Q4 2023 SmartCentres Real Estate Investment Trust Earnings Call
Magazines.
Right.
And due to Jasmine.
[music] paper lying on the sidewalk a little music from the House next door, who lives next door.
Thanks.
Yes.
Oh.
Bob.
Right.
[music] library.
Yeah.
Oh yeah.
Yeah, Yeah, Oh my goodness.
Right.
The Omega man.
Bill.
[music].
Jasmine.
[music] did jasmine.
July.
Okay.
We're not at all.
Well Mohan.
Sure.
Either way either way anyway.
Yes.
Yeah.
[music] I see small are waiting in the Jonah Buda cooking.
Cooking in the play to them all to you.
Yeah.
Oh.
Did reach out to a holding me even in a win win.
Yes.
The conference is now being recorded.
Good day, ladies and gentlemen, welcome to the smart.
To this smart sensors reads Q4, 2023 conference call I would like to introduce Mr. Peter Flynn. Please go ahead.
Thank you and good afternoon, and welcome to our fourth quarter and year end 2023 results call I'm, Peter Slam Chief Financial Officer, I'm joined on today's call by Mitch Gold her smart centers executive chair and CEO and by really Gobin, our executive Vice President of portfolio management and investments.
We will begin today's call with some comments from Mitch Rudy will then cover some operational items and I will review our financial results. We will then be pleased to take your questions just before I turn the call over to Mitch I would like to refer you specifically to the cautionary language about forward looking information, which can be found at the front of our MD&A.
Materials.
It also applies to comments any of the speakers make this afternoon.
Over to you.
Sure.
Good afternoon, everyone and welcome to our fourth quarter call.
And please.
To report strong overall results for Q4 building on the momentum of the three previous quarters.
Before I get into the details a quick reminder, for those who may be newer to spark centers at 35 million square feet and 100 Walmart stores.
Our commitment to value and convenience has never wavered starting from our first.
Newbuild.
Walmart in South Berry, which is now celebrating its 30 year anniversary.
This store and shopping center continues to perform above expectations.
To this day.
It was a busy.
On opening day.
So storm like today.
And it has been busy every day.
Over the last 30 years.
With no end in sight.
Portfolio occupancy was maintained at a leaving 98, 5% leased.
At least.
Oh.
Q3, and Q4 and with over 99% cash collections.
A well balanced combination of offense and defense. This portfolio is located in the midst of established residential communities across the country.
In every province, with a wide tenant mix strong covenant tenants, who provide essential products and services in everyone of our locations.
Leasing continues to strengthen with existing and new retailers continuing.
Continuing to demand more locations or expand in various growing markets.
Newbuild retail demand from the likes of T. J X Canadian tire banners Loblaw has banners. So these banners.
Today in just a few.
It's also growing in both large and small markets.
Tenant retention remains strong to renewal rates are up just over 5%, reflecting the demand.
Of local communities and the need for well located physical retail.
More on leasing.
Hi, Rudy.
Built on this stable cash for cash.
Cash generating platform.
Continued to construct.
On the significant mixed use permissions already in place.
Here are a few highlights.
During the quarter, we completed the balance.
Of the transient CD four and five condos.
Closing on the remaining 106 units for a profit.
$2 7 million.
We also continued our site work for our 40 story artwork project comprising 320 sold out units right here in the BMC.
Throughout her sorry through our smart living brand.
Our 458 unit mill way apartment rental project here in the BMC.
It was fully completed during Q4.
And with the stage occupancy during the year, we are now at 65% leased.
60% leased at year end.
Which is on time and slightly ahead on budget.
Construction of our 174, born northwest town homes with our partner is progressing well.
With closing scheduled to commence in Q2.
2024.
In Lee side.
We continue with our site work for a 224000 square foot retail center.
Apprise, primarily of a 200000 square foot Canadian tire flagship flagship fleece.
Sure.
An autograph in Ottawa, we are progressing with our new partner.
On our planned seniors residential and apartment buildings totaling 200 I'm sorry.
