Q3 2023 Killam Apartment REIT Earnings Call
Good morning, ladies and gentlemen. Welcome to the Columbia apartment real estate investment trust third quarter 2023 financial results conference call.
Good morning, ladies and gentlemen, welcome to the Columbia apartment Real estate investment Trust third quarter 2020 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 require assistance, please press star zero for the operator. This call is being recorded on November 8, 2023.
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 require assistance. Please press star zero, where the operator. This call is being recorded on November eight 2023.
I would now like to turn the conference over to Mr. Philip Fraser, President and CEO . Be still ahead.
I would now like to turn the conference over to Mr. Philip Laser that's exactly C. L. Please go ahead.
Thank you. Good morning and thank you for joining Killam Apartment Reed's third quarter 2023 conference call. I am here today with Robert Richardson, Executive Vice President.
Thank you good morning, and thank you for joining killing apartment Reits third 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.
They'll 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...
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 statement.
Thank you, Philip. This presentation may contain forward-looking statements with respect to Killam Apartments and its operations, strategies, financial performance conditions, or otherwise. The actual results and performance of Killam discussed here today could differ materially from those expressed or implied by such statements.
Thank you Philip.
The presentation may contain forward looking statements with respect to calendar <unk>.
<unk> strategy financial performance condition or otherwise.
The results and performance of John discussed here today could differ materially from those expressed or implied by such statements such statements involve numerous inherent risks and uncertainties and although kill them 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.
Such statements involve numerous inherent risks and uncertainties, and although Killam 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 uncertainties in respect to forward-looking statements, please refer to Killam's most recent annual information form and other securities regulatory filings found online on CEDAR.
For further information about the inherent risks and uncertainty in respect of forward looking statements. Please refer to kill them. Its most recent annual information form and other securities regulatory filings.
All forward-looking statements made today speak only as of the date which this presentation refers, and KLM does not intend to update or revise any such statements unless otherwise required by applicable securities law.
And on SEDAR.
All forward looking statements made today speak only as of the date, which this presentation refers excellent does not intend to update or revise any such statements unless otherwise required by applicable securities law.
Thank you, Aaron. We are very pleased with our strong financial and operating results for the third quarter of 2023.
Thank you Eric we are very pleased with our strong financial and operating results for the third quarter of 2023.
Killam delivered FFO per unit of 32 cents in the quarter, a 3.2% increase from 31 cents per unit in Q3 2022, and achieved 8.1% same property in a while.
Kill them delivery S. F O per unit of 32 cents in the quarter.
Three 2% increase from 31 per unit in Q3 2022.
And achieved eight 1%.
Same property NOI growth across the portfolio.
As we continue to capture market to market opportunities on the unit turns, we have exceeded our 6% NOI growth target in the first nine months of the year. We ended the quarter with 42.8% debt to total asset ratio, the lowest in our operating history.
As we continue to capture market.
Mark to market opportunities on the unit turns we've exceeded our 6% NOI growth targets in the first nine months of the year. We ended the quarter with 42, 8% debt to total asset ratio the lowest and are operating history.
and continue to focus on strengthening our balance sheet through our capital disposition program and the positive lease-up momentum on our recently completed development.
Continue to focus on strengthening our balance sheet through our capital disposition program and the positive lease up momentum on our recently completed developments.
Dale will now take us through our financial results, followed by Robert, who will discuss our operational results.
Dale will now take us through our financial results, followed by Robert who will discuss our operational results.
I will conclude with an update on our current and recent developments in our capital allocation strategy. I will now hand it over to the Chair. I will now hand it over to the Chair.
I will conclude with an update.
Excuse me on a current and recent developments in our capital allocation strategy.
I will now hand, it over to Dale.
Thanks, Bill. Key highlights of KILM Q3 financial performance can be found on slide five. KILM generated strong earnings growth in the quarter with net income of $68.3 million. This includes $38.5 million in fair value gains on investment properties, a result of rent acceleration translating into higher NOI.
Thanks, Phil key highlights of calendar Q3 financial performance can be found on slide five kill them, Jamie generated strong earnings growth in the quarter with net income of $68 3 million.
This included $38 5 million and fair value gains on investment properties are resolved if rent acceleration translating into higher NOI.
Value enhancements from this NOI growth were partially offset by an uptick in cap rates in Ontario, BC and PEI where we increased cap rates between 10 and 25 basis points in Q3.
All you enhancements from this NOI growth were partially offset by an uptick in cap rates in Ontario, B C. N P. I, where we increased cap rates between 10, and 25 basis points in Q3.
In the last year, we've increased cap rates in Ontario and BC by between 35 and 50 basis.
In the last year, we've increased cap rates in Ontario, and B C by between 35 and 50 basis points.
As Phil noted, we continue to exceed our forecasted NOI growth and have again increased our same property NOI target for the year to over 7%, up from over 6%. A summary of our strategic targets and performance to date can be found on slide 6.
As Phil noted, we continue to exceed our forecasted NOI growth and have again increased our same property NOI target for the year to over 7% up from over 6% a summary of the summary of our strategic targets and performance to date can be found on slide six.
Revenue is the key driver of strong NOI performance. Slide seven breaks down the rental growth achieved on renewals and turns by quarter, reflecting rents for tenants whose leases renewed in the quarter and for new tenants who moved into a unit in the quarter.
Revenue was the key driver of strong NOI performance slide seven breaks down the rental growth achieved on renewals insurance by quarter, reflecting rent for tenants, whose leases renewed in the quarter and for new tenants, who moved into a unit in the quarter.
In Q3, Kilim achieved its highest weighted average increase with combined same property rental rate growth of 5.9%, including an average increase of 16.8% on turns and 3.2% on renewals.
In Q3 kilometer cheap its highest weighted average increase with combined same property rental rate growth of five 9%, including an average increase of 16, 8% on turns and three 2% on renewals.
Year over year from September 2022 to September 2023, the average rent for our same property portfolio is up 4.7%.
Year over year from September 2022 to September 2023, the average rent for our same property portfolio is up four 7% with.
With acceleration in rent growth over the last four quarters, our average rent increase in 2024 will exceed the 4.7% we've realized over the last 12 months.
With the acceleration in rent growth over the last four quarters, our average rent increase in 2024 will exceed the four 7% we've realized over the last 12 months.
Lower turnover continues in this tight rental market. Slide 8 provides a summary of turnover by region, including turnover activity through to the end of October . We are anticipating turnover for 2023 to be approximately 19%. Although down from last year, at 19%, new leasing activity continues to be an important contributor to our rent growth.
Lower turnover continues in this tight rental market slide eight provides a summary of turnover by region, including turnover activity through to the end of October we are anticipating turnover for 2023 to be approximately 19%, although down from last year at 19% new leasing activity continues to be an.
[noise] contributor to our rent growth.
