Q2 2023 Killam Apartment REIT Earnings Call
Good morning, ladies and gentlemen, welcome to the Killen apartment real estate investment Trust second quarter 2023 financial results Conference call.
At this time all lines are in a listen only mode.
Following the presentation, we will conduct a question and answer session. If at any time. During this call you need assistance. Please press star zero for the operator.
This call is being recorded on Thursday August 10, 2023, I would now like to turn the conference over to Mr. Philip Fischer President and CEO . Please go ahead.
Thank you good morning, and thank you for joining Cowen apartment Reits second quarter 2023 conference call I'm here today with Robert Richardson Executive Vice President.
Dale Noseworthy, Chief Financial Officer, and Aaron Cleveland, Senior Vice President of Finance.
Slides to accompany today's call are available on the Investor Relations section of our website under events and presentations I will now ask Aaron to read our cautionary statements. Thank you Philip.
Presentation may contain forward looking statements with respect to gentlemen, apparently.
Operations strategy financial.
Otherwise.
The actual results and performance of kill them discuss here today could differ materially from those expressed or implied by such statements.
Such statements involve numerous inherent risks and uncertainties and although Killen management believes that the expectations reflected in the forward looking statements are reasonable there can be no assurance that future results levels of activity performance or achievements will occur as anticipated for further information about the inherent risks and uncertainty in respect to forward looking statements. Please refer to.
<unk> most recent annual information form and other securities regulatory filings.
And on SEDAR.
All forward looking statements made today speak only as of the date, which this presentation refer and kill them and does not intend to update or revise any such statements unless otherwise required by applicable securities law.
Thank you Eric we are very pleased with our strong financial and operating results for the second quarter 2023.
Kill them deliver S. F O per unit of 30 in the quarter, a seven 1% increase from 28 cents per unit in Q2 2022.
We achieved seven 9% same property NOI growth across the portfolio, which included $7 eight same property NOI growth in our permanent portfolio.
Three 8% same property NOI growth and our manufactured home community portfolio and $15 seven same property NOI growth for our commercial properties.
We ended the quarter with a 43, 1% debt to total asset ratio the lowest in our operating history and continue to focus on strengthening our balance sheet through our capital recycling program and the positive lease up momentum on our recently completed developments as we continue to capture the market too.
Market opportunities on unit turns we have exceeded our 3% to 5% NOI growth target in the first half of the year.
Back to exceed 6% for 2023.
Dale will now take us through our financial results, followed by Robert who will discuss our ESG initiatives.
I will continue with an update on our current and recent development and capital allocation strategy.
I will now hand, it over to Dale.
Thanks, Phil key highlights of calendar Q2 financial performance can be found on slides six kill them generate strong earnings growth in the quarter with net income of $114 $5 million or 66, 7% increase compared to Q2 2022.
This increase is primarily attributable to fair value gains on investment properties of $96 2 million, a direct result of revenue and NOI growth across the portfolio.
Jones average same property apartment rental rate at June 32023 to $1319 up four 3% from a year earlier slide.
Slide seven highlights the consistent growth in counts average apartment rental rate with the portfolio's average trend up 26% from five years ago.
Slide seven also provides a summary of the age of the portfolio and the distribution of average rents by unit count.
The impact of <unk> long term strategy of developing and buying new assets is highlighted with 33% is challenged apartment units built in the last 10 years and a total of 46% built in the last 20 years as.
As the chart on the bottom left of the page highlight our portfolio is well diversified from a rent range perspective.
The top chart on slide eight breaks down the rental growth achieved on renewals in terms by quarter.
Reflecting the rent increase for tenants, whose leases renewed in the quarter and for new tenants, who moved into a unit in the quarter.
We're pleased to report continued momentum on rental game with Q2 turns and renewal achieving a combined five 5% rent growth.
With rent control in place across 60% of our portfolio, we are capturing market rental rates when a unit churn.
We realized a 14, 7% increase on turns in Q2.
Our highest spread today.
We're seeing rental growth across the portfolio with our Toronto and kitchen, or whatever Cambridge properties, leading the pack followed by Victoria.
Branch growth continues to be strong and held back and in Europe Other Atlantic Canadian market.
Turnover levels are decreasing across the country for Killen and for all apartment owners. Our turnover was 22% last year and we are anticipating our 2023 turnover to be around 18%.
<unk> nine provides a summary of turnover by our core markets over the last three years. It highlights the range of turnover levels across the country, including how much higher it is in non rent controls market.
