Q3 2023 Minto Apartment Real Estate Investment Trust Earnings Call
Susan Please hold for the next available operator.
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Welcome to precision please hold for the next available operator.
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Thank.
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[music] Edmonton.
We announced another piece of good news yesterday.
Our board of Trustees has approved a $1 five penny or three 1% increase to our annual distribution.
We are very proud that the REIT has now increased distributions in every year since its inception.
Yeah.
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Current increase highlights our confidence in our business outlook for 2024, while also balancing prudent capital management by maintaining a conservative <unk> payout ratio.
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We are encouraged by the recent announcements by the federal and Ontario governments, which are clearly designed to help increase rental housing supply.
Finally, we continue to work towards the sale of our two remaining noncore assets located in Edmonton, which remains subject to financing assumption approval by <unk> and the lender.
Asset sales continued to be an attractive source of capital for us and we will continue to opportunistically pursue select asset sales. However, there can be no assurance that a definitive agreement will be executed.
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Now I will invite <unk> to discuss our third quarter financial and operating performance in greater detail.
<unk>.
Thank you John turning to slide five same property portfolio revenue was $37 million, an increase of five 8% from Q3 last year, reflecting higher occupancy higher average rooms, and reduced promotion amortization for <unk> suites.
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Same property portfolio NOI increased six 9% year over year to $24 million.
And NOI margin increased by 60 basis points to 64, 8%.
The increase in NOI reflected increased revenue from unfinished suites, which outpaced higher operating expenses and lower revenue from furnished suites.
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<unk> was $15 7 million or $23 90 per unit and <unk> was $14 million or 20 139 per unit.
After adjusting for one time insurance recoveries in the prior period normalized <unk> per unit increased by four 4% and five 3% respectively compared to last year.
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The normalized <unk> payout ratio was 57, 3% a reduction of 110 basis points compared to Q3 2022.
Turning to slide six this chart highlights the strong growth in quarterly gain on these and average monthly rent and we have achieved over the last four years and is evidence of a strong industry fundamentals.
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Average monthly rent is growing rapidly quarter over quarter and gain on lease has exceeded 16% for four consecutive quarters.
Moving to slide seven we signed 510, new leases in the third quarter. The average monthly rent on new leases increased 17% to $2130.
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The embedded gain to lease potential at quarter rents also increased to 17, 7% representing $24 9 million of.
Annualized incremental revenue growth.
Moving to slide eight annualized same property turnover was 26% in Q3, which was more in line with historical norms compared to the first two quarters of 2023.
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Turnover was particularly strong in Alberta, where the availability of affordable homes in the province, and tenant departures are rising from the loss of promotions granted in the past I'll now tenants to consider other housing options.
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Hello.
Ottawa saw increased turnover from new supply in the downtown core while Montreal turnover. It was driven by movements in the student pump conviction.
Hello.
If you're on a speaker phone they speed up your handset.
Toronto or reduce turnover as tenants opted to stay in place due to rising market rents.
The orange bars disconnecting now.
Despite the high turnover, we maintained consistent occupancy as move ins kept pace with Luna.
Speaker 1: Yeah, I think we are very happy with our portfolio construction across.
I think we are very happy with our portfolio construction across.
Especially.
Speaker 1: Toronto, Calgary and Ottawa. You know, we might lighten up a little bit Ottawa.
Toronto, Calgary and Ottawa, you know as you know, we might lighten up a little bit of all of them.
But from a from a property perspective being urban being downtown being we're.
Speaker 1: But from a property perspective, being urban...
Speaker 1: We're very happy with how our portfolio is positioned. Probably had less to do with the markets and more than two with our real.
We're very happy with how our portfolio is positioned probably I'd love to do with the market and more to do with our real estate.
Speaker 1: I think where we see kind of disproportionate upside is probably Montreal, as you know the rental market is probably not as strong, or at least the rent growth hasn't been as strong as other areas of Canada, but the embedded rent continues to be very strong, and we have additional upside.
I think where we see kind of a disproportionate upside is probably Montreal.
As you know the rental market is probably not as strong or at least at least our rent growth hasn't been as strong as other areas of Canada, but the embedded rent continues to be very strong and we have additional upside if we can increase occupancy at the same time. So I think just there's more natural to work in Montreal.
Speaker 1: occupancy at the same time. So I think just the more natural torque in our Montreal portfolio than there is in the rest of our portfolio. We're pretty bullish everywhere.
Our portfolio than there is in the rest of our portfolio, we're pretty bullish everywhere.