In addition to increasing top line, we are managing operating expenses. For the second consecutive quarter, expense growth remained below 1%, with total same property operating costs up 0.7%.
In addition to increasing top line, we are managing operating expenses for the second consecutive quarter expense growth remained below 1% with total same property operating costs up <unk>, 7%.
As seen on slide nine, general operating expenses increased 1.7%, a deceleration from the previous quarter. We are starting to see an easing of inflationary pressures and are benefiting from the impact of expense management initiatives. For example, lower HVAC and plumbing maintenance costs reflect preventative maintenance programs and lower insurance premiums aligned with our strong risk management program, both of which have been evolving over the last two decades.
As seen on slide nine general operating expenses increased one 7% a deceleration from the previous quarter.
We are starting to see an easing of inflationary pressures and are betting benefiting from the impact of expense management initiatives for example, lower HVAC and plumbing maintenance costs reflect preventative maintenance programs and lower insurance premiums align with our strong risk management program.
Both of which have been evolving over the last five years.
We are pleased to report continued expansion of our operating margin, a 120 basis point increase on our same property portfolio, achieving a 64.1% margin for the first nine months of the year.
We are pleased to report continued expansion of our operating margin of 120 basis point increase in our same property portfolio, achieving a 64, 1% margin for the first nine months of the year.
Slide 9 shows the steady progression of our margin expansion. In addition to NOI growth, our margin is further expanding from the introduction of new developments with margins well above 70% as well as the sale of lower margin properties.
Slide nine shows the steady progression of our mat margin expansion. In addition to NOI growth. Our margin is further expanding from the introduction of new developments with margins well above 70% as well as the sale of lower margin properties.
Maintaining a healthy balance sheet is a core focus. With the successful execution of our capital recycling program and placing permanent financing on recently completed developments, we've reduced our variable rate debt by 110 million year-to-date. As a percentage of total debt, variables rate debt has decreased to 4.9% compared to 9.6% at the start of the year. This will continue to come down in Q4.
Maintaining a healthy balance sheet is a core focus with the successful execution of our capital recycling program and placing permanent financing on recently completed developments, we've reduced our variable rate debt by $110 million year to date.
As a percentage of total debt variable rate debt has decreased to four 9% compared to nine 6% at the start of the year. This will continue to come down in Q4.
In addition, debt to total assets improved, ending the quarter at 42.8%.
In addition debt to total assets improved ending the quarter at 42, 8%.
the lowest level in our operating history. Debt to normalize EPITA also improved, ending the quarter at 10.5 times.
The lowest level in our operating history, that's normalized EBITDA also improved ending the quarter at two five times.
Finally, slide 11 shows our average apartment mortgage rates by year versus prevailing CMHC insured mortgage rates. Our mortgage maturities are strategically staggered to avoid overexposure in any one year. Looking forward, we have 83 million of mortgages maturing in Q4 with a average rate of 3.3%.
Finally, slide 11 shows our average apartment mortgage rates by year versus prevailing see MHC insured mortgage rates mortgage maturities are strategically staggered to avoid overexposure in any one year looking forward, we have $83 million of mortgages maturing in Q4 with a weighted average rate of three 3%.
In addition, we have two development loans totaling $42 million, which will move from variable rate construction facilities to fixed rate mortgages during Q4.
In addition, we have two development loans totaling $42 million, which will move from variable rate construction facilities to fixed rate mortgages during Q4.
I will now turn the call over to Robert, who will discuss our commercial and MHC results, along with an ESG update.
I will now turn the call over to Robert who will discuss our commercial an MHC results along within the S. G update. Thank you Dale and good morning, everyone comes commercial portfolio, consisting of three major properties for 389000 square foot royalty crossing in Charlottetown, Halifax is 152000 square foot brewery market.
Thank you Dale and good morning everyone. GILM's commercial portfolio consisting of three major properties.
389,000 square foot Royalty Crossing in Charlottetown, Halifax's 152,000 square foot brewery market, and the 306,000 square foot Westmount Place in Waterloo have all experienced impressive leasing in 2023.
And the 306000 square foot plus non place in Waterloo have all experienced impressive leasing in 2023 same property commercial net operating income increased 18, 9% for the quarter attributable to an increase in total commercial occupancy of 230 basis points to 94, 8% from 92.
Same property commercial net operating income increased 18.9% for the quarter.
attributable to an increase in total commercial occupancy of 230 basis points to 94.8% from 92.5% at September 30, 2022.
Two 5% at September 32022.
Plus, continued success with strong rental growth on lease renewals.
Plus continued success with strong rental growth on lease renewals.
Year to date, we have completed 29 lease renewals totaling 77,150 square feet at a weighted average rental increase of 29%, having a weighted average lease term of 6.9 years. We also executed 29 new commercial leases totaling 52,600 square feet at a weighted average net rent of $22.45 per square foot, having a weighted average lease term of 7.6 years.
Year to date, we have completed 29 lease renewals totaling 77150 square feet at a weighted average rental increase of 29%, having a weighted average lease term of six nine years.
So executed 29, new commercial leases totaling 52600 square feet at a weighted average net rent of $22 45 per square foot, having a weighted average lease term of seven six years.
Kiln's MHC properties include 31 permanent communities and 9 seasonal resorts.
MHC properties include 31 permanent communities and nine seasonal resorts.
Collectively, these properties delivered solid results in Q3 2023 achieving 5.4% total same property NOI growth.
Secondly, these properties delivered solid results in Q3 2023, achieving five 4% total same property NOI growth for.
The seasonal resorts, which only operate for the second and third quarters each year, performed very well, producing 7.1% in NOI growth year-to-date 2023, compared to the same period last year.
The seasonal resorts, which only operate for the second and third quarters, each year performed very well producing seven 1% and NOI growth year to date 2023 compared to the same period last year.
Although representing a relatively small segment of Kilms business, our permanent and seasonal communities are steady performers, consistently contributing to Kilms' bottom line. The permanent MHCs have a five-year average operating margin of 65% while the seasonal resorts five-year average margin is slightly less at 60%.
Although representing a relatively small segment of <unk> business are permanent and seasonal communities. Our steady performers consistently contributing to comes bottom line a permanent mfc's have a five year average operating margin of 65%, while the seasonal resorts five year average margin is slightly less at 60%.
Slide 13 illustrates this historical trend and the relationship between the two property types based on the time of year.
Slide 13 illustrates this historical trend and the relationship between the two property types based on the time of the year.
In 2023, Tillme completed its fifth annual GRIF submission, receiving a green three-star designation and maintaining a strong score on our performance and disclosure rating.
And 2023, Tom completed its fifth annual grip submission, receiving a green three star designation and maintaining a strong score on our performance and disclosure ratings.
The Gred's requirements and the ESG sustainability landscape continue to evolve and Kilmeth identified areas where we can improve our climate-related disclosure.
