Q2 2024 Crombie Real Estate Investment Trust Earnings Call

and many more. Thank you. Thank you.

Unknown Executive: Good day, everyone, and welcome to Crombie Reads YouTube conference call. At this time, online in a lesson-only mode. Following the presentation, we will contact the question-and-answer session. If at any time in this call you require immediate assistance, please press R0 for the operator.

Operator: Good day everyone, and welcome to Crombie REIT's YouTube conference call. At this time, all lines are in a listen-only mode.

Speaker Change: Good day everyone and welcome to Crombie REITs Q2 conference call. At this time all lines are in a listen-only mode.

Operator: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on August 8, 2024. I would now like to turn the conference over to Ruth Martin. Please go ahead. Thank you.

Speaker Change: Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star 0 for the operator.

Unknown Executive: This call is being recorded on August 8th, 2024.

Ruth Martin: I would not like to turn the conference over to Ruth Martin. Please go ahead. Thank you.

This call is being recorded on August 8, 2024. I would now like to turn the conference over to Ruth Martin. Please go ahead.

Ruth Martin: Thank you. Good day, everyone, and welcome to Crombie REIT's second quarter 2024 conference call and webcast. Thank you for joining us.

Mark Holly: Good day, everyone, and welcome to Crombie Reads 2nd quarter 2024 conference call in webcast. Thank you for joining us. This call is being recorded in live audio and is available on our website at www.crombie.ca. Slides to accompany today's call are available on the investor section of our website under Presentations and Events.

Ruth Martin: Thank you, good day everyone, and welcome to Crombie REIT's second quarter 2024 conference call and webcast. Thank you for joining us. This call is being recorded in live audio and is available on our website at www.crombie.ca.

Ruth Martin: This call is being recorded in live audio and is available on our website at www.crombie.ca. Slides to accompany today's call are available in the Investor section of our website under Presentations and Events. On the call today are Mark Holly, President and Chief Executive Officer, Kara Cameron, Chief Financial Officer, and Ari Bitton, Executive Vice President, Leasing and Operations. Today's discussion includes four forward-looking statements. As always, we want to caution you that such statements are based on management's assumptions and beliefs.

Speaker Change: Slides to accompany today's call are available on the Investor section of our website under Presentations and Events.

Mark Holly: On the call today are Mark Holly, President and Chief Executive Officer; Kara Cameron, Chief Financial Officer; and Ari Bitton, Executive Vice President, Leasing and Operations. Today's discussion includes forward-looking statements. As always, we want to caution you that such statements are based on management's assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements.

Speaker Change: On the call today are Mark Holly, President and Chief Executive Officer, Kara Cameron, Chief Financial Officer, and Ari Bitton, Executive Vice President, Leasing and Operations.

Speaker Change: Today's discussion includes four looking statements.

Speaker Change: As always, we want to caution you that such statements are based on management's assumptions and beliefs.

Ruth Martin: These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see our public filings, including our management's discussion and analysis and annual information forum, for a discussion of these risk factors. Our discussion will also include expected yield on cost for capital expenditures. Please refer to the Development section of our Management's Discussion and Analysis for additional information on Assumptions and Results. I will now turn the call over to Mark, who will begin our discussion with comments on Crombie's strategy and outlook. Kara will review Crombie's operating fundamentals, discuss our financial results, capital allocation, and approach to funding. And Mark will conclude with a few final remarks.

These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements.

Mark Holly: Please hear public filings, including our management's discussion and analysis and annual information form for a discussion of these risk factors. Our discussion will also include expected yield on cost for capital expenditures. Please refer to the development section of our management's discussion and analysis for additional information on assumptions and risks.

Speaker Change: Please see our public filings.

Speaker Change: including our management's discussion and analysis and annual information forum for a discussion of these risk factors. Our discussion will also include expected yield on cost for capital expenditures.

Speaker Change: Please refer to the development section of our management's discussion and analysis for additional information on assumptions and risks.

Mark Holly: I will now turn the call over to Mark, who will begin our discussion with comments on Crombie's strategy and outlook.

Mark Holly: I will now turn the call over to Mark who will begin our discussion with comments on Crombie's strategy and outlook. Kara will review Crombie's operating fundamentals, discuss our financial results, capital allocation, and approach to funding. And Mark will conclude with a few final remarks. Over to you, Mark.

Mark Holly: Kara will review Crombie's operating fundamentals, discuss our financial results, capital allocation, and approach to funding, and Mark will conclude with a few final remarks.

Ruth Martin: Over to you, Mark. Thank you, Ruth.

Mark Holly: Thank you, Ruth. Good day, everyone.

Mark Holly: Good day, everyone, and thanks for joining us for our second quarter conference call. Crombie's performance in the first half of 2024 continues to demonstrate the resilience of our coast-to-coast necessity-based portfolio and the proficiency of our operating teams. It also highlights our study progress against initiatives designed to enhance financial strength and flexibility while delivering growth and value for our unit holders. I'm very proud of our team's efforts both operationally and financially in the second quarter, which resulted in high occupancy, same-affect property cash, and a wide growth of 3.4 percent, and a 6.7 percent increase in normalized FFO per unit.

Mark Holly: Thank you, Ruth. Good day, everyone, and thanks for joining us for our second quarter conference call.

Mark Holly: And thanks for joining us for our second quarter conference call. Crombie's performance in the first half of 2024 continues to demonstrate the resilience of our coast-to-coast necessity-based portfolio and the proficiency of our operating teams. It also highlights our steady progress against initiatives designed to enhance financial strength and flexibility while delivering growth and value for our unit holders. I'm very proud of our team's efforts both operationally and financially in the second quarter, which resulted in high occupancy, same asset property cash NOI growth of 3.4%, and a 6.7% increase in normalized FFO per unit. Our leasing team successfully negotiated renewal spreads of 9.6% on 293,000 square feet of GLA during the quarter.

Mark: Crombie's performance in the first half of 2024 continues to demonstrate the resilience of our coast-to-coast, necessity-based portfolio and the proficiency of our operating teams.

Mark Holly: It also highlights our steady progress against initiatives designed to enhance financial strength and flexibility while delivering growth and value for our unit holders.

Speaker Change: I'm very proud of our team's efforts both operationally and financially in the second quarter, which resulted in high occupancy, same asset property cash NOI growth of 3.4%, and a 6.7% increase in normalized FFO per unit.

Mark Holly: Our leasing team successfully negotiated renewal spreads of 9.6 percent on 293,000 square feet of GLA during the quarter. We anticipate healthy renewal spreads to continue, underpinned by our strong fundamentals with an outlook of achieving mid to high single-digit renewals. Crombie's resilience and performance is rooted in our unwavering commitment to operational excellence, its financial condition and flexibility, and prudent capital allocation. We maintained a strong and flexible balance sheet, ending the quarter with ample liquidity, debt to EBITDA of 7.6 times, and leverage ratios well within our target ranges. Stepping back for a moment to look at the overall environment, the macro backdrop, while showing signs of clarity and stability, is still challenging, but Crombie continues to be well positioned to deliver cash flow growth consistently, and our overall outlook remains positive. With the structural tailwinds of high immigration levels, a current shortage of quality retail space and limited new supply, demand for our necessity-based properties is strong, and to continue to drive sustainable growth into the future.

Speaker Change: Our leasing team successfully negotiated renewal spread of 9.6% on 293,000 square feet of GLA during the quarter.

Mark Holly: We anticipate healthy renewal spreads to continue, underpinned by our strong fundamentals, with an outlook of achieving mid to high single-digit renewals. Crombie's resilience and performance are rooted in its unwavering commitment to operational excellence, its financial condition and flexibility, and prudent capital allocation. We maintained a strong and flexible balance sheet, ending the quarter with ample liquidity, a debt-to-EBITDA of 7.6 times, and leverage ratios well within our target ranges.

Mark: We anticipate healthy renewal spreads to continue, underpinned by our strong fundamentals, with an outlook of achieving mid- to high-single-digit renewals.

Crombie's resilience and performance is rooted in our unwavering commitment to operational excellence, its financial condition and flexibility, and prudent capital allocation.

Mark: We maintained a strong and flexible balance sheet, ending the quarter with ample liquidity.