Turnover in Alberta, New Brunswick, and Newfoundland remained healthy generally about 25%.
Slide 10 shows our total same property operating costs.
7% in the quarter contributing to our strong NOI growth.
Kill and benefited from lower natural gas and oil pricing in the period.
Almost all increases in water and energy costs.
I am pleased to report that natural gas costs in Nova Scotia, and New Brunswick remained below last year's level. At this time. So we are expecting to see quarter over quarter savings in Q3 also.
We recorded a two 3% decrease in property taxes in Q2, primarily attributable to lower New Brunswick NPI property taxes. The decline in property taxes in <unk> is due to property tax subsidies to help offset the zero percent rent control for 2023, and a decrease in new Brunswick was driven by a.
<unk> and regional no right.
General operating costs were up three 2% in the quarter, a more moderate increase than we realized in Q1, although we continue to see inflationary pressures operating cost pressures appear to be moderating.
As seen on slide 11, our MHC properties had a solid performance in Q2, achieving three 8% same property NOI growth. Additionally, our commercial portfolio delivered an impressive 57% same property NOI growth.
Waiting to increased occupancy of 94, 7%, coupled with higher rental rates on renewal.
Overall with consistent performance in Q2, and following a strong Q1 for forecasting to exceed our three plan of 3% to 5% NOI growth targets with our with new guidelines, increasing that target to over 6% for the year.
On the balance sheet, we're pleased that our disciplined focus on reducing leverage have allowed us to achieve the lowest debt to total assets ratio in our operating history, ending the quarter with 43, 1%.
Our debt to normalized EBITDA continues to move in the right direction ending at 10 nine times at June 30 down from $11. Two one time at year end. Please refer to slide 12 for these debt metrics.
We're focused on strengthening our balance sheet and reducing variable rate debt and have been meeting our internal debt reduction targets.
During the first half of the year, we successfully reduced the balance on our credit and construction facilities by $68 7 million down 32% from $215 million at December 31, 2022.
This reduction was achieved through the reallocation of funds from dispositions and some permanent financing placed on recently completed developments subsequent to quarter end permanently MHC.
<unk> was placed on civic fix the effects further reducing our variable rate debt by another $57 million.
Kill them achieve the maximum points available for energy efficiency eligibility under CMA. These MLR select program at this property, enabling us to lock in permanent CMA sea ensured financing before full lease up and at attractive terms.
Based on our projected asset sale and debt financing program, we anticipate having the majority of our operating and construction lines repaid by the end of the year.
Slide 13 shows our average apartment mortgage rates by year versus prevailing CMA sea insured mortgage rates.
Our mortgage maturities are strategically staggered to avoid over exposure in any one year.
For the remainder of 2023, John has a $102 million of mortgages maturing with an average interest rate of three 5% I will now turn the call over to Robert who will discuss our latest initiatives outlined in our recently published ESG report. Thank you Dale and good morning, everyone. Since you released its 2002.
22, ESG report outlining many of our sustainable initiatives since constructing our first lead certified property 10 years ago, we have identified numerous opportunities to reduce our carbon footprint, resulting in many positive outcomes that include conservation of resources and reduction in energy cost in 2020 to kill them reduced like for.
Greenhouse gas emissions to 7% and our carbon intensity ratio by six 7% both from their 2020 baseline levels. As a result of this progress and to prepare for upcoming regulatory requirements advanced by the task force on climate related financial disclosure better known by the acronym Tc ft.
Kill them adopted new long term targets for 2023. Please see slide 14, we are committed to reducing films carbon intensity, 15% by 2030, coupled with establishing formal greenhouse gas emission reduction goals using science based targets by 2024.
Recognize the importance of reducing carbon footprint and are using related cost savings from lower commodity consumption to further fund our initiatives.
As part of our sustainability program, we are integrating smart building technologies, such as building automation systems.
As part of our preventive maintenance work refer to slide 15. Please.
To date 19 of our properties have been upgraded to use the.
Central server connected to the properties. This enables our team to remotely monitor and diagnose the buildings energy systems performance. Therefore, we can identify operational issue sooner with exceptional reporting and lessen the time and cost required to address problems. This reduces our greenhouse gas emissions.
As well since inefficiencies are identified sooner.
Currently we are integrating an additional 20 buildings for connection to our Eas server this year.
The implementation of Smart building technology, and preventative maintenance measures have resulted in savings in our utility and repairs and maintenance costs across our portfolio. These expense management processes enabled kill them to maintain its carbon reduction momentum while simultaneously improving operating margins in Q2 2023.
