Q4 2023 Dream Industrial Real Estate Investment Trust Earnings Call

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Please standby your meeting is about to begin good day, ladies and gentlemen, welcome to the Dream Industrial REIT fourth quarter Conference call for Wednesday February 14th 2024 joined.

Operator: Welcome to the Dream Industrial REIT fourth quarter conference call for Wednesday, February 14th, 2021. During this call, management of Dream Industrial REIT may make statements containing forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Industrial REIT's control, that could cause actual results to differ materially from those that are disclosed, in or implied by such forward-looking information. Additional information about these assumptions and risks and uncertainties is contained in Dream Industrial REIT's filings with securities regulators, including its latest annual information form and MD&E. These filings are also available on Dream Industrial REIT's website at www.dreamindustrialreit.com. Later in the presentation, we will have a question and answer session. To queue up for a question, press star 1 on your telephone keypad. Your host for today will be Mr. Alexander Sanikov, CEO of Dream Industrial Real Estate. Please go ahead. Thank you. Good morning, everyone.

During this call management may make statements.

<unk> containing forward looking information with the meaning of applicable securities legislation.

Forward looking information is based on a number of assumptions and is subject to a number of risks and uncertainties. Many of which are beyond dream industrial reach control that could cause actual results to differ materially from those that are just closed.

In or implied by such forward looking information.

Additional information about these assumptions and risks and uncertainties is contained in dream industrial REIT filings with securities regulators, including its latest annual information form and MD&A. These filings are also available on dream industrial reached web site at Www Dot Dream and Joshua Reed.

T. A later in the presentation, we will have a question and answer session queue up for a question.

Star one on your telephone keypad your host for today will be Mr. Alexander.

He he all of even just you'll reach Mr. Senegal. Please go ahead.

Thank you.

Morning, everyone.

Alexander Sanikov: Thank you for joining us today at Dream Industrial REITs' year-end 2023 conference. Speaking with me today is Linus Kwan, our Chief Financial Officer. We continue to deliver strong operating and financial results in 2020, and executing them is key growth driver. DIR achieved 11.3% comparative properties NOI growth in 2020, representing the strongest pace of organic growth since the REITs IPO. FF4 per unit was $0.98, 10% higher year over year, marking the third consecutive year of double-digit FF4 per unit growth.

Thank you for joining us today for Dream Industrial reads year end 'twenty Conference call speaking with me today is Glen is Kwon, our Chief Financial Officer.

We continued to deliver strong operating and financial results.

And executed on our key growth drivers.

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Representing the strongest pace of organic growth.

No.

For per unit was 98 cents, 10% higher year over year, marking the third consecutive year of double digit it before.

Alexander Sanikov: Our private capital partnerships continue providing us new avenues for growth. In 2023, we grew our accretive and recurring fee stream with over $9 million of net margin generated from our property management and leasing platform, more than double compared to 2022. We continue to execute on our development pipeline with 300,000 square feet of projects completed in 2023 that are expected to achieve an unwavering yield on cost of $7.5 billion. Supported by a strong balance sheet, we have been actively deploying capital into strategic investment opportunities, especially within our private capital partnership. These investments offer us the opportunity to generate strong returns and maintain balance sheet flexibility. We completed over $360 million in acquisitions through the Dream Summit Venture during the year.

Our private capital partnerships continue providing us new avenues for growth.

'twenty three we grew our accretive and recurring fee stream with over $90 million of net margin generated from our property management and leasing platform more than doubled compared to 'twenty.

We continue to execute on our development pipeline with 300000 square feet of projects completed in 2023 that are expected to achieve levered yield on cost of seven 5%.

Supported by our balance sheet strength, we have been actively deploying capital into strategic investment opportunities, especially within our private capital partnerships.

These investments offer us the opportunity to generate strong returns and maintain balance sheet flexibility.

We completed over $360 million of acquisition through the dreams of adventure during the year.

We're currently in exclusive negotiations on a number of additional assets in the GTA totaling two and a half.

Alexander Sanikov: We're currently in exclusive negotiations on a number of additional assets in the GTA totaling 2.5 million square feet of GLA. Going forward, we will continue to focus on growing our private sector. We will also explore capital recycling opportunities to fund our value-added initiatives and improve our overall portfolio quality. We're currently in negotiations on select disposition opportunities across the portfolio. The dispositions range from user sales to disposals of non-strategic assets to private buyers with compelling pricing parameters, allowing us to recycle capital accretively on a total return basis. Our development execution is progressing well, and we are on track to achieve our forecasted yield. Our 209,000 square foot net zero ready logistics facility in Mississauga is on track to be completed in mid-2024.

In square feet of GLA.

Going forward, we will continue to focus on growing our private ventures.

We will also explore capital recycling opportunities to fund our value add initiatives.

Prove our overall portfolio quality.

We're currently in negotiations on select disposition opportunities across the portfolio. These dispositions range from user sales to disposals of nonstrategic assets to private buyers as compelling pricing parameters.

Allowing us to recycle capital Accretively on a total return basis.

Our development execution is progressing well and we are on track to achieve our forecasted yields.

209000 square foot Mats, you already logistics facility in Mississauga is on track to be completed in mid <unk>.

24.

Alexander Sanikov: We recently signed a 10-year conditional lease for over 60% of the space, achieving a starting rent of over $20 per square foot with annual contractual rent growth of approximately 4%. The remaining 80,000 square feet could be demised into small units, allowing us to capture demand from a broad range of prospective occupiers. Overall, we remain encouraged by the leasing activity across our portfolio. We're responding to numerous requirements, both for our development projects and current vacancies, and have seen a significant increase in levels of touring activity since the beginning of the year. We continue to see significant strength in the small and mid-bay segments of the market, both in Canada and in Europe. We have also seen speculative construction activity decrease significantly in our markets, which should translate into continued strength in fundamentals over the near to medium term.

We recently signed a 10 year conditional lease for over 60% of this space achieving a starting from starting rent of over $20 per square foot with annual contractual rent.

Out of approximately 4%.

The remaining 80000 square feet could be demised into small units, allowing us to capture demand from a broad range of prospective occupiers.

Overall, we remain encouraged by the leasing activity across our portfolio, we're responding to numerous requirements both for our development projects and try and vacancy and haven't seen a significant increase in levels of drilling activity since the beginning of the year.

We're continuing to see significant strength in the small and mid big segments of the market both in Canada and in Europe. We have also seen speculative construction activity decreased significantly in our markets, which should translate into continued strength.

Abundant rentals over the near to medium term.

Our occupancy rate of 96, 2% at the end of 'twenty. Three three was primarily driven by anticipated transitory vacancies across Ontario, and European portfolios, we expect to capture strong rental lifts on these vacancies upon lease up.

Alexander Sanikov: Our occupancy rate of 96.2% at the end of 2023 was primarily driven by anticipated transitory Vacancies across our Ontario and European portfolios, and we expect to capture strong rental lifts on these vacancies upon lease up. We continue to execute on our strategy of maximizing rental rates on our new leases and renewals. Since the beginning of 2023, we have transacted $7 million square feet of new leases and renewals across DIR and Dream Summit portfolios, achieving an average spread of 55%. Achieving Average Contractual Rent Steps of 3% Our lease maturities are well staggered with $6 million square feet of GLA maturing in Canada over the next 24 months, of which approximately 75% is located in Ontario and Quebec, where average market rent is nearly double the in In Europe, we have 2.4 million square feet maturing over the next two years, and the current average market rent for these European leases is nearly 10% higher than in place.

We continue to execute on our strategy of maximizing rental rates on new leases and renewals since the beginning of 'twenty. Three we have transacted 7 million square feet of new leases and renewals across DIR and dreams I'm in portfolios.