Okay, that's great color, Thanks, I'll turn it back.
Thanks.
Speaker 2: Thank you. Your next question is from Kyla Stanley from Desjardins. Please ask your question.
Thank you. Your next question is from Kyle Stan Lee from <unk>. Please ask your question.
Speaker 3: Thanks. Morning, guys. Your turnover spread continued to expand this quarter. In your view, it sounds like the strength is pretty broad based, as you mentioned, but are you beginning to hit any affordability thresholds in any of your markets? Or do you think there's still more room for rents to grow?
Thanks, Good morning, guys.
Your turnover spread continue to expand this quarter in your view it sounds like the strength is pretty broad based as you mentioned, but are you beginning to hit any affordability thresholds in any of your markets or do you think there's still more room for rents to grow.
Speaker 1: I mean, I think there's two questions in there. One is the turnover, which I guess I'll address, and the second is kind of growth and how sustainable.
I mean <unk> got it.
I think there's two questions in there one is the turnover. So its I guess ill address the second is kind of growth.
How sustainable is it.
Speaker 1: Turnover, I would say it was pretty consistent with our historical norms. We were a little bit surprised that the team that it was as high as it was in Q3, but we're encouraged because we're able to, we were able to immediately fill up the move-out with women, which allowed us to capture some gain on lead.
I'll turn it over I would say it was pretty consistent with historical norms, we were a little bit surprised that the team that it was as high as it was in Q3.
We're encouraged because we're able to we were able to immediately fill up the move outs with move ins, which allowed us to capture some gain on lease which maybe we didn't even think about.
Speaker 1: It wouldn't have been available if it turned over with lower. But I think going forward, we still expect to turn over to slow into four, into one, in the colder winter quarters. And I think our, I won't say guidance or estimate, but the way we think about turnover for 2023 and 2024 probably hasn't changed. I think it'll be slower than what it was, and lower than what it was.
It wouldn't have been available if the turnover was lower.
But I think going forward, we still expect turnover to slow in Q4, and Q1 and a colder winter quarters and I think you.
You know I won't say guidance, our estimate but the way we think about turnover for 2023 and 'twenty 'twenty four probably hasnt changed I E. It will be slower than what it was lower than what it was.
In the past.
Speaker 1: In terms of the growth continuing, you know, we haven't seen any cracks yet. We're obviously constantly looking out for them. The good news is, is the embedded rent in our portfolio continues to grow and stay in the mid-teens. So that should continue to support our growth going forward for the...
In terms of the growth continuing we haven't seen any cracks yet we're obviously constantly looking out for them.
The good news is that the embedded rents in our portfolio continues to grow and stay in the mid teens. So that should continue to support our growth going forward for the foreseeable future.
Speaker 1: You know, we don't think gain-delete can grow by 17% forever. So we do expect it to moderate, but it will likely moderate in line with whatever our embedded RAM is at that time.
We don't gain.
<unk> can grow by 17% forever. So we do expect it to moderate but it will likely moderate in line with whatever our embedded rent is at that time.
And.
You know.
We know what's going to happen at some point, we don't think it's anytime soon but that's one of the reasons why we're looking at and really focus on cost containment. So we are in a position to deliver NOI growth, even though our revenue growth might decelerate like it'll still grow but it might decelerate from from from where it is now.
Speaker 1: We know that's going to happen at some point. We don't think it's any time soon, but that's one of the reasons why we're looking ahead and really focused on cost containment. So we are in a position to deliver NOI growth, even though our revenue growth might decelerate, like it'll still grow, but it might decelerate from where it is now at some point, but we don't see that happening in the near future. And we think we're well positioned to keep on delivering both NOI growth and cashflow per unit growth.
At some point, but we don't we don't see that happening in the near future and we think we're well positioned to keep on delivering both NOI growth.
Cash flow for unit growth.
Speaker 3: Okay, no, thank you for that. And just my second question kind of relates to your debt refinancing. So, what are the cadence of your debt maturities next year would be fairly spread out over the year or maybe more concentrated in this specific quarter? And then secondly, with the refinancing activity, where do you see your variable rate debt as a percentage of your total debt stack trending during the year?
Okay. Thank you for that.
And then just my second question kind of relates to your debt refinancing so.
What is the cadence of your debt maturities next year would it be fairly spread out over the year or maybe more concentrated in this specific quarter and then secondly, with the refinancing activity.
Where do you see your variable rate debt as a percentage of your total debt stack that trending during the year.