Mark: debt-to-EBITDA of 7.6 times and leverage ratios well within our target ranges.

Mark Holly: Stepping back for a moment to look at the overall environment, the macro backdrop, while showing signs of clarity and stability, is still challenging, but Crombie continues to be well positioned to deliver cash flow growth consistently. And our overall outlook remains positive, with the structural tailwinds of high immigration levels, a current shortage of quality retail space, and limited new supply. Demand for our necessity-based properties is strong and should continue to drive sustainable growth into the future.

Mark: Stepping back for a moment to look at the overall environment.

Mark: The macro backdrop, while showing signs of clarity and stability, is still challenging, but Crombie continues to be well positioned to deliver cash flow growth consistently.

Mark: and our overall outlook remains positive with the structural tailwinds of high immigration levels.

Speaker Change: a current shortage of quality retail space and limited new supply.

Speaker Change: Demand for our necessity-based properties is strong and should continue to drive sustainable growth into the future.

Mark Holly: Today, I will focus my remarks on three primary value creation drivers that enable us to consistently achieve solid results: our operational excellence, the optimization of our assets, and our partnerships. Owning a portfolio of highly desirable assets in the heart of vibrant towns, expanding cities, and major urban centers is critical to our ability to deliver reliable cash flows and growth for our unit holders. Our portfolio is strategically allocated to high-quality grocery-engrered retail, retail-related industrial, and mixed-use residential properties. These are some of the most desirable asset classes in the Canadian market, which positions us well for both short-term stability and long-term growth.

Mark Holly: Today I will focus my remarks on three primary value creation drivers that enable us to consistently achieve solid results: our operational excellence, the optimization of our assets, and our partnership. Owning a portfolio of highly desirable assets in the heart of vibrant towns, expanding cities, and major urban centers is critical to our ability to deliver reliable cash flows and growth for our unit holders. Our portfolio is strategically allocated to high-quality grocery-anchored retail.

Speaker Change: Today, I will focus my remarks on three primary value creation drivers that enable us to consistently achieve solid results.

Speaker Change: our operational excellence, the optimization of our assets, and our partnerships.

Speaker Change: Owning a portfolio of highly desirable assets in the heart of vibrant towns, expanding cities, and major urban centers is critical to our ability to deliver reliable cash flows and growth for our unit holders.

Speaker Change: Our portfolio is strategically allocated to high-quality grocery-anchored retail, retail-related industrial, and mixed-use residential properties.

Mark Holly: Retail-Related Industrial, and Mixed-Use Residential Properties. These are some of the most desirable asset classes in the Canadian market, which positions us well for both short-term stability and long-term growth. Our in-place annual minimum rent per square foot was $17.93 at the end of the second quarter, approximately 4%, equivalent to $0.65 per square foot higher than 12 months ago.

Speaker Change: These are some of the most desirable asset classes in the Canadian market which positions us well for both short-term stability and long-term growth.

Mark Holly: Our in-place annual minimum rent per square foot with $17.93 at the end of the second quarter, approximately 4%, equivalent to $0.65 per square foot higher than 12 months ago. The increase is supported by diligent leasing efforts, contractual rent step-ups, and further demonstrates our ability to extract value through unique strategic initiatives such as our modernization program while maintaining a strong weighted average lease term of 8.6 years. At the end of the second quarter, 89,000 square feet of GLA was committed at an average first-year rate of $21.34 per square foot, 19% above our in-place portfolio rent per square foot.

Speaker Change: Our in-place annual minimum rent per square foot was $17.93 at the end of the second quarter, approximately 4%, equivalent to $0.65 per square foot higher than 12 months ago.

Mark Holly: The increase is supported by diligent leasing efforts, contractual rent step-ups, and further demonstrates our ability to extract value through unique strategic initiatives such as our modernization program while maintaining a strong weighted average lease term of 8.6 years. At the end of the second quarter, 89,000 square feet of GLA was committed at an average first year rate of $21.34 per square foot, 19% above our in-place portfolio rent per square foot. This includes one non-major development project in Burlington, Ontario, where we repurposed existing vacant space within our portfolio to become the home of a new Farm Boy grocery store, which is expected to open in our third quarter.

Speaker Change: The increase is supported by diligent leasing efforts, contractual rent step-ups, and further demonstrates our ability to extract value through unique strategic initiatives such as our modernization program while maintaining a strong weighted average lease term of 8.6 years.

Mark Holly: This includes one non-major development project in Burlington, Ontario, where we repurposed existing vacant space within our portfolio to become the home of a new Farm Boy grocery store, which is expected to open in our third quarter. While acquisition investment activity is still fairly muted, with limited opportunities to acquire quality grocery-engrered assets in Canada, our team successfully sourced, negotiated, and acquired a 48,000 square foot retail property from a third party for a total purchase price of approximately $9.9 million during the quarter. This asset is anchored by Empire's Freshco banner located in the heart of Powell River, British Columbia, serving the community needs and aligning well with our grocery-anchored asset base.

Mark Holly: While acquisition and investment activity is still fairly muted, with limited opportunities to acquire quality grocery-anchored assets in Canada, our team successfully sourced, negotiated, and acquired a 48,000 square foot retail property from a third party for a total purchase price of approximately $9.9 million during the quarter. This asset is anchored by Empire's Fresco Banner, located in the heart of Powell River, British Columbia, serving the community needs and aligning well with our grocery-anchored asset base.

Speaker Change: While acquisition investment activity is still fairly muted with limited opportunities to acquire quality grocery anchored assets in Canada. Our team successfully source negotiated and acquired a 48000 square foot retail property from a third party for a total purchase price of approximately $9 $9 million during the <unk>.

Speaker Change: <unk>.

Speaker Change: This asset is anchored by empires fresco banner located in the heart of Powder River, British Columbia, serving the community needs and aligning well with our grocery anchored asset base.

Mark Holly: This site also has opportunity for future intensification, which allows us to drive additional value at this property through our non-major development program.

Mark Holly: This site also has the opportunity for future intensification, which will allow us to drive additional value at this property through our non-major development program. Next, I'll focus on Portfolio Optimization, which is an important program to drive AFFO and NAV growth. We are focused on reinvesting within our portfolio and identifying the most effective uses of our assets to maximize returns and strategically allocate capital. Our development program is split into two categories: major development and non-major development.

Speaker Change: Site also has opportunity for future intensification, which will allow us to drive additional value at this property through our non major development program.

Mark Holly: Next, I'll focus on portfolio optimization, which is an important program to drive ABFO and Navgro. We are focused on reinvesting within our portfolio and identifying the most effective uses of our assets to maximize returns and strategically allocate capital. Our development program is split into two categories of major development and non-major development. Our existing portfolio has approximately 10.5 million square feet of potential major development densities spanning coast to coast, providing a pathway for Crombie to unlock embedded value and drive responsible growth both via self-development, joint venture partnerships, or, from time to time, monetizing entitlement values through dispositions.

Speaker Change: Next I'll focus on portfolio optimization, which is an important program to drive <unk> and NAV growth.

Speaker Change: We are focused on reinvesting within our portfolio and identifying the most effective uses of our assets to maximize returns and strategically allocate capital.

Speaker Change: Our development program is split into two categories, a major development and non major development.

Mark Holly: Our existing portfolio has approximately 10.5 million square feet of potential major development density spanning coast to coast, providing a pathway for Crombie to unlock embedded value and drive responsible growth via self-development, joint venture partnerships, or, from time to time, monetizing entitlement values through dispositions. In the second quarter, we closed the sale of our Broadview site in Toronto to a private developer.

Speaker Change: Our existing portfolio has approximately $10 5 million square feet of potential major development density spanning coast to coast, providing a pathway for crummy to unlock embedded value and drive responsible growth via self development joint venture partnerships are from time to time monetizing entitlement values through.

Speaker Change: <unk>.

Mark Holly: In the second quarter, we close the sale of our broader site in Toronto to a private developer. Crombie received total proceeds of $13 million for its 50% stake in the property. The purchase price was significantly above IFRS fair value, further reflecting the quality and attractiveness of our portfolio. Our one active major development project, the Marlestone and Halifax, will introduce 291 residential units to expanding portfolio and will be a welcome addition to one of Canada's fastest growing cities. We remain on track, recently completing the sixth level of the residential structure, with substantial completion expected the first half of 2026.

