Q1 2024 Dream Industrial Real Estate Investment Trust Earnings Call

Welcome to the Dream industrial rate first quarter 'twenty 'twenty four results conference call on Wednesday May eight 2024.

Operator: Welcome to the Dream Industrial REIT first quarter 2024 results conference call on Wednesday, May 8, 2024. Please be advised that all participants are currently in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then 0.

Operator: Please be advised that all participants are currently in listen only mode and the conference is being recorded after.

Operator: After the presentation, there will be an opportunity to ask questions.

Operator: So join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing Star then zero.

Operator: During this call management of Dream Industrial we may make statements containing forward looking information within the meaning of applicable securities legislation.

Operator: During this call, management of Dream Industrial REIT may make statements containing forward-looking information within the meaning of applicable securities legislation. Such 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&A. These filings are also available on its website at www.dreamindustrialreit.ca. Your host for today will be Mr. Alexander Sannikov, CEO of Dream Industrial REIT. Mr. Sannikov, please proceed.

Operator: 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 industrial dream industrially control that could cause actual results to differ materially from those that are disclosed in or implied by such forward looking information.

Operator: <unk>.

Operator: Additional information about these assumptions and the risks and uncertainties is contained in dream industrial REIT filings.

Operator: Securities regulators, including its latest annual information form and M. D N a.

Operator: These filings are also available on Dream Industrials reached web site at Www Dream Industrial Green Dot C J.

Alexander Sannikov: Your host for today will be Mr. Alexander San Nicols CEO of Dream Industrial REIT.

Alexander Sannikov: It's just that I called please proceed.

Alexander Sannikov: Thank you.

Alexander Sannikov: Thank you. Good morning, everyone.

Alexander Sannikov: Everyone. Thank you for joining us today for Dream industrial reached first quarter 'twenty 'twenty four conference calls.

Alexander Sannikov: Thank you for joining us today for Dream Industrial REIT's first quarter 2024 conference call. Speaking with me today is Lenis Quan, our Chief Financial Officer. We started 2024 with strong operating and financial results as we focused on executing on our key growth drivers. We reported 7.1% comparative property NOI growth during the quarter, which drove FFO per unit to $0.24 for Q1, in line with our guidance provided on the last call. We saw a 20 basis points lift in committed occupancy over the last quarter driven by healthy leasing momentum. Our balance sheet remains strong with conservative leverage and ample liquidity.

Alexander Sannikov: With me today is Lantus Kwon, our Chief Financial Officer.

Alexander Sannikov: We started 2024 with strong operating and financial results as we focused on executing on our key growth drivers.

Alexander Sannikov: We reported seven 1% comparative properties NOI growth during the quarter, which drove a full power units 24 cents for Q1 in line with our guidance provided on the last call. We saw a 20 basis points lift in committed occupancy over the last quarter driven by healthy leasing momentum.

Alexander Sannikov: Balance sheet remains strong with conservative leverage and ample liquidity.

Alexander Sannikov: The industrial leasing market is dynamic but healthy.

Alexander Sannikov: The industrial leasing market is dynamic but healthy. On the one hand, availability has risen across our core markets when compared to the historic lows prevalent in the last couple of years. This is due to delivery of anticipated new supply to the market and a rise in sublease activity by tenants, largely in the 3PL industry. On the other hand, construction starts have fallen significantly over the past year. Speculative space under construction currently stands at less than 1% of inventory in the GTA and GMA markets. We are also seeing healthy levels of leasing activity and user acquisition demand. As a result, we continue to expect downsized supply and demand dynamics in our markets.

Alexander Sannikov: On one hand availability has risen across our core markets when compared to the historic lows prevalent in the last couple of years.

Alexander Sannikov: This was due to delivery of anticipated new supply to the market and a rise in sublease activity by tenants largely in this repeal industry.

Alexander Sannikov: On the other hand construction starts have fallen significantly over the past year.

Alexander Sannikov: Speculative space under construction currently stands at less than 1% of inventory in the G. T. A M GMA markets.

Alexander Sannikov: We're also seeing healthy levels of leasing activity and user acquisition demand as.

Alexander Sannikov: As a result, we continue to expect balanced supply and demand dynamics in our markets.

Alexander Sannikov: We remain focused on driving NOI growth through achieving strong rents on leases that are rolling over and driving new leasing in our development projects. We expect that this will translate into continued FFO per unit growth in 2024 and beyond. Our outlook for the year remains intact.

Alexander Sannikov: We remain focused on driving NOI growth through achieving strong rents on leases that are rolling over and driving new leasing in our development projects.

Alexander Sannikov: We expect that this will translate into continued per unit growth in 'twenty 'twenty four and beyond.

Alexander Sannikov: Our outlook for the year remains intact.

Alexander Sannikov: We continue to expect that organic growth in 2024 will be primarily driven by growing in-place rents as opposed to occupancy levels. Since the beginning of 2024, we have signed over 2 million square feet of new leases and renewals at an average spread of 43%. In Canada, we signed 1.6 million square feet of leases at an average spread of 52%. And in Europe, we signed half a million square feet of leases at an average spread of 11%.

Alexander Sannikov: Do you expect that organic growth in 2024 will be primarily driven by growing in place rents as opposed to occupancy levels.

Alexander Sannikov: Since the beginning of 2024, we have signed over 2 million square feet of new leases and renewals at an average spread of 43%.

Alexander Sannikov: In Canada, we signed one 6 million square feet of leases at an average spread of 52% and in Europe, we signed half a million square feet of leases at an average spread of 11% rent.

Alexander Sannikov: Rental Steps Remain Strong. Our recent development leasing activity has also been healthy, with approximately half a million square feet of new leases transacted or in the final stages of negotiations across our pipeline in Ontario and Alberta. Furthermore, activity levels remain in good shape.

Alexander Sannikov: Rental steps remain strong.

Alexander Sannikov: Development leasing activity has also been healthy with approximately half a million square feet of new leases transacted or in final stages of negotiations across our pipeline in Ontario and Alberta.

Alexander Sannikov: Furthermore activity levels remain in good shape, we have been responding to multiple requirements for our development projects, both on balance sheet and within our private ventures.

Alexander Sannikov: We have been responding to multiple requirements for our development projects, both on the balance sheet and within our private venture. Currently, we are engaging with prospective occupiers representing requirements of approximately one million square feet. Our 200,000 square foot net zero redevelopment at Corking Park in Mississauga is a good example of that. The project has achieved substantial completion, and 60% of the building was leased in Q1 for a 10-year term with a starting rent of $21 per square foot and annual steps of approximately 4%.

Alexander Sannikov: Currently we are engaging with prospective occupiers representing requirements of approximately 1 million square feet.

Alexander Sannikov: Our 200000 square foot net zero redevelopment at park in Mississauga is a good example of this.

Alexander Sannikov: The project has achieved substantial completion and 60% of the building was leased in Q1 for a 10 year term with starting rent of $21 per square foot in annual steps of approximately 4%.

Alexander Sannikov: We are in the process of finalizing a lease on the balance of the space at similar rates and terms. We expect this asset to contribute to over four and a half million dollars to our annual NOI on a run rate basis with rent commencement in Q4 2024.

Alexander Sannikov: We are in the process of finalizing a lease on the balance of the space at similar rates. We expect this asset to contribute over $4.5 million to our annual NOI on a run rate basis with rent commencement in Q4 2024. Our capital allocation priorities remain intact.

Alexander Sannikov: Our capital allocation priorities remain intact complete.

