Q4 2022 Crombie Real Estate Investment Trust Earnings Call
Good morning, everyone and welcome to the Crosby REIT Crombie, <unk> Q4 earnings call Conference call.
All lines are in listen only mode. Following the presentation, we will conduct a question and answer session. If at any time. During this call you require immediate assistance. Please press star zero for the operator. This call is being recorded on February 23, 2023, I would now like to turn the conference over to Ruth Martin. Please go ahead.
Thank you good day, everyone and welcome to Crombie <unk> fourth quarter 2022 conference call and webcast. Thank you for joining US. This call is being recorded and live audio and is available on our website at www Dot crombie dots yeah.
But to accompany today's call are available on the investors section of our website under presentations and events.
On the call today are Don <unk>, President and Chief Executive Officer, and Clinton, Kay Chief Financial Officer and Secretary.
Today's discussion includes forward looking statements as always we want to caution you that such statements are based on management's assumptions and beliefs.
These forward looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see our public filings, including our MD&A and annual information form for a discussion of these risk factors.
I will now turn the call over to Dan who will begin our discussion with comments on <unk> overall strategy and outlook along with a development update Clinton will review, Colombia operating fundamentals and then discuss our financial results capital allocation and approach to funding and Don will conclude with a few final remarks over to you Don.
Thank you Ruth and good day, everyone and thanks for joining us when we look back on 2022, our significantly improved financial condition with solid growth is really the story of the year. We have proved we have proven over many years that we are prepared to make hard decisions in the short term for success in the long term.
A lot of our strengthened balance sheet lowered debt levels, leading to improved debt to EBITDA and debt to gross fair value metrics, our ample liquidity and an increase in our unencumbered asset pool.
This significant improvement in our financial condition occurred at the same time as we delivered solid growth in <unk> and NAV.
By delivering on our strategy of outstanding operations, including record occupancy and responsible investment and grocery anchored retail partnership with Empire.
At the end of sustainable development with an award winning an engaged workforce. We are proud of the fact that we remain focused on our long term sustainable growth. Despite the volatility of the capital markets and ongoing macro economics.
Political pressures.
One of our guiding values of crops as Tim Boddy integrity, we do what we say we will do we.
We are pleased to report that our adjusted same asset cash NOI and <unk> are in line with our target annual increases and same asset cash NOI of 2% to 3%.
<unk> growth of 3% to 5% our major development projects have been largely completed on time and on budget.
Relationship with our strategic partner remains strong and our fundamentals continue to improve year over year, our team and culture have been recognized again this year for their fine work and we were recently named one of Atlantic Canada's top employers for the seven times seventh time I'm also humbled to be a recipient of waterstone's most admired.
Oh awards this year and for that I'll give full credit to the culture of our team has built a crombie Steve.
The stability of our organization has once again demonstrated over the last quarter a year through our high occupancy healthy NOI growth steady new leasing and renewal activity our ability to be agile is underpinned by our attention really curated portfolio, which consists of the most desirable asset types in Canada grocery anchored retail and <unk>.
<unk> and mixed use residential in 2022, multiple new tenants moved into our top toy, which 60% is now investment grade and demonstrating the attractiveness of our portfolio and the quality of our cash flow.
The relationship with our strategic partner Empire continues to be an important driver of our success in.
In 2022, Crombie spent $191 million in empower related initiatives, we are committed to spending between $100 million to $200 million annually. The spending will come in the form of Modernizations acquisitions conversions of grocery stores as well as the Buildout of empires Walla grocery E Commerce hub and spoke network. This commitment.
The Empire provides many attractive risk adjusted opportunities often with shorter project durations and allows for stable growth and value creation for our unit holders as our largest tenants <unk> also played a significant part in supporting our sustainability growth as we move forward.
We've proven over the last few years the development of all sizes is a key component to our long term strategy in light of the current economic environment. We have adjusted our annual spending range to be $100 million to $250 million of developments, including non major projects from a previous range of $150 million to $250 million.
Lower spending will likely be on the lower end this year due to the ongoing uncertainty in the economic and geopolitical environment. We have steadfastly focused on unlocking the embedded value within our portfolio. The team continue the hard work of advancing projects through the entitlement process to create value and provide optionality of projects.