Speaker Change: In the second quarter, we closed the sale of our broad view site in Toronto to a private developer Crombie received total proceeds of $13 million for its 50% 50% stake in the property.

Mark Holly: Crombie received total proceeds of $13 million for its 50% stake in the property. The purchase price was significantly above IFRS fair value, further reflecting the quality and attractiveness of our portfolio. Our one active major development project, the Marble Stone in Halifax, will introduce 291 residential units to our expanding portfolio and will be a welcome addition to one of Canada's fastest growing cities. We remain on track, recently completing the sixth level of the residential structure, with substantial completion expected in the first half of 2026.

Speaker Change: The purchase price was significantly above I FRS fair value further, reflecting the quality and attractiveness of our portfolio.

Speaker Change: Our one active major development project the marlstone in Halifax will introduce 291 residential units to our expanding portfolio and will be a welcome addition to one of Canada's fastest growing cities.

Speaker Change: We remain on track recently, completing the six level of the residential structure with substantial completion expected the first half of 2026.

Mark Holly: Our non-major development program, which encompasses shorter duration projects, remains a high priority, especially in the economic environment. The current project pool has an anticipated yield on cost between 5.5% and 10.7%, and they are a great way to enhance and strengthen the value of our portfolio. There is currently 54,000 square feet of GLA under construction, which will be added to our portfolio over the course of 2024 and 2025. Although we did not add incremental GLA from non-major development activities to our portfolio in the second quarter, we were still very active, investing $24.9 million at 77 properties in modernizations with Empire, which will positively impact our NOI for 2024 and beyond.

Mark Holly: Our non-major development program, which encompasses shorter-duration projects, remains a high priority, especially in this economic environment. The current project pool has an anticipated yield on cost between 5.5% and 10.7%, and they are a great way to enhance and strengthen the value of our portfolio. There are currently 54,000 square feet of GLA under construction, which will be added to our portfolio over the course of 2024 and 2025.

Speaker Change: Our non major development program, which is encompasses shorter duration projects remains a high priority, especially in this economic environment.

Speaker Change: The current project pool has an anticipated yield on cost between five 5% and 10, 7% and they are a great way to enhance and strengthen the value of our portfolio.

Speaker Change: There is currently 54000 square feet of GLA under construction, which will be added to our portfolio over the course of 2024 and 2025.

Mark Holly: Although we did not add incremental GLA from non-major development activities to our portfolio in the second quarter, we were still very active, investing $24.9 million in 77 properties in modernizations with Empire, which will positively impact our NOI for 2024 and beyond. Turning to partnerships and the critical role they play in our strategy, the largest of these is our mutually beneficial partnership with Empire. This is highlighted within the quarter as the Alberta warehouse entered economic occupancy, investments in our modernization program, and income earned from our development expertise.

Speaker Change: Although we did not add incremental GLA from non major development activities to our portfolio in the second quarter. We were still very active investing $24 $9 million at 77 properties and Modernizations with Empire, which will positively impact our NOI for 2024 and beyond.

Mark Holly: Turning to partnerships and the critical role they play in our strategy, the largest of these is our mutually beneficial partnership with Empire. This is highlighted within the quarter as the Alberta warehouse entered economic occupancy, investments in our modernization program, and income earned from our development expertise. Last year, Chrome began providing development and construction management expertise, and in the second quarter of 2024, revenue from these services contributed $2.1 million. Revenue will ebb and flow each quarter as we continue to work to streamline the synergistic partnership. In addition to the tremendous relationship we have with Empire, expanding our partnerships is a focus for Chromebee to enable us to unlock the value in our extensive development pipeline while maintaining our top-quality balance sheet.

Speaker Change: Turning to partnerships and the critical role they play in our strategy. The largest of these is our mutually beneficial partnership with Empire. This is highlighted within the quarter as the Alberta warehouse entered economic occupancy investments in our moderate modernization program and income earned from our development expertise.

Mark Holly: Last year, Crombie began providing development and construction management expertise, and in the second quarter of 2024, revenue from these services contributed $2.1 million. Revenue will ebb and flow each quarter as we continue to work to streamline the synergistic partnership. In addition to the tremendous relationship we have with Empire, expanding our partnerships is a focus for Crombie to enable us to unlock the value in our extensive development pipeline while maintaining our top-quality balance sheet.

Speaker Change: Last year, Crombie began providing development and construction management expertise and in the second quarter of 2020 for revenue from these services contributed $2 $1 million.

Speaker Change: Revenue will ebb and flow each quarter as we continue to work to streamline this synergistic partnership.

Speaker Change: In addition to the tremendous relationship we have with Empire expanding our partnerships is a focus for crombie to enable us to unlock the value in our extensive development pipeline, while maintaining our top quality balance sheet.

Mark Holly: Collaborating with the right partners enables us to strategically develop properties while maintaining a disciplined focus on capital allocation and maximizing returns for our unit holders.

Mark Holly: Collaborating with the right partners enables us to strategically develop properties while maintaining a disciplined focus on capital allocation and maximizing returns for our unit holders. I want to take a moment to highlight the great work the team has done in advancing our ESG commitments and further embedding ESG priorities into our strategy, culture, and values. I'm proud of the accomplishments to date. In June, we released our 2023 ESG report, which highlighted our environmental, social, and governance achievements last year.

Speaker Change: Collaborating with the right partners enable us enables us to strategically develop properties, while maintaining a disciplined focus on capital allocation and maximizing returns for our unit holders.

Mark Holly: I want to take a moment to highlight the great work the team has done in advancing our ESG commitments and further embedding ESG priorities into our strategy, culture, and values. I am proud of the accomplishments to date. In June, we released our 2023 ESG report, which highlighted our environmental, social, and governance achievements last year. 2023 was a meaningful year for Chromebee where we made significant progress tracking, measuring, and reducing our greenhouse gas emissions through our climate action plan. Our team volunteered thousands of hours to community organizations across the country, and we introduced a community impact strategy to maximize our contributions to the communities we serve.

Speaker Change: I wanted to take a moment to highlight the great work. The team has done in advancing our ESG commitments and further embedding ESG priorities into our strategy culture and values.

Speaker Change: I am proud of the accomplishments to date in June we released our 2023, ESG report, which highlighted our environmental social and governance achievements last year.

Mark Holly: 2023 was a meaningful year for Crombie, where we made significant progress tracking, measuring, and reducing our greenhouse gas emissions through our Climate Action Plan. Our team volunteered thousands of hours to community organizations across the country, and we introduced a community impact strategy to maximize our contributions to the communities we serve.

Speaker Change: 123 was a meaningful year for crombie, where we made significant progress tracking measuring and reducing our greenhouse gas emissions through our climate action plan.

Speaker Change: Our team volunteered thousands of hours to community organizations across the country and we introduced a community impact strategy to maximize our contributions to the communities we serve.

Mark Holly: Before handing the call over to Kara, I want to congratulate her on being appointed Chief Financial Officer. Since joining Crombie in 2019, Kara has been in a type of part of our financial leadership team known for her strategic thinking and commitment to our financial strength. I look forward to continue our collaboration to further advance Crombie strategy.

Speaker Change: Before handing the call over to Keira I want to congratulate her on being appointed Chief Financial Officer.

Mark Holly: Before handing the call over to Kara, I want to congratulate her on being appointed Chief Financial Officer. Since joining Crombie in 2019, Kara has been an integral part of our financial leadership team, known for her strategic thinking and commitment to our financial strength. I look forward to continuing our collaboration to further advance Crombie's strategy. Now, I hand the call over to Kara, who will highlight our operational results and discuss our financial results, the cornerstone of our solid foundation, our balance sheet.

Keira: Since joining <unk> in 2019 care has been an integral part of our financial leadership team.

Keira: One for her strategic thinking and commitment to our financial strength I look forward to continue our collaboration to further advance probably strategy.

Kara Cameron: I will now hand the call over to Kara, who will highlight our operational vaults and discuss our financial results, the cornerstone of our solid foundation, our balance sheet. Thank you very much, Mark, and hello everyone. We are pleased with our operational and financial performance in the quarter. Our strategic focus remains on value creation, prioritizing our solid financial position and prudent approach to capital allocation while advancing key initiatives. Strong leasing activity over the last 12 months, including new leases and renewals, as well as contractual step-ups, propelled same asset property cash and alloy growth to 3.4%, equivalent to an increase of $2.6 million compared to the second quarter of 2023.