Combined average spread of 55% achieving average contractual rent steps of 3%.

Our lease maturities are well staggered with 6 million square feet of GLA maturing in Canada over the next 24 months.

Of which approximately 75% is located in Ontario, and Quebec, where average market rent.

Double the in place rent.

In Europe, we have $2 4 million square feet maturing over the next two years and the current average market rent for these European leases is nearly 10% higher than in place rents.

With market rents over 30% above in place we are optimistic that we can continue capturing significant organic growth within our portfolio as leases roll.

In the near term, we expect occupancy to fluctuate as we continue prioritizing.

And our leasing strategy.

But 'twenty 'twenty four we expect our in place rents to grow by high single digit percentage range by the end of the year.

We expect that the pace of CP NOI growth will remain strong in the mid single digit range on a constant currency basis. Our C. P. NOI growth expectation is largely predicated on timing of lease up or transitory vacancies.

I will now turn it over to lenders to discuss our financial highlights.

Thank you Alex we ended 2023 with the strong financial results, which demonstrate the successful execution of our strategic initiatives over the past few years they.

Alexander Sanikov: With market rents over 30% above in place, we are optimistic that we can continue capturing significant organic growth within our portfolio as leases roll in. In the near term, we expect occupancy to fluctuate as we continue prioritizing rental growth in our leasing strategy. By 2024, we expect our in-place rents to grow by a high single-digit percentage range by the end of the year. We expect that the pace of CPNOI growth will remain strong in the mid-single-digit range on a constant trend.

They leave it's diluted S. F O per unit was 24 cents for the quarter and 98 for the full year.

10% higher year over year.

The solid year over year growth was primarily due to strong comparative properties NOI growth of nine 6% for the quarter and 11, 3% for the year. In addition to the fee income generated from our property management platform.

Our net asset value per unit at year end was $16.61 modestly lower compared to the prior quarter due to higher cap rates in Europe, partially offset by higher market rents in both Canada and Europe.

We continue to actively pursue financing initiatives to maintain a strong and flexible balance sheet with ample liquidity.

During the year, we issued $400 million of unsecured debt at an average rate of five 2% and refinanced 229 million euros of European mortgages at a weighted average rate of 493%.

Linus Kwan: Our CP&OI growth expectation is largely predicated on the timing of lease-up over a transitory basis. I will now turn it over to Linus to discuss our financial highlights. Thank you, Alex.

We raised $107 million of capital through our ATM program in mid 2023 at an average price of $14 20 $14.27 per unit.

Linus Kwan: We ended 2023 with strong financial results, which demonstrate the successful execution of our strategic initiatives over the past few years. Diluted FFO per unit was $0.24 for the quarter and $0.98 for the full year, more than 10% higher year over year. The solid year-over-year growth was primarily due to strong comparative properties NOI growth of 9.6% for the quarter and 11.3% for the year, in addition to the fee income generated from our property management platform. Our net asset value per unit at year-end was $16.61, modestly lower compared to the prior quarter due to higher cap rates in Europe partially offset by higher market rents in both Canada and Europe. We continue to actively pursue financing initiatives to maintain a strong and flexible balance sheet with ample liquidity.

These proceeds were used to repay floating rate debt generating immediate S. F O create accretion.

In addition, this enhanced our financial flexibility, allowing us to continue funding our development projects and co investments in our private ventures, which are expected to generate attractive returns over time.

In December we priced a 200 million dollar unsecured debt issuance via a reopening of our series of unsecured bonds at a lower implied interest rate than the original issuance in early 2023.

The offering closed in early January 2024, and the proceeds were partly used to reduce the outstanding balance on our credit facility bearing bearing an average rate of approximately six 9% with the remainder earmarked towards funding our development pipeline and contributions to our private capital partnerships.

To date in 2024, we have repaid approximately $41 million of mortgage maturities are remaining unaddressed debt maturities for 2024, it's approximately $260 million, including our series B 200 million unsecured debenture maturing in June we are currently evaluating proposals to refinance this bond.

Linus Kwan: During the year, we issued $400 million of unsecured debt at an average rate of 5.2% and refinanced €229 million of European mortgages at a weighted average rate of 4.93%. We raised $107 million of capital through our ATM program in mid-2023 at an average price of $14.27 per unit. These proceeds were used to repay floating rate debt, generating immediate FFO per unit accretion.

With unsecured term debt at rates at rates comparable or better than the current four 5% rate or we could opportunistically access the unsecured bond market.

We ended 2023 with leverage and our target mid 30% range and net debt to EBITDA at seven seven times with total available liquidity of nearly $700 million, including the 200 million series F. Reopening proceeds we retain sufficient capital to execute on our strategic initiatives.

With our in place rents more than 30% below market and several development projects coming online soon our portfolio is positioned well to continue producing strong organic growth that it can absorb the higher interest costs from refinancing our debt maturities for 2023 and over the course of 2024.

Linus Kwan: In addition, this enhanced our financial flexibility, allowing us to continue funding our development projects and co-investments in our private ventures, which are expected to generate attractive returns over time. In December, we priced a $200 million unsecured debt issuance via a reopening of our Series F unsecured bond at a lower implied interest rate than the original issuance in early 2023. The offering closed in early January 2024, and the proceeds were partly used to reduce the outstanding balance on our credit facility, bearing an average rate of approximately 6.9%, with the remainder earmarked towards funding our development pipeline and contributions to our private capital partnership. To date in 2024, we have repaid approximately $41 million of mortgage maturity.

Based on our competitive properties NOI growth expectations, we expect mid single digit S. S O per unit growth in 2024.

Our SSO growth expectation is predicated on current foreign exchange leverage levels and interest rate expectations as well as expected timing of the lease up of our transitory vacancies.

We expect our in place occupancy in S. F O per unit to remain stable for the first quarter of 2024 with growth weighted towards the middle and back half of the year.

I will turn it back to Alex to wrap up.

Thank you Louis.

2023 has been an incredibly exciting year for you and I are and we're carrying this momentum into 2020 four as we continue focusing on delivering strong results for all of our stakeholders.

Linus Kwan: Our remaining unaddressed debt maturities for 2024 are approximately $260 million, including our Series B $200 million unsecured venture maturing in June. We are currently evaluating proposals to refinance this bond with unsecured term debt at rates comparable or better than the current 4.5% rate, or we could opportunistically access the unsecured bond market. We ended 2023 with leverage in our target mid 30% range and net debt to EBITDA at 7.7 times. With total available liquidity of nearly $700 million, including the $200 million Series F reopening proceeds, we retain sufficient capital to execute on our strategic initiatives.

We will now open it up for questions.

Thank you, we'll now take questions from the telephone lines. If you have a question on using a speaker phone. Please Mr. Han said before making a selection.

I have a question. Please press star one on your devices keypad canceled a question. Please press star two.

My Star one at this time, if you have a question there'll be a brief pause participants register thank you for your patience.

And the first question is from Kyle <unk> from dish All day. Please go ahead.

Thanks, and good morning.

Just want to say thanks for the new disclosure on the expiring lease rate by year, it's very helpful. But just a couple of questions around or at lease maturity profile. So I guess, one I'm just looking for timing of the lease maturities and are there any chunky maturities or is it fairly spread out across the year.

In 2024, there would be fairly spread out there are some larger maturities in 2020 five that are are weighted towards the first half of the year.

But in this range going forward it would be relatively evenly spread.

Okay Perfect and then just secondly, you mentioned this in your commentary and I think it was in the MD&A as well, but just the language around the new expiring rental rate disclosure.

