Q1 2024 Minto Apartment Real Estate Investment Trust Earnings Call
Okay.
Ludi: Good morning. My name is Ludi, and I will be your conference coordinator today. At this time, I would like to welcome everyone to the Minto Apt REIT 2024 1st Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise.
Good morning.
My name is Lucy and I will be your conference coordinator today.
Ludi: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press the star followed by the red 2.
Ludi: At this time I would like to welcome everyone to the Minto apartment REIT 2000 Twenty's first.
Ludi: <unk> first quarter financial results conference call.
Ludi: All lines have been placed on mute to prevent any background noise. After just speakers remarks, there will be a question and answer session. If you would like Joseph a stranger in this time. Thank you press the star followed by the number one on your telephone keypad.
Ludi: If you would like to withdraw your question. Please press the star followed by the <unk>.
Ludi: Before we begin, I want to remind listeners that certain statements about future events made on this conference call are forward-looking in nature. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially. Please refer to the cautionary statements on forward-looking information in the REITs news release and MD&A dated May 7, 2024 for more information. During the call, management will also reference certain non-IFRS financial measures.
Ludi: Before we begin I want to remind listeners that certain statements about future events made on this conference call are forward looking in nature any such information is subject to risks and.
Ludi: Certainties and assumptions that could cause actual results to differ materially. Please.
Ludi: Please refer to the generic statements on forward looking information in the reach new suite piece.
Ludi: Keith and MD&A dated May seven 2024 for more information.
Ludi: During the call management will also reference certain non <unk> financial measures.
Ludi: Although there'll be believes these measures provide useful supplemental information about its Michel performance. They are not recognized measures and do not have standardized meanings under I FRS. Please.
Ludi: Although the REIT believes these measures provide useful supplemental information about its financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please see the REIT's MDNA for additional information regarding non-IFRS financial measures, including reconciliations to the nearest IFRS measures. Thank you. Mr. Li, you may begin your conference.
Ludi: Please see the beats MD&A for additional information regarding non <unk> financial measures, including reconciliations to the nearest I FRS measures.
Li: Thank you Mr. <unk> you may begin your conference.
Jonathan Li: Thank you, operator, and good morning. This is Jonathan Li, CEO of Minto Apt. Also on the call is Eddie Fu, our Chief Financial Officer, and Paul Baron, our SVP of operations. We're off to a great start in 2024.
Ludi: Thank you operator and good morning. This is Jonathan Lee CEO of Minto apartment REIT also wanted to call. It <unk>, our chief financial officer, and ball bearing our SVP of operations.
Jonathan Li: We delivered strong operating performance in the quarter while taking further measures to strengthen our balance sheet and reduce exposure to variable rates. As a result, as you can see in the bottom left-hand chart, our normalized FFO per unit increased for the 5th consecutive quarter, culminating in growth of 27.3% compared to Q1 last year. And our normalized AFFO per unit increased by 32.8% compared to Q1 last year. Normalized FPNOI and normalized FPNOI margin increased materially year over year, reflecting continued strong revenue and rent growth and lower operating expenses due in part to a mild. We continue to accretively strengthen our balance sheet during the quarter, building on our efforts from last year.
Jonathan Li: We're off to a great start in 2024, we delivered strong operating performance in the quarter, while taking further measures to strengthen our balance sheet and reduce exposure to variable rate debt.
Jonathan Li: As a result as you can see in the bottom left hand chart, our normalized <unk> per unit increased for the fifth consecutive quarter, culminating in growth of 27, 3% compared to Q1 last year.
Jonathan Li: And our normalized <unk> per unit increased by 32, 8% compared to Q1 last year.
Jonathan Li: Normalized <unk> NOI normalized SD NOI margin increased materially year over year, reflecting continued strong growth for new and rent growth and lower operating expenses due in part to a mild winter.
Jonathan Li: We continue to Accretively strengthen our balance sheet during the quarter building on our efforts from last year, we sold two properties in Ottawa and receive payment of the CDL persistent bank during the quarter.
Jonathan Li: Proceeds from both transactions totaling almost $100 million.
Jonathan Li: Were used to pay down our revolving credit facility.
Jonathan Li: We sold two properties in Ottawa and received payment of the CDL for Fifth and Bank during the quarter. The proceeds from both transactions totaling almost $100 million were used to pay down our evolving credit, As a result, interest costs in the quarter were 11% lower than last year, variable rate debt made up just 6% of total debt at quarter end, and both debt-to-GVV and debt-to-adjusted EBITDA decreased materially, which demonstrates the solid progress we have made in strengthening our balance sheet, while at the same time growing cash flow. I'll now invite Eddie Fu to discuss our first quarter financial and operating performance in greater detail. Eddie.
Jonathan Li: As a result interest costs in the quarter were 11% lower than last year variable rate debt made up just 6% of total debt at quarter end at both debt to GDP and debt to adjusted EBITDA decreased materially which demonstrates the solid progress we have made in strengthening our balance sheet, while at the same time growing cash flow per unit.
Edward Fu: Thank you, John. Turning to slide 4. Same property portfolio revenue was $38.2 million, an increase of 6.1% from Q1 last year, reflecting higher average monthly rents for unfurnished suites, partially offset by slightly lower occupancy and lower furnished suite revenue. Normalized Same Property Portfolio NOI increased 12.3% year-over-year to $24 million, while the normalized NOI margin rose by 350 basis points to 63%. The growth reflects higher revenue and lower operating costs. As Jon noted, our normalized FFO and AFFO per unit increased by 27.3% and 32.8%, respectively. The normalized AFFO payout ratio was 62.3%, a reduction of 1800 basis points from Q1 2020.
Edward Fu: I'll now invite <unk> to discuss our first quarter financial and operating performance in greater detail.
Edward Fu: Thank you Kevin turning to slide four.
Edward Fu: Same property portfolio revenue was $38 $2 million, an increase of six 1% from Q1 last year, reflecting higher average monthly rents for unfinished suites, partially offset by slightly lower occupancy and lower furnished sweep revenue.
Edward Fu: Normalized same property portfolio NOI increased 12, 3% year over year to $24 million, while the normalized NOI margin rose by 350 basis points to 63%.
Edward Fu: The growth reflects higher revenue and lower operating expenses.
Edward Fu: As John noted, our normalized <unk> and <unk> per unit increased by 27, 3%, a 32, 8% respectively.
Edward Fu: Normalized <unk> payout ratio was 62, 3% a reduction of 800 basis points from Q1 2023.
Edward Fu: Turning to slide 5, this chart highlights the REIT's steady quarter-over-quarter growth in average monthly rent and strong quarterly gain on lease performance. Over the last two years, we have captured consistently strong gains on lease, even in the slower winter leasing season. Moving to slide six, we signed 369 new leases in the first quarter, generating a gain on lease of $12.5 million. We had double-digit gains on lease in every market except Toronto, where the gain on lease was impacted by the mix of suites that turned.