Size and timing of commencement and some of the most desirable locations across the country.
At the end of 2022 four projects have zoning approval in place and two projects have zoning applications submitted with the potential to add approximately $3 3 million square feet of GLA, including 3700 residential units.
In the fourth quarter of 2022, we reached substantial completion at our retail related industrial development, while lost Dfc three in Calgary.
<unk> is the third state of the art Empire grocery E Commerce fulfillment hub in Canada. The second in Crombie portfolio and is powered by Ocado has industry, leading technology, including a robotic grid platform.
304000 square foot facility will service the majority of Alberta, with economic occupancy and rent expected to commence in mid 2023.
Lease up continues at La Duke in Montreal, and brought a village in Oakville.
Duke is 93% leased as of February 10, 2023 at rents over 5% above pro forma stabilization of NOI was achieved in December 2022 ahead of the previously expected timeline of March 2023, we're thrilled with the progress that has been made at ledoux with a special thanks to our partner <unk>.
Developments for their hard work and leadership.
Friday village continued lease up is 52% or 249 units have been leased as of February 10, 2023 at rents, 10% above pro forma stabilization of NOI is expected to be reached in May of 2024, we're always seeking ways to optimize the value of our development pipeline, while balancing capital allocation priorities.
In line with our strategy, we're particularly proud of a milestone achieved in the fourth quarter. The sale of our <unk> site, Surrey BC. This transaction is a great example of the tremendous underlying land value held in our portfolio and highlights one of the many value creation opportunities available to crombie.
In consideration of our current opportunities we have elected to monetize the remaining residential development parcels that are major development Opel rich in Dartmouth, Nova Scotia. Rather then proceed with the residential development option given this direction hopeful ridge was removed from our development pipeline in the fourth quarter.
We're handing the call over to Clinton I want to take a moment to highlight <unk> commitment to sustainability throughout 2022, we focused on and formalized our ESG policies and strategy, while continuing to improve and advanced several important initiatives, we updated our sustainable development policy introduce portfolio wide ESG risk assessments into.
ESG targets to advance our impact and have gathered an inventory of greenhouse gas emissions and identified reduction pathways leaders on our team has built relationships with our peers as well and together, we're working to improve our industry's carbon footprint, we continue to uphold white glove governance and all of our broad committees have mandates that include ESG.
Oversight on the social aspect of ESG, our diversity equity and inclusion committee continues its work on creating a more welcoming workplace for all including inclusive communications training, we continue to accommodate flexible work options and encourage our teams to volunteer for community organizations across Canada in 2022.
Our employees volunteered over 6000 hours of volunteer organizations of their choosing we're truly committed to doing our part to build a Canada, where everyone can thrive measuring and tracking our progress in how we impact our environment and society. It takes time and energy, but it is absolutely worth and I'm proud of our team for their debt.
Acacia to this work.
With that I'll now turn the call over to Quentin who will highlight our fourth quarter operational and financial results and discuss our capital funding approach. Thank.
Thank you Donnie Teng.
Good day.
Two new makes sense increased occupancy by 349000 square feet at a weighted average first year rate of $21 59 per square foot.
At the end of 2020 to 394000 square feet of GLA was committed at an average first year rate of $20 50 per square foot.
It will boost future NOI growth as tenants take precession throughout 2023.
During the fourth quarter 374000 square feet of renewals were completed at an average increase of 12, 9% over expiring rental rates.
<unk> activity was <unk> office renewal, a significant increase over expiring rental rates.
This lease renewal spreads for the quarter would have been three 3% the primary drivers of renewal growth in the quarter within our office and retail Plaza portfolios.
For the full year total renewal activity consisted of $1 56000 square feet with an increase of 7% over expiring rental rates are four 2%, excluding the previously mentioned offshore north.
On a cash basis quarterly same asset NOI increased <unk>, 9% and one 6% for the full year primary drivers are strong occupancy higher supplemental ran from Modernizations and capital improvements and increased parking revenue. This was partially offset by a decrease in lease termination income.
Excluding lease termination income same asset cash NOI increased by two 4% for the fourth quarter and two 6% for the full year.
For the quarter <unk> <unk> per unit or 25 and.
29, <unk>, respectively, both consistent with the same quarter last year.