430 units.
Which was previously delayed as a result of our prior partner.
Lastly.
We are under construction on six self storage units at various stages of completion.
In total.
900000 square feet at 100% as outlined.
In our MD&A.
Okay.
As you can see.
Even in this more complex market.
We remain selective.
Selectively active <unk>.
Making use of our skills and dexterity, bringing projects forward based on.
Their merits and metrics.
Only when financing is available.
In the meantime, we work actively as always seeking additional uses.
Throughout the portfolio.
2023, we achieved over seven 8 million square feet of mixed use permissions compared to the $6 1 million achieved in 2022.
We remain committed to unlocking the tremendous value.
Embedded in the lands we already are.
You can find.
A lot more detail.
In the residential.
Other mixed use development initiatives section in our MD&A.
On the financial side, Peter will provide a full update in a minute.
But let me emphasize a couple of permanent items.
Maintaining a conservative balance sheet remains a high priority for us.
Along with maintaining a significant unencumbered asset pool, which now stands at $9 2 billion.
Our debt level continues to recede and liquidity remains in excess of $800 million.
Okay.
On a final note.
My Thanks and appreciation.
To our great team of associates and partners.
Of course, our tenants.
For your commitment and dedication to what smart centers has always fans.
Good for and continues to stand for.
Which is bringing value to Canadian communities.
With that I will pass the call over to Rudy.
Yes.
Thanks Nish.
Good afternoon, everyone.
The fourth quarter continued to reflect a doubling down on demand by retailers for high quality high traffic space.
The dominance of our Walmart anchor remains in comparable to any other.
Given its combination of mass merchandise electronics, Paul grocery pharmacy.
And the purchasing power of a global retailer.
The momentum in demand by retailers continued building throughout 2023, culminating with an industry, leading 98, 5% leased portfolio as Mitch just mentioned.
Competition for small amounts of remaining vacant space continues.
Driving rents upwards steadily.
Demand surge from our existing portfolio of retailers as well as from new entrants.
Our T J X kidney entire banners pharmacy pet stores banks dollar stores liquor <unk> and full line grocers all remaining very active wanting to secure any remaining vacant space.
And given our proximity to residential we're also hearing from a number of new interested parties in complementary categories, such as entertainment gay.
Gaming logistics.
Health and personal care.
Demand for Newbuild retail is also on the rise and four significant sizes and in some markets that may surprise you.
Allison.
Carlton place London.
Orleans and.
Embraced bridge, while these are smaller markets our centers dominate in most of these communities and are typically 100% leased.
And as consumers continue to battle inflation, a great sense of comfort comes from knowing where prices are reliably low quality meets their expectation and with little substitute for a highly convenient location.
For smart centers, this strategy remains clear and delivering value and convenience to every community.
Strengthening our shopping centers, while preparing the way to city centers with our intensification program utilizing land, we already own within our centers.
With tenant retention in the 85% to 90% range over the past few years 2023 was no different and renewal rents in the quarter came in at an average of five 3% excluding anchors.
First on the specifics.
It's not unusual to see one or two tenant restructurings after the Christmas shopping season, and this year was no different.
This was mastermind this year mastermind filed for credit protection for their 66 locations we.
We have six of the eastern just two are being affected the source closed six locations.
Patients, but all with small footprints and easily re leasable.
And finally.
Bad Boy, a filing in the quarter and subsequent to year end closing its stores in their warehouse, we have no retail store locations, but nevertheless, it was disappointing to see this retailer closing its doors for our newly build industrial warehouse with 40 foot clear ceilings, we expect re leasing in short order and at better rents.
As you know in November 2022, lowest Canada was sold with the expectation of rebranding all locations to Rona by late 2024 <unk>.
Our location in Bonn, close and while it's hard to see it did unlock significant value for future mixed use developments, while giving us the flexibility to structure leases the way we need to generate some short term income in the intervening years, we have good interest in this space, especially when you consider what's.
Going on in the VNC.