Edward Fu: Turning to slide five this chart highlights the steady quarter over quarter growth in average monthly rent and strong quarterly gain on lease performance.
Edward Fu: Over the last two years, we have captured consistently strong gain on lease EBIT in the slower winter leasing season.
Edward Fu: Moving to slide six we signed 369, new leases in the first quarter generating gains on lease up 12, 5%.
Edward Fu: We had double digit gain on lease in every market, except Toronto, where the gain on lease was impacted by the mix of suites that term.
Edward Fu: In Toronto, approximately 70% of the 95 new leases were executed at Niagara West in the popular King West neighborhood. This property is not subject to rent control and has sitting rents that are close to the market.
Edward Fu: In Toronto, approximately 70% of the 95, new leases were executed at <unk> west in the popular key west neighborhood.
Edward Fu: This property is not subject to rent control and had sitting rents that are closer to market.
Edward Fu: As you can see in the table, the new average monthly rent in Toronto is above $2,800 per month, which is much higher than our portfolio overall. Excluding Niagara West, our gain on lease in Toronto was 19% and 13.8% across the portfolio. The embedded gain to lease potential at the end of Q1 remains strong at 15.9%, representing $21.4 million of annualized incremental revenue. Moving to slide seven, the same property portfolio annualized turnover was 15.9% in the first quarter. This was in line with seasonal norms, and move-ins kept pace with move-outs, resulting in stable closing options. Turnover in Calgary was 29%, and strong demand supported high clothing occupancy at 99.1%.
Edward Fu: As you can see in the table the new average monthly rent in Toronto is above $2800 per month, which is much higher than our portfolio overall.
Edward Fu: Excluding nager west our gain on leasing Toronto was 19% and 13, 8% across the portfolio.
Edward Fu: The embedded gain to lease potential at the end of Q1 remained strong at 15, 9% representing $21 4 million of annualized incremental revenue.
Edward Fu: Moving to slide seven the same property portfolio annualized turnover was 15, 9% in the first quarter.
Edward Fu: This was in line with seasonal norms and move ins kept pace with move outs, resulting in stable closing occupancy.
Edward Fu: Turnover in Calgary, with 29% and strong demand supported high clothing occupancy at 99, 1%.
Edward Fu: Auto experience flat turnover year over year and maintain occupancy of 97.7%, and turnover in Montreal was in line with seasonal norms while occupancy increased to 96.2%. Turnover in Toronto increased, driven by tenants in non-rent-controlled buildings. There was a slight drop in closing occupancy in Toronto as lease up of one bedroom suites has lagged during a slower leasing cycle. We are strategically using a small amount of promotion to increase occupancy of these properties, which has shown early signs of. We continue to expect turnover to slow in 2024 as the gap between city rents and market rents remains elevated.
Edward Fu: Auto experienced flat turnover a year over year and maintained occupancy of 97, 7%.
Edward Fu: And turnover in Montreal with in line with seasonal norms, while occupancy increased to 96, 2%.
Edward Fu: Turnover in Toronto increased driven by tenants and non rent control suite.
Edward Fu: There was a slight drop in closing occupancy in Toronto as lease up of one bedroom suites.
Edward Fu: During the slower leasing season.
Edward Fu: We are strategically using a small amount of promotion to increase occupancy of these suites, which has shown early signs of success.
Edward Fu: We continue to expect turnover to slow in 2024 as the gap between city rents and market rents remain elevated.
Edward Fu: On slide 8, we provide an update on our commercial and furnished suite portfolio. For our commercial portfolio, we had year-over-year revenue growth of 17.3 percent, driven by the opening of Dollarama at Niagara West during the pandemic. At Minto Yorkville, we have received strong interest in the ground floor retail space from different types of users, including high-end restaurants and luxury retail. It is a trophy location across the street from the Four Seasons Toronto with excellent visibility and curb appeal, and we're excited to add vibrancy to the corner.
Edward Fu: On slide eight we provide an update on our commercial and furnished street portfolio.
Edward Fu: For our commercial portfolio, we had year over year revenue growth of 17, 3% driven by the opening of dollar ramp up at <unk> west during the quarter.
Edward Fu: At mid tier Yorkville, we have received strong interest in the ground floor retail space for different types of users, including high end restaurants and luxury retail.
Edward Fu: It is a trophy location across the street from the four seasons, Toronto with excellent visibility and curb appeal and we are excited to add vibrancy to the quarter.
Edward Fu: We expect to have a lease signed this year and to start receiving lease payments in 2025, factoring in the time for preparing the space for the new tenant. For our furnace suite portfolio, revenue declined by 6.9% compared to Q1 last year due to lower occupancy. Minto Yorkville in Toronto was impacted by seasonality, as well as the continued recovery from writers and actors.
Edward Fu: We expect to have a lease signed this year and to start receiving lease payments in 2025 factoring in the time for preparing the space for new tenants.
Edward Fu: For our furnished suite portfolio revenue declined by six 9% compared to Q1 last year due to lower occupancy.
Edward Fu: Minto Yorkville in Toronto was impacted by seasonality as well as the continued recovery from the writers and actors.
Edward Fu: Minto 185 in Ottawa was impacted by fewer transient states. Average monthly rent for the furnished suites increased 22% compared to Q1 last year, which partially offset the impact of lower occupancy. The furnace suite inventory has also been reduced by 11 suites compared to Q1 2023, and we continue to evaluate further reduction. Turning to slide nine, normalized property operating costs for the same property portfolio decreased by 2.2% year over year, as a mild winter resulted in lower snow removal and lower repairs in the winter. Same Property Portfolio Property taxes increased 4.7% due to changes in assessed values in Montreal and Calgary and increased rates in Ottawa and Toronto.
Edward Fu: Mid to 185 in Ottawa.
Edward Fu: With impacted by fewer transients states.
Edward Fu: Average monthly rent for the furnished suites increased 22% compared to Q1 last year.
Edward Fu: Which partially offset the impact of lower occupancy.
Edward Fu: The furnished inventory has also been reduced by 11 suites compared to Q1 2023, and we continue to evaluate further reductions.
Edward Fu: Turning to slide nine normalized property operating costs for the same property portfolio decreased by two 2% year over year in Q1.
Edward Fu: Mild winter resulted in lower snow removal and lower repairs and maintenance costs.
Edward Fu: Same property portfolio property taxes increased four 7% due to changes in assessed value and one <unk> in Calgary and increased rates in all of our control.
Edward Fu: Utility costs declined 11.4%, primarily due to a large drop in natural gas costs that reflected lower rates and decreased usage due to mild winter weather. Moving to suite repositioning and slide test. We repositioned seven suites in the first quarter, generating an ROI of 9.4%. Over the last four quarters, we've repositioned 91 suites and generated an average ROI of 9.7%. We expect to reposition 50 to 90 suites this year, that is fewer than previous years as we strategically assess each repositioning along with a lower anticipated term. Turning to slide 11, we have provided our key depth statistics.