<unk> on a per unit basis were diluted by the equity issuance in January 2022.
On a dollar basis, <unk> increased $4 6 million and <unk> increased $5 2 million.
The increase in <unk> and <unk> for the quarter is primarily due to lower finance cost from operations increases in income from acquisitions, Modernizations and capital improvements.
Contribution from our equity accounted investments and a decrease in G&A expenses due to a reduction in unit based compensation costs.
<unk> in that full payout ratios in the quarter were <unk> 88, 1% and 76, 2% respectively.
For the fourth quarter, G&A was $6 1 million or five 6% as a percentage of property revenue.
Excluding the impact of unit based compensation of $1 4 million G&A was four 3% of property revenue.
Crombie, continuing to reduce risk and build financial strength of 2022 through a disciplined approach to financial management and responsible capital allocation, providing significant financial flexibility.
These actions have led to our strengthening balance sheet, having ample liquidity notable deleveraging, while latter debt maturities with balance near term expiries and a healthy weighted average turn to maturity.
All of which are extremely important, especially during the current challenging macroeconomic environment.
We ended the year with available liquidity of $583 million and our unencumbered asset pool reached $2 2 billion, increasing from $1 8 billion in Q4, 2021, primarily due to acquisitions mortgage maturities and development completions and partially offset by dispositions.
As a percentage of unsecured debt unencumbered assets represent 192% up from 129% in the fourth quarter of 2021, providing <unk> with additional financing optionality.
Debt to grow share value was 41, 8% at the end of Q4, a significant improvement from 45, 3% at Q4 2021.
The improvement in our leverage ratio was primarily the result of lower debt outstanding, resulting primarily from mortgage repayments as well as an increase in total gross fair value of $95 million from the substantial completion of bronchial village in early 2020 to acquisition activity and investments and developments.
We ended the quarter with debt to trailing 12 months adjusted EBITDA at 8.02 times down from $8 99 times at December 31 2021.
The improvement is primarily due to lower outstanding debt as a result of mortgage repayments and higher adjusted EBITDA driven by increased operating income and higher net property income from joint ventures.
In the fourth quarter of 2022 Crombie entered into a credit agreement for an unsecured non revolving credit facility.
Credit facility has a maximum principal amount of up to $200 million with a maturity date in November 2025.
$150 million was used to fund the redemption of series D unsecured notes the.
The credit facility allows us to maintain ample liquidity, while also providing maximum flexibility with respect to the timing of obtaining longer term unsecured debt.
Colombia had a weighted average cap rate of 574% inclusive of joint ventures at the end of the fourth quarter compared to $5, 54% at the end of the third quarter and Q4 2021.
The recent expansion of our weighted average cap rate has been partially offset by new development completions and a continued strong demand for grocery anchored assets.
With that I will now turn the call over to Don for a few closing comments. Thank you Clinton today is a bitter sweet for me as I take my last analyst call for Crombie for.
For almost 14 years I've met with you approximately 55 times on a quarterly basis to share our team's results and have enjoyed our time together. Despite your sometimes hard hitting questions. The ceo's primary objective is to leave it organization better than they founded and I feel immense pride in the crombie from which I'm retiring.
We've achieved incredible success over the years and I'm proud to say with top quartile total unit holder return we've evolved from a regional landlord into a national owner, operator and developer of great properties across Canada with curated a portfolio that is largely comprised of the three most highly sought after asset classes in the market grocery anchored retail.
<unk> retail related industrial and residential properties from coast to coast.
Our strategic relationship with Empire has become a more impactful driver of growth over the last five years and has empowered many mutually beneficial opportunities our balance sheet as strong as our fundamentals and we're all we are well positioned to weather any economic storms, we may face over the next few years, we strengthened our team substantially over the last.
A decade, and a half and employed well educated highly skilled people who are as resilient as they are smart and it is this team who together have made everything possible. Peter Drucker Once said culture eats strategy for breakfast and Crombie as proof of this statement next week I'm humbled to be receiving an award is kind of Canada's most admired CEO .
While this award being presented to me. It is primarily a testament to the culture that we've built at crombie at a time when attrition is at an all time high when every business Journal was writing of the war on talent properties engagement scores have risen we've doubled down on the importance of our people and together reconfirmed our guiding values we have.