Hey, good morning, Eddie here.
Speaker 4: In terms of the 2024 maturities, we have approximately $75 million coming due next year. It would be...
In terms of the 2020 maturities.
Approximately $75 million coming due next year.
B.
Okay.
A portion of Q1 and early Q2.
When it comes to a revolver. So we're at 10% of our variable of a cup stock right now.
Speaker 4: When it comes to a revolver, so we're at 10% of our variable of our debt stock right now, which we have made a huge stride since the beginning of the year. We were in the 25-26%.
We have a huge strides at the beginning of the year.
We were in the 25, 6%.
Speaker 4: So we think that with refinancings and our capital commitment.
We think that with refinancings and our capital commitments.
Speaker 4: that we're aiming to be at the end of the year. At least, probably the low gains is what we will manage, but it also depends on refinancing, what the rate for the time, and how much we get on the upper refinance.
We're aiming to be at the end of the year.
Probably the low teens as we will be able to manage but it also depends on the refinancing what the rates are at the time.
How much would you get on the upward revision.
Yeah, we're obviously super cognizant of the rates right now.
Speaker 4: We're obviously super cognizant of the rates right now, because the CHD is around 5% today, fluctuating in the last three, four weeks of the high five and a half. And if you look at some of our disclosures, our age increase on some of these organs.
<unk> is around five.
5% today fluctuated in the last three or four weeks is the highest.
And if you look at some of our disclosures and our exit rates on some of these mortgages are fairly low.
Speaker 4: are fairly low weighted average low to free. So we're mindful of that and make sure that we can try to optimize the capital we can achieve all of these financing.
Average.
So we're mindful of that and make sure that we can try to optimize.
The capital.
We can achieve on the refinancing.
Okay perfect. Thank you for that I'll turn it back.
Speaker 2: Thank you. Your next question is from Good Stop Mathur from Lawrence and Bank. Please ask your question. No. Thanks.
Thank you. Our next question is from this matter from Laurentian Bank. Please ask your question.
Thank you and good morning, everyone.
Speaker 5: I'll just stay on that line of questioning on the debt. As you're looking to refinance, could you provide some color on what the lenders are saying and where you see spreads be as far as the 2020 four-monthage maturity is concerned?
I'll just stay on that line of questioning on the debt.
As you are looking to refinance could you provide some color on what lenders are seeing.
And where you see spreads.
B as far as I try and training framework gets maturities are concerned.
Good morning.
Speaker 4: B terms, those probaniz just you know, whenever some of R you know your CH C today. So record Star work these.
So in terms of spreads and I just went over some of the rates.
You'll see MHC today.
Start with these arent these existing mortgages are insured.
Speaker 4: We would be looking to refinance them. And the rates today would be around 4.9%.
You're looking to refinance them and.
And the rates are today would be around four 9%.
Speaker 4: These financing are the ones that are due early January . We're in the process of working on them. You know, we're looking to get our certificate from insurance. They'll give us a little bit of time. It goes on on usually with about six months to walk in our rate. And we'll be looking at the yield curve and seeing how price and looks.
These financings, but the ones that are due early January we're in the process of working on them.
We're looking to get our certificates of insurance.
A little bit of time to close on those usually have about six months to lock in a rate.
Looking at the yield curve and seeing how pricing looks.
And then when they're due.
Speaker 4: As I mentioned, in terms of the egghead rate some of these mortgages, we're looking at both the trees right now. So that spread is, you know, we're potentially super...
As I mentioned in terms of the exit rates on some of these mortgages.
At both threes right now so that spread is.
Super focused on that spread and how can we narrow that gap.
Speaker 5: Okay, great. And then, you know, what does that mean for your debt-to-gross book value as you sort of complete these refinancings? Is there a certain range that you're targeting, say, by the end of the year and for 2024?
Okay, Great and then.
What does that mean for your debt to gross book value.
You've sort of completed these refinancings is there a certain range that you're targeting say by the end of the year and for 2024.
Speaker 4: Well I guess if all things being equal, you know, if we refi and up a refi, whatever we could get on that, you know, it's highly likely we'll take those funds and pay down our higher and more expensive debt, which is our revolver, which is carrying at around 7.2%.
Well I guess, all things being equal.
Refi and refi wherever we can get on that.
It's highly likely we will take those funds and pay down our higher.
And workspace, a debt, which is our revolver, which is carrying it around seven 2%.
Speaker 4: So net net that to GBB would probably be relatively the same a little bit of a spike because of financing these premiums but it would still be around the entire tutorial about what I would point to for center zone.