Keira: I will now hand, the call over to Kara, who will highlight our operational results and discuss our financial results. The cornerstone of our solid foundation our balance sheet.

Kara Cameron: Thank you very much Matt and Hello, everyone.

Kara Cameron: Thank you very much, Mark, and hello everyone. We are pleased with our operational and financial performance in the quarter. Our strategic focus remains on value creation, prioritizing our solid financial position and prudent approach to capital allocation while advancing key initiatives. Strong leasing activity over the last 12 months, including new leases and renewals, as well as contractual step-ups, propelled same-asset property cash and alloy growth to 3.4%, equivalent to an increase of $2.6 million compared to the second quarter of 2023.

Kara Cameron: We're pleased with our operational and financial performance in the quarter, our strategic focus remains on value creation prioritizing, our solid financial position and prudent approach to capital allocation, while advancing key initiatives.

Kara Cameron: Strong leasing activity over the last 12 months, including new leases and renewals as well as contractual step ups propelled same asset property cash NOI growth to three 4% equivalent to an increase of $2 $6 million compared to the second quarter of 2023.

Kara Cameron: Looking ahead, we still expect to achieve annual same asset property cash and alloy growth in the 2-3% range for 2024, consistent with the targets we have previously communicated. New leases, on a year-to-day basis, increased occupancy by 122,000 square feet at an average first-year rate of $25.61, boosting our in-place rent per square foot. Note worthy new leases in the quarter include five primarily necessity-based tenant expansions, totaling approximately 10,000 square feet, as well as our co-owned industrial facility, Alberta Central Kitchen Commissary, which moved into economic occupancy and commenced paying rent in June. As Mark previously mentioned, 293,000 square feet was renewed in the second quarter at a 9.6% increase for year-one over expiring rental rates, with healthy contribution from each market class.

Kara Cameron: Looking ahead, we still expect to achieve annual same asset property cash and alloy growth in the two to 3% range for 2024, consistent with the targets we have previously communicated. New leases on a year-to-date basis increased occupancy by 122,000 square feet at an average first-year rate of $25.61, boosting our in-place rent per square foot. Noteworthy new leases in the quarter include five primarily necessity-based tenant expansions, totalling approximately 10,000 square feet, as well as our co-owned industrial facility, Alberta Central Kitchen commissary, which moved into economic occupancy and convinced paying rent in June.

Keira: Looking ahead, we still expect to achieve annual same asset property cash NOI growth in the 2% to 3% range for 2024.

Speaker Change: With the targets we have previously communicated.

Speaker Change: New leases on a year to date basis increased occupancy by 122000 square feet at an average first year rate of $25 and 61 Sir.

Speaker Change: Our in place rent per square foot.

Speaker Change: Noteworthy new leases in the quarter include five primarily necessity based tenant expansions totaling approximately 10000 square feet as well as our industrial.

Speaker Change: Facility, Alberta, Central kitchen, commissary, which moved into economic occupancy and convinced paying rent in June.

Kara Cameron: As Mark previously mentioned, 293,000 square feet of space was renewed in the second quarter at a 9.6% increase for year one over expiring rental rates, with healthy contribution from each market class. The team puts an emphasis on achieving rental growth throughout the duration of the lease, securing an 11.8% increase when comparing the expiring rental rate to the weighted average rental rate for the renewal term.

Speaker Change: As Mark previously mentioned 293000 square feet was renewed in the second quarter at a nine 6% increase for year, one over expiring rental rates with healthy contribution from each market class.

Kara Cameron: The team puts an emphasis on achieving rental growth throughout the duration of the lease, securing an 11.8% increase when comparing the expiring rental rate to the weighted average rental rate for the renewal term. It is this commitment to operational excellence that has led to our high occupancy, ending the quarter with committed and economic occupancy of 96.4% and 95.9%, respectively. While occupancy is in line with the second quarter of 2023, we saw a 20 basis point improvement in both committed and economic occupancy from the first quarter of 2024. Normalized for employee transition costs incurred in the second quarter of both 2023 and 2024, AFFO and FFO per unit increased 7.7% and 6.7%, respectively.

Speaker Change: Team puts an emphasis on achieving rental growth throughout the duration of the lease securing an 11, 8% increase when comparing the expiring rental rate to the weighted average rental rate for the renewal term.

Speaker Change: It is this commitment to operational excellence that has led to our high occupancy ending the quarter with committed and economic occupancy of 96, 4% and 95, 9% respectively.

Kara Cameron: It is this commitment to operational excellence that has led to our high occupancy, ending the quarter with committed and economic occupancy of 96.4% and 95.9%, respectively. While occupancy is in line with the second quarter of 2023, we saw a 20 basis point improvement in both committed and economic occupancy from the first quarter of 2024, normalized for employee transition costs incurred in the second quarter of both 2023 and 2024. AFFO and FFO per unit increased 7.7% and 6.7%, respectively. The improvement and Normalized AFFO and FFO per unit was primarily a result of our persistent focus on our primary value drivers.

Speaker Change: Occupancy is in line with the second quarter of 2023, we saw a 20 basis point improvement in both committed and economic occupancy from the first quarter of 2024.

Speaker Change: Normalized for employee transition costs incurred in the second quarter of both 2023 and 2020 for <unk> and <unk> per unit increased seven 7% and six 7% respectively.

Kara Cameron: The improvement in normalized AFFO and FFO per unit was primarily a result of our persistent focus on our primary value drivers. Our commitment to operational excellence and optimizing our assets led to higher property revenue from leasing activity and completed development.

Speaker Change: <unk> and normalized <unk> per unit was primarily a result of our persistent focus on our primary value drivers our commitment to operational excellence and optimizing our assets led to higher property revenue from leasing activity and completed development.

Kara Cameron: Our commitment to operational excellence and optimizing our assets led to higher property revenue from leasing activity and completed development. Leveraging partnerships also contributed to higher revenue, as well as increased income from equity-accounted investments, largely due to the positive leasing momentum over the last 12 months at the Village of Bronte Harbour. This was partially offset by higher interest expense.

Kara Cameron: Funds. Leveraging partnerships also contributed to higher revenue, as well as increased income from equity-accounted investments, largely due to the positive leasing momentum over the last 12 months at the village of Vranti Harbor. This was partially offset by higher interest expense. We take a proactive approach to balance sheet management to minimize the impact of the current high interest rate environment through constant monitoring of the market and our weighted average term to maturity. Our normalized AFFL payout ratio was 79.4%, while our normalized AFFL payout ratio was 69.1%, both improving from Q2 of 2023. General and administrative expenses were $5.4 million in the quarter, or $4.7 million excluding employee transition costs.

Speaker Change: Leveraging partnerships also contributed to higher revenue as well as increased income from equity accounted investments largely due to the positive leasing momentum over the last 12 months at the village.

Rondi Harbor: Rondi Harbor.

Rondi Harbor: This was partially offset by higher interest expense.

Kara Cameron: We take a proactive approach to balance sheet management to minimize the impact of the current high interest rate environment through constant monitoring of the market and our weighted average term to maturity. As a result, our normalized AFFO payout ratio was 79.4%, while our normalized FFO payout ratio was 69.1%, both improving from Q2 of 2023. General and Administrative Expenses, or $5.4 million in the quarter, or $4.7 million excluding employee transition costs. Adjusting for Employee Transition Costs in the Second Quarter of 2024-2023, General and Administrative Expenses as a Percent of Property Revenue were 4% and 4.3%, respectively.

Rondi Harbor: We take a proactive approach to balance sheet management to minimize the impact of the current high interest rate environment through constant monitoring of the market and our weighted average term to maturity.

Unknown Executive: Good day everyone and welcome to Crombie Reads YouTube Conference Call at this time online in a lesson only mode. Following the presentation, we will contact the question and answer session. If at any time in this call you require immediate assistance, please press R0 for the operator.

Rondi Harbor: Our normalized <unk> payout ratio was 79, 4%, while our normalized <unk> payout ratio was 69, 1% both improving from Q2 of 2023.