Alexander Sanikov: With our in-place rents more than 30% below market and several development projects coming online soon, our portfolio is positioned well to continue producing strong organic growth that can absorb the higher interest costs from refinancing our debt maturities for 2023 and over the course of 2024. Based on our Comparative Properties NOI growth expectations, we expect mid-single-digit FFO per unit growth in 2024. Our FFO growth expectation is predicated on current foreign exchange leverage levels and interest rate expectations, as well as the expected timing of the lease-up of our transitory Vacancies. We expect our in-place occupancy and FFO per unit to remain stable for the first quarter of 2024, with growth weighted towards the middle and back half of the year. I will turn it back to Alex to wrap it up. Thank you, Linus.

Indicating that market rent in Ontario, and Quebec is double that of in place I'm, just trying to reconcile that comment with.

The mark to market opportunity table that that's provided which would have the the mark to market just a little bit lower are you able to elaborate on that a little bit.

Yeah, absolutely. So this is new disclosure for us.

And there's there's a couple of things to note with the new disclosure table.

First of all what what's being disclosed the in place rents are not expiring rents. So there's.

In place contractual escalators that will apply to these in place rents.

Second component. Unfortunately, what we are what we captured overnight is theres been a mislabeling of the rows in the table, where posting a corrected MD&A table, a more or less as we speak so are the the table as shown reads.

Operator: 2023 has been an incredibly exciting year for JIR, and we're carrying this momentum into 2024 as we continue focusing on delivering strong results for all of our stakeholders. We will now open it up to questions. We will now take questions from the telephone lines. If you have a question and you are using a speakerphone, please lift your handset before making your selection. If you have a question, please press star 1 on your device's keypad. To cancel the question, please press star 2.

Western Canada, Ontario, and Quebec, It should be the other way around so please bear with US and this is gonna get corrected shortly and then hopefully the table will make more sense and reconciled better with our content.

Okay, perfect that's helpful and Oh.

It's very very much appreciated for the new disclosure.

Secondly, the beliefs and Accordingly park.

<unk> asset very encouraging given the right escalator and I think the timing of getting it done.

When would it come online and then can you just talk about the type of tenants taking that space.

Kyle Stanley: Press star 1 at this time if you have a question. There will be a brief pause for participants. Thank you for your time. The first question is from Kyle Stanley from Deja Vu. Go ahead. Thanks, and good morning.

The Leesville come on line in September.

The 'twenty 'twenty four.

Hum.

Oh please.

But bear in mind that we.

The rate is over $20. So it's not $20 in one sense, but it's a very strong rate, we're very encouraged by that.

Alexander Sanikov: I just want to say thanks for the new disclosure on the expiring lease rate by year. It's very helpful, but there are a couple questions around your lease maturity profile. So I guess one, I'm just looking for the timing of the lease maturities, you know, are there any chunky maturities, or is it fairly spread out across the year? In 2024, it would be fairly spread out. There are some larger maturities in 2025 that are weighted towards the first half of the year, but in 2024, there would be a relatively even spread.

We will obviously provide more color on this could you go lease as it gets fully unconditional.

When it when it comes to the type of tenants is it logistics user not a third party logistics company, but a company that means modern logistics space with a modern clear heights, a great truck courts et cetera. So this facility.

It meets their needs.

Okay, Perfect and then I guess just last one for me.

Reflective of the current leasing environment in the GTA was based process. I guess you made some commentary that I'm you know touring activity has been up to start the year. So I'm just wondering could you give us a bit more of an update on what's going on from a leasing demand perspective.

Alexander Sanikov: Okay, perfect. And then, just secondly, you mentioned this in your commentary, and I think it was in the MD&A as well, but just the language around the new expiring rental rate disclosure, indicating that market rent in Ontario and Quebec is double that of in place. I'm just trying to reconcile that comment with the mark to market opportunity table that's provided, which would have the mark to market just a little bit lower. Are you able to elaborate on that a little bit? Yeah, absolutely.

Yes.

As we as we commented we we've seen significant increase in the levels of RFP activity in the market are there significant requirements are in.

In the.

80 to 200000 square foot range across the G T a.

And southwestern Ontario that are we are responding to for for our new developments.

Existing vacancies, we continue to see that.

Alexander Sanikov: So this is a new disclosure for us, and there are a couple of things to note with the new disclosure table. First of all, what's being disclosed is in-place rents, not expiring rents, and in-place contractual escalators that will apply to these in-place rents. Second component, unfortunately, what we captured overnight is that there's been a mislabeling of the rows. In the table, we're posting a corrected NDNA table, more or less as we speak. So the table, as shown, reads Western Canada, Ontario, and Quebec. It should be the other way around.

Occupiers are looking for space that is readily available.

So in some cases for our new developments are we're starting to put in a small offices on spec as opposed to wait for occupiers to then drive the specifications for the office because we see that our users' needs space are effectively tomorrow and.

You know even for brand new warehouse that is otherwise constructed.

Building, an office requires a permitting process, which then adds to the time as to when occupiers can be in this space. So we definitely are looking at that and then when it comes to small to mid Bay, yet we continue to see a very strong levels of our rental rates and and.

Alexander Sanikov: So please bear with us, and this is going to get corrected shortly, and then hopefully, the table will make more sense and reconcile better with our comments. Okay, perfect. No, that's helpful.

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Okay fantastic. Thank you for that I'll turn it back.

Alexander Sanikov: And, you know, very, very much appreciated for the new disclosure. Just secondly, the lease on the Courtney Park asset is very encouraging, given the rate escalator and I think the timing of getting it done. When would it come online?

Thank you. The next question is from Himanshu Gupta from Scotiabank. Please go ahead.

Thank you and good morning.

So just on the C. P NOI guidance of mid single digit so.

What is driving this I mean is it mostly Ontario, and Quebec, and maybe offset by Europe, and then plateau.

Alexander Sanikov: And then can you just talk about the type of tenant taking that space? The lease will come online in September 2024. Please bear in mind that the rate is over $20, so it's not $20.01.

So maybe you can you can you elaborate on this guidance.

Oh, it's certainly, Ontario, and Quebec are the top drivers for same property NOI growth that we are seeing a good.

Good pace of same property NOI growth in Europe.

In Europe.

Alexander Sanikov: It's a very strong rate. We're very encouraged by that. We will obviously provide more color on this particular lease as it gets fully unconditional. When it comes to the type of tenant, it is a logistics user. Not a third-party logistics company, but a company that needs modern logistics space with modern clear heights, great truck court, etc.

Our lease up of vacancy is going to have a slightly higher.

Contribution to same property NOI growth compared to some other regions, where rents are going to be the driver obviously, our in place escalators are contributing.

Contributing to the overall same property outlook.

And as we commented at our or early in the prepared remarks. The the rents are expected to increase by high single digits mid single digits for same property NOI growth.

Alexander Sanikov: So this facility meets their needs. Okay, perfect. And then, I guess just last one for me: how reflective of the current leasing environment in the GTA was this process? I guess, you know, you made some commentary that, you know, touring activity has been up to start the year. So just wondering, could you give us a bit more of an update on what's going on from a leasing demand perspective? As we commented, we've seen a significant increase in the levels of RFP activity in the market, so there are significant requirements in the... 80 to 200,000 square foot range across the GTA and Southwestern Ontario that we are responding to for our new development and some existing vacancies. We continue to see that occupiers are looking for space that is readily available, so in some cases for our new developments, we are starting to put in small offices on spec as opposed to wait for occupiers to then drive the specifications for the office because we see that users need space effectively tomorrow, even for a brand new warehouse that is otherwise constructed. Building an office requires a permitting process, which then adds to the time as to when occupiers can be in And then, when it comes to small to mid-bay, we continue to see very strong levels of rental rates and activity. Okay, fantastic. Thank you for that.

Largely predicated on timing of lease up of vacancy.

And some downtime on a few upcoming rollovers.