So net net debt to GBP would probably be relatively the same.
Sorry, a little bit.
Fight because.
Financing fees premiums, but it would still be around the same territory alone whatever 42%.
In terms of a target.
Speaker 1: I would say we don't have an official target. I think as a general approach, the lower the better. But we also recognize that we have cash flow commitments that we need to pay.
I would say, we don't have an official target.
I think.
The general approach.
Lower the better but we also recognize that we have cash flow commitments.
We need to pay.
And.
Speaker 1: The source of that is going to be the revolver. So I think like many folks who aren't raising any equity including us, you could probably expect our revolver bound to take up a little bit as we pay some of that, some of those cash flows going forward.
The source of that is going to be the revolver. So I think like many folks who aren't raising any equity including us.
You could probably expect our revolver balance to tick up a little bit as we pay some of that some of those cash flows going forward.
But that's one of the reasons why we're looking where we're looking at.
Speaker 6: But that's one of the reasons why we're looking at some app to sales. And to be honest, we didn't buy fifth and bank. So there's also a GDL repayment that's going to come at us in early 2024. Right. Well, thank you for the call.
At some asset sales.
And to be honest.
You didn't buy 15 bank. So there's also a CDL repayment that's gonna come come at Us in early 2024.
Yep.
Well. Thank you for the color, Jonathan and then I'll turn it back to the operator.
Thanks.
Speaker 2: Until your next question is from Jimish and from RBC Capital Markets, please ask your question.
Thank you. Your next question is from Jamie Shen from RBC capital markets. Please ask your question.
Speaker 7: Thanks. So there's been some news recently about developers potentially getting into trouble and a few of the development projects. So maybe with respect to both CDLs with MPI for our piece of mind can you talk about the five loans?
Thanks.
So there's been some news recently and the developers potentially getting into trouble in a few of the development projects.
So maybe with respect to the CD Alan's with NPI.
For peace of mind can you talk about the five loans in.
Speaker 7: how the development projects are progressing relative to budget, etc., and whether you see any issues at all with any of them.
However, the development projects are progressing relative to budget et cetera.
Whether you see any issues at all with any of them.
Speaker 1: Yeah, sure. I mean, all, you know, they're all very well-abented.
Yeah sure.
They're all very well advanced.
Speaker 1: Right? Like Lawndale is going to be the first one. That is virtually completed. Well, not virtually completed. We're finishing the exterior and we're finishing the interior. You know, I think first occupancy will probably be by the middle of 2024 type thing. Stabilization back half of 2024.
Right like Lauderdale is going to be the first one that is virtually lead it.
Well not virtually completed we're finishing the exterior of our finishing the interior.
I think first occupancy youll, probably be by the middle of 2024 type thing stabilization back half of 2024.
Speaker 1: Pretty similar timeline for 8 10-K ingsway, which is now called the Highland. Maybe a month or two behind Lawndale Square. But again, those are all virtually funded and there's not a lot of incremental equity or anything else to complete it.
Pretty similar timeline for <unk>, which is now called the island.
Maybe a month or two behind Lonsdale square.
But again those are all virtually funded and theres not a lot of that incremental equity or anything else.
To complete it.
Speaker 1: Not that different story from 88 Beechwood, which you walked through, we topped off that building in October , middle of October .
Not that different story from DDA Beechwood.
You walked through.
Topped off that building in October middle of October.
Speaker 1: You know, it's almost, it's virtually fully funded too.
Yeah.
It's almost.
It's virtually fully funded too in terms of.
Speaker 1: as well as the CDL draws, and there's only a tiny bit of equity that we need to put into that.
Senior debt as well as the CDL draws and there's only a tiny bit of equity that we need to put into that so.
Speaker 1: And then University Heights is the only other one in Victoria. That's a long-term project. You know, it's like five towers, and I think the first one will be done in the next 18 months or so.
And then University Heights is the only other one in Victoria, that's a long term project.
You know its like five towers that I think the first one will be done in the next 18 months or so.
Speaker 1: So longer time on that one, we are only a 45% owner in that one. And if you think about the REIT.
So longer time line on that one we are.
While we are 45% owner in that one.
And if you think about the REIT.
Speaker 1: You know, we are completely insulated from this risk, right? We just get an interest payment for the money that we lend.
We are completely insulated from this risk right, we just get an interest payment.
For the money that we lend.
Speaker 1: If anything goes right, we don't have to do anything. We don't have any other exposure rather than the CDL. So we feel pretty good.