Edward Fu: Utility costs declined 11, 4%, primarily due to a large drop in natural gas costs that reflected lower rates a decreased usage due to mild winter weather.
Edward Fu: Moving to suite repositioning on slide 10.
Edward Fu: We repositioned seven suites in the first quarter generating.
Edward Fu: ROI of nine 4%.
Edward Fu: Over the last four quarters, we repositioned 91 suites and generated an average ROI of nine 7%.
Edward Fu: We expect to repositioned $50 to 90 suite this year.
Edward Fu: That has fewer than previous years as we strategically assess each repositioning along with lower anticipated turnover.
Edward Fu: Turning to slide 11, we have provided our key debt statistics.
Edward Fu: Our maturity schedule remains balanced, with no more than 9% of term debt coming due in any of the next five years. As of March 31, 2024, the weighted average term to maturity on our term debt was 5.81 years, with a weighted average effective interest rate of 3.43%. We have steadily reduced our exposure to expensive variable rate debt, which peaked in the first quarter of 2023 at 26% and ended the current quarter at 6% of total debt.
Edward Fu: Our maturity schedule remains balanced with no more than 9% of term debt coming due in any of the next five years.
Edward Fu: As of March 31, 2024, the weighted average term to maturity on our term debt was $5 eight one years with a weighted average effective interest rate of 343%.
Edward Fu: We have steadily reduced our exposure to expensive variable rate debt, which peaked in the first quarter of 2023 at 26%.
Edward Fu: Ended the current quarter at 6% of total debt.
Edward Fu: We also materially improved our leverage ratios, decreasing debt-to-gross book value by 140 basis points to 41.4%, and decreasing debt-to-adjusted EBITDA by 0.85 times to 10.94%. Total liquidity was approximately $188 million at quarter end.
Edward Fu: We also materially improved our leverage ratio decreasing debt to gross book value by 140 basis points to 41, 4% and decreasing debt to adjusted EBITDA by <unk> 85 times to $10 94 times.
Edward Fu: Total liquidity was approximately $188 million at quarter end.
Edward Fu: I'll now turn it back over to Jim.
Edward Fu: Eddie, moving to slide 12, we continue to have an attractive pipeline of growth projects. We are advancing the intensification of Rich Grove and Leslie York Mills with stabilization of both projects expected. Construction continues to progress well at the CDL properties, and the next stabilization is expected in the fall of 2021. Our previous capital allocation decisions have strengthened our financial position, but we will evaluate these upcoming purchase opportunities with discipline and careful consideration of our cost of capital and future cash flow per unit growth.
Edward Fu: Thanks, Eddie moving to slide 12, we continue to have an attractive pipeline of growth projects. We are advancing the intensification that rich Grove, and Leslie York Mills with stabilization of both projects is expected in 2026.
Edward Fu: Construction continues to progress well at the CDL properties and the next stabilization is expected in the fall of 2024.
Edward Fu: Our previous capital allocation decisions have strengthened our financial position, but we will evaluate these upcoming purchase opportunities with discipline and careful consideration of our cost of capital future cash flow per unit growth <unk>.
Edward Fu: Proforma Leverage, Market Sentiment, and other factors. As shown with Fifth and Bank last year, we are disciplined with our capital and will only exercise any purchase option if we are confident it is in the best interests of the company. We also note that MPI has agreed to amend the terms of the Highland CDL. The expiry date of the purchase option and the CDL maturity date have been extended, and beginning in June, the coupon payable by MPI will increase from 6% to 7.07% to match the current interest rate You can find updated photos and other details on the projects in our development pipeline on slides 13 and 14.
Edward Fu: Pro forma leverage market sentiments and other factors.
Edward Fu: We're almost at the bank last year, we are disciplined with our capital and will only exercise any purchase option. If we are confident it is in the best interests of the REIT.
Edward Fu: We also note that NPI has agreed to amend the terms of the Highland CDL.
Edward Fu: The expiry date of the purchase option in the CDO maturity date has been extended and beginning in June the coupon payable by NPI will increase from 6% to 7.07% to match. The current interest rate on our revolving credit facility subject to a range.
Edward Fu: You can find updated photos and other details on the projects in our development pipeline on slide 13 in 2014.
Jonathan Li: I'll conclude with our business outlook on slide 15. We expect that rental housing demand in Canada will remain strong for the foreseeable future. Even with the recent initiatives from the federal government to address both supply and demand, we expect the fundamentals underpinning the sector will include strong population growth relative to all other G7 countries, an insufficient supply of new housing which remains in the last, and continued affordability pressures driving many to the rent.
Edward Fu: I will conclude with our business outlook on slide 15, we.
Jonathan Li: We expect that rental housing demand in Canada will remain strong for the foreseeable future.
Jonathan Li: Even with the recent initiatives from the federal government to address both supply and demand issues. We expect the fundamentals underpinning the sector will remain robust, including strong population growth relative to all other G seven countries.
Jonathan Li: Insufficient supply of new housing, which remains an elastic and continued affordability pressures driving many to the rental market.
Ludi: Going forward, we will continue to focus on the following: Optimizing Revenue and Expenses. Growing FFO and AFFO per unit and exploring attractive refinancing opportunities. Minimizing our Credit Facility Balance and critically assessing the growth opportunities in our, With our high quality portfolio and strengthened balance sheet, we are well positioned to capitalize on the robust rental market fundamentals and deliver continued strong financial performance. Operator, please open the line for questions.
Jonathan Li: Going forward, we will continue to focus on the following.
Ludi: Optimizing revenue and expenses.
Ludi: <unk> <unk> and <unk> per unit.
Ludi: Exploring attractive refinancing opportunities.
Ludi: Minimizing our credit facility balance.
Ludi: And critically assessing the growth opportunities in our pipeline.
Ludi: With our high quality portfolio and strengthened balance sheet, we are well positioned to capitalize on the robust rental market fundamentals and deliver continued strong financial performance.
Speaker Change: That concludes our prepared remarks, operator, please open the line for questions.
Ludi: Thank you. And, ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the number two. Once again, please press star one to join the line. Your first question comes from the line of Frank Lu from BMO Capital Markets. Your line is open.
Speaker Change: Thank you and ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question. Please.
Ludi: The star followed by the number two once again.
Ludi: Press Star one to join the queue.
Frank Lu: Your first question comes from the line upfront.
Frank Lu: BMO capital markets. Your line is open.
Frank Lu: Good morning, guys. Thanks for taking my questions. Just with respect to the impact of Gaion Leasing Toronto's Toronto portfolio on the leases executed at Niagara West, I'm just curious if this is something unique this quarter, where you happen to have a higher proportion of leases executed at this property. And how should we think about this impact moving forward?