Occupancies in as a factor in same property NOI growth outlook, but the number that is going to drive the long term performance of the business are well beyond 'twenty 'twenty four is the rent we continue prioritizing rents are.

In our leasing and.

Easily at least some of our vacancies are if we were to be more aggressive.

On rental rates.

We were choosing not to do that.

Got it okay. Okay. Thank you that's helpful.

And maybe shifting gears on the acquisitions on the Green summit.

And to be a I think you mentioned done assets under negotiation comprising 215 million square feet can you elaborate on that are you know what kind of pricing are you seeing the market today on a cap rate basis.

Yeah.

These acquisitions are in the G. T. A we continue to see pricing that's consistent with what you've seen from the acquisitions, we completed in 2023.

And pricing that is consistent with us and a lot of transactions.

Have been completed.

In the market by some of our peers are.

You would've seen a late last year.

The largest transactions announced both on a price per square foot basis, and cap rate from a mark to market cap rate perspective, we're seeing a kind of a high six range Oh in terms of what we can achieve on a spot market rents over capital value.

Alexander Sanikov: I'll turn it back, www.realestateinvestmenttrust.com. Thank you and good morning. So just on the CPNOI group guidance of mid-single digit, so what is driving this, I mean, is it mostly Ontario and Quebec, and maybe offset by Europe and Alberta, so maybe you can elaborate on this guidance? It's certainly Ontario and Quebec are the top drivers for same-property NOI growth. We are seeing a good pace of same-property NOI growth in Europe. In Europe, lease-up of vacancy is going to have a slightly higher contribution to same-property NOI growth compared to some other regions where rents are going to be the driver. Obviously, our in-place escalators are contributing to the overall same-property outlook.

Got it Okay and is it fair to say that you know like dream industrial will be a bit quiet on the acquisition fun and maybe acquisitions would be more in the beam summit a kidney.

That'd be true well.

I think that's fair overall, we continue our allocated capital.

For new acquisitions through our private adventurers for various reasons that we've talked about including the additional returns we're generating from our property management platform.

For Jim Industrials balance sheets, we have other capital allocation priorities, specifically, our completion of our development program and our projects that are currently underway.

We don't exclude the possibility of pursuing strategic acquisitions, Oh that would be 100 per cent for drew industrials.

Alexander Sanikov: And as we commented early in the prepared remarks, rents are expected to increase by high single digits, mid single digits for same property NOI growth, which is largely predicated on the timing of lease up of vacancy and some downtime on a few upcoming rollovers. So occupancy is a factor in the same property NOI growth outlook, but the number that is going to drive the long-term performance of the business well beyond 2024 is rent. We continue prioritizing rents in our leasing, and we could easily lease some of our vacancies if we were to be more aggressive on rental rates. However, we're choosing not to do that. Thank you; that's helpful.

Account. However are the bar is relatively high for us to pursue something are on gas Dallas, you'd given the conflict and capital priorities.

Got it okay. Thank you maybe the last question is on the new supply in D D.

Obviously, a fair bit of supply you got to remember that in Q4.

And then if I look at your cause me pause development I mean, what you've got.

$20 rents.

An escalator that's de baseball pricing.

Will pricing like this and tonnage more new supply in the market. So can you comment on the development pipeline are you seeing for this year.

There's been a decent product delivered in a in the second half of 2023.

The number that we think is a much more interesting is the level of a speculative activity currently in the market.

What we see right now is that there's about 9 million square feet.

Alexander Sanikov: And maybe shifting gears on the acquisitions under the Dream Summit entity, I think you mentioned 10 assets under negotiation comprising 2.5 million square feet. Can you elaborate on that? You know, what kind of pricing are you seeing in the market today on a cap basis or dollar basis? If these acquisitions are in the GTA, we continue to see pricing that's consistent with what you've seen from the acquisitions we completed in 2023 and pricing that is consistent with some other transactions that have been completed in the market by some of our peers that you would have seen late last year, some large transactions announced both on a price per square foot basis and cap rate.

Speculative construction in the GTA, which represents roughly 1% of inventory and that's arguably a low.

The low number in real low number of boats in historic context, and in the context of other major industrial markets in North America.

We expect that the level of speculative construction activity will remain low for 'twenty 'twenty four and.

New speculative starts will remain low which will translate into strong occupier fundamentals are when it comes to our pricing on new supply. We continue to see a range are in the market. There are private developers who would be prioritizing.

Alexander Sanikov: From a mark-to-market cap rate perspective, we're seeing a high six range in terms of what we can achieve on a spot market rent over capital value. Okay, and is it fair to say that, you know, like Dream Industrial will be a bit quiet on the acquisition front, and maybe acquisitions will be more in the Dream Summit, JB, in that venture? I think that's fair.

Our occupancy.

Over rain or over rate.

And there are institutional groups, who are developing or have delivered products, who are prioritizing right.

Overall occupancy so there's there's a range in the market.

And we generally don't think that it's going to have a one way or the other the impact on the market is not going to be significant or long lasting.

Alexander Sanikov: Overall, we continue allocating capital for new acquisitions through our private ventures for various reasons that we've talked about, including the additional returns we're generating from our property management platform. However, on Dream Industrial's balance sheet, we have other capital allocation priorities, specifically completion of our development program and projects that are currently underway. We don't exclude the possibility of pursuing strategic acquisitions, although that would be 100% for Dream Industrial's account. However, the bar is relatively high for us to pursue something on DIR's balance sheet given the conflicting capital priorities. Buddy

Given the.

Deliveries are.

That took place in 2023 were relatively low as a percentage of total stock.

Got it.

Thank you so much.

Thank you.

The next question is from Brad Sturges from Raymond James. Please go ahead.

Hey, good morning.

Just to.

Touch on your.

Your discussion on asset sales it sounds like there's some discussions happening right now I'm. Just curious if you have a dollar amount that we could see you execute on from our announced that silicon recycling perspective.

Thank you Brad.

Okay.

Alexander Sanikov: Okay, thank you. Maybe the last question is on the new supply in GTA. Obviously, a fair bit of supply got delivered in Q4. And I mean, if I look at your Courtney Park development, you achieved like $20 rents, a 4% escalator, that's very, very strong pricing. Will pricing like this encourage more new supply in the market? So can you comment on the development pipeline you're seeing for this? There's been indeed some product delivered in the second half of 2023.

I understand the reason for the question and obviously, it's at a it's a significant input in the model.

We would be providing more color on the on these disposal discussions as they progress.

Given we're in negotiations.

Negotiations with private buyers Theres a.

Lower transaction certainty in some cases.

And so our we would.

Want to advance these deals are a little further before we can provide more specific guidance.

Pricing parameters timing and quantum so there then the modeling of it can be more precise.

Yeah.

Would the would this all be through the wholly owned portfolio deals or transactions that are in terms of cap recycling occurring through the sun the jeep useful.

Alexander Sanikov: The number that we think is much more interesting is the level of speculative activity currently in the market. What we see right now is that there are about 9 million square feet under speculative construction in the GTA, which represents roughly 1% of inventory. And that's arguably a low number, both in historical context and in the context of other major industrial markets in North America.

Yeah Theres, both there was there's some.

Also the discussions are with injuries summit and on wholly owned portfolio as well.

And it's not really focused on any particular markets just based on the opportunistic transactions at this point.

Opportunistic are for the most part that's right.

Okay. Thanks, a lot.

Thank you.

The next question is from Mike <unk> from BMO capital markets. Please go ahead.

Hi, Thank you everybody two questions from my end just.