But we'll be taking care to maintain the flexibility we need to execute our intensification plan overtime.
Grocers, such as wallboard soybeans and Metro are all very active wanting to add new stores to expand our customer reach.
I don't need to tell you the importance of having another full line grocer on our existing sites or in a new site to be developed which we are also looking at.
It's all around Michaels Mark's golf town TTS have all signed new deals in the quarter solidifying your position with us and many mid markets.
Large tenants like Canadian tire and their banners are selectively expanding.
Some of your stores, which affords us the opportunity to shuffle, the CRB index a bit.
One of the great advantages of the open format design.
That is smart centers.
As you can tell relate.
Relationships matter.
And strong national relationships matter, even more so we are very proud that we're able to help our tenants grow and innovate their business with more locations and lease flexibility.
Our premium outlets continue to dominate this category are exceeding even our partners expectations, we are 100% leased with traffic and sales continuing to improve.
Growth in Q S. Our concepts continue with demand from U S concepts and the chicken pizza and hamburgers categories, such as chicken fillet and ship all day, all driving higher rents are.
Our national platform offer the unique opportunity for any new entrant looking for a coast to coast or regional presence.
And lastly, while NOI was down modestly in Q4 over Q3. Most of this change was a result of year end final Cam billings, which gets adjusted and Mccann installment rates for new tenants for tenants in the new year.
All in all 2023 operational results delivered on every metric.
Occupancy.
Hi, <unk>.
Cash collections renewals and improving array of tenants serving the everyday needs of each community.
Embedding value for the long term.
As we continue to see all of this culminated in a stable and growing cash flows we expect for years to come.
With that I'll now turn it over to Peter.
Thanks Rudy.
The financial results for the fourth quarter and full year. Once again reflect the strong performance in our core retail business and a continued comp contribution from our mixed use development portfolio through the final closings at trends with Citi for an trends with Citi five condo towers and the von Metropolitan Center for.
For the three months ended December 31, 2023, <unk> per fully diluted unit was <unk> 59.
An increase of 4% from the comparable quarter last year, and an increase of 7% from last quarter.
These results include $2 $7 million or one cent per unit of profits from the closing of the remaining 106 condominium units at transit city four and five.
Higher rental income was driven by increases in base rent, primarily due to contractual rental step ups Lisa lease up activity.
An increase in percentage rents and rents from self storage and apartment properties, all partially offset by higher interest costs.
<unk> also includes a gain on our total return swaps of seven cents per unit.
As a result, <unk> with adjustments, which excludes both the condo profits and the Trs gain was 51.
For fully diluted unit for the fourth quarter.
Net operating income for the quarter remained essentially flat with a marginal decline of zero point $7 million or half of half a one percentage point from the same quarter last year.
Including our equity accounted investments, however, NOI increased by $2 $7 million or 2% largely due to condo closing profits higher rental renewal rates and continued strong performance across our shopping center portfolio.
Same property NOI, including equity accounted investments increased by $2 $3 million or one 7% compared to the same period in 2022.
G&A costs were somewhat elevated compared to Q3 due to some development costs that we wrote off during the quarter amounting to approximately <unk> <unk> per unit of <unk>.
Leasing activity remained strong during the quarter, our occupancy level, including committed leases was 98, 5% at the end of Q4 unchanged from the prior quarter and up 50 basis points from a year earlier.
In terms of distributions, we maintained our distribution during the quarter at an annualized rate of $1 85 per unit.
The payout ratio to <unk> for.
For the three months ended December 31, 2023 was 89, 4% an improvement from 95, 7% for the same period a year earlier.
During the quarter as Mitch mentioned earlier, we closed on the sale of the remaining 106 condominium units.
Transit City, four and five for gross proceeds at the reached 25% share of $13 $2 million and net profit of $2 8 million.
For the full year, we are booked net profits on these two condo towers of $25 $5 million on gross revenues of $136 million, resulting in a margin of 18, 8%.
Adjusted debt to adjusted EBITDA was $9 six times in Q4, representing continued modest improvement from 10.3 times in the prior year and nine seven times last quarter.