<unk> requirements and the ESG sustainability landscape continues to evolve and quilmes identified areas, where we can improve our climate related disclosure, we recognize that climate change related impacts are increasing in frequency and severity. Therefore, killing must develop resiliency plans to protect our portfolio. This.
we recognize that climate change related impacts are increasing in frequency and severity. Therefore, Killam must develop resiliency plans to protect our portfolio. This includes exploring best practices that identify, assess, and mitigate climate change risks.
<unk> includes exploring best practices that identify assess and mitigate climate change risks. So we can prioritize the more significant exposures and likewise effective countermeasures. Finally, we are proud to announce that based on the results of our 2023 employee survey telemedicine recognize.
so we can prioritize the more significant exposures and likewise affect countermeasures.
Finally, we are proud to announce that based on the results of our 2023 employee survey, Kilomet's been recognized as an employer of choice for Nova Scotia and New Brunswick by the Best Companies Group.
As an employer of choice for Nova Scotia, and New Brunswick by the best companies Group.
Our third party administered survey results show an overall satisfaction score of 81% highlighting that 85% of children employees are satisfied with their role. 87 report excellent relationships with their supervisors. 90% feel positively both killed diversity efforts and 92% of employees like their coworkers.
Our third party administered survey results show, an overall satisfaction score of 81% highlighting that 85% of children employees are satisfied with their role.
87 report excellent relationships with their supervisors, 90% feel positively about comes diversity efforts and 92% of employees like our coworkers.
Kiln utilizes the results of its annual employee survey to ensure we maintain a positive work environment for our employees, communicating to them that their contribution is both recognized and valued. We embrace the survey's insights, using these to keep Kiln current so we may make changes as necessary. Next quarter, we look forward to sharing the details of Kiln's annual tenant survey with you.
Kill me utilized as a result of its annual employee survey to ensure we maintain a positive work environment for our employees communicating to them that their contribution is both recognized and valued we embraced the surveys insights using these to keep tuned killen current so we may make changes as necessary.
Next quarter, we look forward to sharing the details of films annual tenant survey with you.
I will now hand you back to Philip to provide further details on our Renewable Energy Project and an update on our development and disposition activities.
I will now hand, you back to sell up to provide further details on our renewable energy projects and an update on our development and disposition activities.
Thank you Robert.
During the quarter, Killam invested $2.5 million in energy initiatives. Back in 2020, Killam started investing in solar energy production, and we now have solar panels installed at 19 properties located in Nova Scotia, PEI, Ontario, and Alberta.
During the quarter kill them invested $2 $5 million in energy initiatives back in 2020, Killen started investing in solar energy production and we now have solar panels installed at.
At 19 properties located in Nova Scotia at Pgi, Ontario, and Alberta.
Our current production capacity of 1900 megawatt hours per year produces approximately 4.1% of our operational control electricity, moving towards our long term goal of 10% of our electrical consumption source through renewables by 2025.
Our current production capacity of 900 megawatt hours per year produces approximately four 1% of our operational control electricity moving towards our long term goal of 10% over the electrical consumption sourced through renewables by 2025.
In addition, we have five additional solar projects underway that are expected to produce an additional 700 megawatt hours per year.
In addition, we have five additional solar projects underway that are expected to produce an additional 700 megawatt hours per year.
We have also been active in rolling out electric vehicle charging stations with 355 units installed across 47 properties. This number continues to grow and we are committed to investing $900,000 in EV charging installations in 2023 targeting over 400 chargers across 54 properties with all our new developments being built to incorporate this technology.
We have also been active in rolling out electric vehicle charging stations with 355 units installed across 47 properties. This number continues to grow and we are committed to investing $900000.
In EV charging installations in 2023 targeting over 400 Chargers across 54 properties with all our new developments being built to incorporate this technology.
A key component of this year's strategy was to recycle capital by divesting out of slow growth secondary markets for lower yielding assets while focusing on our development program and strengthening our balance sheet. transit funding to 50 million cryptocurrency whether not to? yere 20-2-3-2-1-2-2-3-0-3-1-2-3-4-0-2-4-0-1-2-3-4-3-1-2-3-1-2-3-1-2-2-3-0-2-3.
A key component of this year's strategy was to recycle capital by divesting out of slow growth secondary markets or lower yielding assets, while focusing on our development programs and strengthening our balance sheet.
As of September 2023 kilograms sold.
Five properties for $97 million and subsequent to the quarter have closed three additional properties for $33.5 million. The majority of the proceeds have been used to reduce our floating rate debt.
Five properties.
For $97 million and subsequent to the quarter.
It closed to three additional properties for $33 $5 million. The majority of the proceeds have been used to reduce our floating rate debt.
With completed dispositions in Ottawa, Halifax, Charlottetown, Miramichi and Sydney, totaling 815 units, we have exceeded our target of $100 million for the year.
With completed dispositions and Ottawa, Halifax, Charlottetown Mirror Mercy, and Sydney totaling 815 years, we have exceeded our target of $100 million for the year.
These planned dispositions meet our criteria for recycling capital and will also further increase our percentage of NOI generated outside of land in Canada, thereby enhancing our geographical diversification.
These planned dispositions meet our criteria for recycling capital and will also further increase our percentage of NOI generated outside Atlanta, Canada, thereby enhancing our geographical diversification.
On the growth side, we have completed $94 million of high-quality development this year. The Governor, a 12-unit property in downtown Halifax, in Citic 66, 169-unit property in Kitchh.
On the growth side, we have completed $94 million of high quality developments. This year. The governor of 12 unit property in downtown Halifax, and Civic 66 to 169 unit property in Kitchener.
Both properties are built with several advanced green technologies that will reduce operating costs, greenhouse gas emissions, and our exposure to energy pricing.
Properties are built with several advanced Green technologies.
That will reduce operating costs greenhouse gas emissions and our exposure to energy pricing.
We have two active developments, the second phase of Nolan Hill, shown on slide 19 and 21, and the CARE on slide 21. The second phase of Nolan Hill, a three building 234 unit development in Calgary, is expected to be completed in December of this year.
We have two active developments the second phase of <unk> Hill shown on slide 19, and 20 and the care on Slide 21, the second phase of Nolan Hill, a three building 234 unit development in Calgary.
As expected to be completed in December of this year.
Killam owns a 10% interest and has a commitment to purchase 100% of the development for $65 million. We are currently leasing the first building, which is 42% leased, and will close the transaction once the other two buildings are finished.
<unk> owns a 10% interest and is a commitment to purchase 100% of the development.
The $5 million. We are currently leasing the first building, which is 42% lease and we'll close the transaction once the other two buildings are finished.
This will add an additional 234 units to our Alberta portfolio. And with current rent growth in the region, we are expecting the all cash yield to be over 6.5%.