Alexander Sanikov: And we expect that the level of speculative construction will remain low for 2024, and new speculative starts will remain low, which will translate into strong occupier fundamentals. However, when it comes to pricing on new supply, we continue to see a range in the market. There are private developers who would be prioritizing occupancy over rate, and there are institutional groups who are developing or have delivered products who are prioritizing rate over occupancy. So there's a range in the market, and we generally don't think that it's going to have a significant or long-lasting impact on the market. The deliveries that took place in 2023 were relatively low as a percentage of total stock. All right, fair enough. I'll turn it back.

I apologize I apologize if I missed this thousands at cold Lake.

Yeah, maybe last year your expectation of the market is sort of normalized was that 4% to 6%.

Correct me, if I'm misquoting, you about 46% market rent growth going forward was a reasonable expectation or something certainly there's something you guys were operating under I'm. Just wondering if how that's changed over the last several months if at all.

Thank you, Mike well the growth expectations that we had for the market in 'twenty three generally materialized.

Uh huh.

We've seen.

That mid single digit pace of our rental growth across our key markets are even higher than for some nodes or submarkets.

Going forward.

We remain encouraged by the level of a speculative supply that we just commented on and so we would think that the pace of rental growth will reaccelerate in the second half of 'twenty for early 'twenty five as to the outlook for the next couple of quarters, it's really hard to hard to predict but you know when we.

Brad Sturgis: Thank you. The next question is from Brad Sturgis from Raymond. Go ahead. Hey, good morning.

Alexander Sanikov: Just to touch on your discussion on asset sales, it sounds like there's some discussions happening right now. I'm just curious if you have a dollar amount that we could see you execute on from an asset sale or capital recycling perspective. Thank you, Brad. I understand the reason for the question; obviously, it's a significant input into a model.

Look at supply demand dynamics.

In the GTA in particular they are.

Yeah.

Okay. That's that's great thanks for that.

And then just Lantus I think you had mentioned you were talking about the remaining.

Our remaining debt maturities that you have coming due is specifically the series B and I think you said, 40% to 45% was where it sits today.

Alexander Sanikov: We would be providing more color on these disposal discussions as they progress, given we're in negotiations with private buyers, there's lower transaction certainty in some cases, and so we would... want to advance these deals a little further before we can provide more specific guidance as to pricing parameters, timing, and quantum so that then the modeling of it can be more precise. Would this all be through the Holyoan portfolio? Is there any transactions that are, in terms of capital recycling, occurring through the Summit GB as well? Yeah, there's both. There's some...

But you also said that you think you can refinance that are at or better. So I'm just wondering what type of financing you're contemplating here it gets a little bit more color there would be helpful.

Yeah sure so.

We would look to her ideally replace that with unsecured debt. So we're looking at it.

Some various options I should say as I'd mentioned unsecured term debt potentially accessing the unsecured bond market the.

It is currently slots heroes, so euro equivalently rate would be low fours that were seeing them today.

Swaps of Canadian term debt.

Alexander Sanikov: This post was a discussion within Dream Summit and Holyoan Portfolio as well. And it's not really focused on any particular market, it's just based on opportunistic transactions at this point. Okay, thanks a lot. The next question is from Mike Markides from BMO Capital Markets. Please go ahead. Hi, thank you, everybody.

Probably in the low fives. So we're still seeing 100 basis points difference there and so that's sort of where we're coming out with the mid fours are better our average rate on refinancing this one.

Okay. So I guess the swap rate into euros has improved materially over the past three to six months it sounds like.

Sorry, I couldn't catch what you said there were no just the.

The equivalent euro swap rate seems to recruitment to meaningfully over the past several months.

Mike Markides: Two questions from my end. I apologize if I missed this. I guess, maybe last year, your expectation of the market sort of normalized was that 4% to 6%. Hey, Craig, I'm misquoting you, but 46% market rent growth going forward was a reasonable expectation or something, certainly the assumption you guys were operating under. I'm just wondering how that's changed over the last several months, if at all. Thank you, Mike

Ah, Yes, it's come down it's come down maybe 50 basis points or so in the last few months yes.

Okay.

Last one for me on your mid single digit NOI growth or sorry growth guidance does that contemplate any acquisitions or dispositions or the existing portfolio.

No just existing portfolio and you know the developments that have been completed and leased up impact of that's in there as well.

Okay. That's very helpful. That's it for me thanks, so much.

Thank you. The next question is from semi side from CIBC. Please go ahead.

Thanks. Good morning, just wanted to follow up on the Mississauga deal you did in the quarter and getting the 4%.

Alexander Sanikov: Well, the growth expectation that we had for the market in 2023 generally materialized. We've seen that mid-single-digit pace of rental growth across our key markets, even higher for some nodes or submarkets, going forward. We remain encouraged by the level of speculative supply that we just commented on, and so we think that the pace of rental growth will re-accelerate in the second half of 2024 or early 2025. As to the outlook for the next couple of quarters, it's really hard to say at www.realestateinvestmenttrust.com. Okay, that's, that's great. Thank you for that.

Escalators, obviously for opinion location, just any thoughts around your ability to push 4% escalators on tenants more broadly and if you see that coming down at all based on just macro level are softening.

Thank you. So my we consistently achieved in around 4%.

Escalators across our.

Our leasing in the G T a in some cases.

It's four and a half to five on smaller a smaller units for larger units.

Generally see four to four and a half a day.

Range.

With rental rates. So we do see that some groups out there would be looking to do.

As long as three and a half and there's folks out there who would be pushing as hard as high as five there's a range in the market, but we are generally consistent with the landing in that 4% range on everything.

Linus Kwan: And then just, Lenis, I think you mentioned you're talking about the remaining debt maturities that you have coming due, and specifically the Series B, and I think you said four to four and a half percent was where it is today. But you also said that you think you can refinance that app for better. So I'm just wondering what type of financing you're contemplating here. If you could give us a little bit more color, it would be helpful.

Okay. So no no change there.

I also wanted to clarify just kind of what kind of lease up timeframe. You are assessing in your same property NOI outlook I think Lance you mentioned occupancy likely grows in H. Two so would that suggest you would be fully addressing the existing vacancy by the end of the year.

Yeah.

The target is to address most of it by the end of the year, having said that.

Linus Kwan: Yeah, sure. So, we would look to ideally replace that with unsecured debt. Some various options, as I mentioned, unsecured term debt, potentially accessing the unsecured bond market, it's currently swapped to Euros, so Euro equivalent rate would be low fours that we're seeing today, unswapped, so Canadian term debt, probably in the low fives, so we're still seeing 100 basis points difference there, so that's sort of where we're coming at with the mid fours or better average rate on refinancing this.

The.

Occupancy on average will remain steady.

For 2024, that's part of our guidance.

Okay. Thank you I'll turn it back.

Thank you. The next question is from Sam Damiani from TD Colin. Please go ahead.

Thank you and good morning, everyone.

First question I guess just on the on the guidance for same property in the mid single digits I assume that captures the drop in occupancy that we've seen over the last couple of quarters.

I'm just wondering when you see occupancy gains being a positive contributor to same property NOI growth.

Yeah as long as commented Sam.

We are generally expecting some occupancy gains towards the second half.

Linus Kwan: Okay, so I guess the swap rate into euros has improved materially over the past three to six months, sounds like. Sorry, I couldn't catch what you said there. No, just the equivalent euro swap rate seems to have improved materially over the past several months. Yeah, it's come down maybe 50 basis points or so in the last few months, yeah. Okay.

Towards the second half of the year.

In terms of the.

Guidance and then obviously on a run rate basis beyond that they will contribute are contributing more into 2025.

So is it fair to say the same property NOI growth stat that you'll report each quarter this year might be a little bit below average in the first part of the year and then above average and the law.

Part of the year.

We expect that the pace will accelerate through the year and on a run rate basis. It's not that we are providing guidance into 2025, it will strengthen towards the second half of 'twenty four and into 'twenty five as well.