Body integrity, we care passionately, we deliver excellence together, we outperform expectations and empower one another every day ICR team employ these values to guide decision, making and the way we work together and I know that this team will continue to enhance neighborhoods across Canada through long term sustainable growth.
I am so pleased to introduce my successor, Mark Hawley, who will lead this team to ongoing growth and success that take it to the next level Mark as a strategic leader with a proven track record of more than 20 years in real estate development operations and capital management and he is recognized within the industry is an exceptional communicator.
<unk> and relationship builder with deep expertise across the entire real estate development cycle.
<unk> joins us from Empire, where he led the firm's real estate business and had the opportunity to collaborate closely with the crop executive leadership team on a range of successful initiatives that have generated substantial value for both companies by sincerely. Thank you for the respectful discourse. We've enjoyed over the last 14 years and now proudly haven't things.
Over to Mark Mark.
Thank you Don for the kind words and congratulations on your retirement.
Truly amazing career.
After five years of working as a partner to crombie I'm thrilled to be joining this amazing organization.
Im looking forward to carrying the successes that have made crombie one of the top performing REIT in Canada, and I look forward to meeting all of you in the near future.
Thank you.
That concludes our prepared remarks, and we're now happy to answer your questions.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone you will hear three tones pump acknowledging your request and your questions will be pulled in the order they are received.
If you wish to decline from the polling process. Please press the star followed by the Q.
You are using a speaker phone please lift the handset before pressing any Keith one moment. Please for your first question.
Okay.
Okay.
Your first question comes from Mario <unk> with Scotiabank. Please go ahead.
Hi, good afternoon.
Afternoon.
I just wanted to start off by congratulating you.
On the news and welcome Mark as well.
I'm sure a lot of it.
What I call the view that you've achieved your initiatives in your goal that you set out well congratulations on that.
And good luck on board.
Thank you.
Hi.
With with that.
I wanted to focus a bit on the same store NOI growth in 'twenty three.
And kind of a target 2% to 3%, which is your traditional target.
Outside of.
Central substantial economic deceleration, which protect tool is there anything notable from a leasing perspective in 'twenty three that could drive that number either higher or lower than the 2% to 3%.
No <unk> I think generally things will be steady course.
We continue to lease.
Our lease up our residential properties, which we think in the future.
We do consolidate those results.
For people.
We will end up showing call it may be an increasing.
Range.
As expected growth or guidance, but in general our portfolio has been doing that for a long time on the retail side.
And it's been I'll call. It we've been up covenant in the portfolio I think through Covid and continue to see that.
That trend and so I think to the downside we are quite pleased with where we stand.
And to the upside we think it's probably more to that end of the spectrum just because again.
We don't really consolidate our residential properties and we're trying to figure out a way to in the future to show the growth from that and which is actually quake.
Quite interesting and proving to be as we thought which is seeing solid growth in the various residential markets.
I'd say generally steady course, with a little more opportunity hopefully to the upside as we move forward.
Got it so it was in terms of tenant watch list.
Like that are notable leases that are set to expire in 'twenty three.
No.
Okay, and then in terms of parking revenue.
No Bob.
<unk>.
Still some upside.
To chew there, we're getting close to pre pandemic levels, but we still do have some upside.
On a full year basis.
So.
Yes.
I'd leave it at that.
Okay.
My second question just in terms of capital deploy.
Deployment.
I appreciate that the development.
Cycle, maybe a little bit slower or the spend maybe a bit lower.
And then what you've achieved.
Curious in terms of.
How about in part because the do you expect to spend on the Empire, driven initiatives about $1 million to $200 million per year.
Turner in place.
On that range why not two to 300 billion for example.
A year, where developments that can be done.
What I'd say is that the relationships never been better and never more creative and the initiatives I see coming forward are we think are exceptional in terms of their quality for both driving results for Empire driving results for Crombie. So we did show call it.
Closer to the $200 million level of spending in 2022, and our forecast this year and next would be call. It at the higher end of that spectrum. There is a possibly go over but just because the relationship is so good and Empire is continuing with project horizon and continuing to look for.
And evolution of their network plan and continued efficiencies in that network plan and we just I think are well positioned to work with them to Cree.
Create opportunities for <unk> to invest.