Rondi Harbor: General and administrative expenses were $5 $4 million in the quarter or $4 seven.

Unknown Executive: This call is being recorded on August 8th, 2024.

Speaker Change: $7 million, excluding employee transition costs.

Ruth Martin: I would not like to turn the conference over to Ruth Martin, please go ahead. Thank you.

Kara Cameron: Adjusting for employee transition costs in the second quarter of 24 and 23, general and administrative expenses as a percent of property revenue are 4% and 4.3%, respectively. We proactively manage these costs and have been able to derive a new revenue stream without adding incremental expense.

Speaker Change: Adjusting for employee transition costs in the second quarter of 'twenty, four and 'twenty, three general and administrative expenses as a percent of property revenue or 4% and four 3% respectively.

Mark Holly: Good day everyone and welcome to Crombie Reads 2nd quarter 2024 conference call in webcast. Thank you for joining us. This call is being recorded in live audio and is available on our website at www.crombie.ca. Slides to accompany today's call are available on the investor section of our website under presentations and events. On the call today are Mark Holly, President and Chief Executive Officer, Kara Cameron, Chief Financial Officer, and Ari Bitton, Executive Vice President, Leasing and Operations.

Kara Cameron: We proactively manage these costs and have been able to derive a new revenue stream without adding incremental expenses. Now, turning to our balance sheet. Our strong financial condition is marked by our steadfast focus on leverage, liquidity, and a well-structured maturity ladder to ensure we have access to multiple capital sources to support our growth and operational strategy. We ended the quarter with available liquidity of $77 million and are on and covered as that pool increased from $2.6 billion in Q4 2023 to $2.7 billion in the second quarter of 2024.

Speaker Change: We proactively manage these costs and have been able to derive a new revenue stream without adding incremental expense.

Kara Cameron: Now, turning to our balance sheet. Our strong financial condition is marked by our steadfast focus on leverage, liquidity, and a well-structured maturity ladder to ensure we have access to multiple capital sources to support our growth and operational strategies. We ended the quarter with available liquidity of $707 million, and our unencumbered AFFL pool increased from $2.6 billion at Q4 2023 to $2.7 billion in the quarter of 2024. Death to growth fair value was 42.6%, down 40 basis points compared to Q4 of 2023, and our death to trailing 12-month adjusted EBITDA was 7.68 times, an improvement from 8.03 times at December 31, 2023.

Kara Cameron: That to grow fair value was 42.6%, down 40 basis points compared to Q4 of 2023, and our debt to Trailing 12 Months adjusted EBITDA was 7.68 times, an improvement from 8.03 times at December 31, 2023. Crombie remains committed to achieving an upgrade to BBB Mid from the current BBB Low for Morningstar DBRS. We are pleased to have received a trend change to positive from previously stable, a reflection of the team's hard work and dedication.

Speaker Change: Now turning to our balance sheet, our strong financial condition is marked by our steadfast focus on leverage liquidity and a well structured maturity ladder to ensure we have access to multiple capital sources to support our growth and operational strategies.

Speaker Change: We ended the quarter with available liquidity of $707 million and our unencumbered asset pool increased from $2 $6 billion at Q4, 2023 to $2 7 billion in the second quarter of 2024.

Mark Holly: Today's discussion includes forward-looking statements. As always, we want to caution you that such statements are based on management's assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please hear public filings, including our management's discussion and analysis and annual information form for a discussion of these risk factors. Our discussion will also include expected yield on cost for capital expenditures. Please refer to the development section of our management's discussion and analysis for additional information on assumptions and risks.

Speaker Change: That's the gross fair value was 42, 6% down 40 basis points compared to Q4 of 2023 and our debt to trailing 12 month. Adjusted EBITDA was 768 times an improvement from 8.03 times at December 31 2023.

Kara Cameron: Columbia remains committed to our goal of achieving an upgrade to triple B mid from the current triple B low for Morningstar DBRS. We are pleased to have received a try and change to positive previously stable, a reflection of the team's hard work and dedication. Morningstar DBRS cited the update reflects our strong operating results underpinned by our grocery-anchored properties and our continued momentum in the stabilization of our recently completed major development. An important component of our financial strength is maintaining well-latter debt maturities. For the remainder of 2024, we have $101 million of debt maturing, and in early 2025, we have a $175 million unsecured note due coming due.

Speaker Change: Colombia remains committed to our goal of achieving an upgrade to <unk> from the current triple below for Morningstar D. BRAF.

Mark Holly: I will now turn the call over to Mark who will begin our discussion with comments on Crombie's strategy and outlook. Kara will review Crombie's operating fundamentals, discuss our financial results, capital allocation, and approach to funding, and Mark will conclude with a few final remarks.

Speaker Change: We're pleased to have received the trend change to positive previously stable.

Speaker Change: A reflection of the team's hard work and dedication.

Kara Cameron: Morningstar DVRF cited the update as reflecting our strong operating results underpinned by our grocery-anchored properties and our continued momentum in the stabilization of our recently completed major development. An important component of our financial strength is maintaining well-laddered debt maturities. For the remainder of 2024, we have $101 million of debt maturing, and in early 2025, we have a $175 million unsecured note coming due. Of the remaining 2024 debt maturities, we will look to move approximately $90 million from secured to unsecured debt.

Speaker Change: Good morning Star D. Brs cited the update reflects our strong operating results underpinned by our grocery anchored properties and our continued momentum and the stabilization of our recently completed major development.

Mark Holly: Over to you, Mark. Thank you, Ruth. Good day, everyone, and thanks for joining us for our second quarter conference call. Crombie's performance in the first half of 2024 continues to demonstrate the resilience of our coast to coast necessity-based portfolio and the proficiency of our operating teams. It also highlights our study progress against initiatives designed to enhance financial strength and flexibility while delivering growth and value for our unit holders. I'm very proud of our team's efforts both operationally and financially in the second quarter, which resulted in high occupancy, same-affet property cash and a wide growth of 3.4 percent, and a 6.7 percent increase in normalized FFO per unit.

Speaker Change: An important component of our financial strength is maintaining well latter debt maturities for the remainder of 2024, we have $101 million of debt maturing in early 2025, we have a 175 million dollar unsecured note coming due.

Kara Cameron: Of the remaining 2024 debt maturities, we will look to move approximately $90 million from secured to unsecured debt. We plan to maintain ample liquidity with access to multiple sources of capital and will continue to monitor the market for the best opportunities to refinance our maturing debt.

Speaker Change: Of the remaining 2024 debt maturities, we will look to move approximately $90 million from secured to unsecured debt.

Kara Cameron: We plan to maintain ample liquidity with access to multiple sources of capital and will continue to monitor the market for the best opportunities to refinance our maturing debt. An important milestone was reached at the debt maturity subsequent to the quarter. We signed the commitment letter to secure CMHC financing for $105 million through the MOI Select Program. During the construction phase, the loan will be at a floating rate, and upon completion of the project, it will be converted to term financing.

Speaker Change: We plan to maintain ample liquidity with access to multiple sources of capital and we will continue to monitor the market for the best opportunities to refinance our maturing debt.

Kara Cameron: And in court, a milestone was reached at the milestone subsequent to the quarter. We signed the commitment letter to secure CMHC financing for $105 million through the MLI Select program. During the construction phase, the loan will be at a floating rate, and upon completion of the project, we will confer to term financing. We anticipate closing on this financing and receiving the first advance in the third quarter.

Speaker Change: An important milestone was reached at the milestones subsequent to the quarter, we signed a commitment letter to secure.

Mark Holly: Our leasing team successfully negotiated renewal spreads of 9.6 percent on 293,000 square feet of GLA during the quarter. We anticipate healthy renewal spreads to continue, underpinned by our strong fundamentals with an outlook of achieving mid to high single-digit renewals. Crombie's resilience and performance is rooted in our unwavering commitment to operational excellence, its financial condition and flexibility, and prudent capital allocation. We maintained a strong and flexible balance sheet ending the quarter with ample liquidity debt to EBITDA of 7.6 times and leverage ratios well within our target ranges.

Speaker Change: Financing for $105 million through the MLR select program.