Three our overall same property operating margin increased by 160 basis points to 64, 5% for the quarter.
As part of our journey to prepare Killen assets for net zero emissions by 2050.
Our operations team is working with consultants across the country on energy modeling improved envelope design and longer term faith mechanical upgrades as our buildings infrastructure approaches its end of life, we are modeling, how and where we can replace old equipment with new more efficient systems.
Collaborations by <unk> engineering team with consulting engineers, and architects helps identify suitable technologies and best practices for decarbonization.
Implementation is achieved with coordinated effort across all departments overlaying, our operations acquisitions finance and sustainability teams.
We have learned there is a strong correlation between comes the largest greenhouse gas emitting properties and those requiring capital investment kilometer balance of capital investment return on investment and estimated greenhouse gas savings to realize optimal returns further come considers the timing of these upgrades with mortgage refinancings two acts.
As you may see programs that reward a reduction in carbon emissions.
I'll now hand, you back to Philip to provide further details on our renewable energy projects and an update on our development and disposition activity.
Thank you Robert during the quarter Killen invested $2 $8 million in energy initiatives in 2020, Killen started investing in solar energy production and we currently have solar panels installed at 18 properties across Nova Scotia.
<unk> and Alberta.
Our current production capacity of 800 megawatt hours per year produces.
Proximately, 4% of our operationally control electricity moving us closer to our goal of 10% by 2025.
This year, we plan to invest $1 $5 million in solar and currently have five additional solar projects.
Underway that are expected to produce an additional 690 megawatt hours per year.
We have also been active in rolling out electric vehicle charging stations.
With 260 units installed across 39 properties. This number continues to grow and we are committed to investing $1 million in EV Chargers installations in 2023 targeting over 400 Chargers across 50 properties with all our new developments being built to incorporate this technology.
Kill them has completed $82 million in dispositions year to date with proceeds, allowing us to reduce our floating rate debt.
With completed dispositions and Ottawa Halifax in Charlotte town, and five additional properties expected to be unconditional by September 2023, Killen plans to exceed its capital recycling target by the end of the year.
Our development pipeline further supports our focus on improving our liquidity and capital flexibility, which saw two properties reached substantial completion subsequent to quarter end.
Our $94 million of developments completed year to date is composed of the Governor currently 33% leased highlighted on slide 20, and <unk> 66 currently 43% leased highlighted on slide 21.
Additionally, both properties are built with several advanced create technologies that will reduce operating costs greenhouse gas emissions and our exposure to any energy prices.
Our 2022 completed developments for <unk> in latitude has similar features and are currently performing at operating margins over 70%.
We have two active developments the second phase Nolan Hill highlighted on slide 23, and the <unk> on slide 24.
The second phase of Nolan Hill, the three building development in Calgary is well underway and is expected to be completed by January of 2024.
Kill them holds a 10% interest in the second phase with a commitment to purchase the remaining 90% for $65 million upon completion.
We expect to acquire the first building in September in the following two buildings in Q4.
This will add an additional 234 units to our Alberta portfolio.
The carrier, which is expected to be completed.
During the first half of 2025, we will add 139 units adjacent to our existing commercial property and Waterloo.
Looking forward.
With Canadians current immigration target of approximately 500000 individuals per year.
<unk> recognizes the development of new housing is a key factor in solving the housing crisis.
Our development pipeline remains a fundamental component to our growth strategy distinguishing us from our peers and allows us to grow our portfolio and strong markets in.
In 2022, <unk> for the second fastest growing region in the country and as such our housing starts must keep pace.
Killen is currently working on long term planning for large redevelopment sites and Halifax and Waterloo.
Where additional density can be achieved through the planning process with minimal disruption to our existing tenants.
Yes.
To conclude we are very pleased with our Q2 performance.
I'd like to thank our employees for their hard work and dedication.
We are optimistic for the future.
To execute our priorities and create value for all of our unit holders.
Thank you.
I will now open up the call for questions.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session.
Have a question. Please press the star followed by the one on your Touchtone phone you will hear three Tom prompt acknowledging your request.
I'll use my speaker phone please lift the handset before pressing.
First question comes from Jonathan Culture at TD Cowen. Please go ahead.
Thanks.
Morning.
First question for Bill just on the five unconditional prop.
Five properties, we expect to be unconditional by September what see rough dollar.
All of amount and number of units on.
Those.
Well again understanding that they are not unconditional. So they are still in the due diligence period, but it would be roughly about $80 million and maybe up to between five and 600 units.