Frank Lu: Good morning, guys. Thanks for taking my questions.
Frank Lu: Just with regard to the impact of <unk> Toronto portfolio from the leases executed at Niagara.
Frank Lu: I'm just curious if this is something unique this quarter, where you happen to have higher proportional thesis execute at this property and how should we think about this impact going forward.
Unknown Executive: Yeah, a great question. Thank you.
Speaker Change: Yeah, Great question. Thank you.
Speaker Change: So it is a bit unique.
Unknown Executive: We've talked a little bit about it before but in Toronto were seeing our vacancy predominantly in our one bedroom suite tight.
Unknown Executive: So it is a bit unique. We've talked a little bit about it before, but in Toronto, we're seeing our vacancy predominantly in our one bedroom suite type. We've been focused on working through this availability using tactical promotion, some rent changes, and really creative marketing to lease it up. We have seen signs of this success.
Speaker Change: We've been focused on working through this availability using tactical promotion, some rent changes and really creative marketing to lease it up we've.
Unknown Executive: <unk> see the signs of this success you see the number of leases at <unk> in the quarter.
Unknown Executive: You see the number of leases at Niagara West in the quarter. From a competitive standpoint, it's due to a few reasons. We're seeing some pressure from the shadow condo market that's coming online, particularly on the smaller suite types, those one-bed units. Some investors are chasing cash flow and offering slightly lower rent. At the same time, Niagara West is still facing a little bit of pressure from the lease above the well.
Unknown Executive: From a competitive standpoint, it's due to a few reasons, we're seeing some pressure from the shadow condo markets that's coming online.
Unknown Executive: Particularly on the smaller sweet types those one bed units.
Unknown Executive: Some investors are chasing cash flow and offerings slightly lower rents.
Unknown Executive: At the same time Niagara West is still facing a little bit of pressure from the lease up of the well. So that said the development just down the road that at the end of Q1 had about 35% availability.
Unknown Executive: So, that said, the development just down the road that at the end of Q1 had about 35% availability. That said, we were able to get through a lot of those one beds in Q1, and we continue to see strong interest in our twos and threes. And really broadly across the Toronto portfolio, the embedded rent in the portfolio remains strong. We're also anticipating a bit of an uptick as we enter the busy leasing season. Overall net positive absorption, according to Urbanation in the Toronto Purpose Built Marketing Q1. So yeah, it's a bit unique to answer your question.
Unknown Executive: That said we.
Unknown Executive: We're able to get through a lot of those one beds in Q1, and we continue to see strong interest in our twos and threes.
Unknown Executive: And really broadly across the Toronto portfolio embedded rent in the portfolio remains strong.
Unknown Executive: We're also anticipating a bit of an uptick as we entered the busy leasing season.
Unknown Executive: Overall.
Unknown Executive: Net positive absorption according to urban Asian in the Toronto purpose built market in Q1.
Unknown Executive: So yes, we do.
Unknown Executive: Unique to answer your question.
Unknown Executive: Yeah, that's great. Thanks for the caller. This is kind of leading to my second question. I'm not sure if you have a preliminary occupancy figure for Toronto in April and May that you can, you may have it handy, because I think you commented that you started using some small incentives to drive occupancy. So, just curious if you have any figures handy for April and May.
Speaker Change: Yeah, that's great. Thanks for the color.
Unknown Executive: Leading to my second question I'm not sure if you have it.
Speaker Change: Hello, Mary after they figure for Toronto.
Unknown Executive: April and May that you can't you may have handy.
Unknown Executive: Because I think you commented that you start using some small incentives to drive occupancy. So just curious if you have any.
Unknown Executive: Figures handy or April or May.
Unknown Executive: What I can say is that we are seeing results from the promotions and activities that I've described in April and May.
Speaker Change: What I can say is that we are seeing results from that promotions and activities that I've described.
Unknown Executive: In April and May.
Unknown Executive: Got it. And then, so I guess, like, with some pressure from, you know, condos and other newly completed rentals in Toronto, I see, I also see that. Market Rent Estimates are coming down slightly. Is this a sign, or do you think this is a sign of, softness in the Toronto rental market? I mean, we'll have seen results from the rental FCA. That's like the average rise coming down slightly in recent months. Just want to hear your thoughts on that.
Unknown Executive: Got it and then so I guess like with with some <unk>.
Unknown Executive: Pressure from condos and other newly completed rentals and Toronto.
Unknown Executive: I also see the <unk>.
Unknown Executive: Marcia, Brian Ashton Thats coming down slightly.
Unknown Executive: Is this a sign like do you think this is a sign up like Lansing.
Unknown Executive: In the rental market.
Unknown Executive: I mean, we have seen results from Rocco FCA that site.
Unknown Executive: The average rise coming down slightly and recent emphasis just wanted to hear your thoughts with us.
Unknown Executive: Yeah, it's certainly something we're watching closely. What we also know is the condos that are delivering through the remainder of 2024 were purchased on average above $1,000 a square foot. The good news is that translates into about five bucks a foot for those investors that are going to rent them out in order to cover their mortgage costs, condo fees, and taxes. So the economic rent of the new competition coming online as the year continues is quite high versus some of the market rents for the purpose built in the market.
Unknown Executive: Yes, it's certainly something we're watching closely what we also know is the condos that are delivering through the remainder of 2024 were purchased on average above $1000 a square foot.
Unknown Executive: Good news is that translates into about five bucks a foot for those investors that are going to rent those out in order to cover their mortgage cost condo fees and taxes. So the economic rents of the new competition coming online as the year continues those are quite high versus some of the market rents for the purpose built in the market.
Frank Lu: Okay, great. Thanks for all the color. I'll turn it back.
Speaker Change: Okay, great. Thanks for all the color I'll turn it back.
Frank Lu: Great.
Speaker Change: Thank you.
Jonathan Kelcher: Your next question comes from the line of Jonathan Kelcher with P.D. Cowan. Please go ahead.
Frank Lu: Your next question comes from the line of Jonathan Culture with PD Cowen. Please go ahead.
Jonathan Kelcher: Thanks, good morning. First question, just a quick one on Dollarama. Was it on stream for the full quarter, or did that come on stream part way through?
Jonathan Kelcher: Thanks, Good morning.
Jonathan Kelcher: First question just.
Jonathan Kelcher: One on dollar Ram I was it was it there for the full quarter or did that come on.
Jonathan Kelcher: Stream partway through.
Unknown Executive: No, it came in partway through. So cash flow started on that one, Feb 16. And they opened their doors officially that first week of March.
Jonathan Kelcher: It came in part way through so cash flow started on that one <unk> and they open their doors officially yet at first week of March.
Unknown Executive: Okay, that's helpful. Secondly, just the furnished suites. It is more seasonal, and last year there was a writer's strike. What's your sense in terms of how Q2 and Q3 are shaping up this year occupancy wise?
Unknown Executive: Okay.