So I'd say higher end of that that range is probably the next year or two.
Is likely and again those types of projects have solid risk adjusted returns and shorter durations in general so for US it's more it's faster activation of <unk> growth.
For Crombie.
In that part of our capital allocation so.
Yes, I would say that thats.
Probably where we land.
Okay and.
And just my last question just on the 20 basis point cap rate, so as Kathy jump quarter over quarter. It was a bit higher than we would have.
We anticipate a bit higher than what the peers recorded this quarter.
How much of the increase would you say is supporting by actual transactions versus.
Something else driving that conviction, there and I'd say on a year have a look at the year because I think if you look at ourselves and our peers were all right around the same number and so some of them might have adjusted second quarter or third quarter, and we just have to adjust a little bit in the fourth quarter more but the total for 2022 the numbers are.
Here to us to be roughly the same.
And again Theyre not really substantiated by significant transactions there just aren't a lot of transactions one year considered grocery anchored retail industrial.
Or apartments.
And so for us, we're quite comfortable and feel like our numbers are conservative.
And at the end of the day, we have a good process, where our evaluation committee has a very robust discussion and evaluation and lots of opinions, but not a lot of call. It evidence underneath it so we're kind of reaching a little bit but at the end of the day, we're comfortable with it the good news for US is that our NOI keeps growing and we are in.
Titling projects et cetera, so I noticed that the <unk> fair value actually stayed the same despite a reduction in the value of the portfolio by a couple hundred million Bucks. So this shows you the.
How things do balance out in general.
Alright, and I guess, what we've been hearing.
From a transaction perspective.
Bigger deals seem to be on pause. It was on the retail landscape smaller assets are very much in demand, especially by private equity or private groups.
Is it your sense.
We could see a decent amount of deal flow.
In the first half of this year to better substantiate where.
Transactions or valuation.
I think it's a difficult question to answer.
Honestly, the people who own it or well.
Funded and its generally fairly consolidated especially for grocery anchored.
Retail you are seeing a large deal obviously the summit, we want to congratulate our friend, Paul Dykeman, <unk> mono amazing transaction and Thats.
A large portfolio and obviously the folks at dream industrial for doing that deal.
I think really that pricing was totally disconnected from the market and industrial but we're not we're not expecting to see large chunks of grocery anchored retail or apartments, I don't feel that it might happen, but I don't think it's going to happen too much because the people who own of what in general long term cash flow growth and solid cash flow.
That's resilient in the face of a lot of economic uncertainty read at the moment I will tell you that there is significant interest in those types of real estate. So if we did want to sell we could but we just felt general so.
And I suspect most of the owners that we know.
Still in a similar way so.
Hope that's helpful.
No that's great.
Congratulations gentlemen.
<unk> 56 analyst call.
[laughter], that's a large large number mario but thanks very much for everything we really appreciate it.
That's it for me thank you.
Yes.
Your next question comes from Lorne Kalmar with Desjardin. Please go ahead.
Thanks, Good afternoon, and congrats to John and Mark.
Mark.
Thank you.
Just on occupancy you guys seem to be hitting record quarter after quarter now you know.
Close to 97, starting to look pretty full how much further do you think you can take it or you kind of comfortable that 97% occupancy range. So that you can kind of start pushing rents a little bit more.
We often get asked what is key.
Call It full occupancy and we've generally told people 1% to 2% is has some structural issue to it and we're working on it. So I would say that's still roughly the case so.
Pretty close to full occupancy.
We are pushing rents I would say at the moment you saw some monophagous said you saw otherwise the retail portfolio. So for us it's an ongoing process. It's not easy the economy has challenges for everybody. So it's I'd say, it's more of a balanced marketplace today than something that.
People can really push it.
But so for us it's steady as she goes is probably the more apt description.
Put it that way.
I'm noticing a theme with the steadiness.
On on the Opel Ridge.
Any idea on timing are expected proceeds I know, it's probably still a little bit early but figured I would put that out there yes.
Yes, I would say over 2023.
Okay easy enough and then just on the opposite you mentioned, obviously you got a pretty good.
Pretty good lease there in the quarter, what's the thoughts on holding onto those are maybe looking to dispose of them.
As time allows.