The improvement was as a result of both growth and EBITDA and the repayment of approximately $87 million of debt during the quarter, including repayments under equity accounted investments.
Our debt to aggregate assets ratio was 43, 1% at the end of the quarter, a 50 basis point improvement compared to the same period a year earlier.
However, as construction proceeds on some of our larger development projects and condo profits fall off from our trailing EBITDA levels. We do expect our leverage ratio will begin to grow modestly.
Our unencumbered asset pool increased to $9 2 billion in Q4 from $9 1 billion last quarter.
Our unsecured debt, including our share of equity accounted investments was $4 3 billion.
Virtually unchanged from Macquarie <unk> from the prior quarter and represents approximately 81% of our total debt of $5 3 billion.
During the quarter, we recognized a fair value loss on our investment portfolio of $14 $9 million.
This adjustment was mainly attributable to a cap rate increase of 25 basis points for our premium outlet properties, partially offset by rising rental rates and increased leasing activity.
In addition, we recognized a fair value loss on our EAA properties of $13 million, which was attributable to a cap rate increase of 50 basis points for our office properties in the BMC.
From a liquidity perspective, we're very comfortable with our current liquidity position with more than 523 million of Undrawn liquidity as at December 31.
Including our share of equity accounted investments and cash on hand, but excluding any accordion features.
The weighted average term to maturity of our debt, including debt on equity accounted investments is three six years.
Our weighted average interest rate was 4.15% a slight increase of two basis points from the prior quarter.
Our debt ladder remains conservatively structured where the most significant aggregate maturities are in 2025 and 2027.
Approximately 80% of our debt is at fixed interest rates.
Just before we open the call up to questions I want to touch briefly on our development projects that are underway.
Once again, we have updated our new MD&A disclosure focusing on those development projects that are currently under construction you can find this on page 17 of our MD&A materials and you will see there are currently 12 projects under construction down from 13 last quarter.
There were two additional projects that commenced this quarter and three projects that were completed.
Two new ones are self storage projects, one on James Street in Toronto, the other indoor Val Quebec.
The projects that came off the list, where the mill way purpose built residential rental project and the transit city four and five condo projects all in the BMC.
The REIT share of the total capital costs on these 12 projects is approximately $578 million with the estimated cost to complete standing at $382 million.
We expect to see initial closings on the first phase of the von townhouse developments at FERC.
Of 2024.
And with that we would be pleased to take your questions. Operator can we have the first question on the line. Please.
Yes of course, our first question comes from Mario <unk> from Scotia Capital. Please go ahead.
Please go ahead Mario.
Hi, Thank you for taking my question. So just a couple of really quickly maybe first with for.
Rudy.
Occupancy essentially out of box 98, 5%, how should we think about 2024.
The lease spreads, both including and excluding anchors.
Alright, Mario can you repeat that I didn't hear the end part of that.
Oh, sorry.
Asking given occupancy is.
At a maximum kind of leading the sector what is your expectation for.
24 lease renewals spreads both Inc.
Leading that excluding anchors.
Sure.
Yes.
We don't expect it to be.
Any lower I'll say it this way we don't expect it to be any lower Mario then we have found in 'twenty three given that we have fewer less less.
Phase II lease and demand is still remaining strong. So we express we expect spreads to be a little bit better than we're seeing right now and you've seen the spreads that we've had in the last quarter and it's improved in Q4.
So you expect to see some uptick on that where you see the churn is coming in from south of the border there will be even bigger spreads in that area.
Got it Okay. And then you also spent a bit of time kind of running out.
Some of the tenant failures and the broader market.
Post the holiday season, when you look out.
And the 24 outside of those kind of.
You have very minimal exposure to are there any larger leases.
Exploration standpoint, but.
I mean, all of them are you pretty comfortable.
Multiple with kind of the 90.
So you kind of hold them through.
Yes.
Two things one is.