Unknown Executive: Secondly, just the furnished suites.
Unknown Executive: It is more seasonal over the last year there was the writers strike.
Unknown Executive: <unk>.
Unknown Executive: In terms of how Q2 and Q3 are shaping up this year occupancy wise.
Unknown Executive: Jonathan, it's a good question. I mean, the business has evolved. We're seeing the transient business for the furnished suites down year over year. That said, we've seen an uptick in government bookings at 185 and the film business continuing to come back at Yorkville. So I would say, you know, we're trending slightly below our expectations that we shared earlier in the year for the furnished suites.
Speaker Change: Hey, Jonathan it's a good question I mean, the business has evolved we're seeing the transient business for the furnished suites down year over year that said, we've seen an uptick in government bookings at 185, and the film business continuing to come back at York, Phil So I would say.
Unknown Executive: Were trending slightly below our expectations that we shared earlier in the year for the furnished suites.
Unknown Executive: Okay, and how much, how much? How far out can you see on that stuff? Like, what's the booking timeframe? Yeah, I mean, we've got
Unknown Executive: Okay.
Speaker Change: How much.
Unknown Executive: How far out can you see on that stuff like what is the booking timeframe.
Unknown Executive: Yeah, I mean, we've got really good visibility, you know, kind of three months out. And depending on the booking type, we've got bookings out for the remainder of the year. But I'd say good visibility is really 90 days.
Speaker Change: Yes, I mean, we've got really good visibility kind of three months out.
Unknown Executive: And depending on the bookings.
Unknown Executive: Booking type, we've got bookings out for the remainder of the year.
Unknown Executive: I'd say, good visibility really 90 days out.
Unknown Executive: Okay.
Unknown Executive: And then you talked, John, a little bit about the CDLs maturing this year. What are really some of your options there? What options are you guys looking at thinking about?
Unknown Executive: And then you.
Unknown Executive: You talked John a little bit about the.
Unknown Executive: Cdls maturing this year, what what are what are really some of your some of your options there.
Unknown Executive: What options are you guys looking at thinking about.
Unknown Executive: Sure. Thanks, Jonathan.
Unknown Executive: Sure.
John: Thanks, Jonathan so.
John: Looking at a whole bunch of different options I guess just to lay them out would be done by them.
Unknown Executive: So we're looking at a whole bunch of different options. I guess, just to lay them out, it'd be don't buy them. It would be buy them stand alone. It would be buy them with a partner. It would be sell assets, and use those proceeds to buy them. And it could, it could be a combination of any of those things.
John: Would be buy them standalone.
Unknown Executive: It would be by them with a partner.
Unknown Executive: It would be sell assets.
Unknown Executive: And use those proceeds to buy them.
Unknown Executive: It could be buying one instead of two. So the reality is all options remain on the table for us. Obviously, some are financially better than others given current interest rate environments, i.e., the standalone acquisition of both is probably the most dilutive.
Unknown Executive: It could be a combination of any of those things it could be buying one instead of two.
Unknown Executive: So.
Unknown Executive: The reality is all options remain on the table for US obviously, some are financially better than others given current interest rate environment.
Unknown Executive: I E. The Standalone acquisition of both is probably the most dilutive.
Unknown Executive: And then it gets better from there with everything else that I just talked about. And I guess the good news is that we don't have to make a decision now. We pretty much have on one of them till, you know, the end of the year, and then the other one till, you know, the beginning of the next. And so hopefully, things will change between now and then. I know I've been saying that to myself for the last two years, but it does look like there is some light at the end of the tunnel. I just don't know how long the tunnel is.
Unknown Executive: Then it gets better from there with everything else that I just talked about.
Unknown Executive: And I guess the good news is we don't have to make a decision now we pretty much have on one of them we have till.
Unknown Executive: At the end of the year and then the other one we have Joel.
Unknown Executive: The beginning of the next and so hopefully so.
Unknown Executive: Things change between now and then I know I've been saying that to myself for the last two years, but.
Unknown Executive: It does look like there is some light at the end of the tunnel I just don't know how long the tunnel is.
Unknown Executive: And so time is our friend. We've got the Bank of Canada, you know, likely making a decision in June and a second decision in July. We have at least until then to monitor what we're doing, and I think that's what we're going to do.
Unknown Executive: So I think time is our friend.
Jonathan Kelcher: Okay, and then would 88 Beachwood fall into the same sort of thought process?
Speaker Change: Got that.
Unknown Executive: The Canadian Bank of Canada.
Jonathan Kelcher: Likely.
Jonathan Kelcher: Making a decision in June and the second decision in July.
Jonathan Kelcher: We have at least until then to monitor what we're doing and I think that's what we're going to do.
Jonathan Kelcher: Okay, and then with AAP towards fall into the same sort of thought process.
Unknown Executive: Yeah, it would. It's kind of like the middle of 2020. I mean, this is, I think this is a big project in Ottawa, 227 units, and leasing just started. You know, the building is in really good shape. I walked by it a couple of weeks ago. And a very exciting building, but I think the lease uptime is probably going to take a little while. And so I think we have some time there as well.
Speaker Change: Yes, it would it's kind of like middle of 2020.
Unknown Executive: This is a it's a big project in Ottawa 227 units.
Unknown Executive: Leasing just started.
Unknown Executive: The building is is in really good shape I walked at a couple of weeks ago.
Unknown Executive: Very exciting building.
Unknown Executive: But I think the lease uptime is probably going to take a little while and so I think we have some time there as well.
Jonathan Kelcher: Okay, that's it for me. I'll turn it back. Thanks.
Speaker Change: Okay. That's it for me I'll turn it back thanks.
Speaker Change: Thanks, Jonathan Jonathan.
Jamie Schmid: Your next question comes from the line of Jamie Schmid, RBC Markets. Please go ahead.
Jonathan Kelcher: Your next question comes from the line of Jim niche.
Jamie Schmid: Rbc's markets. Please go ahead.
Jamie Schmid: Thanks. Just to follow up on the Toronto condo rents or flatlining. So it sounds like the Niagara West is a bit of a situation, a bit of a unique one. I'm curious what you're seeing in the other Toronto assets and thinking, like the Yorkvilles, the Roehamptons, where are sort of market rents trending? And in those in those assets.
Jamie Schmid: Thanks, just to follow up on the Toronto condo rack sort of Flatlining.
Jamie Schmid: So it sounds like the Niagara Wes.
Jamie Schmid: <unk>.
Jamie Schmid: Situations ability unique one.
Jamie Schmid: Curious what you're seeing in the other your other Toronto assets and thinking like that Youll build civil Hudson's.
Jamie Schmid: Where are sort of market thats trending.
Jamie Schmid: And in those in those assets.
Unknown Executive: Jimmy, I don't want to be too pessimistic, just going back to Niagara. In Q1, we did push through renewal increases of 3.92% on average for that property. But to your question on the other properties in Toronto, so really seeing the availability on the one side. I think the good news is, as I shared, doing some some pricing adjustments at those properties as well, but still capturing significant embedded gains on turnover on new leases.