Look we own we own and the best office in Halifax in my mind, and we've outperformed the market we have an outstanding team at Halifax developments of Scotia Square.
So it's a key part of our portfolio and performing very well roughly 90, 495% occupancy in a market. That's got roughly now 86% occupancy so we've outperformed the market.
We've just renewed a number of leases as you see with strong uplift.
And so for us it's a strong strong performers so.
So I just leave it at that we don't have any plans to sell office now even though it is a small <unk> part of our portfolio.
Because it's so well managed so strong such a strong performer.
So yes.
It's nice to hear some positive commentary on office for lunch.
And then just last quick one any idea on the expected yield on the western on Duke.
Yes, what we saw.
Said is call it in the high fives.
We won't get into much more than that.
And so we've historically when we see those numbers, we've been able to able to deliver it.
We're.
Roughly where we're working.
As we look forward on the project.
That's great Congrats to you both again and I'll turn it back okay. Thanks, so much thanks.
Ladies and gentlemen, as a reminder, should you have a question. Please press the star followed by the one.
Your next question comes from.
Sam.
<unk> with TD Securities. Please go ahead.
Thank you congratulations to both you Donnie and Mark as well.
Look forward to meeting you market the nearest opportunity.
Is that just for the background noise, if you can hear it.
I guess my first question would be on the residential developments.
And resolving.
Program.
Based on the good success that the REIT has achieved its first.
Projects, what would be the most important lesson learned that would inform the go or no go decision on future projects.
Today, it's probably managing cost and a higher inflationary environment and doing so in a market where you still have growing rents where you can call. It pass those costs onto our consumer.
In the form of higher rates and we're very fortunate to have the bulk of our property development portfolio is in Vancouver, and also in places like Halifax, where theres significant ryzen population and increasing rents on a continuous basis.
Have relatively high level. So for us that is alerting we built our first three projects through a relatively low inflationary environment and Delta is still nevertheless, a fair amount of uncertainty, which is normal in development, but this inflation.
<unk> added an additional layer and then also obviously interest rates is planning the financing of these projects but.
In general Sam we're continuing to work on entitlements, continuing to give ourselves the options and the delays.
I can say it in terms of approving the next project, it's really been more of a macro issue and looking for things to normalize or just at least show stronger signals of normalization in my mind.
Probably MISO with Mark taking on the leadership he'll bring some fresh thinking to that and but again I think the good news is that development has been very well done by our team and our partners that we are very enthusiastic about how it.
Matches the profile of investment in <unk>.
In terms of increasing our growth diversifying to some degree our income stream.
An increasing or the quality of our portfolio and increasing the percentage thats in the major markets. So it's got a lot of attributes that are really positive and again as we said in our <unk>.
Marks we are prepared to do in the short term, we will sacrifice to some degree to do what's right in the long term and so may be a short I'll call it slowdown.
Okay and in the meantime, again, we're also continuing to invest in stuff that's under the $50 million that adds up to over $100 million in total on development, which is still very profitable for us. So it's a nice combination of balanced approach.
That makes sense I appreciate that.
Just looking maybe Clinton over to you on the.
Excess density inclusion in your fair value disclosure is there anything better now and what do you see maybe over the next year or two.
Sites get approved we're including some fair value bumps going forward, yes.
I would say that youre right about the accounting treatment that's required.
As we get the entitlements at a spot where we get fully entitled from.
<unk>.
Positioned to take the fair value bounce back I can't give any guidance at this time other than to say, obviously as we get to those milestones that will be bumps in the fair value in the quarters, Yes, Sam I'll jump in and I have said for many quarters I think we have $500 million to $1 billion worth of excess land value does not recognize an derived for us right.
Rightfully. So we have lots of debates internally about the timing <unk> amount, but it's real value and we were I think quite.
Portfolio in terms of executing on King George that as proof of that.
That concept.
And so we're proud of that effort in the transaction with West group.
But it is important to show that it's proof of concept that we have large number of other properties like that so.
It is just a matter of time, but it's something where we have to respect the accounting rules and the process.
And we continue to be I'll call it relatively conservative so.
It is the way it is.
I appreciate that and last one for me, it's great to see crombie fully participating in the strong retail leasing environment that we're in but when we just look at some of the turnover and I recognize it's rather low these days when tenants are deciding to not renew what would be the biggest one or two reasons that youre seeing out there and is there any read throughs.