Alexander Sannikov: Completion of our existing development project is the main use of our capital for the next 12 months. Additionally, while our private capital partnerships do not require significant capital, these co-investment opportunities continue to drive incremental FFO per unit. Today, in 2024, we have completed over $180 million of acquisitions in the Dream Summit Venture, which are accretive to our FFO per unit and our current total return pipeline profile. A property management and leasing platform generated over two and a half million dollars in net margin for the quarter.

Alexander Sannikov: Completion of our existing development project is the main use of our capital for the next 12 months.

Alexander Sannikov: While our private capital partnerships do not require significant capital. These co investment opportunities continue to drive incremental off a full per unit.

Alexander Sannikov: To date in 2020 four we have completed over $180 million of acquisitions and the dreams haven't adventure, which are accretive to our ethical per unit and a current total return by play profile our property management.

Alexander Sannikov: And leasing platform generated over two and a half million dollars in net margin for the quarter.

Alexander Sannikov: We're also looking for opportunities to scale up our solar program, both in Canada and in Europe. We're advancing feasibility studies on multiple projects resulting in yields on invested capital of over 10% on average. Our business is well-funded to pursue these initiatives on a leverage-neutral basis, store existing liquidity, and retain cash flow. In addition to these sources of liquidity, we are pursuing several disposition opportunities of non-strategic assets. We're currently in discussions to sell over $100 million of assets at compelling prices. Many of the prospective buyers are private groups, so the transactions may require longer execution timeframes. We expect to provide further details on these initiatives over the balance of 2024. I will now turn it over to Lenis to discuss our financial highlights.

Alexander Sannikov: We're also looking for opportunities to scale up our solar program, both in Canada and in Europe, We're in advance.

Lenis: Advancing feasibility studies on multiple projects, resulting in yields on invested capital of over 10% on average.

Lenis: Our business is well funded to pursue it isn't it these initiatives on a leverage neutral basis through existing liquidity and retained cash flow.

Lenis: In addition to the sources of liquidity, we are pursuing several disposition opportunities of non strategic assets.

Alexander Sannikov: Currently in discussions to sell over $100 million of assets at compelling pricing metrics.

Lenis: Many of the prospective buyers of private groups. So the transactions may require a longer execution time frames, we expect to provide further details on these initiatives over the balance of 'twenty 'twenty four I will now turn it over to let us to discuss our financial highlights. Thank.

Lenis W. Quan: Thank you, Alex. Our financial results for the first quarter were strong. Diluted FFO per unit was $0.24 for the quarter, driven by strong comparative properties NOI growth of 7.1% for the quarter and fee income generated from our property management platform. Our Q1 2023 FFO included 0.4 cents of lease termination income relating to an anticipated vacancy in Europe. Excluding this non-recurring income, our year-over-year FFO was relatively consistent with the prior year and in line with our guidance.

Lenis: Thank you Alex our financial results for the first quarter were strong diluted per unit was 24 cents for the quarter driven by strong comparative properties NOI growth of seven 1% quarter in fee income generated from our property management platform.

Lenis W. Quan: Our Q1 'twenty two 'twenty three S. F O included airplanes or sense of lease termination income relating to an anticipated vacancy in Europe. Excluding this nonrecurring income or year over year. So it was relatively consistent with the prior year and in line with our guidance.

Lenis W. Quan: Our net asset value per unit at quarter end was $16.72 slight increase compared to the prior quarter due to higher asset values in Canada and stable values in Europe.

Lenis W. Quan: Our net asset value per unit at quarter end was $16.72, a slight increase compared to the prior quarter due to higher asset values in Canada and stable values in Europe. We continue to actively pursue financing initiatives to optimize our cost of debt and maintain a strong and flexible balance sheet with ample liquidity. In January, we closed on 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.

Lenis W. Quan: We continue to actively pursue financing initiatives to optimize our cost of debt and maintain a strong and flexible balance sheet with ample liquidity.

Lenis W. Quan: In January we closed on a $200 million unsecured debt issuance via a reopening of our series F unsecured bond and a lower implied interest rate than the original issuance in early 2023.

Lenis W. Quan: The proceeds were partly used to repay $44 million of mortgage maturities and repay the outstanding $50 million balance on our credit facility, which for an average rate of approximately $6, 9% with the remainder earmarked towards funding our development pipeline and contributions to our private capital partnerships.

Lenis W. Quan: The proceeds were partly used to repay $44 million in mortgage maturities and repay the outstanding $50 million balance on our credit facility, which bore an average rate of approximately 6.9%, with the remainder earmarked towards funding our development pipeline and contributions to our private capital partnership. In May, we repaid an additional two European mortgages totaling $44 million.

Lenis W. Quan: In May we repaid an additional two European mortgages totaling $44 million IRA.

Lenis W. Quan: Our remaining unaddressed debt maturities of approximately $220 million for 2024 include our $200 million Series B unsecured debenture maturing in June at a floating interest rate which is currently 4.5%, and a European mortgage maturing in August. We are in advanced discussions to refinance the Series B bond with a new unsecured term loan denominated in Euros with a relationship lender. We expect to achieve a rate that is 50 basis points lower than the maturing bond based on the current market environment and more than 110 basis points lower than Canadian dollar denominated debt. We ended Q1 with leverage in our targeted mid-30% range. With total available liquidity of over $600 million, we retained sufficient capital to execute on our strategic initiatives.

Lenis W. Quan: Our remaining unaddressed debt maturities of approximately $220 million for 'twenty 'twenty four and include our 200 million series B unsecured debenture maturing in June a floating interest rate, which is currently four 5%.

Lenis W. Quan: In the European mortgage maturing in August.

Lenis W. Quan: We are in advanced discussions to refinance our series B bonds with a new unsecured term loans denominated in euros with a relationship lender.

Lenis W. Quan: We expect to achieve a rate that is 50 basis points lower than the maturing bond based on the current market environment and more than 110 basis points lower than Canadian dollar denominated debt.

Lenis W. Quan: We ended Q1 with leverage and our targeted mid 30% range with total available available liquidity of over $600 million, we retain sufficient capital to execute on our strategic initiatives.

Lenis W. Quan: Given our private joint ventures are reported on an equity-accounted basis, our net debt to EBITDA could fluctuate quarter over quarter. We expect net debt to EBITDA to average the low eights on a run rate basis for 2024, which is lower than 2023 and the run rate prior to the summit transaction. For 2024, we expect our in-place rents to grow in the high single-digit percentage range by the end of the year. Our outlook for comparable properties NOI growth remains intact in the mid-single-digit range on a constant currency basis, primarily driven by contractual rent steps and rent spreads on leasing. We are expecting that in-place occupancy will remain largely flat on average for the year.

Lenis W. Quan: Given our private joint ventures are reported on an equity accounted basis, our net debt to EBITDA can fluctuate quarter over quarter.

Lenis W. Quan: We expect net debt to EBITDA to average low eights on a run rate basis for 'twenty, 'twenty, four which is lower than 2023 and the run rate prior to the summit transaction.

Lenis W. Quan: For 2024, we expect our in place rents to grow in the high single digit percentage range by the end of the year our outlook for comparative properties NOI growth remains intact in the mid single digit range on a constant currency basis, primarily driven by contractual rent steps and rent spreads on leasing we are expect.

Lenis W. Quan: Thing that in place occupancy will remain largely flat on average for the year, we are expecting some space to come back to us in Q2 and Q3, so in place occupancy levels may fluctuate quarter over quarter.