This will add an additional 234 units to our Alberta portfolio and with current rent growth in the region. We are expecting the all cash yield to be over six 5%.
The carat is expected to be completed in the second half of 2025 and will light 139 units adjacent to our existing commercial property in Waterloo.
The carrier is expected to be completed in the second half of 2025, and a light 139 units adjacent to our existing commercial property in Waterloo.
The construction industry for single-family homes, condos, and apartments has not kept pace with the population growth over the last 10 years. The insufficient housing supply, three years of high inflation, and 18 months of rising interest rates.
The construction industry for single family homes condos and apartments is not kept pace with the population growth over the last 10 years, the insufficient housing supply three years of high inflation and 18 months of rising interest rates.
has created a housing affordability crisis and a housing shortage.
<unk> has created a housing affordability crisis and a housing shortage.
Recently, a number of provincial governments and the federal government
Recently, a number of provincial governments and the federal government.
has started to shift their attention to this issue and are working towards a solution to help the development industry create more supply. By reducing the time it takes to receive a building permit and eliminating that GST, HST tax. This is creating many exciting, I'm not sure if I can do that.
Has started to shift their attention to this issue and are working towards a solution to help the development industry create more supply by reducing the time it takes to receive a building permit.
Eliminating the GDS THST tax.
This is creating many exciting opportunities for killing.
We own a number of development sites and a number of large redevelopment sites that will create value by building housing on land that we own for many years.
We own a number of development sites in a number of large redevelopment sites that will create value by building housing on land that we owned for many years.
We are experienced developers who have been building rental housing complexes for the last 15 years and have built over 1900 units and six provinces. We are actively working on a number of-
Our experienced developers we have been building rental housing complexes for the last 15 years and has built over 1900 units and six provinces.
We are actively working on a number of new and exciting developments.
To conclude, we are very pleased with our Q3 performance. I would like to thank our employees for their hard work and dedication.
To conclude we are very pleased with our Q3 performance.
I would like to thank our employees for their hard work and dedication.
We are excited for the future and will continue to execute on our strategy and create value for all of our unit holders. Thank you. I will now open.
We are excited for the future and we'll continue to execute on our strategy and create value for all of our unit holders.
I will now open up the call for questions.
Thank you and ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your telephone keypad. You will hear a three-tone prompt acknowledging your request and your questions will be pulled in the order to receive. Should you wish to decline from the polling process, please press the star followed by the number two. And if you're using a speaker phone, please click the handset before pressing any keys. One moment please for your first question.
Thank you and ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the number one on your telephone keypad, you will hear a telephone from logging Eric quick and your questions you'll be pulled into order to Eric He should you wish to declines on the filing process.
Press the star followed by the number two and if youre using a speakerphone. Please pick up the handset before pressing anarchy. One moment. Please for your first question.
Your first question comes from the line of Mark Rothschild from Canada Court. Your line is open. Thanks.
Your first question comes from the line of Mark Rothschild from Canaccord. Your line is open.
Thanks, Dan and good morning, everyone.
Good morning, guys good morning, Matt.
So, arrested transaction market, are you seeing any pick up in large transactions actually looking like they might get done?
The rest of the transaction market are you seeing any pickup.
And large transactions actually looking like it might get done obviously interest rates have been somewhat volatile and.
volatile and maybe in that note, how do you see assets being valued with interest rates where they are and the large rent growth that will take a while to come?
Maybe in that note.
How do you see asset being valued with interest rates, where they are and the large rent growth that we.
We will take a while to come but should come from any asset.
Mark, to answer your first question, I'm not aware of any large actively marketed marketed.
Mark the answer to your first question.
Not aware of any large.
Actively marketed marketed.
transactions in the marketplaces across Canada that are actually going through. Well, we've been able to accomplish, they've been relatively small deals, and there's been local interests for those deals.
Transactions in the marketplace across Canada.
That are actually going through.
Well, we've been able to accomplish.
Relatively small.
Deals and Theres been local interest.
For those deals.
Okay.
and in regards to how property being valued on the small deals is it more just you know maybe families that
Yes.
And in regards to how properties being valued on the smaller deals is it more just.
Maybe families that look at things differently.
I think it is, I mean, obviously they're private buyers and they're looking long term, they're looking at maybe there is upside in these properties, especially when you look at it from a per-door basis. And they're just happy to be able to sort of acquire this type of asset in some of the smaller markets.
I think it is I mean, obviously, they're private.
Buyers and they're looking long term, they're looking at maybe there is upside.
In these properties, especially when you look at it from us.
Per door basis.
They're just happy to be able to sort of acquire.
This type of asset and some of the smaller markets.
Okay. Great then maybe just if I can look at the same property NOI, which has been very strong but.
the operating expenses have come down. Should I infer from your comments that with the rank growth continuing next year and maybe some easing on the operating cost side, internal growth could potentially be even stronger? I don't want to read into your words too much, but I want to make sure I understand.
The operating.
This cost the cost expenses have come down should I infer from your comments that with the rent growth continuing next year and maybe some easing on the operating cost side internal growth could potentially be even stronger.
Don't want to read into your words too much but make sure I understand.
Yeah, certainly I mean, I think that.
On our general operating expenses, I think that that's fair. Property tax is the one I think we would have talked about this last call to. Certainly, we're not going to see this reduction in property taxes in PEI and New Brunswick next year that we would have seen. So that's one line item on the expense side that we anticipate will be higher next year. But still, I think it's done.
On our general operating expenses, I think that Thats fair property taxes. The one I think we've talked about this last call to certainly we're not going to see this reduction in property taxes in <unk> and New Brunswick next year that we would've seen so that's one line item on the expense side that we anticipate will be higher next year, but still I think.
It's done.
We're quite bullish on the NOI for next year, but I'm not sure if it's going to be as low, but still be very healthy on top line in NOI growth next year.
We're quite bullish on the NOI for next year, but not sure expenses will be as as low but still be very healthy on topline and NOI growth next year.
Excellent great. Thank you so much.
Thank you.
Your next question comes from the line of Mike <unk> from BMO capital markets. Your line is open.
Thank you operator, good morning, Dale, Phil and Claire. First question from me is just on the dispositions and referring to the slide in your deck. I get the effort for a Cretian given the pay down of the high cost variable rate that you slide, Burbage also refers to nav Cretian. And...
Thank you operator, good morning, Gail fill and Claire.
First question for me is just on the dispositions.
And referring to the slide in your deck I get the ethical accretion given the pay down of the high cost variable rate debt.
Slide Burbidge also.
It refers to NAV accretion.
I just wanted to clarify, is that simply a referral to sale price that you captured versus prior our fresh value? Or does it take into account your future expectations for operating performance and cap ex of those assets and specific ones?
<unk>.