Linus Kwan: And this last one for me, on your mid-single-digit FFO growth guidance, does that contemplate any acquisitions or dispositions, or is it just the existing portfolio? I know just the existing portfolio and the developments that have been completed and leased up; the impact of that's in there as well. Okay, that's very helpful. That's it for me.

Gotcha, and then is that a is that guidance you know pretty much the same for both Canada and Europe or.

Is there a big difference in that mid single digit guidance for for 2024.

Canada is a bit higher than Europe generally speaking.

Simaya Saeed: Thanks so much. The next question is from Simaya Saeed from CIBC. Go ahead. Thanks, good morning.

As we commented.

Okay.

And then just on the acquisitions. The Dream Center JV is that is that still a 10% stake for the REIT.

Alexander Sanikov: Just wanted to follow up on the Mississauga deal you did in the quarter and getting the 4%. Escalators, obviously, for a premium location. Just any thoughts around your ability to push 4% escalators on tenants more broadly and if you see that coming down at all based on just macro level softening? Thank you, Sumaya. We consistently achieve around 4% escalators across our leasing in the GTA. In some cases, it's 4.5% to 5% on smaller units, but for larger units, we generally see 4 to 4.5 being the market range. As with rental rates, we do see that some groups out there would be looking to do as low as $3.50, and there are groups out there who would be pushing as high as $5.00.

We are targeting for the time being to stay at that 10% that's right.

Okay.

And I guess last question for me in the I guess at the GTA, but perhaps Montreal as well are you getting any more pushback from tenants on rent on the on the level of rent that you're.

Basket versus a year or so ago.

Of course, it's a negotiation.

With our with our occupiers.

And are there are more options available to occupiers now than 18 months ago.

Which is healthy however, you know frequently we see that our occupiers would look.

At the market and come back to staying put because it's cheaper.

And.

They don't need to incur moving costs are you set up costs et cetera et cetera.

But generally speaking we are occupiers see more options and that informs the discussions that we're having with them.

Alexander Sanikov: So, there's a range in the market, but we are generally looking at $3.50, landing in that 4% range on our. Okay, so no change there. I also wanted to clarify just kind of what kind of lease time frame you are reflecting in your same property NOI outlook. I think, as you mentioned, occupancy likely grows in H2. So would that suggest you would be fully addressing the existing vacancy by the end of the year? The target is to address most of it by the end of the year. Having said that, occupancy on average will remain steady for 2024. That's part of our guide. Okay, thank you. I'll turn it back. Thank you. Go ahead. Thank you. Good morning, everyone.

Makes sense, okay. Thank you, that's great and I'll turn it back.

Thank you once again, please press star one if you have a question.

Next question is from Paul <unk> from RBC capital markets. Please go ahead.

Thanks, Good morning, just coming back to the the 'twenty 'twenty four Epiphone guidance. Then it's can you maybe just a clarifying I'm not sure. If you mentioned it but how you see leverage shaping up for the year and whether the guidance.

Incorporate any any equity.

The equity issuance through the ATM.

So leverage and it would be consistent with current levels on both and.

Our net debt to assets and debt to EBITDA basis, largely consistent for the full year.

And no no issuances on the ATM.

Hey, Tim.

Simpson there.

Got it.

I wanted to just come back to the occupancy drop in the quarter can you maybe just provide some additional color or background on that slippage and I'm curious as well are you seeing any longer.

Alexander Sanikov: First question, I guess, just on the guidance for same property in the mid-single digits. I assume that captures the drop in occupancy that we've seen over the last couple of quarters. Just wondering when you see occupancy gains being a positive contributor to the same property and why growth. Yeah, as Blynda's commented, Sam, we are generally expecting some occupancy gains towards the second half, towards the second half of the year, in terms of the guidance, and then obviously, on a run rate basis beyond that, they will contribute more. So is it fair to say the same property, in a Y growth stat that you'll report each We expect that the pace will accelerate through the year on a run rate basis.

Longer periods to get leasing done or maybe some notable differences regionally.

Thank you Bonnie.

We are seeing that at least sometimes are longer, especially as we are still pushing to achieve the kind of market leading rates on those vacancy.

The occupancy drop.

As a function of a few units.

We got some.

Space that we were anticipating to get back in Spain.

So we're working through a refurbishment of that space and in lease up.

Again, some anticipated vacancy and Ah in France, where we had one occupy or change their the setup of their operations and a give back of about 180000 square feet. We've re let some of it already and are working with to occupiers.

Alexander Sanikov: Not that we are providing guidance into 2025; it will strengthen towards the second half of 2024 and into 2025. Is that guidance pretty much the same for both Canada and Europe, or is there a big difference in that mid-single-digit guidance for 2024? Canada is a bit higher than Europe, generally speaking, as we call it.

To take the balance.

We got about 100000 square feet in Ontario that was not anticipated.

Tenants are taking place and it was a struggling.

Towards the second half of 'twenty three so we're working through a really say nothing will achieve better rents than what the previous time. It was banks in the long run it's gonna be beneficial for the asset and the overall cash flow profile of the business, but in the meantime, we are seeing some.

Alexander Sanikov: Okay. And then just on the acquisitions, the Dream Summit JV, is that still a 10% stake for the REIT? We are targeting, for the time being, to stay at $10,000. And I guess my last question for me, in the GTA, but perhaps Montreal as well, are you getting any more pushback from tenants on rent, on the level of rent that you're asking versus a year or so ago? Of course, it's a negotiation with our occupiers, and there are more options available to occupiers now than 18 months ago, which is healthy. However, you know, frequently we see that occupiers look at the market and come back to staying put because it's cheaper, and they don't need to incur moving costs, new set up costs, et cetera. But generally speaking, we have occupiers see more options, and that informs the discussions that we are having. Makes sense. Okay. Thank you. That's great. And I'll turn it back.

Vacancy in some downtime on that particular space. So there's a there's a few a few pockets are.

As we commented before.

Occupancy will fluctuate in the.

In the.

Mid to high 90% range for us across the board and Ah Yeah. We continue prioritizing rates for example on that particular space.

I just mentioned in the GTA are it's about 100000 square feet.

We had the opportunity to lease it at a 10% spread relative to prior rents are which.

From my perspective was a bit of a concession and we chose to continue pushing for higher rents. So we could have had at least oh.

A month ago, but we decided to continue pursuing our pursuing a rate so moving occupancy in many cases is a is the easiest lever for us to pull.

But it may not be the right long term decision it will translate into short term gains at the expense of long term growth.

Operator: Once again, please press star 1 if you have a question. And the next question is from Pommy Burr from RBC Capital. Go ahead. Thanks. Good morning.

The cash flow of the business.

Thank you you know that's that's really helpful. Just one last one for me.

Pommy Burr: Just coming back to the 2024 FFO guidance, Lennox, can you maybe just clarify, and I'm not sure if you mentioned it, but how you see leverage shaping up for the year and whether the guidance incorporates any equations to the ATM? Um, so leverage, it should be consistent with current levels, um, on both, um, a net debt-to-assets and debt-to-eBITDA basis, largely consistent for It's been going on ever since.

On these the stomach the Dream Center JV acquisitions in Q4 and post Q4 are the ones that are in the works I think he mentioned 10 properties or just over 2 million square feet. What is the what's the total value of those.

From a transaction standpoint, and I'm curious as well if the growth profile is similar to that sort of mid single digit same property NOI growth that you've cited for your 2020 for guidance.

So the growth profile is our is similar to what.

Linus Kwan: Got it. I wanted to just come back to the occupancy drop in the quarter. Can you maybe just provide some additional color or background on that slippage?