Lenis W. Quan: We are expecting some space to come back to us in Q2 and Q3, so in-place occupancy levels may fluctuate quarter over quarter. We are reiterating our prior guidance of mid-single-digit FFO per unit growth in 2024, which is predicated on current foreign exchange rates, leverage levels, and interest rate expectations. Looking further out to 2025, we expect that the pace of organic growth within our portfolio will continue to exceed the pressure from higher interest rates, as 93% of our debt maturities for next year occur in November and December 2025.

Lenis W. Quan: We are reiterating our prior guidance of mid single digit F. A hope of unit growth in 2024, which is predicated on current foreign exchange rates leverage levels and interest rate expectations.

Lenis W. Quan: Looking further out to 2025, we expect that the pace of organic growth within our portfolio will continue to exceed the pressure from higher interest rates as 93% of our debt maturities for next year, Oh, Curt in November and December 2025.

Lenis W. Quan: With some development assets achieving stabilization by the end of this year, as well as upcoming lease maturities in late 2024 and early 2025, we expect both NOI and FFO per unit growth to accelerate into 2025. I will turn it back to Alex to wrap up.

Lenis W. Quan: With some development assets achieving stabilization by the end of this year as well as upcoming lease maturities in late 'twenty four in early 'twenty five we expect both NOI and <unk> per unit growth to accelerate into 2025.

Lenis W. Quan: I will turn it back to Alex to wrap up.

Alexander Sannikov: Thank you, Lenis. It has been a solid start to 2024, and we remain focused on delivering strong FFO and cash flow growth for all our stakeholders. We will now open it up to questions.

Alex: Thank you Louis It has been a solid start to 2024, and we remain focused on delivering strong <unk> and.

Alex: Cash flow growth for all of our stakeholders, we will now open it up for questions.

Alex: Thank you well now begin the question and answer session.

Operator: Thank you. We'll now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad; you'll hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, press star then 2. Our first question is from Kyle Stanley with Desjardins. Please go ahead.

Kyle Stanley: To join the question queue. You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing and key to withdraw your question Press Star then two.

Kyle Stanley: Last quarter, you mentioned being in negotiations or under contract to acquire upwards of 2.5 million square feet within the Dream Summit JV. It looks like since then, you've done about 800,000 square feet, so are you still progressing on the balance of that space, and could you disclose, maybe, the total cost of the 800,000 square feet acquired if the REIT participated at the 10% level?

Kyle Stanley: Our first question is from Kyle <unk> with DHL Dan. Please go ahead.

Speaker Change: Thanks, Good morning, everyone.

Kyle Stanley: Last quarter, you mentioned being in negotiations are under contract to acquire.

Kyle Stanley: Upwards of two and a half million square feet within the dream somebody JV.

Kyle Stanley: It looks like since then you've done about 800000 square feet. So are you still progressing on the balance of that space and you know could you disclose maybe your total cost to be 800000 square feet acquired three participated out the kind of 10% economics.

Speaker Change: Thank you Paul are you you're absolutely right the pipeline a last Oh last quarter was a was larger one of the assets that was in the pipeline didn't materialize and we are proceeding with the rest of it.

Alexander Sannikov: Thank you, Kyle. You're absolutely right.

Alexander Sannikov: The pipeline last quarter was larger. One of the assets that were in the pipeline didn't materialize, and we are proceeding with the rest of the assets, as we commented. Acquisitions to date amounted to $180 million. And we continue to pursue opportunities in our target markets, including Montreal, we're looking at opportunities in Vancouver, and we continue, obviously, to look for opportunities in the GTA.

Alexander Sannikov: The assets as we commented our acquisitions to date amounted to $108 million.

Alexander Sannikov: And we continue to pursue opportunities in our target markets, including including Montreal are we're looking at opportunities in Vancouver, and continue to obviously look for opportunities in the GTA.

Speaker Change: Okay, Thanks, and just to confirm the REIT economics as part of the JV still kind of 10%.

Alexander Sannikov: Okay, thanks. And just to confirm, the REIT economics as part of the JV are still kind of 10%?

Alexander Sannikov: Oh, that is correct. Yes, it's our current investment at 10%.

Speaker Change: That is correct yes.

Alexander Sannikov: Our co investment is at 10%.

Alexander Sannikov: Okay, perfect. Lenis, you gave some disclosure on maybe expecting to get back a bit of space in Q2, Q3. Would the expectation then still be for a bit of a stronger kind of Q4 leasing period to then keep occupancy flat? Is that how I think we should think about things?

Speaker Change: Okay perfect.

Alexander Sannikov: So let US you gave some disclosure on maybe you're expecting to get back a bit of space. In Q2, Q3 would the expectation then there'll be a bit of a stronger kind of Q4 leasing periods and then keep our occupancy flat is that how I think we should think about things.

Lenis: I think that that is there are we would probably expect that that that trajectory will be will be accurate.

Lenis W. Quan: I think that is fair. We probably expect that that trajectory will be accurate.

Speaker Change: Okay Perfect and then just the last one I think you highlighted you know maybe some of the.

Kyle Stanley: Okay, perfect. And then just the last one, I think you highlighted, you know, maybe some of the softer fundamentals in the space. You know, broker stats have been suggesting the same thing, but just given your size and then portfolio scale across the country, speaking Canada specific here, you know, how are you interpreting what's happening? Are you seeing anything different in your portfolio, just given your geographic mix or, you know, asset type mix and size of space?

Kyle Stanley: Softer fundamentals in the space.

Kyle Stanley: Broker stocks have been suggesting the same but just given your size and then portfolio scale across the country.

Kyle Stanley: Candidate specific here.

Kyle Stanley: You know how how are you interpreting what's happening are you seeing anything different in your portfolio just given your geographic mix or you know asset type mix size of space.

Alexander Sannikov: Yeah, thank you. Thank you for this follow-up question. As we commented, our development leasing activity has been pretty healthy. We are finalizing many transactions as we speak, and we continue to see requirements and user demand both in the GTA and Alberta, which is where we're currently developing. We do see that user demand is bifurcating. There is pretty strong activity for what we would categorize as mid-bay space, so that's less than 200,000 sf. ft. footprint

Speaker Change: Yeah. Thank you. Thank you for this follow up question.

Alexander Sannikov: As we call them into our development leasing activity has been pretty healthy we are finalizing our main transactions as we speak and we continue to see a requirements and user demand both in G. T E N, Alberta, which is where we're developing currently we do see that.

Alexander Sannikov: User demand is bifurcated there was pretty strong activity for what we would categorize as mcveigh's space. So that's less than 200000 square foot footprint, we do see some requirements in the market for a million square feet range as well, which is healthy there's an awful lot of supply.

Alexander Sannikov: We do see some requirements in the market for millions per feet, which is healthy. There's not a lot of supply of that product, and as a result, the requirements are also limited. But in the segment of the market that is core to our business, which is the mid-bay urban product, we continue to see pretty strong demand and pretty strong rates. Our Courtney Park project is a good example of that.

Alexander Sannikov: That product.

Alexander Sannikov: And as a result of requirements are also limited.

Alexander Sannikov: But in the second.

Alexander Sannikov: Segment of the market that is a core to our business, which is mid day urban product. We continue to see a pretty strong demand and a pretty strong rates are Accordingly Park project is a good example of that we do have some exposure to small b assets in our key markets and <unk>.

Alexander Sannikov: We do have some exposure to small-bay assets in key markets, in the GTA, in Calgary, and in Montreal. And as you know, there's been virtually no supply of this product over the last decade, and so we continue to see strong fundamentals, and supply-demand dynamics are still very favorable. The availability that is in the market is generally larger, larger spaces, in some cases older spaces, and doesn't always necessarily compete with our product.