No we keep a close eye on what we call at risk tenants and we talked about that on our last call a little bit and we talked about a couple of tenants that we were concerned about so no I think now that we've gone through the year and we are not expecting.
Any any any further deterioration in that.
For for this year is again that normally happens right after the Christmas holidays.
So that is looking very positive and you know.
We did have a time for many many years when we were at 99% occupied if you recall.
So we are not planning on stopping at 98, 5% occupancy we are carrying on leasing and talking to all of our tenants new and existing.
In our portfolio.
Okay.
That's helpful. Thanks, Rudy a quick financial question for Peter perhaps.
With floating rate debt as a percentage of total debt remained.
40% to 20% I think you mentioned, 20% in your prepared remarks.
While it's perhaps delayed a couple of months the expectation is still for the short end of the curve to come down over the summer so it's staying at 20%.
Launches precision given the expected lower rates later this year or is it more kind of structural in nature.
I would say is conscious.
Okay. So.
Where do you think that 20%.
Suitable to by the end of the year.
A portion of that floating rate debt is used for our construction facilities and we have just embarked on a couple of new large projects. The Artois project here in BMC.
Canadian tire project and lease side.
And so as those ramp up will continue to see.
The incurrence of floating rate debt.
I would expect the ratio to remain relatively stable over the course of the year, though meera.
Okay.
Okay. That's it for me ill return to the queue.
Alright next question comes from Matt <unk> from National Bank financial.
Please go ahead Matt.
Hey, guys.
Just just quickly.
And a bit of that being new to the name in a quarter. That's got I think a fair bit of one time adjustments, but can you.
Give us a sense as to.
What the impact of that Cam expense this quarter would have been and how it would kind of.
Revert back in Q1.
Okay.
Yeah, Hi, Matt.
Yes.
I don't have the exact number in front of me, but that would probably be a couple of pennies in terms of the impact on the NOI.
And again that is not going to be a recurring item because we adjust for that after we do our final year end billings.
In the Cam installments for 2024 that we send to tenants.
And I think there was a 4 million dollar adjustment on the same property number and part of it would have related to <unk>.
Bad debt expense versus recoveries year over year, but.
Would that also be in that 4 million or is that something in addition to the $4 million.
That's part of it that is exactly part of it and there will be a little bit of provision D. C. O. That's also included in there yes. Okay. So if I had that number back as you get to something that is.
Stable stable.
Okay.
Okay. No. That's helpful. And then the other are the other adjustments during the quarter was I think with with regards to the mill way because it.
60% occupied at year end, presumably little less though during the quarter did that generate.
And the net any NOI or was it a net negative.
Because you had costs, but not necessarily enough rent to offset them and how much interest would you be capitalized.
Relative to that project.
Okay.
Yes.
Essentially a breakeven Matt during the quarter.
Okay.
I'll get the incremental NOI contribution in <unk>.
I guess at least of expected.
Winter is usually not.
The biggest loser, but that kind of by mid year 2024.
We're currently leasing at an average.
Probably have.
Yeah, it's between five and 10 units a week.
That's as much as we can actually do.
So.
Yeah.
Uh huh.
At 10 a week.
No.
Yeah.
It's like 20 slide.
23.
<unk> 30 weeks, maybe three weeks from now.
So most of the year.
Okay.
That's helpful.
And then lastly, just with regards to our G&A and the capitalized amount to the development portfolio I know you used to disclose it but will that impact.
Future G&A. If you are less active on development or is that number kind of steady this year.
And into 2024 in terms of the capitalized amount.
Development activity.
Directly proportional relation to development Nepal.
There's a lot of.
People are on the land side.
Right.
When it comes to construct.
Development development, the actual physical construction.
I don't think we see.
A reduction in overhead so as it relates to have Peter do you want to.
As it relates to this quarter in particular map Q4.
The amount of <unk> G&A did include a one time write off of.
About 171 $8 million relating to the development activities that we are no longer pursuing so thats not recurring.
Okay, so that almost $5 million.
Service.
And other revenue.
I'm, sorry, I'm looking at the wrong line item 10 at $5 million was higher than.
