It's something that us and our partner Daniels and chose to do.
Okay. Thank you.
That's all from my side. Thank you.
Your next question is from Tal Woolley with National Bank financial.
Hi, good morning, everybody.
Morning.
You know we've heard on some of your peers conference calls too.
The idea that you know now that things are.
<unk> opened up a little bit more youre seeing more interest.
Touring retail space.
You know more prospects out there.
And I recognize kind of a difficult question to answer, but you get a sense that this is a bit of a.
Okay.
A rush of activity just that you know people are eight back getting sort of back into the swing of things or do you think this is kind of a stable level of interest that youre going to see over the long haul.
Why.
Our interest has been quite strong throughout and that I think stems from the fact that.
Our portfolio is predominantly grocery anchored and service based retail and so I think more tenants are looking to locate with a strong grocery anchor so that definitely benefited us.
And I would say that you know winter breadth in terms of our power centers and so forth, that's where we're really seeing sort of a renewed.
Tim It then and.
Sunday mental belief that having a bricks and mortar location is really important from an overall retail strategy like that omnichannel approach is proving to be.
Yeah.
What tenants are are really.
Thank you and you see that even with Amazon opening a bricks and mortar location. So.
No.
I think this is something that's for sure.
It's going to be sustained.
Okay.
Then just on the office portfolio.
We're thinking about.
Let me ask the question a different way what is sort of your base case for when you expect kind of the occupancy bleed to stop.
Like when are you thinking that you are.
Okay.
Sorry, sorry, how are the market or.
You're in the within the office portfolio wed like whats your sort of.
Time horizon for when do you think because obviously some of this.
Endemic related and some of it maybe it's cyclical I don't know how youre thinking about it but.
Will when do you sort of see the occupancy bleed in office.
Stop.
Okay got it.
And.
Look I think told the first thing is you have to separate our portfolio between Alberta and the rest of the country in Alberta has really dragged us down significantly it's been a very challenging market and the pickup that I spoke about we are seeing.
In all other markets across the country.
We have positioned on previous quarters that there was an upcoming vacancy that we knew about in our portfolio and you are seeing that in Toronto, but that was.
That was vacancy that we knew about pre pandemic.
And we are.
We very bullish by the increase in activity that we've seen recently.
When exactly it will stabilize.
We don't we obviously don't know exactly but we are encouraged by the recent activity.
If you want to add anything.
Yeah.
Sure.
That's across it.
You know our rollover exposure.
Pretty limited about 300000 square feet.
Next year.
32% of those expiring leases, we completed another 24 our.
Government tenants that we know we're going to renew so there may be some further.
<unk> absorption through the year, but I think it will be less than we've seen through 2021, and it's just going to depend on.
How much the new leasing activity picked up which I'm I'm hopeful that well.
Okay and then just.
Just lastly.
I'm wondering if you can give.
Some color on what management's thinking is and what the board.
On the distribution, obviously, I think with no inflation rising.
Feedstocks, often held as a bond proxy medicine shareholders here, maybe looking for more going forward, what's what's the current thinking around that.
Sure I'll take that one.
We really like where our business is today the last couple of years.
We've had growth didn't really reinvested it until leverage reduction and improving the quality of the asset.
Some development.
Ladies and investing in development spending and so we felt that that was kind of a priority.
I think for 2022.
You're going to see a lot of value initiatives come out you may not see it in the cash flow right away because as real estate. We had we were in a net disposition position. So.
Voice and capital to kind of Delever control the industrial Vacates.
You've got some development stabilize so.
But I think all the seas are planted and I think we solve local areas that they may be in a position to start talking about it again, because you're right I think our investors limitation and I think with installation.
It's.
We expected and I think we'll be in a position once all the seasonally cycle today.
And you'll see it in the cash flow to fund it.
So this is something I think we will be talking about that we haven't talked about for three years.
Okay, that's great. Thanks, everybody.
And as a reminder to ask a question you will need to press star one on your telephone who withdraw your question press the pound key.
Your next question is from Penn Me Bear with RBC capital markets.
Good morning, just wanted.
I wanted to clarify needing to comment on the value recognition of development is the intention to record additional gains as projects are zoned and secondly, any visibility you can share it perhaps on the amount of square footage that couldn't get approved over the next call. It one to two years.
Yeah, I'll take the first one.
It's really.
The development development recognition is really a new area and I think it's evolving and it's becoming more high profile as more companies are developing.
We had our own framework, where.
We.
Given the rigor with auditors audit committee.
So we'd like to make sure that there is some third party validation and what we do and so we don't necessarily wait till that there is a.
The zoning, but a high probability of it and so we may be the laggard with Alaskan wanted to do was start accounting for this in the public space through our financial statements based on internal probabilities. So.
So but that being said I think what youre seeing now is you're seeing people carry projects on their books, but then they're transacting at higher rates and I think thats whats.
Leading maybe some some other reason.
The industry to kind of go more into what is that market perspective, or something as opposed to there being.
Third party validation and so so right now we tend to go with this milestone approach and especially when you get larger scale projects, they're all unique they are complex.
It really is complicated so so I think it's really.
There is a build attitude, we've just taken a more conservative approach, but I think you know.
We are positive and a lot of the elements that are undergoing.
Haven't hit certain milestones, but there is value there so, but I think it's going to evolve and it's going to be a little different than you saw.
A couple of releases everybody has taken their own perspective as to how they value their developments.
I think just on visibility.
We obviously are hopeful that we can get some of the industrial zoned.
Later this year. So obviously the large parcel of land in calendar is significant and then on the residential side and likely some old golden mile and potentially Granville growth now we.
We should be able to achieve zoning later this year.
Got it okay.
Just.
You mentioned some of the vacancy this year and then maybe.
It's still a bit too early but when you look at the 2023, new tier three.
Are there any larger ones that maybe give you some.
In terms of renewals or perhaps for you.
Perhaps might offset some of that.
Okay.
To call it 2% plus organic growth in 'twenty three.
In 2020 , three we start having Ludlow renewals, it's very hard to get that 2% plus.
As you know in all likelihood.
The leases are capped at 2% the growth, but I thought of loblaw theres nothing that concerns us and on the industrial side as Anna mentioned, we should get significantly higher than the 2%.
Got it Okay last one from Egypt.
Again nice to see some of these.
Pretty strong spreads in industrial, particularly G DTA.
When you look at the industrial portfolio as a whole where do you estimate the in place rents are relative to the market.
And probably we don't have that stat handy.
In outside of.
Alberta is more similar to market.
Whereas outside of Alberta significantly in <unk>.
Base rents are significantly below market, but I don't think we have that exact number in Nevada is a bit more color.
Well I would say in Ontario, specifically are in place ranking.
Ill.
At least 50% to 80% below market and seven like under $7.50 per square foot. So that's significantly below where we're doing deals right now.
Always in the double digits and lately, it kind of $12 a square foot.
Typically and town.
Yeah, that's where we have our biggest opportunity.
Great.
I'll turn it back thanks.
And there are no more questions at this time.
So thank you everyone for joining today's call.
Keys to all that you can't you stay healthy and safe and for those celebrating family day on Monday.
Have a good long weekend.
Ladies and gentlemen, this concludes today's conference call. Thank you all for participating you may now disconnect.
Okay.
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