Alexander Sannikov: T a in Calgary and in Montreal, and as you know.

Alexander Sannikov: Theres been virtually no supply of this product over the last decade, and so we continue to see strong fundamentals and supply demand dynamics are.

Alexander Sannikov: Still very favorable.

Alexander Sannikov: The availability that is a in the market is generally larger larger spaces and in some cases older spaces.

Alexander Sannikov: And doesn't always necessarily compete with our with our product.

Speaker Change: Okay. Thank you for the color I'll turn it back.

Kyle Stanley: Okay, thank you for that caller. I'll turn it back.

Kyle Stanley: Yeah.

Kyle Stanley: The next question is from Sun Tamiami with T. D. Cohen. Please go ahead.

Operator: The next question is from Sam Damiani with TD Cohen. Please go ahead.

Operator: Yeah.

Sam Damiani: Thanks and good morning, everyone. First question, I guess, just on the development pipeline, just given... everything that's going on in the market, how are you feeling about starting construction on the next phase of your Brampton project?

Sam Damiani: Thanks, and good morning, everyone.

Sam Damiani: First question I guess just on on the development pipeline just given.

Sam Damiani: What's going on in the market how are you feeling about starting construction on the next phase of your your Brampton, though.

Sam Damiani: Brampton project.

Sam Damiani: Yeah.

Speaker Change: Thank you Sam Yeah, we are advancing that project are we started marketing.

Alexander Sannikov: Thank you, Sam. Yeah, we are advancing that project. We started marketing the asset on a pre-leasing basis. We are finishing horizontal development, if you will, finalizing the site plan, and design of the building. So we are not necessarily in the position to uh... launch construction just yet, but we are we continue to advance the project and start marketing.

Alexander Sannikov: The assets.

Alexander Sannikov: Pre leasing basis.

Alexander Sannikov: We are finishing a horizontal.

Alexander Sannikov: Horizontal development, if you will finalizing site plan design of the building. So we are not necessarily in a position to.

Alexander Sannikov: Lunch construction, just yet, but where we continue to advance the project and started marketing it.

Speaker Change: Okay, that's great and just on the occupancy.

Sam Damiani: Okay, that's great. And just on the occupancy outlook you provided, Lenis, I think you basically said occupancy would be roughly flat for the balance of the year. What kind of fluctuations do you see possible? And then for your 2025 outlook, "accelerated growth," does that mean, you know, one or two percent faster, or is that three to four percent faster? If you could be any more specific would be helpful.

Sam Damiani: You provided Atlantis basic.

Sam Damiani: And basically said occupancy would be roughly flat for the balance of the year.

Sam Damiani:

Sam Damiani: What kind of fluctuations do you see possible and then for your 2025 outlook.

Sam Damiani: Accelerated growth does that mean, you know one or two per cent faster or is that three to four per cent faster. If he could be any more specific would be helpful. For you.

Lenis: Sam Let me maybe start with the was the balance of the second part of the question. So when we say accelerated a more meaningful than one to two per cent and we were not in a position necessarily to provide guidance at the moment.

Lenis W. Quan: Sam, let me maybe start with the balance, with the second part of the question. So, when we say Accelerate, it's more meaningful than 1-2%, and we're not in a position necessarily to provide guidance at the moment, but we are considering... providing a multi-year outlook at some point later in 2024 that will capture not only 2025 but also 2026, etc. So when we say accelerate, there's more material than 1%. As far as the occupancy fluctuations... As we commented, we expect the average to remain largely flat and that the growth this year is going to be driven by rents as opposed to occupancy levels. We're not necessarily guiding necessarily kind of the quarter of a quarter occupancy, but they can be, the swings can be, 50 to 100 basis points from one quarter to another.

Lenis W. Quan: But we are considering them.

Lenis W. Quan: Abiding more multi year outlook at some point later in the in 2024 that will capture not only 2025, but also 2026 et cetera.

Lenis W. Quan: Yes.

Lenis W. Quan: So when we say accelerated as more of a until it's at 1%.

Lenis W. Quan: As far as the occupancy fluctuations.

Lenis W. Quan: As we commented we expect the average to remain largely flat and that the the growth. This year is is going to be driven by by rents are as opposed to occupancy levels and.

Lenis W. Quan: We're not guiding necessarily kind of a quarter over quarter occupancy, but they can be the swings can be.

Lenis W. Quan: 50 to 100 basis points from one quarter to another.

Lenis W. Quan: Yeah.

Sam Damiani: That's great. Thank you very much I'll turn it back.

Sam Damiani: That's great. Thank you very much.

Sam Damiani: The next question is from Brad Johnson with Raymond James. Please go ahead.

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

Bradley Sturges: Hey, good morning.

Bradley Sturges: Due to follow on questions around the development pipeline.

Bradley Sturges: To follow on questions around the development pipeline, just based on the projects you're looking to complete construction over the course of this year, totaling 1.5 million square feet, how do you think about the buildup of NOI from those projects, and when would you expect full contribution from an NOI perspective?

Bradley Sturges: Pipeline just based on the I guess the projects you're looking to complete construction over the course of this year.

Bradley Sturges: Totaling one 5 million square feet, how do you think about the buildup of the NOI from those projects and when would you expect a full contribution from <unk> and another one for smokers.

Alexander Sannikov: Thank you, Brad. So the two projects that are coming to completion and we anticipate will be revenue-producing this year are Courtney Park and our smaller development project in Balzac. So we expect that both will be revenue-producing in the fourth quarter. Those are the two most meaningful projects on the Allen Sheet. We have other projects within our private partnerships that will also be revenue-producing later this year, but because they are in a private partnership, their contribution to overall FFO and NOI is going to be lower.

Speaker Change: Thank you Brad.

Bradley Sturges: So the two projects that are completing and will well, we anticipate will be revenue producing our this year. Our accordingly park and are smaller development projects in Balzac. So we expect that both will be largely revenue producing in the fourth quarter.

Alexander Sannikov: And.

Alexander Sannikov: Within the those are the two most meaningful projects on balance sheet, we have other projects within our private partnerships that are will also.

Alexander Sannikov: The revenue producing later this year, but because there are no private partnership their contribution to overall <unk> and NOI, it's gonna be a lower and then as you are as you can see from our M. D. N. A we do disclose our anticipated completion for for other projects. So for example, our Whitby project.

Alexander Sannikov: And then, as you can see from our MD&A, we do disclose anticipated completion for other projects. For example, our Whidbey project is going to be completed in the first half of 2025, so that's when it's going to be revenue-producing. The larger development in Calgary is slated to get completed at the end of 2024, so it's going to be producing revenue into 2025.

Bradley Sturges: Okay, so that schedule closely resembles when the NOI would kick in, or is there a little bit of lag overall? I would say the lag, so what we are disclosing is expected completion, so from expected completion, it takes time to build out the office for the respective user. It takes some time to set up racking within the space, so there's usually at least a six months delay from completion to commencement or brand new.

Alexander Sannikov: Is gonna be completing in the first half of 2025. So that's the way it's gonna be revenue producing the larger are developing in Calgary is slated to get completed at the end of our 24, so it's gonna be producing revenue into 2020 five.

Bradley Sturges: Okay. So that schedules is a.

Bradley Sturges: Closely resembles when the when the NOI would would kick in or is there a little bit like I guess, there's still some leasing to do on some of the sport.