What we had seen historically on G&A. Okay. So we can we can back out $1.7 million from that as well to get to a stabilized figure corrected it's about a penny a share of <unk>.
The consensus.
Without this.
Bluntly, but like consensus was I think 54% versus 51 ex condo gains in the.
Hum.
The total return swap.
It sounds like if we make these adjustments it should be largely in line with that figure.
Got it.
Yes, I think so.
Okay.
Thanks, guys I'll turn it back.
Alright, perfect. So next question comes from Sam Damiani from TD Securities. Please go ahead.
Please go ahead Sam.
Thank you and good afternoon, everyone.
First question for me is on the miscellaneous revenues because they were they were up nicely not only for the year, but in the fourth quarter as well.
I assume this is still largely coming from parking and the premium outlets, but how do you see that playing out in 2024, how much how much gas is left in the tank on that line item.
It's majority of that is.
Percentage rents from premium outlets.
And parking.
Parking revenue.
And we.
We do think there's a lot of.
Cash left in both of those tanks are both robust in fact approaching particularly BMC is very strong.
And to NTT <unk>.
Sure.
As is also both of them are.
Our very strong so we would expect to continue.
Those numbers to continue.
Okay.
Okay.
Okay.
Okay.
Sorry, Sam we lost you.
Yes, Hi, this is <unk>.
Operator, I believe his line.
Thank you.
To ask a question please press star one.
Okay. If we have the next question in the queue, we can move there.
Sam.
Dialed back in let's get them back on that on the call.
Okay, just one moment please.
Yes.
Okay.
Okay.
Okay. Sam you May go ahead. Thank you.
Yeah.
Sorry about that I don't know what happened can you hear me now.
Hopefully we answered all your questions and your next question Sam.
So are you already answered my next three questions that's really it.
[laughter].
So the next one was just all actually on the.
Credit losses.
$1 2 million in the quarter $1 8 million for the year. It seems to kind of resurfaced after a pretty quiet 2022.
Is there a do you expect sort of this expense line item to continue into 2024, and I guess really what what's driving it where what where are the areas of I guess challenges in your in your tenant base that is driving this.
Well I'll defer to Rudy on any challenges Sam but essentially there was a there was a net recovery.
Stemming from.
Some COVID-19 matters that were just coming to an end and we had over provided during COVID-19. So there was a net recovery in the prior year and then this year is a much more normalized run rate that I think is.
As good as anything in terms of going forward.
Yeah, and I would say Sam the same thing.
And the Covid here in 2000 22021, we had some big Big ECL provisions and then in 'twenty. Two we saw a recovery of a lot of those tenants were around.
22023 is starting to become a steady state so.
Peter is bang on.
Okay last question from me, probably a quick one just an update on that.
Disposition intentions, now where do you see.
Taking the leverage I know Peter you mentioned, just with the progression of condo gains getting further in the rearview mirror the debt to EBITDA calculation is going to go up a little bit just what are your thoughts and targets on leverage over the next couple of years.
Yes.
Yes.
We are keeping a close eye on on that I guess.
It's starting to feel like that's more.
More the market's working Joseph.
Conditions are moving in the direction.
So we will see but yes, we are.
Open or we're interested in.
And dispositions.
At the right price.
But until now.
It's just hasn't been a market for dispositions.
It seems like it seems like its opening up a little bit and if it opens up.
Little bit more will we will certainly be exploring that.
Thank you. Thank you very much I'll turn it back.
Yeah.
Any more questions in the queue.
Just as a reminder, if you'd like to kill for a question. Please press star one.
Okay.
And we have two more questions.
Get the name.
Uh huh.
Alright next question comes from Fannie Burke from RBC capital markets. Please go ahead.
I just wanted to.
Yeah.
Go ahead Barry.
Thanks, Hi, everyone.
Everyone I just wanted to on the back of Sam's club and just with respect to the dispositions that you said you are open to does.
Does that include.
Income assets or are you, referring more to density.