Speaker Change: And Jimmy I don't want to be too pessimistic, just going back to Niagara in Q1, we did push through renewal increases of 392% on average for that property.
Unknown Executive: But to your question on the other properties in Toronto, So really seeing the availability on the one bed side.
Unknown Executive: I think the good news is as I shared doing some some pricing adjustments at those properties as well, but still capturing significant embedded.
Unknown Executive: James on turnover on new leases. So we are seeing pressure.
Unknown Executive: So, we are seeing pressure across the board in Toronto on the one beds, but with the pricing adjustments and a little bit of promotion that we put in place, we're seeing success, and we're capturing those strong embedded rents that are in those rent-controlled properties. We're also seeing some.
Unknown Executive: Across the board in Toronto on one beds, but with the pricing adjustments and a little bit of promotion that we put in place where we're seeing success and we're capturing a strong embedded rents that are in those SaaS.
Unknown Executive: Rent control properties.
Unknown Executive: We're also seeing, I'd say, barbell embedded rent opportunities. So I said, you know, you know, you mentioned it.
Unknown Executive: Also seeing I'd say bar Bell.
Unknown Executive: Embedded rent opportunities, so I would say.
Unknown Executive: You mentioned it.
Unknown Executive: Niagara West, as well as Yorkville, I'd say those have lower embedded rents. And I'd say the other buildings in Toronto, all the other ones, including Broughampton and Rich Grove and Leslie York Mills and Hyde Park, those are all very high in terms of the embedded rent. Just given the kind of cost and where the competition is in terms of, you know, that high month.
Unknown Executive: Niagara West as well as Europe drill I'd say those are lower embedded rents and I'd say the other buildings in Toronto, all the other ones, including Roehampton in Rich Grove, and Leslie York Mills.
Unknown Executive: In high bar those are all very high in terms of the embedded rents.
Unknown Executive: Just given kind of.
Unknown Executive: The cost and where the competition is in terms of.
Unknown Executive: That high monthly rents.
Unknown Executive: Right.
Jamie Schmid: Okay. And it sounds like it's the smallest, as you mentioned several times, it's the smallest suite size, I guess, the supply, the deliveries, and in the smallest suite size, it's causing a little bit of an issue in Niagara West. That's how it's characterized, right? As opposed to a broad base, um, kind of high-end market issue.
Unknown Executive: Okay.
Speaker Change: It sounds like it's the small as you mentioned several times, it's the smallest suite size I guess.
Jamie Schmid: Supply deliveries.
Jamie Schmid: In the small suite side, that's causing a little bit of an issue.
Speaker Change: Good luck.
Jamie Schmid: How I'd characterize it right as opposed to a broad base.
Jamie Schmid: Kind of high end market issue.
Unknown Executive: I think that's that's accurate. I think, you know, we've been discussing these one beds for a couple of quarters now.
Jamie Schmid: I think that's that's that's accurate I think we've been discussing the one beds for a couple of quarters now and.
Unknown Executive: And even then, the framework that we've disclosed, or at least talked about, around our overall growth and that equation that we talked about with renewals and with turns and growth related to both of those. We've been pretty consistent, right? We're getting three to three and a half percent growth on our renewals. And we're getting, we've been saying, low teens to mid-teens on our turn.
Unknown Executive: And even then the framework that we've disclosed or at least talked about.
Unknown Executive: Around our overall growth in that equation that we talked about with renewals and with turns and growth related to both of those we've been pretty consistent rate, we're getting three to three 5% growth on our renewals and we're getting we've been saying low teens to mid teens on our turns.
Unknown Executive: And that's what we keep getting. And I think that framework is still relevant for the rest of this year and likely for next. And so, you know, I think we were asked the question last quarter around, you know, are we basically sandbagging our game to lease? It's going to keep growing. And we've very consistently said, no, we don't think that that's going to keep growing to the sky. And I think the framework that we've given folks for the next couple of years still applies.
Unknown Executive: And that's what we keep getting and I think that framework is still relevant for the rest of this year.
Unknown Executive: Likely for next and so.
Unknown Executive: I think I think.
Unknown Executive: We were asked the question last quarter around are we basically sandbagging our gain to lease is going to keep growing and we've very consistently said no. We don't think that that's going to keep growing to the sky.
Unknown Executive: And I think the framework that we've given folks for the next couple of years still applies.
Unknown Executive: Okay.
Jamie Schmid: and then the CMHC upward financing of $55 to $65 million. When are you looking to do that?
Unknown Executive: And then.
Unknown Executive: CME C output financing of $55 million to $65 million, what are you looking to to do that.
Edward Fu: Hey Jimmy, it's Eddie here. So in terms of upward refinancing, I think that's still a good range. Right now, we're still just waiting for our paperwork to come in. So we're waiting for our certificates of insurance. And once we have that, we can then proceed with the final. Okay, and your expectation would sometimes be
Jamie Schmid: Hey, Jamie it's Adeel here. So in terms of upward refinancing I think thats still a good range right now we're still just waiting for our paperwork to covenants or waiting for certificates of insurance.
Edward Fu: And once we have that we can then proceed with the financing.
Jamie Schmid: Okay, and your expectation is that sometime this quarter you'll be able to get those certificates?
Edward Fu: Okay, and your expectation would be sometime this quarter.
Speaker Change: Well to get the certificates.
Jamie Schmid: Correct.
Jamie Schmid: Okay.
Speaker Change: Thank you.
Jamie Schmid: Thanks, Jamie Thanks, Jamie.
Matt Kornack: Your next question comes from the line of Matt Kornack from National Bank Financial. Please go ahead.
Jamie Schmid: Your next question comes from the line of Matt <unk> from <unk>.
Matt Kornack: Bank financial please go ahead.
Matt Kornack: Hey guys, just following up on that line of questioning around kind of the supply side and delivery of condos. I mean, this is a legacy issue for condos that were under construction as a result of low financing costs during the pandemic. Um, can you give us a sense as to what that delivery cycle looks like? Because presumably, there's a bit of a vacuum developing behind it. And then obviously, the government's trying to encourage new supply of apartments or purpose-built rental housing. But are you seeing kind of an indication that people are moving ahead with those types of projects at this point?
Matt Kornack: Hey, guys just following up on that line of questioning around kind of the supply side and delivery of condos.
Matt Kornack: This is a legacy issue for condos that were under construction.
Matt Kornack: As a result of low financing costs during the pandemic.
Matt Kornack: Can you give us a sense as to what that delivery cycle looks like because presumably there's a bit of a vacuum in developing in behind that.
Matt Kornack: And then obviously the government is trying to encourage new supply of apartments are purpose built rental but are you seeing kind of an indication that people are moving ahead with those type projects at this point.