Speaker Change: During the construction phase alone will be at a floating rate and upon completion of the project. We will convert to term financing we anticipate closing on this financing and receiving the first advance in the third quarter.

Kara Cameron: We anticipate closing on this financing and receiving the first advance in the third quarter. To conclude, we are well positioned to continue to reach our financial goals and proactively pursue the right opportunities at the right time. With that, I will now turn the call over to Mark for a few closing comments.

Kara Cameron: To conclude, we are well positioned to continue to reach our financial goals and proactively pursue the right opportunities at the right time.

Speaker Change: To conclude we are well positioned to continue to reach our financial goals and proactively pursue the right opportunities at the right time with that I will now turn the call over to Mark for a few closing comments.

Mark Holly: With that, I will now turn the call over to Mark for a few closing comments. Thank you, Kara. To conclude, our strong performance in the second quarter underscores our commitment to delivering consistent results and advancing key strategic initiatives while allocating capital responsibly.

Mark Holly: To conclude, our strong performance in the second quarter underscores our commitment to delivering consistent results and advancing key strategic initiatives while allocating capital responsibly. Looking ahead, we remain dedicated to providing attractive returns and sustainable growth for our unit holders. And with that, we are pleased to answer any questions you may have.

Mark Holly: Thank you Kara to conclude our strong performance in the second quarter underscores our commitment to delivering consistent results and advancing key strategic initiatives, while allocating capital responsibly looking.

Mark Holly: Stepping back for a moment to look at the overall environment, the macro backdrop, while showing signs of clarity and stability, is still challenging, but Crombie continues to be well positioned to deliver cash flow growth consistently, and our overall outlook remains positive with the structural tailwinds of high immigration levels, a current shortage of quality retail space and limited new supply, demand for our necessity-based properties is strong, and to continue to drive sustainable growth into the future.

Mark Holly: Looking ahead, we remain dedicated to providing attractive returns and sustainable growth for our unit holders.

Mark Holly: Looking ahead, we remain dedicated to providing attractive returns and sustainable growth for our unit holders and with that we are pleased to answer any questions. You may have.

Unknown Executive: And with that, we are pleased to answer any questions you may have.

Unknown Executive: Thank you, ladies and gentlemen. If you'd like us a question, please press star one. To withdraw a question, press star two. One moment, please, for your first question.

Operator: Thank you, ladies and gentlemen, if you'd like to ask us a question, please press star one to withdraw a question, press star two, one moment please for your first question. Your first question comes from Lorne Kalmar from Desjardins. Please go ahead. Thanks.

Speaker Change: Thank you, ladies and gentlemen, if you'd like to ask a question. Please press star one to withdraw your question Press Star two.

Mark Holly: Today, I will focus my remarks on three primary value creation drivers that enable us to consistently achieve solid results, our operational excellence, the optimization of our assets, and our partnerships. Owning a portfolio of highly desirable assets in the heart of vibrant towns, expanding cities, and major urban centers is critical to our ability to deliver reliable cash flows and growth for our unit holders. Our portfolio is strategically allocated to high-quality grocery-engrered retail, retail-related industrial and mixed-use residential properties.

Speaker Change: Please.

Speaker Change: First question.

Lauren Callanore: Your first question comes from Lauren Callanore from Desjardins. Please go ahead. Thanks, Graffinian, everybody, and congratulations on the appointment of CFL.

Speaker Change: Your first question comes from Lauren.

Speaker Change: From Deutsche Bank. Please go ahead.

Lorne Kalmar: Thanks, good afternoon everybody, and congratulations on the appointment to CFO. Thanks, Lorne. Did I hear correctly that you guys are maintaining the 2-3% TAM Property and Ally Guidance?

Speaker Change: Thanks, Good afternoon everybody.

Speaker Change: The appointment to CFO.

Mark Holly: Thanks, Lauren. Do I know correctly that you guys are maintaining the 2-3% team property in a Y guidance? Yeah, that's correct, Lauren. So when you look at how we've been performing over the last number of quarters, and where we ended last year, we were at the 3% range. We had a really good quarter this quarter. But we're lapping some fairly strong numbers from last year. So at this point, we're maintaining our targets in that 2-3% range. Okay.

Brian: Thanks, Brian.

Speaker Change: Did I hear correctly that you guys are maintaining the 2% to 3% same property NOI guidance.

Kara Cameron: Yeah, that's correct, Lorne. So when you look at how we've been performing over the last number of quarters and where we ended last year, we were in the 3% range. We had a really good quarter this quarter, but we're lapping some fairly strong numbers from last year. So at this point, we're maintaining our targets in that 2% to 3% range.

Speaker Change: Yes, that's correct Lauren so when you look at how we've been performing over the last number of quarters and where we ended last year. We were at the 3% range. We had a really good quarter this quarter.

Speaker Change: We're lapping some fairly strong numbers from last year. So.

Speaker Change: At this point, we are maintaining our our targets in that 2% to 3% range.

Mark Holly: These are some of the most desirable asset classes in the Canadian market, which positions us well for both short-term stability and long-term growth. Our in-place annual minimum rent per square foot with $17.93 at the end of the second quarter, approximately 4%, equivalent to $0.65 per square foot higher than 12 months ago. The increase is supported by diligent leasing efforts, contractual rent step-ups, and further demonstrates our ability to extract value through unique strategic initiatives such as our modernization program while maintaining a strong weighted average lease term of 8.6 years.

Kara Cameron: Okay, is there anything you're seeing right now that gives you reason to believe that, you know, other than maybe, I think, a tougher comp in Q4? You know, that you wouldn't be able to maintain the current trajectory, at least in Q3. Because I believe if I look at Q3 of last year, it was relatively similar to the same property underline growth for the first couple quarters.

Speaker Change: Okay.

Mark Holly: Is there anything you're seeing right now that gives you reason to believe that, you know, other than maybe I think a top of comp in Q4, you know, that you wouldn't be able to maintain the current trajectory at least to 3, because I believe I looked at Q3 last year, relatively similar to the same property I know I wrote for the first couple quarters. Yeah, and I feel like that Q4, to your point, we were on the higher end that kind of landed the year. So we're going to be comping a little bit in the back half.

Speaker Change: Is there anything you're seeing right now that gives you.

Speaker Change: Reason to believe that other than maybe a tougher comp in Q4.

Speaker Change:

Speaker Change: That you wouldn't be able to maintain the current trajectory at least in Q3, because I believe they look at.

Speaker Change: At Q3 of last year was relatively similar to same property NOI growth for the first couple of quarters.

Kara Cameron: Yeah, and if you look at Q4, to your point, we were on the higher end that kind of landed for the year. So we're going to be comping a little bit in the back half, but there's nothing that we're kind of looking at in the business that gives us any concerns. You know, you've seen sort of the great work that the leasing and operations team has done on renewal growth and new leases and how we're driving value within the business. So at this point, there's nothing that we're looking at that gives us any pause, but we're just maintaining that outlook at this point.

Speaker Change: Yes, if you looked at Q4 to your point, we were on the higher end kind of landed the year. So we're going to be comping, a little bit in the back half, but there's nothing that we're kind of looking at in the business that gives us any concerns you have seen sort of the great work that the leasing office team has done in on renewal growth in new leases and how we're driving value within the.

Mark Holly: But there's nothing that we're kind of looking at in the business that gives us any concerns. You've seen sort of the great work that the leasing and off-stream has done, and on renewal growth and new leases and how we're driving value within the business. So at this point, there's nothing that we're looking at that gives us some pause, but we're just maintaining that outlook at this point. Okay, fair enough.

Mark Holly: At the end of the second quarter, 89,000 square feet of GLA was committed at an average first-year rate of $21.34 per square foot, 19% above our in-place portfolio rent per square foot. This includes one non-major development project in Burlington, Ontario where we repurposed existing vacant space within our portfolio to become the home of a new farm-boy grocery store which is expected to open in our third quarter. While acquisition investment activity is still fairly muted with limited opportunities to acquire quality grocery-engrered assets in Canada, our team successfully sourced, negotiated, and acquired a 48,000 square foot retail property from a third party for a total purchase price of approximately $9.9 million during the quarter.

Speaker Change: Yes.

Speaker Change: So at this point Theres nothing that we were looking at that gives us some pause, but we're just maintaining that outlook at this point.