Yeah.
Okay.
And you're mostly east coast.
Eastern Canada.
Yes, mostly east coast if not.
The largest percentage of it for sure.
Okay.
Good.
Are you looking at buying any new assets, maybe recycling some of the some of the proceeds in to that or.
Nolan Bill.
Covers Nolan Hill is primarily the largest asset that we're looking at.
Okay, and then Rob on the the Bas.
That something that you guys will eventually roll out to all properties and is there any sort of.
How much does it cost too.
For property or however, you. However, you guys look at it.
We will roll it out throughout the portfolio and what it costs. It depends on the buildings some of our older. Some are newer so it really is customer ice's property, but we're seeing benefits from it and it makes perfect sense.
250 buildings thats difficult to.
Do without automation.
Yes, correct I agree.
And then just lastly, Dale on the Civics 66.
What rate did you get on knee as soon as the financing.
With 4344 or tenure.
Okay. That's it for me I'll turn it back thanks.
Thanks, Jonathan.
Thank you. The next question comes from Mike Mckee BMO capital markets. Please go ahead.
Good morning <unk> team.
Bill I think you mentioned that.
Rent growth that you were seeing was largest in Toronto kitchen Cambrian Waterloo.
And then maybe just confirming that point and then maybe dovetailing on that if you could talk to what youre seeing in terms of market rent growth whether it's.
Steady steady pace moderating in Halifax in your press release.
So I would say.
Moderating to accelerating in Palo back then.
We're not seeing it go down on a market rent perspective, I'd say when I think of the last couple of quarters, we've been able to achieve that so and it depends.
On the market, but stayed.
Stable to accelerating.
Okay.
Right.
And then obviously you know there's a lot of your ability and volatility in your op cost line and no one's got a great Crystal ball, but how do you guys think of or do you think of what sort of the.
Revenue growth profile on a same property basis of your portfolio it looks like next year.
Well I think that we're pretty optimistic that it will accelerate next year because when we look at the acceleration we're seeing throughout this year and you know you kind of think out 12 months, how that role so that's going to be a positive and with the 5% renewal rate and Nova Scotia.
<unk> to 2% and looking at the number of units we have those two things alone should should lead to stronger rent growth next year.
Okay great.
Phil you've been really successful on the on your asset sale program. So I might say more successful on relative basis.
And perhaps some of your peers I was wondering if you had any thoughts as to.
Why you've been able to act so quickly.
And whats.
What's driven your success versus I mean, we've heard some commentary from others, but financing is quite challenging.
Maybe walk back a little bit from the capital recycling story. So maybe you could just provide some thoughts on your successor.
I think that there is from our point of view.
We've never been a seller. So the fact that there is and there is a larger group of emerging.
Landlords and Atlantic Canada.
And I would like to believe that if we put.
Property for sale. The fact that we've owned it for a long time relative to the condition of it the <unk>.
All of the of the tenants.
There is quite a bit attraction and for many years. We've always had inquiries do you want to sell something if you do let me know so I think there has been a bit of pent up demand from our ownership, but that aside there is a very positive.
Yes.
Look for the rental market in Atlantic Canada.
And basically we're happy and now our deals hurt to close absolutely the interest rate environment is not helping the lack of basically.
<unk>.
Services relative to do an environmental work.
There is a shortage, which is prolonged and some of these deals, but we're willing to work with the folks that we have.
Our engaged with to sort of dispose of these assets.
Okay. Thank you that's helpful and last one from me before I turn it back.
You've got a good long term development runway in your portfolio cost of capital and other factors have obviously slowed the start process thus far.
Hearing that perhaps there may be some demand from institutional players out there.
Dissipate and developments.
Joint venturing to.
To help facilitate the start of your development pipeline is something that you would consider exploring at this point.
Well again I know.
The industry has.
Coal continues to look for other sources of capital.
Partnerships are great I mean, we have partnerships today, but at the same time.
Where we are we think we can grow right now.
On our own balance sheet, especially with the recycling of our.
A few properties. This is a huge sort of influx of capital that we can recycle.
We are going to take that money and eventually put it into the ground with the next development or the one after that and then the amount that you tend to spend the first year or so before you go into your construction line is very manageable at this level. So right now we're not looking at it very seriously, but we always would never turn down the.
Too early to talk to somebody.
Okay, I mean, obviously, you've got a target for for this year, but.
If the market doesn't change with asset sales still be on Europe .
Party list in 2024.