Bradley Sturges: Would you expect a little bit of a lag overall.

Bradley Sturges: Oh, absolutely we would expect a lag so what we are disclosing is expected completion.

Bradley Sturges: So from expected completion, a it takes time to build out the office are for for their respective user Ah. It takes some time to set up racking within the space. So there's usually a at least a six months delay from completion to to commencement.

Bradley Sturges: Brent.

Speaker Change: Okay and.

Bradley Sturges: Okay, and I think you said in your opening remarks that related to the development pipeline, you're in various stages of negotiations for, I think it was a million square feet. From your experience, if that's the right number, based on your experience, how much could that translate into actual signed leases? Like, what's the conversion rate typically?

Bradley Sturges: Hum It I think you said in your opening remarks that are related to the development pipeline to get your.

Bradley Sturges: Various stages of negotiation, but I think it was a million square feet.

Bradley Sturges: From your experience or if that's the right number from your experience how much could that translate into actual signed leases like what's the conversion rate typically.

Bradley Sturges: Yeah.

Alexander Sannikov: It is a great question. It's not as scientific as that, some of these requirements. We've been negotiating for some time. Some are relatively new requirements. So this comment was rather aiming to address the overall levels of activity and demand we see within our development program. We will be reporting on actual leasing as we finalize it in more detail. OK.

Speaker Change: It is a great question, it's not as scientific as is that some of these are requirements.

Alexander Sannikov: We've been negotiating for some time some are relatively new requirements. So the these this comment was oh, rather aiming to address.

Alexander Sannikov: The overall levels of activity and demand we see in our within our development program, we will be reporting on actual leasing as we as we finalize it in.

Alexander Sannikov: In more detail.

Speaker Change: Okay. Thanks.

Bradley Sturges: Okay, thanks a lot; I'll turn it back.

Speaker Change: Paul I'll turn it back.

Bradley Sturges: Okay.

Speaker Change: The next question is from.

Operator: The next question is from Himanshu Gupta with Scotiabank. Please go ahead.

Bradley Sturges: <unk> Gupta with Scotiabank. Please go ahead.

Himanshu Gupta: Thank you and good morning.

Himanshu Gupta: Thank you and good morning. Quite a big discussion on the occupancy side, so you know, just turning attention to the rental spreads, very strong on the 2 million square feet done so far. Any change in outlook for the remaining 2 million square feet? I mean, do you see any slowdown in those rental spreads for the rest of the year?

Himanshu Gupta: Oh quite a good discussion.

Himanshu Gupta: Occupancy side. So you know just turning your attention on the agenda spreads Oh yeah.

Himanshu Gupta: So very strong on the 2 million square feet done so far.

Himanshu Gupta: Any change in the outlook for the remaining two minutes what he can come and do you see any school down in Louisiana Snags are blessed here.

Speaker Change: Thank you you mentioned no we do not and in fact are you you will note that our Q1.

Alexander Sannikov: No, we do not. And in fact, you will note that our Q1 disclosure as to the market rents that we expect for our asset is slightly higher than what it was in the prior quarter. So we continue to continue to see opportunities to mark rents to market that is consistent with, with our overall levels for the portfolio. And in fact, we have captured a couple of opportunities.

Alexander Sannikov: The disclosure as to the market rents that are we expect for our assets is in line slightly higher.

Alexander Sannikov: And then what it was in the prior quarter. So we continue to change you see opportunities to mark rents to market and which is consistent with that.

Alexander Sannikov: With our overall, our overall AR levels for the portfolio and in fact, we are we have captured a couple of opportunities. Some of them are sizable where we had a contractual escalators are previously or contractual renewal options previously was.

Alexander Sannikov: Some of them are sizable, where we had contractual escalators previously or contractual renewal options previously with certain users. Some of these options were either missed or not exercised, and we would be able to capture more upside on some of these spaces than we originally anticipated.

Alexander Sannikov: Certain users some of these options were either missed or not exercised and we thought we would be able to capture more upside on some of these.

Alexander Sannikov: Spaces than we originally anticipated.

Speaker Change: So okay.

Himanshu Gupta: And then Alex, I think in your prepared remarks, you did mention sub-leasing activity and I think you called out three third-party logistics as well. Is that putting pressure on the market rents here? Do you see any slippage in market rents at all?

Speaker Change: And then Alex I think in your prepared remarks, you did mention about sub leasing activity and I think you called out cheap cobalt is logistics as well.

Himanshu Gupta: Sure.

Himanshu Gupta: Is that putting pressure on the market rents here did you see any slippage in market rents at all.

Himanshu Gupta: Yeah.

Alexander Sannikov: It is a great question, but it depends on the definition of market rents. So in the GTA, roughly a third of the available space is coming from subleasing activity. Direct vacancy remains in the 2% range, and what we see from subleasing activity is that it's not always competing with direct vacancy because, in many cases, it's being over-preferred for a term. In many cases, prospective occupiers do not see the opportunity to reconfigure the spaces they need to or do not have the term security to pursue the investments that they need to pursue in the space.

Alex: So it is a great question it depends on the definition of market rents are so so in the G. T. A roughly a third of the available space is on the is coming from sub leasing activity.

Alexander Sannikov: Direct vacancy remains a in the 2% range and what we see from sub leasing activity is that.

Alexander Sannikov: It's.

Alexander Sannikov: It's not always is competing with direct vacancy.

Alexander Sannikov: Because in many cases as being over it for short term are in many cases, a prospective occupiers do not see the opportunity to reconfigure the spaces, they need to or do not have the term security to pursue investments that they need to pursue in the space.

Alexander Sannikov: And so, yes, it does compete with certain direct vacancies, but it's not a one-to-one ratio. When it comes to market rent levels, so as we commented before, the market rent levels that are being reported by various market participants are average asking rents, and the asking rents do change, and they do not always represent the true market rent levels. When we look at our portfolio, and as we commented in response to the previous question, the market rents that we see for our assets are intact, and we actually increased them slightly from one quarter to another.

Alexander Sannikov: And so yes, it does compete with certain direct vacancies, but not not a it's not a one to one ratio.

Alexander Sannikov: When it comes to the market rent levels. So as we commented before are the market rent levels that are being reported by various market participants are average asking rents in the asking rents due change and do do not always represents the true market rent levels.

Alexander Sannikov: When we look at our portfolio and as we commented to in response to the previous question the market rents that we see for our assets are intact and we are we actually increased slightly from quarter two two for one quarter to another.

Speaker Change: Got it okay. Thank you.

Himanshu Gupta: Got it. Okay, thank you. And then, just on the 3PLs, do you have a sense of how much 3PLs account for leasing in, you know, the Toronto market, the GTA, or the Montreal market?

Alexander Sannikov: Just wanted.

Himanshu Gupta: P P L Pic basketball Jesse.

Himanshu Gupta: Do you have a sense of how much T. P. M account for leasing in the Toronto work could you D. All of the Montreal market.

Himanshu Gupta: Yeah.

Speaker Change: It is a great question, we do not have the stat are kind of right in front of us, but we can get back to you. What we see from third party logistics providers are we actually see both sides of activity from from these groups.

Alexander Sannikov: It is a great question. We do not have the statistics right in front of us, but we can get back to you.

Alexander Sannikov: What we see from third-party logistics providers is that some of these groups are indeed putting space on Subway's market, but in many cases, they are also looking to take more space because many end users are looking to outsource their logistics needs to third-party logistics providers. We see both sides of the 3PL activity in the market, both subleasing and significant new requirements.