And if anything goes awry.
We don't have to do anything.
We don't have any other exposure other than the CDL.
So we feel pretty pretty good.
Speaker 7: And maybe on the flip side, like, are you seeing...
Okay.
And then maybe on the flip side are you seeing.
Speaker 7: Or maybe MPI is seeing any potential opportunity to step in and if you have those development projects that with you know book and cap structure or anything like that is that something that
Or maybe NPI seeing any potential opportunity to step in and a few of these development projects there.
And cap structure or anything like that is that something thats.
Speaker 7: Seems to be bubbling up a little bit now in the news, but I'm wondering if you're seeing that at all.
Seems to be Bubbling up a little bit now in the news, but I'm wondering if you're seeing that at all.
Speaker 1: Yeah, look, I think we are going to see some interesting opportunities. I think the folks who are very well capitalized will be much better physicians than others. I would call mental private company very well capitalized. You know, they might not be able to pursue every single transaction that they want, because everyone is huddling down a little bit and making sure the things are fencing out and maybe taking a little bit more time as they assess risk over the long term and do this work term.
Yeah, Yeah look I think we are going to see some interesting opportunities I think the folks who are very well capitalized will be much better positioned than others I wouldn't call Ninja private company very well capitalized.
They might not be able to pursue every single transaction that they want because everyone is hunkering down a little bit and making sure things are penciling out and maybe taking a little bit more time as they assess risk over the long term and after the short term.
Speaker 1: So, you always want to be prudent, you always want to be safe. I think they're going to make the right decisions for them.
So you always want to be prudent you always want to be safe.
They're going to make the right decisions for them and.
And.
Speaker 1: I don't know if they're going to be more aggressive or less aggressive, but I think there will be opportunities for that one more.
You know I don't know, what theyre going to be more aggressive or less aggressive, but I think there will be opportunities for that.
Thank you.
Speaker 2: Thank you. Your next question is from Matt Cornack from National Bank. Please stop your question.
Thank you. Your next question is from Matt <unk> from National Bank. Please ask your question.
Speaker 8: Hey guys, just quickly back to operations. Can you give us a sense as to how your non-rent controlled assets are performing and if you're still seeing market rent growth for those properties.
Hey, guys just quickly back to the operations can you give us a sense as to how your non rent controlled assets are performing and.
If youre still seeing market rent growth for those properties.
Speaker 9: Matt, still seeing great growth. Most notably Niagara and obviously the Alberta market. We are experiencing a little bit more turn but as John noted earlier in the call, backfilling quite quickly.
Hey, Matt I guess still seeing great growth.
Most notably at <unk>.
And obviously, the Alberta market.
We are experiencing a little bit more churn, but as John noted earlier in the call back filling quite.
Quite quickly.
Speaker 9: For us, as the leaping season enters the colder months, it's really continuing to tighten up occupancy. So we have some tactical promotions on some of the more expensive units at Niagara. But otherwise, just continuing on this occupancy trajectory.
For us the leasing season in terms of the colder months, it's really continuing to tighten up occupancy. So we have some tactical promotions on some of the more expensive units at Niagara.
But otherwise just continuing on this occupancy trajectory.
Okay. It makes sense and then on that front just quickly.
Speaker 8: And then on that front just quickly.
Speaker 8: the spread between average in-place occupancy and end-of-period occupancy was a bit higher. I assume that has to do with the amount of turnover in the quarter, but should we see for kind of the slower months that average occupancy converge more to the end-of-quarter occupancy?
The spread between average in place occupancy and our end of period occupancy was a bit higher I assume that has to do with the amount of turnover in the quarter, but should we see for kind of the slower months that average occupancy converge more to the end of quarter occupancy.
Yeah, I mean, we hope so.
Speaker 1: I guess what we could say is that our end of October , or our October occupancy stats, both closing as well as average, are pretty consistent with September .
I guess, what we can say is that our end of October.
Our October occupancy stat, both closing as well as average are pretty consistent.
With September.
Speaker 1: So, we're pretty pleased with that progress so far, you know, like, so the 1st month of 3 months and a quarter.
So.
We're pretty pleased with that progress so far.
So the first month of three months in the quarter.
No no no real bad news yet so we're we think it's a pretty good foundation for us to to keep putting our heads down and hopefully hopefully.
Speaker 1: You know, no real bad news yet. So we think it's a pretty good foundation for us to keep putting our head down and hopefully generating.
Generating a nice Q4.