To your expectations for 2023, and $2 24, as a result of those close to purchase.
We haven't seen any big credit type issues, we've seen maybe a couple of small lines, we've seen more I'll call. It people moving to different parts of the market.
Importantly for us as Youll see in our occupancy rate with backfill quickly generally with better quality covenants and higher rents. So we've been.
Good and Lucky.
At the same time in our leasing and Thats always a healthy combination.
And so our turnover hasn't bothered us to be Frank we have not had a lot, but it hasnt bothered us at all.
Grocery anchored still honestly is very popular add <unk> is very successful and the traffic that generate is very desirable for for our tenants. So yes. We're.
We're super pleased with our portfolio.
Performance in that regard.
That's great. Thank you I'll turn it back thanks, so much.
Your next question comes from Tammy <unk> with RBC capital markets. Please go ahead.
Thanks, Hi, everyone Donnie Marc Congratulations again.
And Unfortunately I missed the early part of the call. So I do apologize.
This has been addressed.
But just coming back to to Opel Rich can you just maybe.
Just maybe expand on the comments on the decision to monetize it versus building it and then just secondly.
It looks like Broadway commercial the rezoning expectation is being pushed to 2024. So just curious what you can share with us on those two.
Yes rich.
Call It a smaller development opportunity for us in many ways and we had a good partner and these are tough decisions I mean were honestly we.
We have a predisposition for building things and ultimately gathering solid cash flow and good cash flow growth over time, and so where we are.
That project is going to be a good one I was just on the smaller and I think at the end of the day for US said, we felt it was better done by someone.
What else.
Great commercial on the other hand, as an amazing opportunity to number one transit node in Western Canada number three ish in all of Canada.
And a great partner in Westpac.
We had an opportunity to increase the density there.
As we were essentially deferred last July by them.
Initial process.
And for US that's an opportunity to give some increase affordable housing in the marketplace.
And again for US is extra density and so for US. It's it's a natural part of development. These things occur we couldnt control it it's an external factor in.
And but we're going to hopefully be able to work with it and work with the city.
The lasers by a bit but at the end of the day, we think we'll end up with a more profitable projects, that's going to really serve the community a lot better to so everybody wins hopefully.
Got it and then just maybe on Opel Rich did you disclose what the estimated proceeds would be and then secondly has the fair value Mark on that because I think it was already zoned has that already been is that already reflected in your <unk>.
<unk> fair value, yes, we cannot disclose the number unfortunately, but it was at or above IR for us yes.
Okay.
Just lastly on bronchi village.
Just any update there in terms of the leasing it seems to be going still a bit slow but.
The Duke as I have done better.
So what can you share just in terms of the lease up of <unk> village and where you think it may end.
Two by the end of this year.
While we're pleased actually with our leasing overall it with Daily Street, we were well ahead of schedule and.
Call It record performance in that part of the marketplace in Vancouver, and Duke we're ahead of schedule by a quarter and 5% above pro forma.
Prostate call a little slow, but it's a large project DNA I'll call. It a submarket of Toronto.
And.
So it just takes extra time, our view is that once it's fully leased it'll be call it stickier or people will generally.
Stay longer.
I'll remind people that inflation when you've already built the asset inflation is actually a friend and that competitors will have to pay.
20%, 30% more to build competed project and therefore have to come out at higher rates. So.
For us it takes.
Taking just a little extra time as we said in our remarks, we're coming still at 10% above pro forma.
And we're confident in those numbers that we think that the project has a really good community feel.
Largest part of that.
No tenant base is people, who are downsizes and so for us it is having a solid community for those people that really works for them.
That type of transition in their lives and so it's I think it works, it's just a matter of getting through.
Marketing and getting a little.
Hopefully the leasing is completed in the next.
Next 12 months.
That's great. Thanks, very much I will say I will turn it back thank you.
There are no further questions at this time I will now turn the call over to Ruth Martin for closing remarks.
Thank you for your time today, and we look forward to updating you on our first quarter call in May.
Thanks, Eric Thank.
Thank you.
Okay.
Ladies and gentlemen, this concludes your conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.
Yeah.
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Okay.
Okay.
Keith will now begin with Florida.
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