I just wanted to clarify is that simply a referral to sale price that you captured versus prior for us value or does it take into account your future expectations for operating performance and Capex are those assets.
Specifically.
I think it takes into consideration the fact that we're paying down debt when we're looking at our now lower debt on that as well. It's part of that. Because of our investments, we're seeing some improvement too, just in terms of operating costs.
I think it takes into consideration the fact that we're paying down debt when.
When we're looking at earn outs.
Lower debt on that as well as part of that and because of our are investments. We're seeing some improvement too just in terms of operating costs.
Thanks, Rob. I didn't mean to admit you in my good morning. You're near and dear to my heart. Okay, thanks for that. What about the in place and a wide yield? I don't know if you're able to provide us with a range, but just given the markets that Josh, we can work that aspect of you and you will still be special
Thanks, Rob I didn't mean to them that you and Mike Good morning.
As far as your near and Dear to my heart, Okay. Thanks for that.
What about the in place NOI yield.
I don't know if youre able to provide us with a range, but just given the markets that you have.
Sold recently, he also did me a mirror machine in St. John , where roughly are you able to probably sort of, roughly yield range? Who knows that? Yeah, I mean.
Sold recently, Sydney Mayor machine St. John.
We're roughly are you able to price for roughly yield range.
Yes.
The earlier ones, the properties like in Ottawa, the one in Halifax.
The earlier ones.
The property is like in an auto or the one in Halifax.
and even the first transactions.
And even in the.
The first transaction Transat.
transaction PEI, they were all into the high three mid-force or lower. Once we got into the sort of the markets that we had one asset, which would have been the Marivichee and the two buildings that were tied by size up in Cape Breton, they were roughly about six and a half.
Transaction and Pgi.
They were all into the high threes mid fours were lower.
Once we got into the sort of the markets that we had one asset which would have been the <unk> and the two buildings that were side by sides up and keep Britain. They were roughly about six and a half.
And then Nolan Hill, last one for me for a turn back. Nolan Hill, I think last call you deferred and said you might give us a little bit more of an update on the parameters of your expected return based on your development and fixed purchase price on the remaining 90%. Do you have anything for us on that one? Yeah.
Okay.
Q.
And then Nolan here last one for me before I turn it back knowing Hill I think.
Last call you deferred and so you might give us a little bit more of an update on the parameters of your expected return based on your your development fixed purchase price on the remaining 90%.
I haven't seen gross on that one.
Yes, I mean again, we're we.
We are leasing it as a group in terms of our ownership group today, the first building, the other two buildings should be finished around the middle of December . And then we'll be in position to be able to purchase it. We've stayed at a couple times that the 100% ownership of this second phase is $65 million.
We are we are leasing it as a group in terms of our ownership group today. The first building the the other two buildings should be finished around the middle of December and then we'll be in position to be able to purchase it.
We stated a couple of times that the 100% ownership of this second phase of $65 million.
And.
You gotta think about that. We are 10% of the ownership now, so there's a development profit going to us.
And you got to think of it that we are 10% of the ownership now so theres a development profit going to us.
And then we'll purchase it at the $65 million mark. And roughly, it's close to, it's well over a six, maybe six, six and a half.
And then we will purchase as the $65 million Mark.
And roughly it's close to it.
It's well over six maybe six six and a half.
And that has basically, the reason it's that, is because we would have done this purchase and sale agreement two and a half years ago when the rents were roughly about $1,500, probably on a pro forma basis, and now they're plus $1,800.
And that has basically the reason.
That is because we would've done this purchase.
Sale agreement of two and a half years ago, when the rins for roughly about $500, probably on a pro forma basis and they're now they're plus 800.
Yes, got that. Okay, perfect. And then just, just to clarify, so the first building, you're releasing that as a group, and then you're buying the second two. So the stabilized yield, it will take several months for that to stabilize up.
Yes, you got that okay, perfect and then just just to clarify.
So the first building.
Youre leasing that as a group and then youre buying the second too so the stabilized yield that will take several months for that to stabilize.
Yes, we're buying three of them at the together. But it will be stabilized. It will be stabilized.
Yes, we're buying three of them at the.
Together.
But it will be at a stabilized deal we have to lease the remaining.
two buildings up throughout the first half of the year of 2024.
Two buildings up.
Through the first half of the year of 2024.
Understood. Thank you very much that's all for me.
Thanks.
And your next question comes from the line of Jonathan Keltcher from T.D. Kow and your line is open.
And your next question comes from the line of Jonathan <unk> from TD Cowen Your line is open.
Thanks, good morning. First question, just following up, Dale, on your property tax comment on for same property NLI. There's no reason to think that it's gonna be a big number just back to more typical.
Thanks, Good morning.
First question just following up on deal on your property tax comment on on <unk>.
Same property NOI Theres no real Theres no reason to think that it's going to be a big number im just back to that more typical.
Annual growth there.
Correct.
Okay. And then switching the repositioning, your repositioning program, it slowed a little bit in Q3. I guess given the strength in the markets and the higher cost of capital, how do you think about that program going forward?
Okay.
And then switching.
The repositioning you're repositioning program it slowed a little bit in Q.
Q3.
I guess, given the strength in the markets and the higher cost of capital how do you. How do you think about that that program going forward.
So yes, that's a program we certainly enjoy. We have 304 completed so far budgeting for 450 for the year.
So yes, that's a program we certainly enjoy.
We had a 304 completed so far budgeted drink for 450 for the year.
It's the turnover that can impact us, but we are still seeing some good activity and healthy increases. So we're gonna try and convert as many as we can.
It's the turnover that can impact us, but we are still seeing some good activity in healthy increases so we're going to try and.
Convert as many as we can.
Okay, so it's still full steam ahead. It's just a function of what units you get back.
Okay. So it's still full steam ahead, it's just a function of what units you get back.
Yes.
Okay and then lastly just on the capital recycling program, this is really the first time you guys have started doing that and I guess it's something you want to continue but how should we think about the pace going forward? I'm guessing you got rid of a lot of the low-hanging fruit right off the bat but how should we think about that in terms of volumes for
Okay, and then lastly, just on the.
Capital recycling program. This is really the first time you guys have started doing that and I guess, it's something you want to continue but how should we think about the <unk>.
Pace going forward and I'm guessing you got rid of a lot of the low hanging fruit right off the bat, but how should we think about that in terms of volumes for <unk>.
On annual basis.
I don't know if we have a number that we could give you today on an annualized basis, but I think it's the
I don't know if we have a number that we could give you today on an annualized basis, but I think.
<unk>.
Part of that answer would be that we're going to continue to look at selective assets to dispose on every single year and go forward.
Part of that answer would be that we're going to continue to look.
Selective assets to dispose every single year a go forward basis. So we could give you more guidance in February but it's safe to say that the program will continue next year.