Kara Cameron: Okay, fair enough. And then on the development fees, obviously, a pretty stellar quarter there. Can you maybe give us an idea of how you expect the balance of the year to evolve in terms of fees and maybe look for 25 as well, or some rough guidance?

Speaker Change: Okay fair enough.

Mark Holly: And then on the development fees, obviously, a pretty stellar quarter there.

Speaker Change: And then on the development fees, obviously, a pretty stellar quarter there.

Mark Holly: Can you maybe give us an idea of how you expect the balance of the year to evolve in terms of the fees and maybe, and what for 25 as well, or some rough guidance? Yeah, we had a weight of terrific quarter, 2.1 million. Really, what is what we're trying to do when we talked about this for a few quarters is trying to streamline that. And at this point, it's really based on deal structure and timing of recognition. And we're trying to smooth that out so that we can clip it along at a consistent level quarter based on the status of project completions.

Speaker Change: Can you maybe give us an idea of how you expect the balance of the year to evolve in terms of the season and maybe.

Speaker Change: That's a 25 as well or some some rough guidance.

Kara Cameron: Yeah, we had a terrific quarter, $2.1 million. Really, what we're trying to do, and we've talked about this for a few quarters, is trying to streamline that part of the business. And at this point, it's really based on deal structure and timing of recognition, and we're trying to smooth that out so that we can clip it along at a consistent level quarter over quarter based on the status of project completions. For the balance of the year, I would look to Q1 as a bit of a proxy for how you can model out the back half of the year.

Speaker Change: Yes, we had a we had a terrific quarter $2 1 million really what is what we're trying to do when we've talked about this for a few quarters is trying to streamline that that part of the business.

Speaker Change: And at this point, it's really based on deal structure and timing of recognition.

Speaker Change: And we're trying to smooth that out and so that we can clip it along at a consistent level of quarter over quarter based on the status of project completions.

Mark Holly: This asset is anchored by Empire's Freshco banner located in the heart of Powell River, British Columbia, serving the community needs and aligning well with our grocery anchored asset base. This site also has opportunity for future intensification which allows us to drive additional value at this property through our non-major development program.

Mark Holly: For the balance of the year, I would look to probably Q1 as a bit of a proxy to how you can model out the back half of the year. And for 2025 and beyond, I think where we landed the year in 2023 at $3.4 million is a fairly reasonable number. But, as we talked about, this is a very early program that we're sort of leaning into. The team is doing a good job, but it's early days.

Speaker Change: For the balance of the year I would look to probably Q1 is a bit of a proxy to how you can model out the back half of the year.

Speaker Change: And for 2025 and beyond.

Kara Cameron: And for 2025 and beyond, you know, I think where we landed the year in 2023, at $3.4 million, is a fairly reasonable number. But, as we talked about, this is a very early program that we're sort of leaning into. The team is doing a good job, but it's early days.

Speaker Change: Where we landed the year in 2023.

Mark Holly: Next, I'll focus on portfolio optimization, which is an important program to drive ABFO and Navgro. We are focused on reinvesting within our portfolio and identifying the most effective uses of our assets to maximize returns and strategically allocate capital. Our development program is split into two categories of major development and non-major development. Our existing portfolio has approximately 10.5 million square feet of potential major development densities spanning coast to coast, providing a pathway for Crombie to unlock embedded value and drive responsible growth both via self-development, joint venture partnerships, or from time to time monetizing entitlement values through dispositions.

Speaker Change: At $3 $4 million is a fairly reasonable number.

Speaker Change: But as we've talked about this as a very early program that were sort of leaning into the team is doing good job.

Speaker Change: But it's early days.

Unknown Executive: Okay, sorry not.

Kara Cameron: Okay, fair enough. And then, just last one for me, I believe you talked about there being something like 300 banners looking for space right now.

Speaker Change: Okay Fair enough and then just last one from me I believe you talked about there is something like 300 banners space right now.

Mark Holly: And then just last one for me, I believe you talked about there's some like 300 banners for space right now. Has that changed at all? I know there's been some softer retailer earnings. Just wondering if you're seeing any change there. Yeah, we talked about just the healthiness of the retail portfolio. Ari, who's with us today, certainly give a lot of color on all the great work his team is doing in that class. But yes, there's been a lot of great groups looking to grow their portfolios. No real change. No, we're seeing a lot of interest in our open air grocery anchor portfolios.

Kara Cameron: Has that changed at all? I know there's been some softer retailer earnings. Just wondering if you're seeing any change there.

Speaker Change: Has that changed at all I know there's been some softer retailer earnings just wondering if you're seeing any change there.

Kara Cameron: Yeah, we've talked about just the healthiness of the retail portfolio. Ari, who's with us today, certainly gave a lot of color on all the great work his team is doing in that class. But yes, there have been a lot of great groups looking to grow their portfolios.

Speaker Change: Yes, we've talked about just.

Speaker Change: The healthiness of the retail portfolio.

Speaker Change: With us today is certainly give a lot of color on all the great work his team is doing.

Speaker Change: In that class, but yes, there's been a lot of a lot of great.

Mark Holly: In the second quarter, we close the sale of our broader site in Toronto to a private developer. Crombie received total proceeds of $13 million for its 50% stake in the property. The purchase price was significantly above IFRS fair value, further reflecting the quality and attractiveness of our portfolio. Our one active major development project, the Marlestone and Halifax, will introduce 291 residential units to expanding portfolio and will be a welcome addition to one of Canada's fastest growing cities.

Speaker Change: Groups looking to grow their portfolios.

Kara Cameron: Okay, so no reels.

Speaker Change: No real change.

Kara Cameron: No, we're seeing a lot of interest in our open-air, grocery-anchored portfolio, so a lot of QSRs, a lot of value retailers, and they're really coming to us because of the footfall that we're seeing out of our grocery anchors at those properties. A lot more tenants are gravitating toward that asset class, so we remain really optimistic about the growth profile we have in that asset class.

Speaker Change: No we're seeing a lot of interest in our open air grocery anchored portfolio. So a lot of <unk> are a lot of value retailers.

Mark Holly: So a lot of QSR, a lot of value retailers. And they're really coming to us because of the football that we're seeing out of our grocery anchors at those properties. So a lot more tenants are gravitating towards that asset class. So we remain really optimistic about the growth profile we have in that asset class.

Speaker Change: And they're really coming to us because of the footfall that we're seeing out of our grocery anchors.

Speaker Change: So a lot more tenants are gravitating towards that asset class. So we remain.

Mark Holly: We remain on track recently completing the sixth level of the residential structure with substantial completion expected the first half of 2026. Our non-major development program, which is encompasses shorter duration projects, remains a high priority especially in the economic environment. The current project pool has an anticipated yield on cost between 5.5% and 10.7% and they are a great way to enhance and strengthen the value of our portfolio. There is currently 54,000 square feet of GLA under construction, which will be added to our portfolio over the course of 2024 and 2025.

Speaker Change: Really optimistic about the growth profile, we have in that asset class.

Kara Cameron: Okay, fantastic. Thank you everybody for the call. I will turn it back.

Lauren Callanore: Okay, fantastic. Thank you, everybody, for the color.

Speaker Change: Okay Fantastic. Thank you everybody for the color I will turn it back.

Unknown Executive: I will turn it back. Thanks, Laura.

Laura: Thanks, Laura.

Mike Markidis: Your next question comes from Mike Markidis from BMO Capital Markets. Please go ahead. Thanks, Operator.

Operator: Your next question comes from Mike Markidis from BMO Capital Markets. Please go ahead.

Speaker Change: Your next question comes from Mike Marquez from BMO capital markets. Please go ahead.

Michael Markidis: Thanks, operator. Kara, congratulations on the permanent appointment. Can you just remind me, I know there are advantages to MLI Select, and obviously it's great to get Sumayya's financing, but what are the particular advantages of this particular loan from a rate or LTV perspective, and are there any concessions on your part in order to receive that right?

Mike Marquez: Thanks, operator.

Kara Cameron: Cara, congratulations on the permanent appointment. Can you just remind me? I know there are advantages in BMO. I'm glad it's great to see you financing. But what the particular advantages are with this particular loan from a rate or LTV perspective, and there are any gifts on your partner's overseas that way. Yeah, so I think that there's quite a few advantages on the right side of things with this MHC in short, and the MRI select really does have some advantages, especially for our milestone, which is really, I think, doing well on the accessibility. We've talked about it being cancer and certified upon completion.