I mean.
It's more to do it's strategic or just the equity raise.
It would be.
<unk> be just density land.
No.
But there I guess, there would be a scenario where it might be.
<unk> be some income involved but I guess.
It would be just density.
Okay.
And then just I wanted to come back to some of the earlier remarks.
Some of the tenant closures that you mentioned can you just comment on the estimated impact on occupancy.
You see over the next few quarters, and how you see that sort of trending over the year as you backfill that space.
Generally speaking.
There's going to be maybe a bit of an impact in the beginning maybe in Q1, but there's a lot of interest in.
He knows.
And actually there are opportunities.
So there's a lot going on on those but the effects probably the impact.
It will be.
May be felt in the first quarter, but after that it will be.
It will be.
Maybe it will be positive and ultimately short medium term potentially.
Really positive or did you already.
Yeah, not much to add to that Mitch the.
If you look back at the last few years Youll.
You'll see a trend and with tenants after the Christmas season, like we talked like I mentioned earlier there are a few.
There'll be a little bit of softness in Q1 as usual and then it builds quickly into the balance of the year. So I expect to see that trend to continue.
Throughout this year, and especially with all the new builds yet that I talked about tenants being very interested in space.
That will get rebuilt quickly we think.
So if you if you just sort of put all that together, it's fair to say that the same property NOI growth for 2024.
Perhaps wouldn't be that dissimilar from what you.
Delivered in last year.
It's hard to say it could very well end up being similar but it's so it's a little bit.
Throw you off but it's a little lumpier, because there's some big potential.
Big deals.
But I guess the.
Other than that I guess, it's probably.
Probably similar it has potential for being better.
We're sort of being conservative when we say, we're sort of hoping it will be the same or better.
Yes.
Got it okay.
A couple small ones on the Pickering industrial what's your sense of retail re leasing on that space and maybe the upside in rent you think you can capture.
That deal was done before.
We even bought the land.
So you know it was a it was a slightly preferred rent.
<unk>.
It was actually it is wasn't sure in Orlando and buy Io investment, Ontario.
<unk> sold lands.
Under certain circumstances, but pretty.
Reasonable terms. So we're quite we're in I think get a good number there.
And that's why their rent was favorable as all part of it.
Yes, I mean <unk>.
Market rent is higher than their rent there is quite a bit of interest.
There has been interest even before that event, it's been steady in fact, I don't think theres been a weakness come by that there hasnt been somebody.
Seemingly serious about taking what was the the remaining vacancy and now the entire building.
Yes, I mean, it's been a bit a bit.
In terms of getting your absolutely buttoned down, but there's been a steady stream of very serious companies interested in the building and so sort.
Sort of the anatomy of Av.
We're in the right.
Place the planets are lined up nicely, but.
Until it's done I mean, it's vacant but we felt we anticipated will be fully leased this year.
<unk>.
Based upon what's going on in the negotiations we have going on.
Okay.
Okay, great. Thanks, very much I'll turn it back.
Thank you and our next question comes from Dean Wilkinson from CIBC World markets. Please go ahead.
Thanks afternoon, just one question for Peter.
Going back to Marios question around the floating rate debt exposure.
The majority of that is related to the construction lines correct.
Yes, that's right and the majority of it.
Is related to construction debt and then as that.
As those projects get built out we look at take a financing to term it out right.
How much of that would be capitalized as opposed to just sort of flowing through to the cash flow.
I don't have that number at my fingertips I'm happy to get back to you after the call Dean.
Okay great.
That's all I had thanks guys.
Okay.
Thank you.
Any more questions.
At the moment.
Reminder, if you'd like to queue up for a question. Please press star one.
You bet.
Thank you.
Don't seem to have any more questions.
Okay.
Okay well.
Thank you all for participating in our Q4 and year end analyst call. Please feel free to reach out to any one of US if you have any further questions.
Have a great rest of your day. Thank you.
Ladies and gentlemen. This concludes today's Q4 2023 conference call. Thank you for your participation and have a nice day.