And just last question you mentioned Montreal, we've seen kind of a steady progression there on occupancy and rate has continued to be pretty strong stronger than I think some would have expected given the occupancy.
Speaker 8: And just last question, you mentioned Montreal. We've seen kind of a steady progression there on occupancy and rate.
Speaker 8: pretty strong stronger than I think somewhat have expected given the occupancy. But it's the anticipation that that kind of continues on a slow and steady pace or should we expect that it's more of a spring-leasing season next year up.
But.
Is the anticipation that that kind of continues on a slow and steady pace or should we expect that it's more of a spring leasing season next year uptick.
Speaker 9: I think slow and steady. So possibly a small improvement, a very small improvement in the remainder of the year, but really happy with the performance of that portfolio. Occupancy now above 95. Broadly speaking, I know you know that market well, but it remains affordable to alternatives of Toronto or Vancouver. Where we're really focused from a leasing activity standpoint is some availability at Haddon Hall and 4300. Rock Hill and La Hill Park are very tight.
Thanks, Lew and setting so, possibly a small improvement very small improvement in the remainder of the year, but really happy with the performance of that portfolio occupancy above 95.
Speaking I know you know that market well, but it remains affordable alternatives, a toronto or Vancouver.
We're really focused from a leasing activity standpoint in some availability it had call. It 4300 rock Hill and <unk> Parker.
Speaker 8: but it's gone notice the opportunity re-premakes very robust in the market with those healthy spreads. Very nice and mortgage rates are high. So, renting makes.
But as John noted the opportunity remains very robust in this market with those are healthy spreads.
Okay fair enough and mortgage rates are high so.
I don't think makes more sense.
Okay. Thanks, guys.
Thank you.
Yeah.
Speaker 2: Thank you once again. Please press star 1 should you wish to ask a question. Your next question is from Mario Zarek from Scotiabank. Please ask your question.
Thank you once again, please press star one should you wish to ask a question.
Our next question is from.
Mario <unk> from Scotia Bank. Please ask your question.
Speaker 10: Thank you. Good morning. I just wanted to come back to the comment on the turnover. I think, John , you mentioned that it was a bit higher than expected based on your tenant exit discussions and whatnot. What's your best guess in terms of the driver?
Hi, Thank you and good morning.
I just wanted to come back to the comment on the turnover I think John you mentioned that it was a bit higher than expected.
Based on your kind of tenant discussions and whatnot, what's your best guess in terms of the driver behind it.
Yeah, Hey, Mario Thanks for your question.
Speaker 1: Yeah, hey, Mario. Thanks for your question. We have...
Yeah.
Speaker 1: It's not really a best guess, I mean, we kind of know. And so we can give you some background there. I think in Calgary, what drove it was, there are a number of affordable home alternatives in that market is one. Number two, so people are moving out to go to those homes. Number two, there was some promotion running off for some people that made it more expensive because there's now no more promotion. So some of those folks,
It's not a really a best guess I mean, we got to know.
And so we can give you give you some background there I think in Calgary what drove it was.
There are a number of affordable home alternatives in that market as one number two so people are moving out to go to those.
There was some promotion running off for some people that made it more expensive because there is now no more promotions and so some of those.
Okay.
Speaker 1: You know, and a little bit of detail. A lot of some folks left to actually rent with someone else with a roommate to just make it more affordable. So.
And then.
A little bit of detail a lot of some folks left to actually rent with someone else with a roommate to just make it more affordable.
No.
Speaker 1: You know, that's always worth the three main reasons in Calgary. The good news, as you see, is the occupancy stayed pretty constant, so that's good for us.
Those were the three main reasons in Calgary.
The good news is you see as the occupancy stayed pretty constant so that's good for us.
Speaker 1: Ottawa, there is a little bit of competition right in that downtown node of 285, Lyon as well as the Carlyle.
There is a little bit of competition right in that downtown node.
85.
And as well as the Carlisle.
Speaker 1: So we saw some people moving around for that. And again, good news is our occupancy remains constant. So we were able to backfill.
So we saw some people moving around for that.
Again, good news is our occupancy remained constant so we were able to backfill.
Speaker 1: And in Montreal, it was up a little bit, turnover, but we've noticed a little bit of movement in the student population.
And then in Montreal, It was up a little bit turnover, but it was we noticed a little bit of movement in the student population.
So, but again occupancy even ticked up in that market. So the good news is we were able to move ins were able to keep up with the move outs again, allowing us to capture a little bit more gains at least than what we had anticipated.