So we could give you more guidance in February , but it's safe to say that the program will continue next year and we're going to go and spend the next month or so to figure out which assets we might look at disposing of. Okay. Do you think it'll be more?
And we're going to go and spend the next month or so to figure out which assets we might look at.
Close enough.
Okay do you think it will be more than this year or lessen this year.
Oh, I would probably say by the time we finish this year and maybe some of those slip into the beginning of next year or whatever, this is a pretty good sort of number that we can achieve 100 million a year. And so maybe some years, it might be less, but I, right now, it'd be hard to see us selling 200 to 300Million in a year. Okay.
Oh, I would probably say by the time, we finish this year and maybe some of those slip into the beginning of next year or whatever.
This is a pretty good.
Sort of number as we can achieve 100 million a year and so maybe some years it might be less.
But.
Right now it would be hard to see us selling.
$200 million to $300 million in the year.
Okay that works I'll turn it back thanks.
Thanks.
Your next question comes from the line of Kyle Stanley from the Jordans. Your line is open.
Your next question comes from the line of Kyle Stanley from Jordan. Your line is open.
Thanks, Good morning, everyone.
So we know that renewal rent growth for next year is going to be strong, especially with the 5% growth in Halifax, but just on the turnover side of things, two questions. So.
So we know we know the renewal rent growth for next year is going to be strong, especially with the 5% growth in Halifax, but just on the turnover side of things two questions. So you indicated you expect turnover to be about 19% for this year, where does that trend for 24 based on what Youre seeing.
You indicated you expect turnover to be about 19% for this year. You know, where does that trend for 24 based on what you're seeing? You're deep. Where would you say maybe the turnover floor is in your portfolio? And then just secondly, I mean, the turnover spreads have obviously continued to accelerate materially year to date. Um, you know, would you, would you say the running expectation is that those continue to trend towards maybe that 25 to 30% mark to market opportunity?
Where would you say maybe the turnover floor is in your portfolio and then just secondly, I mean, the turnover spreads have obviously continued to accelerate materially year to date.
Would you say, they're running expectation is that those continue to trend towards maybe that 25% to 30% mark to market opportunity.
I'll answer the first part of that. I think from a turnover point of view, we were kind of projecting 18. Now we're back up to 19 to finish the year. And I think it's going to be plus or minus a couple points off of that 19 for next year. I don't see it trending down on a sort of a year over year basis at the same rate.
I'll answer the first part of that I think from a turnover point of view, we are kind of projected in 2018 and now we're back up to 90% to finish the year and I think it's going to be plus or minus a couple.
Off of that 19 for next year I don't see keep trending down on a sort of year over year basis at the same rate.
No.
Yeah, what's your thought or the... Yeah, the turn. You know, I mean, we're looking at that closely to say, you know, the big question we're having around the table here is, have we, you know, are we starting to see plateau and market rents? And I'd say in some region...
What's your thought.
On the churn.
We're looking at that closely to say you know the big question, we're having around the table here is have we are we starting to see a plateau in market rents and I'd say in some region.
select assets we might see but there's still acceleration in others. So you know you've seen the trend in the MD&A that continues to accelerate on turns. I think that there is still some room to continue to set up. I'm not sure if they'll keep it the same pace that we've been seeing. So lots of room there in terms of the mark-to-market. So we're looking at you know 28 to 30 percent mark-to-market overall. I think that there is still room in...
Left assets with Nike, but theres still acceleration and others. So.
You've seen the trend in the MD&A that continues with continues to accelerate on turns I think that there is still some room to continue to add up not sure keep at the same pace that we've been seeing so lots of room. There in terms of the mark to market. So we're looking at 2008.
To 30% Mark to market overall.
<unk>.
I think that there is still room and <unk>.
A number of our markets that that's continuing to move that.
Okay, that's great color. And I guess kind of building on that a little bit, maybe a bit of a higher level question, but the underlying fundamentals that you just talked about in the space continue to be quite strong. Where do you see the biggest risks that could derail maybe the fundamental picture? Would it be regulatory, new supply, immigration policy driven? Or how are you thinking about that?
Okay, that's great color and I guess kind of building on that a little bit.
Maybe a bit of a higher level question, but the underlying fundamentals that you just talked about in this space continue to be quite strong where do you see the biggest risks that could derail maybe the fundamental picture would it be regulatory new supply immigration policy, driven or how are you thinking about that today.
So you just mentioned three. One is basically new supplies been to take a long time in terms of our world to sort of bring on. You know, everybody has to do their part.
Well you just mentioned three one is basically new supply is going to take a long time.
In terms of our world to sort of bring on.
Everybody has to do their part.
So even today, if you were ready to put a shovel in the ground, it's probably 24 months to 30.
So even today, if you were ready to put a shovel in the ground. It's probably 24 months to 30 months. So you can sort of project out there immigration whether they.
So you can sort of project out there. Immigration, whether the federal government slows it down a little bit a lot, or just continues at the same pace, that will create the demand that we have for housing again for the next five plus years for sure. The first one you say.
Whether the federal government slows us down a little bit a lot or just continues at the same pace that will create the demand that we have for housing again for the next five plus years for sure.
The third but the first one you said was.
Sorry.
Alright mandatory.
which I shouldn't have even slipped my mind. That could be the one that we don't know. That's the unpredictable one. But I think everything that we've been hearing for the last number of months is there is a housing shortage and the governments, all levels are aware of it, all three levels. And everybody I think is starting to rally around the fact that we need more housing.
Which I shouldn't have even slipped my mind.
That could be the one that we don't know that's the unpredictable one but I think everything that we've been hearing for the last number of months.
There is a housing shortage and the governments all levels are aware of at all three levels and everybody I think is starting to sort of rally around the fact that we need more housing.
I think the lack of cooperation amongst the various levels of government is interesting to note. And it's in the paper today again, so they have to figure it out and or optimistic they will get together and cooperate. The other thing I think is the constraint is skill labor. That's going to be an issue as you're trying to increase supply. And so we're optimistic that part of the immigration takes a hard look at skill labor as one of the components that we can welcome back to Canada.
The lack of cooperation amongst the various levels of government is interesting to note and it's in the paper today again, so they have to I think figure it out and we're optimistic they will get together and cooperate. The other thing I think is a constraint is skilled labor that's going to be an issue as you are trying to increase supply and so we're off.
Domestic that part of the immigration takes a hard look at skilled labor is one of the components that we can.
Welcome back to Kevin Welcome to Canada.
We all need it going forward.
Okay, no, that all makes sense. And then just the last one kind of like a building on that, you've got seven projects expected to start development between 24 and 26. You know, how are you thinking about breaking ground on new projects today? How many of those seven would you look at maybe starting next year or is that maybe something for 25 or 26? Well, I guess it's...
Okay, No that all makes sense and then just the last one kind of I guess building on that.