Alexander Sannikov: Some of these groups are indeed, putting space on the sublease market, but in many cases, they're also looking to take more space. Because many end users are looking to outsource their logistics needs to a third party logistics providers.

Alexander Sannikov: And so we see both sides of the three P. L activity in the market, both sub leasing and a significant new requirements.

Speaker Change: Okay. Okay. Thank you maybe just last question and you know tell me to Europe.

Himanshu Gupta: Okay, thank you. Maybe just one last question and, you know, turn into Europe.

Speaker Change: I first Kathy for you all but I think it's around five 9%.

Himanshu Gupta: I think it's around 5.9%. Up like 50 basis points year over year, not much on a quarter over quarter basis. So are we mostly done with the adjustments? So any color on the valuation side there? What's happening here?

Himanshu Gupta: Up like 15 basis points year over year not much on the corridor called a b C and so.

Himanshu Gupta: Are these mostly done to be adjustments, so any any color on both solutions idea, what's happening in New York.

Himanshu Gupta: So fundamentals are consistent with what we see in Canada and in Canada, what we what we've seen over the last.

Alexander Sannikov: Fundamentals are consistent with what we see in Canada. In Canada, what we've seen over the last, three years, three, four years, let's say, is a significant rise in market rents on the back of increasing demand and a very muted supply response. And so when we look at the market today, while it is not half a percent of availability in the GTA, the market is very balanced. And so many markets in continental Europe are similar.

Alexander Sannikov: Three years three four years, let's say is significant rise in market rents are on the back of increasing demand and very muted supply response, and so when we look at the market today, while it is not a half a percent of availability in the G. T. A the market is very balanced.

Alexander Sannikov: And so in many markets in Continental Europe are similar a supply response has been limited and these markets are increasingly supply constrained and so we continue to see upward pressure on rent, albeit not to the same degree as what we've seen in G. T E N G M a.

Alexander Sannikov: Supply response has been limited, and these markets are increasingly supply-constrained. And so we continue to see upward pressure on rent, albeit not to the same degree as what we've seen in GTA and GMA. So the outlook for fundamentals is healthy. When it comes to cap rates, we have seen more interest in urban industrial properties in Europe, which is what we own predominantly on the continent. We continue to be encouraged by the opportunities there and the valuation metrics that we're reporting are consistent with some of these transactions and opportunities that we're looking at or evaluating in Europe.

Alexander Sannikov: So sort of the outlook for fundamentals is healthy when it comes to cap rates, we have seen.

Alexander Sannikov: No more interest in urban industrial in Europe, which is.

Alexander Sannikov: Which is what we own are predominately on the continent and.

Alexander Sannikov: We continue to be.

Alexander Sannikov: Encouraged by the opportunities there and the valuation metrics that.

Alexander Sannikov: Hum.

Alexander Sannikov: We are reporting a consistent with some of these transactions and and opportunities that we're looking at or evaluating are in Europe.

Speaker Change: Okay. Yeah, that's right. Thank you, ladies and put them back.

Himanshu Gupta: I hope it's fair enough. Thank you, guys, and I'll turn it back.

Himanshu Gupta: The next question is from Mark Cornick with National Bank Financial. Please go ahead.

Operator: The next question is from Matt Kornack with National Bank Financials; please go ahead. Hey guys.

Matt Kornack: Hey guys, just a few quick accounting questions here. On bad debt excess in the quarter, it seemed elevated relative to kind of historical levels. Was there anything to that, and should we view that as kind of anomalous to this quarter?

Matt Kornack: Hey, guys.

Matt Kornack: Just a few quick accounting questions here on bad debt expense.

Matt Kornack: In the quarter it seems elevated relative to historical levels was there anything.

Matt Kornack: Do that and it should be that it's kind of anomalous this quarter.

Matt Kornack: Yeah.

Matt Kornack: Yeah.

Lenis W. Quan: Similar to the themes that Alex was talking about and what we're seeing about some of the third-party logistics occupiers, we do have ones that are doing well in our portfolio, and we have one in particular that's been a little bit struggling and took up a little bit more space, so that similar subleasing trend that we're seeing in some of the markets driven by 3PLs reflects that. We monitor receivables, so we're just being careful with this one. A 3PL provider that seems to be struggling a little bit more, so we've prudently bumped up some provisions this quarter related to that.

Speaker Change: Yeah, Yeah, Matt Thanks, and so sort of similar to the themes Alex was talking about it and what we're saying about that and some of the third party logistics occupiers and we do have ones that are doing well in our portfolio and we have one in particular, that's been a little bit struggling and took a little bit more more space.

Lenis W. Quan: So that that's similar sub leasing trend that we're seeing in some of the markets driven by three P. M.

Lenis W. Quan: Yes.

Lenis W. Quan: Like did that and you know we monitor our receivables so we're just being.

Lenis W. Quan: Careful with this one.

Lenis W. Quan: Three Cal provider that seems to be struggling a little bit more so we're prudently bumped up some provisions this quarter related to that.

Matt Kornack: Okay, but judging by your kind of overall same property and OI growth commentary... I would assume that you're not assuming that level of adjustment in the remaining three quarters of the year.

Lenis W. Quan: Okay, but judging by your kind of overall same property NOI growth.

Matt Kornack: The commentary.

Matt Kornack: I would assume that you're not not assuming that level of adjustment.

Matt Kornack: The remaining three quarters of the year is that fair.

Speaker Change: Yeah, No I think overall, that's fair I think as lean and mean as we mentioned the growth are driving the C. P. N O I has been largely coming from contractual rents and achieve market rental spreads not so much occupancy so and any gibson in occupancy from quarter to quarter.

Lenis W. Quan: I think overall that's fair. As we've mentioned, the growth driving the CP&OI is largely coming from contractual rents and achieved market rental spreads, not so much occupancy. Any dips in occupancy from quarter to quarter would be outpaced by the growth from the rest of the portfolio.

Lenis W. Quan: B L paced by the growth from the rest of the portfolio.

Matt Kornack: And then on fee income, that had kind of the opposite impact. This quarter was an all-time high and was up sequentially. Is that a good proxy for where the fee income should be? Obviously, if the portfolio changes, that metric will change, but I'm trying to get a sense as to the trajectory of that sort of $4.7 million in the quarter.

Lenis W. Quan: And then on the income that would put kind of an opposite impact this quarter was at an all time high and.

Matt Kornack: It was up sequentially is that a good kind of proxy for where the fee income should be obviously, that's the portfolio changes.

Matt Kornack: That metric will change, but I'm trying to get a sense as to the trajectory of <unk>.

Matt Kornack: That's sort of $4.7 million in the quarter.

Matt Kornack: Yeah.

Speaker Change: So Matt I think you're referring to that's happening are you referring to the property management.

Lenis W. Quan: So Matt, I think you're referring to the property. Are you referring to the property management income? Yeah.

Matt Kornack: Yeah, Yeah, I mean, I think the run rate it'll be fairly lumpy because a lot of it would be based on leasing fees and that are we also earn out as part of the property management contracts that we have with their private capital partnerships.

Matt Kornack: Yeah, I mean, I think the run rate will be fairly lumpy because a lot of it will be based on a leasing fee that we also earn as part of the property management contract that we have with our private capital partnerships. So this quarter, the leasing was actually a little bit on the lower side. We did have the Dream Summit contract for the full quarter. So if you're looking year over year, there would be...

Matt Kornack: So this quarter is leasing is actually a little bit on the on the lawyer I'm a lawyer assign them. We did have the dream summit.