Speaker 10: Okay, that's really helpful. And then maybe for Eddy, on the credits facility, I think it stood at $117 million or so at the end of the quarter. I know there's a bunch of puts and takes with potential dispositions, developments and so on, but in an ideal world, based on your outlook over the next six months, how should we think about that balance six months out in terms of quantum?
Okay, that's really helpful.
And then.
Maybe for Eddie.
On the credit facility I think it's stood at $117 million or so during the quarter.
I know, there's a bunch of puts and takes with potential dispositions developments and so on.
An ideal world.
Based on your outlook over the next six months.
Should we think about that balance six months ago.
In terms of quantity.
Do you like to see it go.
Thanks Mario.
Speaker 4: Thanks, Mario. Ideally, I would like to see it as low as possible, given it's our most expensive piece of debt, but over the next six months...
Ideally I would like to see that lowest possible given it's our most expensive debt.
But over the next six months.
We have mentioned, we have refinancing opportunities in the front half of the year. So yes, we would expect that we can use any upward proceeds to pay that down so that would dip a little bit, but we still have our capital commitments CDO advances.
Speaker 4: As mentioned, we have refinancing opportunities in front of the year. So, you know, we would suspect that we use any upward proceeds to pay that debt. So that would dip a little bit. But we still have our capital commitments, CDL advances, developments, and CAPEX. And those would be primarily funded from the revolvers. So, some of that would then bring...
Elements and Capex and those would be primarily funded from the revolvers.
That up a bit.
Speaker 4: So overall, over the next six months, I would actually think it'd be pretty, pretty slow.
So overall it went up to six months I would actually think it would be pretty pretty flat from what it is today.
Hey, Mario I think the wildcard here for us is the potential for asset sales.
Speaker 1: Hey Mario, I think the wildcard here for us is the potential for asset sales. And it impacts
And it impacts.
Speaker 1: you know, a few strategic decisions for us, right? Like, if we're able to get to the finish line on some incremental asset sales, it really provides us a lot more flexibility in terms of some of the refinancing that we're looking at and maybe give us a bit more time to lock in maybe a lower rate in the future. So.
You know a few strategic decisions for US right like if we were able to get to the finish line on some incremental asset sales.
It really provides us a lot more flexibility in terms of some of the refinancings that were looking at and maybe give us a bit more time to lock in maybe a lower rate in the future.
There's a lot of moving parts.
Speaker 1: There's a lot of moving parts, can't control a lot of these moving parts, and they're all interconnected, so I think you're going to see us try to just be nimble and try to minimize our revolver balance going forward.
Can't control a lot of these moving parts and Theyre all interconnect. So I think youre going to see us try to just be nimble and try to minimize our revolver balance.
Going forward.
Speaker 10: Okay, and then speaking of interconnectedness
Got it okay.
And then speaking of interconnectedness.
Speaker 10: And the facility and whatnot. Can you give us your updated thoughts? I know it's a year out, but can you give us your updated thoughts on the pros and cons of acquiring Lonsdale and Highland?
And the facility and whatnot can you give us your updated thoughts I know, it's a euro but can you give us your updated thoughts on the pros and cons of acquiring one zero Highland.
Speaker 11: know how that decision is related if at all to your your credit facility balance and your ability to sell off.
How that decision is related if at all to your.
Credit facility balance.
Your ability to sell off.
Yes sure so.
Speaker 1: I think we're going to look at Lawnsdale and the Highlands through the same lens that we looked at Shipton Bank, which you know we terminated. The main options we're looking at are, maybe we don't buy them.
I think we're going to look at large scale in the island through the same lens that we looked at Joseph Bank.
Which we terminated.
The main options, we're looking at or maybe we don't buy them.
Speaker 1: Maybe we sell some assets to fund it.
We sell some assets to fund it.
Speaker 1: Maybe we buy them, or maybe we buy them with a partner.
Maybe we buy them or maybe we buy them with a partner.
And I'd say everything will depend on really the main driver.
Speaker 1: And I say everything will depend on like really the main driver.
Speaker 1: For our decision making, it's basically, it's very simple, right? It's like what's the cap rate compared to what's the long-term 10-year financing rate? Like that spread will either give you a very diluted transaction if it's wide, or as that's...
For our decision, making is basically it's very simple right. It's like what's the cap rate compared to what the long term 10 year financing.
Like that spread.
I will give you a very dilutive transaction if it's wide.
Or is that spread narrows.
That dilution.
Great.
So.