<unk> got seven projects expected to start development between 24 and 26.
How are you thinking about breaking ground on new projects today, how many of those seven would you look at maybe starting next year or is that maybe something for for 'twenty five or 'twenty six.
Well I guess, it's a it's a complex.
Answered even a complex question in terms you're looking at a lot of different variables. So one is is that
Answer even a complex question in terms youre looking at a lot of different variables. So one is is that we have a development program that is basically.
We have a development program that is basically the areas of concentration are right across the country. So there's opportunities in Alberta. Obviously there's opportunities with two or three big markets in Ontario and then here in Atlantic Canada. So you're looking at really what are the under...
The areas of concentration or right across the country. So there's opportunities in Alberta, obviously, there's opportunities within two or three big markets in Ontario, and then and then here in Atlantic Canada. So youre looking at really what are the.
the underlying fundamentals in all those markets. You're looking at what's availability from the trade.
The underlying fundamentals in all those markets Youre looking at whats availability from the from the trade.
and construction sort of capacity to be able from a pricing point of view, and then we get into even the next level, which is are we looking at larger projects that might be 30 stories high, that they're gonna take three years to build, or are there opportunities to go and do four or five story combination of concrete and stick, and basically get it into the ground and finish within 18 months. So we are, we're juggling a lot of sort of opportunities.
And construction sort of capacity to be able to from a pricing point of view and then you get into even the next level, which is are we looking at.
Larger projects that might be 30 stories high they're going to take three years to build or are there opportunities to go and do four or five story combination concrete and stick and basically get it into the ground and finished within 18 months. So we're juggling a lot of sort of opportunities.
And I think the fundamental objective is to be able to say, can we get one or two projects ready to be able to say we're announcing them and we're gonna start building because we wanna be part of that solution and take advantage right now that essentially, and a lot of problems is the HSP is off, which is a really big cost savings for all developers.
And I think the fundamental.
Objective is to be able to say can we get one or two projects ready to be able to say, we are announcing them and we're going to start building because we wanted to be part of that solution and take advantage right now that's essentially in a lot of provinces the HST.
Is off which is a really big.
Cost savings for all developers.
Perfect. Thanks for all the color I'll turn it back.
Thank you. Your next question comes from the line up correct for primarily Laurentian bank. Your line is open.
Thank you. Your next question comes from the line of correct, Florida, primarily Laurentian Bank. Your line is open.
Thank you and good morning, everyone.
When I'm looking at the debt ladder going forward and the 280 million in mortgage maturities, are those maturities staggered across the year or are they somewhat lumpy?
When I'm looking at the debt, Florida going forward and the $280 million in market maturities.
Are those maturities.
Staggered across the year or are they somewhat lumpy in nature.
Yeah.
Light on the first two quarters. Majority of it is in the back, third and fourth quarters.
Sort of.
On the first two quarters.
The majority of it is in the back third and fourth quarter.
Okay great and would it be possible for you to provide some color on the conversations with your lenders that you're currently having and where Streds currently lies?
Okay, great and would it be possible for you to provide some color on conversations with lenders that you're currently having and where spreads currently lie.
Yeah, I mean, I think that when we look at today CMHC this week, probably 4.8% that we can get in terms of really 5 and 10 is pretty similar in terms of that rate. So that's come down quite nicely from a week or two ago. So it is ever changing, but nice to see that sub 5. So I think looking forward, if based on today's bond yields and market, that's probably reasonable to expect. Bye.
Yes, I mean, I think that when we look at today seem HC. This week, probably four 8% that we can get in terms of really five and tens is pretty similar in terms of that right. So that's come down.
Quite nicely from a week or two ago. So it is ever changing but nice to see that sub five so I think looking forward based on today's bond yields end market, that's probably reasonable to expect.
Also with an expectation that second half of the year, that's the fact that it comes.
Also with an expectation that second half of the year.
Thats come down.
Right. Thank you so much. And then just my last question, when you're looking at debt total assets, you know, we've seen you guys make a lot of progress on it, but where would that be trending to towards the end of the year and potentially for 2024?
Right. Thank you so much and then just my last question.
When you look at that's total assets you've seen.
You guys make a lot of progress on that.
But when you're right why would that be trending to towards the end of the year and potentially for 2024.
Certainly, you know, we do expect to continue to pay down more of that variable rate debt. So that alone should improve it. The big question is, you know, fair value in Q4 that will be spending a lot of time on that. But we continue to grow that top-line growth. So that's an important contributor. So I think the trend that you've seen is it's reasonable to expect that to continue based on what we have underway. Fantastic. Thank you.
Certainly we do expect to continue to pay down more of that variable rate debt. So that alone should improve is the big question is fair value in Q4 that we'll be spending a lot of time on that but we continue to grow that top line growth. So that important contributor. So I think that trend that you've seen is it reasonable to expect.
That to continue based on what we have underway.
Fantastic. Thank you for the color I'll turn it back to the operator.
Thank you.
Thank you and your next question comes from the line up to me Sean from RBC Capital Markets, your line is up.
Thank you and your next question comes from the line of Jamie Sean from RBC Capital markets. Your line is open.
So just to follow up on the future devalence program, I know there are a lot of variables that you'd consider.
Thanks, just to follow up on the future development program I know there are a lot of variables that you'd consider.
you decide to push forward with the project, but what's your return threshold today?
When you decide to push forward with probably about well what's your return thresholds today's four to four and a half sounds like that's what it was before but would it be today.
Well, I think we still work on, we want at least 150 basis points spread between the cost of debt that we're participating in the yield that we get into the chief. And so really it means that it just starts a project in the next-
Well I think we still work on and we want to at least 150 basis points spread between the cost of debt that we're participating.
And the yield that we get into the chief and so really it means that.
To start a project in the next.
three to six months, most likely that you'd be looking at some of the CMHC financing opportunities that they have currently up there.
Three to six months, most likely that you would be looking at some of the CMA Sea.
Financing opportunities that they have currently.
Sure.
So that would put you in at least 5% plus.
Okay. So that would put you in at least.
It's that plus.
Great puts us.
Or is that did I hear that.
Roughly yes.
Okay.
And then just to equip the construction loan on Civic 66 and the governor.
Okay.
And then just a quick a construction loan on civic 66, and the governor.
that's being replaced that that's already been done or is that happening in Q4?
That's being the place that's already been done or is that happening in Q4, and what was the amount again combined.
The specific 66 was done at the end of July . The governor would not be done. Yes, him will be done in Q4. Okay, so there's just governor left and how much is that roughly?
<unk> 66 was done at the end of July the Governor would not be done yet and we will be done in Q4.
Okay. So it's just going to have left and how much impact roughly.
Today, we have about 14 million in construction financing.
Okay.
Thank you.
Your next question comes from the line of Math, Portak, Promotional, Bank, Financial, Your Line is open.