Matt Kornack: Contract for that full quarters, so if you're looking year over year, there that would be it.

Lenis W. Quan: A bit of an increase just driven by ownership for the full quarter. Leasing fees will be lumpy from a quarter-to-quarter basis on that. And then the last one.

Matt Kornack: A bit of an increase just driven by.

Matt Kornack: My and the ownership for the full quarter at leasing teams will be lumpy from quarter to quarter basis on that.

Matt Kornack: Okay, and then the last one for me, just on the accounting side, interest income was higher, but you carried more cash, but you've essentially deployed that into paying down debt post-quarter, so should we expect kind of the offset being lower interest expense? Less interest income, I guess as a result.

Speaker Change: Okay and then the last one for me just on the accounting side interest income was higher but you're carrying more cash, but you've essentially deploy that into paying down debt post quarter. So it should be expect kind of the opposite being lower interest expense.

Matt Kornack: Less interest income I guess as a result.

Matt Kornack:

Speaker Change: You're correct that we were sitting on the cash from largely from the bond that was raised at the beginning of the year and so we were reinvesting that hasn't.

Lenis W. Quan: You're correct that we were sitting on cash largely from the bond that was raised at the beginning of the year, so we were reinvesting that as we were deploying it, so the interest income would wind down over the course of the second quarter. Some of it was used to repay debt gradually over Q1 and Q2, so yes, there will be some corresponding decrease, but I think we'll see some decrease in interest expenses from refinancing the floating rate bond towards the end of Q2.

Lenis W. Quan: It doesn't mean, we're deploying that's in the interest income wind wind down over the course of the second quarter.

Lenis W. Quan: Some of it was used to repay debt gradually over Q1 and Q2, so yes, there'll be some corresponding decrease but I think we'll see.

Lenis W. Quan: Some decrease on interest expense from refinancing the floating rate bond in it towards the end of Q2, and we're expecting as I had mentioned on the call about 50 basis points of savings and given where we see pricing based on today. So that's pretty it's the interest for the remainder of the year.

Lenis W. Quan: We're expecting, as I had mentioned on the call, about 50 basis points of savings given where we see pricing based on today, so that's where we would see interest for the remainder of the year. Okay, that's it.

Matt Kornack: Okay, that's perfect.

Speaker Change: Okay. That's perfect. Thank you.

CIBC: The next question is from some I am sad with CIBC. Please go ahead.

Operator: The next question is from Sumayya Syed with CIBC. Please go ahead. Thanks.

Sumayya Syed Hussain: Thanks, Good morning, just on the acquisition side and the assets acquired by D. Yes, I'm a JV in the quarter.

Sumayya Syed Hussain: Thanks. Good morning. Just on the acquisition side and the assets acquired by the Summit JV in the quarter, any more info on the assets, if they're single or multi-tenant size, and then also what kind of NOI upside you expect from those?

Sumayya Syed Hussain: Any more info on the assets up there single or multi tenant size and then also what kind of I don't know.

Sumayya Syed Hussain: Upside you expect from those.

Sumayya Syed Hussain: Thank you so my very consistent with a generally what our dreams summit adventure or cemetery that used to own a high quality urban assets M. A G G. A a very functional.

Alexander Sannikov: Thank you, Sumayya. Very consistent with generally what... Dream Summit Venture used to own high-quality urban assets in the GTA, very functional. In terms of the upside and in terms of return metrics, these are consistent with what you've seen from the venture throughout 2023 in terms of acquisition profile. So we are expecting I6s, mark-to-market yields, with reasonable volts to get there.

Alexander Sannikov: In terms of the upside and are in terms of return metrics are these are consistent with what you've seen from the venture.

Alexander Sannikov: Throughout 2023 in terms of acquisition profile. So we are expecting kind of high stakes as a mark to market are the yields oh with with reasonable worlds two to get there.

Sumayya Syed Hussain: Okay, so the market would be in line with the REITs broader market.

Alexander Sannikov: Okay. So don't Mark to market would be in line with the.

Sumayya Syed Hussain: That brought our mark to market.

Sumayya Syed Hussain: In line with reeds broke them out to market and generally in line with our valuation parameters.

Alexander Sannikov: In line with REITs brought to market and generally in line with our valuation parameters. And generally speaking, I think what's important to highlight in the acquisition market and the overall activities is that we continue to see more and more capital looking at Canadian industrial properties from abroad, primarily from the United States, because the fundamentals are strong and we, you know, we have pretty low... supply low availability, especially in the GTA, so we continue to see more interest from specifically US institutional investors in the Canadian market.

Alexander Sannikov: And generally speaking I think what's important to highlight on the acquisition market.

Alexander Sannikov: And the overall activities, we continue to see more and more capital looking at Canadian industrial AR from from abroad, primarily from the United States because the fundamentals are strong and we are we have a pretty low.

Alexander Sannikov: Supply or a low availability in especially in the G. T. H. So we continue to see more interest from specifically U S. A.

Alexander Sannikov: Institutional investors in the Canadian market.

Alexander Sannikov: Yeah.

Sumayya Syed Hussain: And then, on the flip side, just any more color you can provide on your disposition program and targeted assets or markets.

Alexander Sannikov: And then on the on the flip side just any more color you can provide on your disposition program and targeted assets all of our markets.

Alexander Sannikov: Thank you for following up on that. We will provide more color. These are assets that are non-strategic to us, and so as these transactions materialize, we will provide obviously more color on pricing metrics, the assets themselves, why we regard them as non-strategic. I think to describe them broadly is going to be perhaps premature at this point.

Speaker Change: Thank you for following up on that we will provide more color are these are assets that are non strategic to us and so as these transactions materialize, we will provide obviously more color on.

Alexander Sannikov: Pricing metrics the assets themselves are why we regard them. There's no strategic I think to describe them broadly is going to be a perhaps a premature at this point.

Speaker Change: Fair enough.

Sumayya Syed Hussain: Fair enough. And then lastly, I'm not sure if I missed it, but on your development on the Cambridge site and what are your expectations for the timing of the lease up there?

Alexander Sannikov: And then lastly, I'm not sure if I missed it but on your developments on the camera side and what are your expectations for timing of lease up there.

Speaker Change: Yeah. Thank you for calling them up on that we actually signed our first lease in in Cambridge during the quarter.

Alexander Sannikov: Yeah, thank you for following up on that. We actually signed a first lease in Cambridge during the quarter at rents that are in line with our underwriting on a trended basis. So, low 15s, starting rents with good escalators, and we're engaging with a number of prospects for the balance of the asset. It is going to be a multi-tenant lease-up, which is how the asset has been designed, and we are encouraged by the level of activity for this particular property.

Alexander Sannikov: Rents that are inline with our with our underwriting on.

Alexander Sannikov: On a trended basis, so a low fifteens are starting rents with good escalators.

Alexander Sannikov: And are we engaging with a number of prospects for the balance of the asset. It is gonna be a multi tenant lease up which is how how the asset has been designed and we are encouraged by the level of activity for this particular property.

Speaker Change: Okay, Great I'll turn it back thank you.

Sumayya Syed Hussain: Okay, great. I'll turn it back on. Thank you.

Sumayya Syed Hussain: The next question is from David Crystal with Echelon. Please go ahead.

Operator: The next question is from David Crystal with Echelon; please go ahead.

David Crystal: Thanks, Good morning all.

David Crystal: Good morning. Just a quick one for me.

David Crystal: Just a quick one for me on the share of F. F O from equity accounted investments it looks like it went down a few hundred thousand sequentially I know why it was largely flat or down a little less as this interest expenses or anything else to read into here.