Unknown Executive: Yeah, it's a good question, Matt. So I would say I don't have the answer right in front of me, but just the unsold condo inventory in the city right now is amongst the highest it's been in recent years. So I think to your point, the economics are getting more challenging. The other point that I shared earlier was just the average cost of the condos that will be delivered in the future will be above that thousand dollar a square foot mark, translating into, you know, in our view, rents that need to be in excess of five dollars a foot, which looks very different.
Speaker Change: Yes, it's a good question Matt.
Unknown Executive: I would say.
Unknown Executive: Don't have the fact right in front of me, but just the unsold condo inventory in the city right now is amongst the highest it's been in recent years.
Unknown Executive: So I think to your point the economics are getting more challenging.
Unknown Executive: The other point that I had shared earlier was just the average cost of the condos that we'll be delivering into the future we will be above that dollar or square foot mark.
Unknown Executive: Translating into.
Unknown Executive: Our view rents that need to be in excess of $5 a foot.
Unknown Executive: Which looks very different as a competitor when they come into the market.
Unknown Executive: I think we're seeing the information that we've read is like there's going to be a bit of a spike in supply, a small spike in supply in the early part of the next quarter or two, but the number of projects that are being mothballed right now is kind of at an all-time high. So we expect that long-term supply to start moderating.
Unknown Executive: I think we're seeing the <unk>.
Unknown Executive: Information that we've read as like Theyre going to be a bit of a.
Unknown Executive: A spike in supply of small spike in supply in the early in the next quarter or two.
Unknown Executive: But the number of projects that are being mothballed right now it's kind of like at an all time high.
Unknown Executive: So we expect that long term supply to start moderating.
Unknown Executive: Quite significantly on the cargo side.
Matt Kornack: That makes sense. And then if you look at your other markets outside of Toronto, Ottawa, I think there's a little bit of purpose-built rental that was highlighted. [inaudible]
Speaker Change: That makes sense and then if you look at your other markets outside of.
Matt Kornack: Toronto, Ottawa, I think theres, a little bit of purpose built rental that was that was.
Matt Kornack: Highlighted this.
Matt Kornack: Essentially something that may temper rent growth caliber.
Matt Kornack: Calgary is obviously strong Montreal it does seem like your occupancy has crept up and continues to creep up.
Matt Kornack: Very little supply in that market.
Matt Kornack: Is this really a toronto specific and maybe if anybody had been cool, but they don't Vancouver specific issue.
Unknown Executive: We're really seeing it as a Toronto-specific issue, Matt.
Matt Kornack: We're really seeing it as a Toronto specific issue Matt.
Unknown Executive: Okay.
Matt Kornack: Okay, that's it for me. Thanks. Thank you.
Matt Kornack: Okay. That's it for me thanks.
Matt Kornack: Okay.
Ludi: And once again, if you would like to ask a question, simply press star followed by the number one on your telephone keypad. Your next question comes from the line of Kyle Stanley with Day Jordan. Your line is open.
Matt Kornack: And once again, if you would like to ask a question simply press star followed by the number one on your telephone keypad.
Ludi: Your next question comes from the line of Kyle Stanley Des Jordan. Your line is open.
Kyle Stanley: Thanks morning, guys.
Kyle Stanley: You mentioned, Jonathan, just in your, in answering the previous question, the stabilization on Beechwood may be taking a bit longer than expected. Just curious, you know, what might be driving that? Is that maybe indicative of the market in Ottawa or competing products? Just thoughts there.
Kyle Stanley: You mentioned, John I think you just send your in answering the previous question the stabilization on beach, where it may be taking a bit longer than expected just curious what might be driving that is that may be indicative of the market and auto are competing product just thoughts there.
Unknown Executive: Oh, no, no; I didn't mean that it was taking longer than expected. I just think that there's a gap between when we expect that to stabilize and when the other two Vancouver projects. So I think our target was always kind of the middle of 2025.
Kyle Stanley: Oh, no no I Didnt mean that it was taking longer than expected I, just think that there's a gap between when we expect that to stabilize when the other two vancouver projects or stabilize.
Unknown Executive: So I think our target was always kind of middle middle of 2025 for that.
Kyle Stanley: Okay, thanks for that clarification. I think, I mean, Paul, you just kind of hit on this, I think, you know, along that line of questioning, but, you know, you guys have been, you know, very transparent with the softness and then maybe the one bedroom rents and it being kind of within a few specific properties and strategic incentives being offered, you know, is it safe to say that maybe this Softness is probably felt for the next couple quarters as we see maybe the peak delivery cycle and then To that end as we hit this vacuum of new deliveries, maybe early 25 You see that softness dissipate a bit about how you're thinking of things
Unknown Executive: Okay. Thanks for that clarification, I think I mean, Paul you just kind of hit on this I think.
Kyle Stanley: On that line of questioning, but you guys have been very transparent with the softness and then maybe the one bedroom rates and being kind of.
Kyle Stanley: Within a few specific properties and strategic incentives being offered.
Kyle Stanley: Is it safe to say that maybe this softness is probably felt for the next couple of quarters as we see maybe the peak delivery cycle and then.
Kyle Stanley: To that end as we hit this vacuum in new deliveries, maybe early 'twenty five you see that softness dissipate a bit about how you're thinking of things.
Unknown Executive: I think that's I think that's a fair assessment. You know, as you know, Kyle, we're working hard, you know, creative marketing promotions, really trying to increase demand. And, and we've seen early signs of that in the early part of this year. But I think your assessment looking forward is consistent with our view.
Speaker Change: I think Thats I think Thats a fair assessment.
Unknown Executive: As you know we're working it hard.
Unknown Executive: Creative marketing promotions that really trying to increase demand and we've seen early signs of that in the early part of this year, but I think your assessment looking forward is consistent with our view.
Unknown Executive: And just to give you a very specific example of some of the things that we're doing, you know, we were going through Hyde Park Village a couple of weeks ago. We have a number of vacant one-bedroom apartments, and they're like 480 square feet. There's no air conditioning. There's no washer and dryer in the unit.
Unknown Executive: And just to give you a very specific example of some of the things that we're doing.
Unknown Executive: We were going through high Park village a couple of weeks ago.
Unknown Executive: And we have a number of bacon, one bedrooms and they are like 480 square feet, There's no air conditioning.
Unknown Executive: There is no <unk>.
Unknown Executive: Washer dryer in the unit.
Unknown Executive: And, you know, we're asking $2400 a month. And so we saw some really nice uptake because we did open houses when we reduced that by like $100. And, and so like, that's what we're talking about here, right? It's kind of like 100 on quite a high rent for something that, you know, it is the product offering is, you know, what I just described. And so, those are the types of things that we're doing, and I think we're seeing some success in terms of filling up some of these vacancies. But, you know, we are optimistic about the spring leasing season, and we think we'll be in a good spot consistent with the framework that we've been describing for many.