I think I've said, a couple of times before on a go forward basis, we will always look to review and sell assets.
Into the future this will be part of what we do.
Okay. So good reminder, thanks so much.
Thanks.
Thank you. The next question comes from Kyle Stanley Chardan. Please go ahead.
Thanks, Good morning, everyone.
Maybe just going back to John's question, just on acquisitions I know obviously your focus as you mentioned as Nolan hail, but I'm wondering are you actively underwriting new opportunities in the market right now and maybe what are you seeing out there and at what point.
Do you maybe start to become more offensive with your capital going forward as I think Dale you mentioned in your prepared remarks that by year end you hope to have most of your variable rate debt dealt with.
We are not actively underwriting any deal that has presented by.
Any of the brokerage houses on a marketing basis across the country. We are looking at them just took form of interest sake to see where the market is.
Right now.
Like I said, we're concentrating on our development side, we're concentrating on.
The disposition of a number of assets.
We're spending way more time looking at the the development deal flow and how to accelerate some of these projects to get them to the point of being able to go into the ground and then the other part of this equation is the amount of energy and time it takes to even get a current coffee on some.
The projects and then the third part of it is the long term.
Larger development play.
And a number of locations, where we can add significant density like the West Mountain Plaza in Waterloo, that's taken up a lot of our time now if there happens to be a little house next door to one of these development sites, yes, we're going to buy it but it's a very small one off adding to the land play.
Okay. No I think that makes a lot of sense you do have a lot of opportunity in the existing portfolio.
Maybe next just.
Today, obviously, you're again talking about reducing the variable rate debt exposure is that still your best use of proceeds just looking for maybe thoughts on potentially using in CIB.
More as we go forward through the year.
Yeah right now it is I mean, you're talking it's no secret has gone from essentially 2% up to about 7%.
And if we can quickly.
Reduce that line of credit our acquisition line, then we're going to be in really good shape from a liquidity point of view from a debt level.
Leverage point of view and from just pure flexibility to look at future opportunities.
Okay Fair enough and then just the last one.
I'm just looking for your thoughts on maybe the expectation for stabilization that each of the governor and 666 more for our modeling purposes.
Sure so as always during the lease up period, there will be a bit of a drag as.
As we are no longer capitalizing interest though.
Im sure Youre aware of that but looking forward when we look at those two combined.
From a.
<unk> perspective, we're probably about $1 5 million stabilized from an NOI perspective, we're probably four to four and a half stabilized for those assets.
Probably closer to it okay, yes.
Okay.
Perfect. Thank you very much I'll turn it back.
Thank you.
Thank you next question comes from Matt.
Please go ahead.
Good morning, guys.
Uh huh.
Follow up to <unk>.
<unk> questioning there.
In terms of timing was there any NOI attributable to either the governor's civic 66 positive or negative in Q2.
No actually didnt move into it still was an AIPAC until July one. So we just moved it into investment properties and looking forward to the rest of the quarter will be we expect negative.
Until probably the end of this year.
Okay, and then in terms of stabilized occupancy.
Spring leasing season, or do you think you will stabilize in advance of the spring.
On both of them.
Yes.
Sure.
Yes, the government a little bit different.
<unk>.
With 766, we've got 78.
Three leases those 169.
Seitz Seitz units leased.
We would be.
Optimistic leave speaking that we should be almost full by the end of the year.
Okay. That's helpful.
And then just with regards to the the market rent growth question.
And next year.
Lisa Nova Scotia, you do get to go to 5% on renewals do you think that 5% represents kind of market rent growth of the mark to market potential will stabilize at least in that province, or do you still think that.
Market rent growth is expanding in at above that and then I guess on turnover.
How are you thinking about suite renovations at this point in terms of driving kind of above that number.
Yeah.
I understand your question the 5%.
It is not getting us I don't think close to market rents.
So I think we're going to continue to see lots of opportunity on churn.
Even after that we get that 5% bump.
I think that as sweet renovations that theres still lots of opportunity there and we're looking at it as market rents are increasing and what we see is that the ability to to really.
Move those rents and kind of change the.
Value offering of those units it continues to make sense. So I think it's reasonable to expect similar levels to what we've done this year when we look at reposition beyond this year.
Okay makes sense and then and then last question just with regards to supply.
I mean, the population growth that you've had at east is pretty staggering.
Has there been.
Apply response at this point from kind of the local development.
Contingent or is it is it facing challenges like elsewhere in terms of just putting product up getting making the numbers work et cetera.