David Crystal: Here's a quick one for me on the share of FFO from equity-accounted investments. Looks like it went down a few hundred thousand sequentially, while NOI was largely flat or down a little less. Is this interest expense, or is there anything else to read into here?

Speaker Change: No I think your summary is it's quite accurate in terms of that.

Lenis W. Quan: No, I think your summary is quite accurate in terms of that, in terms of the share of FFO pickups.

Lenis W. Quan: In terms of the share of S. S O pick up.

David Crystal: Okay, so the, I guess, organic interest expense increases and possibly some increases tied to acquisitions in the JVs?

Speaker Change: Okay. So it should be.

Lenis W. Quan: I guess organic interest expense increases and possibly some increases tied to acquisitions in the jb's.

David Crystal: Yeah, No that's right that's right there were some acquisitions.

Lenis W. Quan: Yeah, no, that's right. That's right.

Lenis W. Quan: Financed by a combination of debt and equity so the acquisitions I mean, I think Alex went through the metrics are kind of going in with getting good.

David Crystal: There are some acquisitions financed by a combination of debt and equity. So the acquisitions – I mean, I think Alex went through the metrics, kind of going in with good value growth on the acquisitions. So it'll take a couple quarters to see the accretion kind of kick in from that.

David Crystal: No. It's good value growth on the acquisition so it will take that.

David Crystal: You know couple of quarters to just.

David Crystal: You see that the accretion kind of kick in from that.

David Crystal: And in terms of the growth outlook, I mean, it would be similar or slightly better than the outlook, I would say, for your Canadian portfolio if we're reading into the Summit JV in particular.

David Crystal: And then in terms of the growth outlook I mean, it would be similar or slightly better than the outlook I would say for your Canadian portfolio. If we're reading into this summit JV in particular.

Speaker Change: <unk> can you can you maybe elaborate on this question do you growth outlooks, you mean in terms of built in mark to market potential within the Dream summit assets.

Alexander Sannikov: Can you maybe elaborate on this question, growth outlooks you mean in terms of built-in mark-to-market potential within the Dream Summit assets? Yeah, Mark, Mark.

David Crystal: Mark to market, so I guess the NOI growth and the FFO growth should be similar or superior to the consolidated Canadian portfolio.

Alexander Sannikov: Yeah, Mark Mark to market. So I guess, the NOI growth N D. S. F O growth should be similar or superior to the Canadian portfolio, the consolidated Canadian portfolio.

Alexander Sannikov: We don't track FFO for Dream Summit because it's obviously a private venture that is focusing on a total return strategy. However, in terms of NOI and mark-to-market, we have commented previously that the built-in mark-to-market opportunity within Dream Summit's portfolio is greater and has been greater at the time of acquisition compared to GIR's mark-to-market opportunity, primarily as a result of longer-weight And that thesis remains intact. And then the assets that we're adding to Dream Summit generally have significant mark-to-market built into them as well. So there is still a pretty strong outlook for organic and white growth within the venture.

David Crystal: So we don't.

David Crystal: Track F O for Dream Summit, a because it's a it's obviously a private venture debt is focusing on total return strategy. However in terms of NOI and a mark to market.

Alexander Sannikov: We have commented previously that our.

Alexander Sannikov: The Martin the built in Mark to market opportunity within Dream summits portfolio is greater than it has been greater at the time of acquisition compared to a G. I always mark to market opportunity, primarily as a result of longer weighted average lease terms historically within the portfolio.

Alexander Sannikov: And that our thesis remains intact.

Alexander Sannikov: And then are the assets that we're adding to dream summit, Germany have significant mark to market they'll tend to them as well.

Alexander Sannikov: So there is a still pretty strong outlook for organic NOI growth within within the venture.

David Crystal: Okay, great. Appreciate the color. I'll turn it back.

Speaker Change: Okay, Great I appreciate the color I'll turn it back.

Speaker Change: Once again, if you have a question. Please press Star then one.

Operator: Once again, if you have a question, please press star then 1. The next question is from Pammi Birch with RBC Capital Markets. Please go ahead.

Pammi Bir: The next question is from Toni Baer with RBC capital markets. Please go ahead.

Pammi Bir: Thanks, good morning. Just a couple of quick ones. On the disposition side of coming back to that, is the expectation to get most of those, call it the roughly hundred million, is the aim to get most of that done this year, or do you see that possibly trending or extending into 2025?

Pammi Bir: Thanks. Good morning, just a couple of a I think it will be quick ones on the disposition side coming back to that is the expectation to get most of those call. It roughly 100 million is.

Pammi Bir: Do you aim to get most of that done this year or do you see that possibly trending or extending into 2025.

Pammi Bir: The deals that we're working on if they do materialize, we'll we'll close our this year pardon me.

Alexander Sannikov: The deals that we are working on, if they do materialize, will close this year, Pammi, and we expect that from a modeling perspective, they will not have a material impact on the guidance that we just reiterated.

Alexander Sannikov: And we expect that the from a modeling perspective are they will not have a material impact on the on the guidance that we just reiterated.

Speaker Change: Got it.

Pammi Bir: Got it. Okay, and then just, you know, the debt to EBITDA metrics, they did move up this quarter, a fairly sizable increase. And I think, again, maybe that's some of that lumpy income from the distribution from the JV or the JVs. So, you know, when you think about the growth that you've guided to this year and again, these dispositions, where do you see that metric sort of trending by year end?

Alexander Sannikov: Okay, and then just you know the debt to EBITDA metrics I'm you know they did move up this quarter I'm fairly sizable increase and I think again, maybe that's some of that lumpy income from the distribution from the JV or the JV. So you know when you think about the growth that you've guided to this year and again. These these dispositions.

Pammi Bir: Ah well, where do you see that metric sort of trending by year end.

Speaker Change: Yeah. Thanks Tommy.

Lenis W. Quan: Yeah, thanks, Pammi. As you pointed out, the debt-to-EBITDA number can be a little bit lumpy based on the way that we have to treat the investments in the private ventures, but we do see that debt-to-EBITDA sort of averaging below 8 over the quarter, closer to, on a run rate basis, and kind of getting down to, you know, closer to eight by the end of the year on a run rate basis.

Speaker Change: Yeah, No. We as you pointed out the the debt to EBITDA debt to EBITDA number it can be a little bit lumpy based on the way that we have to treat the investments and the private ventures, but we do see that debt to EBITDA and sort of averaging low eight.

Lenis W. Quan: Or get a quarter.

Lenis W. Quan: And you know closer to on a run rate basis.

Lenis W. Quan: And getting down to closer to eight by end of year on a run rate basis.

Speaker Change: Thanks, very much Elena so I'll turn it back.

Pammi Bir: Thanks very much, Lenis. I'll turn it back.

Lenis: That concludes the question and answer session I would like to turn the conference back over to Mr. Steiner calls for any closing remarks.

Alexander Sannikov: This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Sannikov for any closing remarks.

Sannikov: Thank you very much for your interest in Dream Industrial REIT, we look forward to reporting this quarter.

Alexander Sannikov: Thank you very much for your interest in Dream Industrial REIT. We look forward to reporting next quarter. Goodbye.

Alexander Sannikov: Right.

Alexander Sannikov: Okay.

Alexander Sannikov: [music].

Alexander Sannikov: Hmm.

Alexander Sannikov: [music].

Operator: © BF-WATCH TV 2021 ?? ?? ?? ?? ??

Operator: Yeah.

Operator: [noise].