What we see across the board are in some cases higher as we buying our properties was a meaningful mark to market potential. There's a couple of assets. There that are more stabilized are with steady.

Alexander Sanikov: And I'm curious as well; are you seeing any longer periods to get leasing done or maybe some notable differences regionally? Thank you, Fahmy. We are seeing lease-up times are longer, especially as we are still pushing to achieve market-leading rates on this vacancy. The occupancy drop is a function of a few units. We got some space that we were anticipating to get back in Spain. We are working through the refurbishment of that space and lease-up. Again, some anticipated vacancy in France, where we had one occupier change the layout of their operations and give back about 180,000 square feet. We've relet some of it already and are working with two occupiers to take the balance. Um, We've got about 100,000 square feet in Ontario. That was unexpected.

Growth opportunities.

As far as value quantum.

We will be providing more color as these transactions advance. Some of these are in exclusive negotiations some of them are under contract. So we still need to complete our work on due diligence or in negotiations in some cases so for.

For now for four sizing we would just encourage you to use the capital values that you've seen from us in our 2023 on the acquisitions that we completed two then.

Extrapolate onto this.

This set of acquisitions.

Okay, I will I'll turn it back thanks very much.

Thank you. The next question is from Matthew Korn from National Bank Financial. Please go ahead.

Hey, guys notwithstanding your comments on prioritizing a rate over occupancy you've had pretty good retention in the Canadian portfolio should we expect that that and I think you mentioned in your commentary that there were some.

Alexander Sanikov: The in-place tenant was struggling towards the second half of 2023, so we're working through releasing that, and we'll achieve better rents than what that previous tenant was paying. So in the long run, it's going to be beneficial for the asset and the overall cash flow profile of the business. But in the meantime, yeah, we're seeing some on that particular space.

Upcoming potential nonrenewals, but is that in the Canadian portfolio is it still largely Europe, where retention that's been lower.

Yeah.

Indeed that our retention has been pretty high for us in 2023 higher than our historic run rate. We would expect that the retention will be you know a bit lower this year than 2023 but consistent overall with the historic averages as you know we would disclose.

Alexander Sanikov: Occupancy will fluctuate in the mid to high 90% range for us across the board. And yeah, we continue prioritizing rates. For example, that particular space that I just mentioned in the GTA, it's about 100,000 square feet.

Alexander Sanikov: We had the opportunity to lease it at about 10% spread relative to prior rents, which, from our perspective, was a bit of a concession, and we chose to continue pushing for higher rents. So we could have had at least... a month ago, but we decided Right so moving occupancy in many cases is the easiest lever for us to pull, but it may not be the right long-term decision. It will translate into short-term gains at the expense of long-term growth of the cash flow. Thank you. No, that's really helpful.

As long term averages are over 10 plus years in our investor presentation. So.

'twenty 'twenty four will likely be consistent with that long term average.

Nonrenewals that we are expecting are not specific to any region, it's more more state specific.

Yes.

And then just on the development deliveries you get good disclosure as to what the yield on cost and the timing should we just assume that the NOI comes in over the average of that period and is there anything and I.

Alexander Sanikov: Just on the last one for me, on the Dream Summit JV acquisitions in Q4 and post-Q4, the ones that are in the works, I think you mentioned 10 properties or just over 2 million square feet. What's the total value of those from a transaction standpoint? And I'm curious as well if the growth profile is similar to that sort of mid-single digit NOI growth that you've cited for your 2024 guidance. The growth profile is similar to what we see across the board, in some cases higher as we're buying properties with meaningful mark-to-market potential. There are a couple of assets there that are more stabilized with steady growth opportunities as far as value quantum.

Obviously, there's some lease up from from assets that were previously delivered but I don't know let us if you have the number off hand as to what the contribution would be from development NOI was this year.

Yeah, it's gonna be in sort of throughout the threat ear. So I don't have that number off hand on that on the contribution I'm, obviously as they're delivered and in at least in and then occupied that's my neighborhood start contributing.

<unk>.

So they don't it'll be kind of over the second half of the year mass for modeling purposes for for run rate. Our modeling you can look at our development disclosure and look at projects that are complete.

Complete are we just supposed to cost to complete we disclose the yield on cost achieved.

So obviously they will contribute on a run rate basis into the 'twenty 'twenty four and then for projects that are delivering.

Alexander Sanikov: We will be providing more color as these transactions advance. Some of these are in exclusive negotiations, some of them are under contract, so we still need to complete our work on due diligence or negotiations in some cases. So, um... For now, for sizing, we would just encourage you to use the capital values that you've seen from us in 2023 on the acquisitions that we've completed for them, extrapolate onto this set of acquisitions. Okay, I'll turn it back. Thanks very much.

It was in 2024.

As we commented before as lease up time is usually about six months post completion. So.

But for modeling purposes, you could use a roughly this time frame.

Okay, so a bit of a lag to what it looked like the numbers that are disclosed their completion, they're not necessarily expected economic occupancy.

Completions, that's correct correct.

And then just last one for me with regards to I mean, this is not an insignificant amount of space or sorry value of the transactions that you're doing and dream summit.

On our numbers something approaching $700 million of that is that Oh, what's the nature of the seller at this point it would be disposing of these assets and in terms of targeting kind of value add versus newer AR, how should we think about.

Alexander Sanikov: Q&A Q&A Q&A Q&A Q&A Q&A, Hey guys, notwithstanding your comments on prioritizing rate over occupancy, you've had pretty good retention in the Canadian portfolio. Should we expect that? And I think you mentioned in your commentary that there's some upcoming potential non-renewals, but is that in the Canadian portfolio? Is it still largely Europe where retention has been lower? Indeed, Matt, retention has been pretty high for us in 2023, higher than historic run rate. We would expect that the retention will be, you know, a bit lower this year than 2023, but consistent overall with the historic averages. As you know, we disclose long-term averages over 10 plus years in our investor presentation. So 2024 will likely be consistent with that long-term average.

What the profile of what you're purchasing.

Yeah, I think thinking about we see a range, we see private groups a private institutional groups are asset managers.

Selling assets.

Part of our normal lifecycle of their vehicles.

The value added fund that was established.

Established five six years ago, they've done their work and they're exiting we see as a sale leaseback opportunities are it's a pretty broad range.

When it comes to the profile of the assets that we commented earlier on the growth expectation are we underwrite all of these opportunities on a total return basis.

And whether they're stabilized or have some value add to do.

Alexander Sanikov: Non-regionals that we are expecting are not specific to any region, www.realestateinvestments.com. And then just on the development delivery. You give good disclosure as to the yield on cost and the timing. Should we just assume that the NOI comes in over the average of that period?

We want to make sure that they get to a total return number that is compelling and that's that's how we price them and our approach to these opportunities.

Yeah, no that makes sense and one very quick follow up just on the Montreal Port.

It seems like you've gone the route of replacing it adds as opposed to redevelop ing it.

Linus Kwan: Is there anything, and I know obviously there's some lease-up from assets that were previously delivered, but I don't know, Lenis, if you have the number offhand as to what the contribution would be from development NOI-wise this year? Yeah, it's going to be in sort of throughout the throughout the year, so I don't have the number offhand on the contribution. Obviously, as they're delivered and leased and then occupied, that's when they would start, and how to get started. Please see the complete disclaimer at https://sites.google.com. If you have any questions or other problems, please post them in the comments section. Thank you for watching, and I hope you enjoy your day!

Is there a prospect or a timeline as to when that would have a tenant in place.

Yeah, I think about we have a few discussions that are ongoing.

We also have some user acquisition interest of which we are following up on <unk>, so that could be fruitful and could materialize.

I'm pointing to share them, we have not excluded the redevelopment the possibility and Oh I expect that.

At the time, we report either Q1 or Q2 results. This year will will provide more color as to the direction for this asset.