Your next question comes from the line of Matt <unk> from National Bank Financial Your line is open.
just with regards to the balance sheet flexibility bit.
Hey, good morning, all.
Just with regards to the balance sheet flexibility that you've been able to achieve here and improving debt levels.
should be think of that as a structural shift or is that kind of in preparation for eventually getting more active on the
Should we think of that as a structural shift or is that kind of in preparation for eventually getting more active on the development side.
It gets more structural, I think, for years we've been talking about wanting to improve our balance sheet and have been executing on that plan.
It gets more structural I think for years, we've been talking about wanting to improve our balance sheet and have been executing on that plan. So.
I think it's just continuing on that strategy that we've had, recognizing the value and having that flexibility. So if opportunities come up, we can evaluate that, but I think this is more strategic initiative to bring those debt levels down.SOUND
I think it's just continuing on that strategy that we've had recognizing the value in having that flexibility. So if opportunities come up we can evaluate that but I think this is more strategic initiative to bring those debt levels down.
Okay that makes sense and then.
As you look at the development pipeline, is there any thought towards maybe bringing a partner in to some of these projects in order to reduce the capital that you'd need to put into it and maybe get a bit of a fee stream and benefit from the plot?
As you look at the.
The development pipeline is there any thought towards maybe bringing a partner in to some of these projects in order to reduce the capital that you would need to put into it and maybe get a bit of a fee stream and benefit from the platform you've built with regards to development or would you do them all on book.
with regards to development or would you do them all on books?
You never say never. I mean, there are opportunities, but again, well, we know, and maybe we don't know everything in terms of the opportunities that are out there for us in terms of new partners. But.
You never say never I mean, there are opportunities, but again, what we know and maybe we don't know everything in terms of the opportunities that are out there for us in terms of <unk>.
New partners, but typically you got to have it ready shovel ready and ready to go so there's no issues or no delays on the zoning permitting or any of that and you have a pretty good sense of your budget.
Typically you've got to have it ready, shovel ready, and ready to go so there's no issues on or no delays on the zoning, the permitting or any of that. And you have a pretty good sense of your budget. But really it would be only if we decide to do a very large building that we've not even entertained a partner. Otherwise the typical buildings that are 100 to 150 to 200 units, they're kind of bite size for us these days.
But really it would be only if we decided to do.
A very large building that we might even entertain a partner otherwise the typical buildings that are 100 to 150 to 200 units there.
Bite size for us these days.
That makes sense. And then lastly, just a technical one. As a result of these asset sales, are you anticipating any tax consequences? Is there enough kind of return of capital component
Okay that makes sense and then lastly, just a technical one as a result of these asset sales are you anticipating any tax consequences or is there enough kind of return of capital component of your distribution that you wouldn't have to necessarily do a special or something along those lines.
Yeah, we're not anticipating that.
So distributions.
In Africa.
Perfect. Thank you.
Okay.
Thanks, Matt and once again, if you would like.
Thank you. And once again, if you'd like to ask a question, simply press the star followed by the number one on your telephone keypad.
Thank you and once again, if you'd like to ask a question simply press star followed by the number one on your telephone keypad.
Your next question comes from the line of Mario Saric from Scotiabank. Your line is open.
Your next question comes from the line of Mario Sorry from Scotiabank. Your line is open.
Good morning. This one really quick question on the newly spread.
Hi, good morning.
Just one really quick question on the new lease spreads.
specifically thinking about the 17% of this quarter versus the quoted 28 30% mark to market. I guess theoretically over time those two should converge. They should be fairly consistent, but that would assume Compton kind of turnover across the Easteration, which I suspect is in the case now. So is that does that explain the majority of the gap between the 17 and the 20 or 30 or is there anything else? Compton Quentin preventing
Specifically thinking about the 17% this quarter versus the quoted 20%, 30% Mark to market I guess theoretically over time, those two should converge they should be fairly consistent but that would assume kind of comps and kind of turnover across lease duration, which I suspect.
Case now so is that does that explain the majority of the gap between the 17 and 2030 or is there anything else.
Consequently <unk>.
Medical's, 200%.
Part of its location of where things are turning to, so when you look at our turnover and
Part of its location of where things are turning to so when you look at our turnover and.
Some of our highest market spread would be in the GTA kitchen and waterloo, and that is where our lowest turnover is. So when we're looking at that market spread opportunity,
Some of our highest mark to market spreads would be in the GTA Kitchener Waterloo and that is where our lowest turnover is so when we're looking at that mark to market spread opportunity.
The weighting makes a difference of where assets are turning. So that's the biggest factor.
Yeah. The weighting makes a difference where assets are attorney so that the biggest factor.
and you write what depends which units. You know, what is the average rent? How long do you write? The duration of people who have been in there. So...
And you're right what depends which unit what is the average Rand how long the duration that people have been in there. So.
All those factors come into play and that's why we see a bit of a differentiation.
All those factors come into play and that's why we see a bit of a differentiation.
We've waited average when we're looking at what we've been able to do.
Because looking at the weighted average when we're looking at what we've been able to achieve.
Okay, and are you seeing a notable trend in terms of like the, so the 18 to 20% turnover expectation in 24? I think that kind of full reference plus or minus relative to 23.
Okay.
Are you seeing.
Notable trend in terms of like the so the 18% to 20%.
Turnover expectation in 'twenty, four I think that kind of full referenced plus or minus relative to 'twenty three.
Are you seeing a trend where you're seeing a notable uptick in turnover for residents that have been around for less than two to three years?
Are you seeing a discernible trend where youre seeing like a notable uptick in turnover.
Rather than sort of been around for less than two to three years.
Relative to a year ago or is it fairly stable.
Yeah.
Yeah, we don't have, you know, in terms of duration on turnover, we haven't got those stats on hand, but I would say, you know, we, it is higher than we had expected this year. Certainly the trend.
Yeah, we don't have yet in terms of duration on turnover, we haven't got those stats on hand, but I would say that.
It is higher than we had expected this year certainly the trend.
We're not seeing such a significant trend as we've seen some other years in terms of that reduction. It just varies by property.
Not seeing such a significant trend as we've seen some other years.
Of that reduction.
It just it just varies by property and by region.
Okay.
Thank you.
Yeah.
Great. Thanks.
Thank you, and there are no further questions at this time. I would like to turn it back to Philip Fraser for closing remarks.
Thank you and there are no further questions at this time I would like to turn it back to fill the freezer for closing remarks.
I would like to thank everyone today for listening and participating in our third quarter, to 2023 conference call. And we look forward to our fourth quarter in February of 2024. Thank you.
I would like to thank everyone today for listening and participating in our third quarter 2023 conference call and we look forward to.
Our fourth quarter in February of 2024, Thank you.
Thank you, presenters and ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
Thank you presenters and ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.