Speaker 1: That's at a high level kind of, the high level math we're kind of looking at, I would say the only difference between how we looked at Fifth and Bank and how we might look at those two assets is that these two assets are in a market that is very strategic for us.
At a high level kind of.
High level math, we're kind of looking at I would say the only difference between how we looked at <unk> bank and how we might look at those two assets.
These two assets are in a market that is very strategic for us.
Speaker 1: It's in a market in Vancouver that is very difficult to enter a period. And if you do enter it, it's usually very expensive.
It's in a market in Vancouver that is very difficult to enter.
Period, and if you do enter it it's usually very expensive.
Speaker 1: And so for us, we want to enter the market, it's not a scenario where we're going to enter every auction process and pay the highest price and enter the market, that's not what we're doing. We actually have a partner who is developing out there, more in pre-development, and we actually have, you know, a potential path to owning a platform with scale.
So for US we want to enter the market.
It's not a scenario, where we're going to enter every auction process to pay the highest price and enter the market that's not what we're doing.
We actually have a partner who is developing out there.
Or in pre development and we actually have.
A potential path.
Owning a platform with scale.
Speaker 1: you know, at a price that isn't as high as the price. So if you...
And at a price that isn't the highest price.
So if you include the discounts.
So we're not going to do that at any cost we're highly cognizant of the math and we're highly cognizant of delivering cash flow growth going forward.
Speaker 6: So we're not going to do that in any cost. We're highly cognizant of the math. And we're highly cognizant of delivering cash flow growth going forward. So.
And maybe there is a nice creative way for us to do it to minimize any potential dilution right like if you were able to sell some assets at a cap rate.
Speaker 6: And maybe there's a nice creative way for us to do it to minimize any potential delusion, right? Like, if you were able to sell some assets at a cap rate, that makes sense. Pay down extent to revolver. Have that run through our business for two or three quarters, generate some accretion. And then maybe that's the accretion that we can play with.
That makes sense to pay down the revolver.
I have that right through our business for two or three quarters generate some accretion and then maybe maybe that the accretion that we can play with it.
Speaker 6: in terms of finding some of the solutions going forward from expanding to the West, right?
In terms of funding some of the dilution going forward.
From expanding into the west right.
Speaker 6: So, no decisions have been made where we still have some time where many things can change, including cost of debt, including cap purchase, cap rate, including a bunch of things.
So no decisions have been made where we still have some time, where many things can change including cost of debt, including cap purchase cap rate, including a bunch of things.
Speaker 6: So, you know, we're binding our time. And, you know, what do we think we'll do with what's in the best interest for our share?
So.
We're biding our time.
And.
Yeah.
We think we'll do what's in the best interest for our shareholders.
Great.
Speaker 10: Great, all of that makes sense, John . Thank you for that. Just to follow up quickly.
All of that makes sense.
Thank you for that.
Just a follow up quickly.
The total CDL commitments on the 234 million.
Speaker 11: The total CDL commitment on the two is $34 million, and as you mentioned earlier on the call, it's pretty much there already. What would the incremental equity requirement for Minto be?
As you mentioned earlier on the call it's pretty much there.
They're already with the incremental equity requirement for them to be.
Speaker 11: at where valuations are today, if you were to proceed.
Kind of where valuations are today, if you would proceed.
And he's asking about the incremental equity required to purchase the asset.
Incremental.
Speaker 4: incremental. For Lonsdale and the Highlands, we'd be looking at around 30 million combined.
So prolonged tail end in.
The Highland.
So.
Around 30 million combined.
That would be required to close.
Speaker 11: Perfect. Do you get that, Merrick? OK. $30 million? Yeah. $30 million. Got it. OK.
Perfect.
$30 million.
Got it okay.
Yeah.
Speaker 2: Thank you. There are no further questions at this time. Please proceed.
Thank you.
There are no further questions at this time. Please proceed.
Thanks, operator, and thanks, everyone for your time, we really appreciate the commitment and we know it's a really really busy time and a lot of conflicts with other calls too. So we're looking forward to talking to everyone.
Speaker 6: Thanks operator and thanks everyone for your time. We really appreciate the commitment. We know it's a really, really busy time and a lot of conflicts with other calls too. So we're looking forward to talking to everyone in early March of 2024.
In early March of 2024.
Take care.
Speaker 2: Thank you, ladies and gentlemen. The conference has now ended. Thank you all for joining. You may all disconnect.
Thank you ladies and gentlemen, the conference has now ended.
You all for joining you may all disconnect.