Okay sounds good thanks for the color.

Thank you.

Next question is from Mike Makita from BMO capital markets. Please go ahead.

Thanks, and sorry for getting the way of everybody's lunch here, but.

Operator: If you have any questions or other problems, please post them in the comments section. So it'll be kind of over for the second half of the year. Matt, for modeling purposes, for run rate modeling, you can look at our development disclosure and look at projects that are complete. We disclose the cost of completion; we disclose the yield on cost achieved. So obviously, they will contribute on a run rate basis into 2024, and then for projects that are delivering them within 2024. As we commented before, lease-up time is usually about six months post-completion. Again, for modeling purposes.

Alex maybe you can just give us. Some you know you talk about sort of what we see dynamic did.

Did you see in GMA in.

Maybe again I missed this commentary, but how does that compare to what you're seeing in Europe. You know just in terms of the <unk>.

Spec supply you're seeing in the GTA and how that makes you feel good about our growth this year and accelerating potentially look pretty 25, what what's the dynamic of your key markets in Europe.

Thank thank you, Mike well Europe is or isn't.

It's a big place, we see different dynamics in different markets, but also we see different dynamics in different segments of the industrial industrial market So starting with.

With Spain, we see Spain, maybe a little bit more supply than we'd like so that the supply is getting absorbed and so we're actively watching that unlikely market, where we'll be allocating more capital because of this kind of this is kind of the supply levels.

Linus Kwan: Okay, so a bit of a lag between what is like the numbers that are disclosed or completion, they're not necessarily expected to be occupied economically. Completion, that's correct. And then just last one for me with regard to, I mean, this is not an insignificant amount of space or, sorry, value of the transactions that you're doing in Dream Summit on our numbers, something approaching $700 million in assets. What's the nature of the seller at this point that would be disposing of these assets? And in terms of targeting kind of value-add versus newer, how should we think about what the profile of what you're, Yeah, thank you Matt. We see a range. We see private groups, private institutional groups, and asset managers selling assets as part of a normal life cycle of their vehicles. It's a value-added fund that was established five, six years ago. They've done their work, and now they're exiting. We see some leaseback opportunities, but it's a pretty broad range.

When it comes to France, Germany, and Netherlands broadly speaking a supply demand is is balanced.

We were not really concerned about the pace of lease up or a competition from new developments.

And in terms of segments of the market, we see a continued bifurcation in fundamentals between what we would call urban logistics assets and a big box logistics.

Roughly half of our portfolio in Europe is what we would categorize as urban logistics.

The rest is a larger box larger boxes, historically seen more supply, albeit moderate levels, it's still more compared to supply in urban locations and as a result are we we've seen already a rinse for urban asset.

ER exceed rents four or the pace of growth for urban assets exceeded the big Bucks are by a factor of one point a one to one three times, depending on the market and a weak second to continue seeing that as a there's very low.

Alexander Sanikov: When it comes to the profile of the assets, we commented earlier on the growth expectation. We underwrite all of these opportunities on a total return basis, and whether they are stabilized or have some value add to do, we want to make sure that they get to a total return number that is compelling, and that's how we price them and approach them. Okay, no, that makes sense.

A little to no supply of urban industrial are smaller big products.

Okay.

Okay. That's a very detailed and useful so I guess no incremental capital to Spain, It sounds like France, Germany, and the other ones again, correct me, if I'm reading it incorrectly but.

Alexander Sanikov: And one very quick follow-up, but just on the Montreal Port asset. It seems like you've gone the route of replacing it as is, as opposed to redeveloping it. Is there a prospect or timeline as to when that would have a tenant in place? Thank you, Matt.

Quite demand imbalance in the opportunities for growth notwithstanding bifurcation, which we do see I think he would say we've seen in the GTA and GVA markets to some degree as well those markets. They would you know or.

Alexander Sanikov: We have a few discussions that are ongoing. We also have some user acquisition interests which we're following up on. That could be fruitful and could materialize at some point this year. We have not excluded the redevelopment possibility, and I expect that by the time we report either Q1 or Q2 results this year, we'll provide more color as to the direction for this aspect. Okay. Sounds good.

Are they as good.

Or better or worse than what you're seeing in sort of Ontario in Montreal.

We would continue to rank G T. A as one of the best markets globally for industrial.

With the depth and liquidity of the market and the supply demand dynamics. So it's very hard to find another market like this globally.

Operator: Thanks for the call. The next question is from Mike Markides from BMO Capital Markets; please go ahead. Thanks, and sorry for getting in the way of everybody's lunch here.

But the absolute levels of rents in Europe are.

Low and despite the rental growth that we've seen especially in 'twenty two first half of 'twenty three in some markets. It was as high as 40%.

Mike Markides: Alex, could you just give us, you know, talk about sort of the leasing dynamics that you're seeing in the GTA and GMA. Maybe again, I missed this commentary, but how would that compare to what you're seeing in Europe, you know, just in terms of the supply and demand. What's the supply you're seeing in the GTA and how that makes you feel good about rent growth this year and accelerating potentially into 2025? What's the dynamic in your key markets in Europe? Thank you, Mike.

Yeah, the absolute levels of revenue remained low and so we expect that there's more runway for growth in Europe.

Especially in the in the segments of the market that we are that we just talked about.

Thank you.

Thank you.

Alexander Sanikov: Big place. We see different dynamics in different markets, but we also see different dynamics in different segments of the industrial market, in Spain for example. We see in Spain maybe a little bit more supply than we'd like, so that supply is getting absorbed, and so we're actively watching that. It is an unlikely market where we'll be allocating more capital because of this kind of supply levels. When it comes to France, Germany, and the Netherlands, broadly speaking, supply-demand is balanced, and we're not really concerned about the pace of lease-up or competition from new developments. And in terms of segments of the market, we see continued bifurcation and fundamentals between what we would call urban logistics assets and big box logistics. Roughly half of our portfolio in Europe is what we would categorize as urban logistics, and the rest is larger box.

No further questions registered at this time I'd like to turn the call back over to Mr. Todd.

Okay.

Thank you operator, thank you everyone for your interest in our business, we look forward to reporting on our progress in the first quarter of 2024.

Goodbye.

Thank you. The conference has now ended please disconnect your lines at this time and we thank you for your participation.

Alexander Sanikov: Larger boxes have historically seen more supply, albeit at moderate levels; it's still more compared to supply in urban locations. And as a result, we've already seen rents for urban assets exceed rents for the pace of growth for urban assets exceeded the big box by a factor of... 1.1 to 1.3 times, depending on the market, and we expect to continue seeing that as there's very little to no supply of urban industrial smaller bay products. Okay, that's very detailed and useful. So, I guess no incremental capital to Spain. It sounds like France, Germany, and the Netherlands.

Alexander Sanikov: Again, correct me if I'm reading you incorrectly, by Demand and Balance and the Opportunities for Growth, notwithstanding by application, which we do see, I think you would say we've seen the GTA and GMA markets to some degree as well. Those markets, are they as good or better or worse than what you're seeing in Ontario and Montreal? We would continue to rank GTA as one of the best markets globally for industrial with the depth and liquidity of the market and, Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com.au low and despite the rental growth that we've seen, especially in 22, first half of 23, and the market that was as high as 40%. The absolute levels of rent remain low, and so we expect that there's more runway for growth in Europe, especially in the segments of the market that we just talked about.

Operator: Thank you. There are no further questions registered at this time. I'd like to turn the call back over to Ms. www.realestate.com. Thank you, operator. Thank you everyone for your interest in our business. We look forward to reporting on our progress in the first quarter of 2020. Goodbye. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation, www.realestateinvestments.com

Yeah.

Okay.

Yes.

Okay.