I don't think it's accelerating at this time.
The forecast is for roughly 6000 units to come online over the next eight nine months and I think that thats going to hold steady for the foreseeable future.
Now if interest rates continue to rise fewer builders will show up.
And there is tremendous demand.
We'll have to find that balance so they can work together.
Okay fair enough. Thanks, Ed.
Thank you the next question.
The next question comes from Gaurav Mehta.
Capital markets. Please go ahead.
Thank you and good morning, everyone. Just one quick question a filter on your.
A comment about the buyer pool increasing.
As you're looking to dispose of assets would it be fair to say that the Red Bull is also increasing at the same time on how's that affecting the bid ask spread as these assets come to market.
Sorry, I didn't catch the last little bit of the buyer pool that you, which was framing your question could you repeat that please.
Of course my question is you know how do you see the buyer pool increases.
You're also seeing an increase in the vendor pool.
How is that affecting the bid ask spread for the assets that come to market.
I mean, that's a good question I don't actually see a lot of other assets for sale and Atlantic Canada.
Okay.
And what would you say about the bid ask spread at the moment is that sorry to narrow a bit or is it.
Or is it mostly the same as you've seen through the start of the AR.
I think it's the same I think a lot of the owners.
If I was to go knock on the door and say I'd like to buy that asset there was quite a spread of what I would pay versus what they think its worth.
Okay, great. Thank you for the color I'll turn it back.
Thank you.
Ladies and gentlemen, as a reminder, should you have any questions. Please press star one.
Next question from Darryl Genovesi Cormack Securities. Please go ahead.
Thank you operator, good morning, everyone.
Good morning back Legato, Golar questioning and your comment on the dispositions.
Just to kind of a profile of the buyers can you comment on the kind of buyers you see helping the market institutional retail and how have you seen that evolve over the last 12 months.
Okay.
Well I think really the only comment is is that there.
It's a combination of older smaller well established.
Owners looking to acquire.
Because they've been able to sort of.
Basically retain a lot of their earnings into the have the cash and the willingness to continue to increase.
And then there are.
Sort of the newer entities.
That have their own access to capital and they want to sort of grow in this region. So it's a combination of that.
Obviously, it's not.
Our peer group the other publicly traded Reits.
Yeah.
Okay, Great I also not.
Institutional right yes.
Fair enough.
Thanks, guys. Thanks, Niccolo Dawn Becker.
Thank you. The next question comes from David Crystal at Epsilon Capital markets. Please go ahead.
Thanks, Good morning.
Just quickly on the upcoming Nolan Hill acquisition can you comment on expected yield and how that has changed given rent increases over over the course of since locking in the purchase price.
Yeah, I mean, good question and we're not going to say exactly because we're just starting to lease but.
The.
The question itself. It really is about how much it has gone up since we.
Did agree to purchase this and start to build this.
Basically a year and a half ago. So we had modeled this the pricing around a five it has gone up substantially since that time, it's going to be we'll be able to give you really color on it.
Third quarter once we basically.
Closing.
To start the leasing of what the market is out there, but it's up substantially.
We did our underwriting.
Okay Fair and on your same property NOI target, obviously bumped it up to 6% you're already trending year to date north of seven.
Do you see any risk to that 7% coming down.
Or.
Any risk on the Opex side in the back half of the year or.
And the oversight over 6% really a kind of open ended talk.
I think that's a good way to look at it I mean.
We.
We think that probably two to two and a half kind of on the expense side, it's probably right now of what it's looking like but with the continued top line growth.
Thank God, we feel fairly comp, we feel very confident that with the over six.
Okay, and then maybe last one on the on the Mark to market upside I mean, it's been it's been growing since the start of the quarter. Its now in the I think 25% to 30% range.
Is this a good indication of where we should expect lift on turnover to trend.
It's obviously hitting records and rising rapidly, but should we expect to keep seeing it trend higher.
Yes.
I think that's reasonable it's hard to get the full number because it all depends on where the units turn so when we're looking at the weighted average mark to market certainly some of those markets, we talked about in Ontario.
Some of the highest but yet the lowest churn. So it just depends on where those units are turning but.
The trend that we've been presenting.
<unk> can continue.
In terms of the highest they increasing Ontario.
Okay, great. Thanks, I'll turn it back.
Thank you there are no further questions I will turn the call back over for closing comments.
Okay.
At this time I would like to thank everyone for listening and asking questions today, and we look forward to the third quarter conference call in November . Thank you.
Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and we ask that you. Please disconnect your lines.