Unknown Executive: And we're asking 2400 bucks.
Unknown Executive: <unk>.
Unknown Executive: And so we.
Unknown Executive: We saw some really nice uptake because we did open houses.
Unknown Executive: When we reduce that by like $100.
Unknown Executive: And and so that's what we're talking about here right, it's kind of like a 100 on quite a high rent for.
Unknown Executive: Something that.
Unknown Executive: Is that the product offering is.
Unknown Executive: No.
Unknown Executive: What I just described and so.
Unknown Executive: Those are the types of things that we're doing and I think we're seeing some success in terms of filling up some of some of these vacancies.
Unknown Executive: But we are.
Unknown Executive: Optimistic about the spring leasing season.
Unknown Executive: And we think we'll be in a good spot.
Unknown Executive: Listen with the framework that we've been describing for for many quarters.
Kyle Stanley: Okay, thanks for that color. I will turn it back.
Speaker Change: Okay. Thanks for that color I will turn it back.
Speaker Change: Thank you.
Bradley Sturges: Your next question comes from the line of Brad Sturges with Raymond James. Please go ahead.
Kyle Stanley: Your next question comes from the line of Brad Sturges with Raymond James. Please go ahead.
Bradley Sturges: Hey guys, just wanted to follow up on the discussion around the CDL program and just the thinking around the options that you have that you highlighted. I guess my question would be, you know, given there's, it's tied to your cost of capital, I'm curious to know, like, how much of your how much of a decline would you kind of need in your cost of capital for the projects, in terms of acquisition, depends a lot more? Is it, you know, is there a range you're looking for in terms of a reduction in the cost of capital before it makes more sense to pull the trigger on an acquisition?
Bradley Sturges: Hey, guys.
Bradley Sturges: Just wanted to follow up on the.
Bradley Sturges: The discussion around the CDL program and just the thinking around the options that you have that you highlighted.
Bradley Sturges: I guess my question would be.
Bradley Sturges: Given there is.
Bradley Sturges: It's tied to your cost of capital I am curious to know like how.
Bradley Sturges: How much of your.
Bradley Sturges: How much of a decline would you kind of need in your cost of capital for the projects in terms of acquisition depends a lot more.
Bradley Sturges: It.
Bradley Sturges: Is there a range you're looking for in terms of rigs.
Bradley Sturges: Reduction in cost of capital before it makes more sense to pull the trigger.
Bradley Sturges: On acquisition.
Unknown Executive: Yeah, the framework, Brad is basically not the framework, but the current situation is that tap rates are in like that high three low 4% rate, and our cost of financing right now is in the mid four.
Speaker Change: Yes, the framework, Brad is basically not the framework, but.
Unknown Executive: The current situation is cap rates are in like the high.
Unknown Executive: High three low 4% range.
Unknown Executive: And our cost of financing right now is in the mid 4% range.
Unknown Executive: So.
Unknown Executive: [inaudible] We'd love that to be closer, but all of those different scenarios that I walked through in a previous Question, you know, the math is different for all of us. So, there isn't necessarily... Transcripts provided by Transcription Outsourcing, LLC.
Unknown Executive: We'd love that to be closer.
Unknown Executive: But all of those different scenarios that I walked through on a previous question.
Unknown Executive: The math is different for all of those.
Unknown Executive: So there isn't necessarily.
Unknown Executive: Arrange that bogey that we're going to hit in <unk>.
Unknown Executive: Automatically do the transaction.
Unknown Executive: It's definitely going to be an educated call on what this package looks like as a whole, but I would say we understand that the market tolerance for any type of dilution in today's market is extremely low. And I would say even lower than what it was even back in January and February. So as we try to be an adaptable, nimble management team, you know, we're adapting as we go here; the bogeymen aren't set in stone. And we're trying to be, you know, mindful about what our growth looks like over the short, medium, and long term, and the quality of our portfolio over that same time period.
Unknown Executive: It's definitely going to be a.
Unknown Executive: Educated call on what does the stack as it looked like as a whole.
Unknown Executive: But I would say we understand that.
Unknown Executive: The market tolerance for any type of dilution in todays market.
Unknown Executive: He is extremely low.
Unknown Executive: And I would say even lower than what it was even back in January and February.
Unknown Executive: So as we try to be an adaptable nimble management team.
Unknown Executive: Sure.
Unknown Executive: Adapting as we go here.
Unknown Executive: The bogies aren't set in stone they are changing.
Unknown Executive: And we're trying to be.
Unknown Executive: Mindful about.
Unknown Executive: What our growth looks like over the short medium and long term and the quality of our portfolio over that same time period, we're going to balance it all.
Speaker Change: Makes sense.
Bradley Sturges: And again, I guess in the ideal world, you can buy both Vancouver assets, and you start adding scale there. But in the scenario that that's not feasible, do you think it does make sense to maybe execute on one versus both and not quite get the scale that you're looking for? How do you think about that in terms of a strategic footprint?
Unknown Executive: Again, I guess the ideal world you can buy both Vancouver assets, you're sort of adding scale there but.
Bradley Sturges: And the scenario that that's not feasible.
Bradley Sturges: Do you think it does makes sense too.
Bradley Sturges: So maybe you don't want versus both and not quite get the scale that you are looking for how do you. How do you think about that in terms of our strategic footprint.
Unknown Executive: Yeah, pretty similar to what we've been saying all along, which is that our partner is building a very large platform there, and the pipeline in Vancouver from Minto Private is robust. So if we don't execute on one or two right now, we can do something with them later, and that's okay. I mean, that's one of the advantages we have with such a well-capitalized partner that is an active developer.
Speaker Change: Yes, pretty similar to what we've been saying all along which was our partner.
Unknown Executive: Is building.
Unknown Executive: A very large platform there.
Unknown Executive: And the pipeline in Vancouver from Minto private is robust.
Unknown Executive: If we don't execute on one or two right now.
Unknown Executive: We can do something with them later.
Unknown Executive: And that's okay.
Unknown Executive: So that's one of the advantages we have with with such a well capitalized partner that has an active developer.
Bradley Sturges: Yep, that makes sense. I'll turn it back. Thanks.
Speaker Change: Okay makes sense I'll turn it back thanks.
Jonathan Li: Thank you. And there are no further questions at this time. I'd like to turn it back to Mr. Jonathan Li for closing remarks.
Bradley Sturges: Thank you and there are no further questions at this time I would like to turn it back to Mr. Jonathan Lee for closing remarks.
Jonathan Li: Thank you and thank you everyone for your time. We look forward to speaking with you again in the summer. Take care.
Jonathan Li: Thank you and thank you everyone for your time, we look forward to speaking with you again in the summer take care.
Ludi: Thank you, presenters, and ladies and gentlemen. This concludes today's conference call. Thank you all for participating. You may now disconnect.
Speaker Change: Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you all for participating you may now disconnect.
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