Speaker Change: Karen congratulations on the permanent appointment.

Karen: Uh huh.

Speaker Change: Can you just remind me I know there are advantages to my last slide Thats great to hear.

Speaker Change: And you can ask them, but what the particular advantages are with this particular loan from a a rate or LTV perspective, and there are any.

Mark Holly: Although we did not add incremental GLA from non-major development activities to our portfolio in the second quarter, we were still very active, investing $24.9 million at 77 properties in modernizations with Empire, which will positively impact our NOI for 2024 and beyond.

Speaker Change: It gives on your part where you receive that rare.

Kara Cameron: Um, yeah, so I think that there are quite a few advantages on the right side of things with the CMHC, in short, and the MLI select really does have some advantages, especially for our milestone, which is really, I think, you know, doing well on accessibility. We, we've talked about it being Rick Hansen certified upon completion.

Speaker Change: Yeah. So I think that there is a quite a few advantages on the on the rate side of things with the CMA and short in the MLR select really does have some advantages, especially for our milestone which is.

Mark Holly: Turning to partnerships and the critical role they play in our strategy, the largest of these is our mutually beneficial partnership with Empire. This is highlighted within the quarter as the Alberta warehouse entered economic occupancy, investments in our modernization program and income earned from our development expertise. Last year, Chrome began providing development and construction management expertise and in the second quarter of 2024 revenue from these services contributed $2.1 million. Revenue will ebb and flow each quarter as we continue to work to streamline the synergistic partnership.

Speaker Change: Uh huh.

Speaker Change: Really I think doing well on the accessibility.

Speaker Change: We've talked about it being breck Hanson certified upon completion, and so that really helped us out in and getting favorable rates. We ended up about middle tier in that MLR select program.

Kara Cameron: And so that really helped us out in getting favorable rates; we ended up about in the middle tier in that MLI select program. And so yeah, during construction, we are looking at having a floating rate until the end of construction. And that's going to be about 160 basis points above our lenders' cost of debt, and that lenders' cost of debt will loosely follow the overnight rates for us. And so the MLI select program has benefits when we look at affordability, accessibility, as well as climate compatibility. And we did very well on accessibility as well as climate compatibility.

Kara Cameron: And so that really helps us out in getting favorable rates. We ended up about middle tier in that MRI Select program. And so, yeah, during construction, we are looking at having a floating rate until the end of construction. And that's going to be about 160 basis points above our lender's cost of debt. And that lender's cost of debt will loosely follow the overnight rate for us. And so the MRI Select program has benefits when we look at affordability, accessibility, as well as climate compatibility. And we did very well on the accessibility as well as the climate compatibility.

Speaker Change: And so yeah. During construction, we are looking at having a floating rate until the end of construction and thats going to be about 160 basis points above our lenders' cost of debt and that lenders talk to that will loosely follow the overnight rate for us and for them.

Speaker Change: Analyze select program has benefits when we look at affordability accessibility as well as climate compatibility and we did very well on the accessibility as well as the climate compatibility.

Mark Holly: In addition to the tremendous relationship we have with Empire, expanding our partnerships is a focus for Chromebee to enable us to unlock the value in our extensive development pipeline while maintaining our top quality balance sheet. Collaborating with the right partners enables us to strategically develop properties while maintaining a disciplined focus on capital allocation and maximizing returns for our unit holders.

Kara Cameron: Okay, wonderful. And then when you go to fix that out, when it converts to a fix rate, is the spread, is there any advantage there, or is there just trying to get a sense? Yeah, there will be an advantage there as well. Hopefully more to come on that when we come out of the construction phase and go to fix. We'll be able to give a bit more color on what that looks like. And we're just not getting guidance on that right in the moment.

Kara Cameron: Okay, wonderful. And then when you go to fix that out, when it converts to a fixed rate, is the spread, is there any advantage there?

Speaker Change: Okay Wonderful and then when you go to fix that out when it converts to a fixed rate.

Speaker Change: What's the spread is there any advantage there.

Speaker Change: I'm, just trying to get a sense.

Kara Cameron: Yeah, there will be an advantage there as well. Hopefully, more to come on that when we come out of the construction phase and go to six. We'll be able to give a bit more color on what that looks like. We're just not getting guidance on that right now.

Speaker Change: Yes, there will be an advantage there as well.

Mark Holly: I want to take a moment to highlight the great work the team has done in advancing our ESG commitments and further embedding ESG priorities into our strategy, culture and values. I am proud of the accomplishments to date. In June, we released our 2023 ESG report which highlighted our environmental, social and governance achievements last year. 2023 was a meaningful year for Chromebee where we made significant progress tracking, measuring and reducing our greenhouse gas emissions through our climate action plan. Our team volunteered thousands of hours to community organizations across the country and we introduced a community impact strategy to maximize our contributions to the communities we serve.

Speaker Change: Hopefully more to come on that when we come out of the construction phase and go to <unk> will be able to give a bit more color on what that looks like.

Speaker Change: Just not giving guidance on that right at the moment.

Kara Cameron: Okay, fair enough. Okay, so I mean, the existing business is doing well. Maybe the rate environment is getting a little bit better. Mark, I know that when you were sort of in your, I guess it was the early days in your tenure, but in the initial stages of your tenure. You want to be very cautious in terms of the amount of capital that you want to put into development at one period of time versus maybe where Crombie has been in the past.

Unknown Executive: Okay, fair enough. Okay, so I mean, the existing business is doing well. Maybe the rate environment is getting a little bit better.

Speaker Change: Okay fair enough.

Speaker Change: Okay. So I mean, the existing business is doing well.

Speaker Change: Maybe the rate environment, getting a little bit better market and all of that when you sort of.

Mark Holly: Mark, I know that when you sort of in your, I guess it was early days in your tenure, but in your initial stages of your tenure, you wanted to be very cautious in terms of the mental capital that you wanted to put out into development at one period of time versus maybe where Crombie's been in the past. But I guess from a step-change perspective, just with programs announced, such as an online selector or any of the other incentives that are out there to try and spur construction and maybe improving it on the right side, does that make you want to get maybe a little bit more aggressive in terms of putting capital into the ground?

Speaker Change: Your.

Speaker Change: Early days in your tenure, but.

Speaker Change: Your initial stages of your tenure.

Speaker Change: <unk>.

Speaker Change: You wanted to be very cautious in terms of the amount of capital that you wanted to put out.

Speaker Change: Development at one period of time versus maybe where it probably has been in the past, but I guess.

Kara Cameron: But I guess from a step change perspective, just with programs announced such as MLI Select or any of the other incentives that are out there to try and spur construction and maybe in... Proving Outlook on the right side, does that make you want to get maybe a little bit more aggressive in terms of putting capital into the ground?

Speaker Change: A step change perspective, just with <unk>.

Mark Holly: Before handing the call over to Kara, I want to congratulate her on being appointed Chief Financial Officer. Since joining Crombie in 2019, Kara has been in a type of part of our financial leadership team known for her strategic thinking and commitment to our financial strength. I look forward to continue our collaboration to further advance Crombie strategy.

Speaker Change: Programs announced that she's got all our select or any of the other incentives that are out there to try and spur construction and maybe.

Speaker Change: Improving outlook on the rate side does that make you want to get maybe a little bit more aggressive in terms of putting.

Speaker Change: Capital into the ground.

Mark Holly: Well, we typically give a guidance around is, you know, we have a humble of about $250 million last year. We spent on the lower side of what we would historically would have spent. We spent around 180, and how we spent the money to your point was different than historically. We put a lot of investments in the non-major development category because we had a bit more certainty around timing in and timing out cost, and they had very attractive returns. And so when you look at 2024, we're still leaning into non-major developments. We're still in that range between $102 and $250 million of capital being spent.

Mark Holly: What we typically give guidance around is, you know, we have an envelope of about $250 million. Last year, we spent on the lower side of what we would have spent historically. We spent around $180 million. And how we spent the money, to your point, was different than historically.

Speaker Change: Well, we typically giving guidance around us.

Speaker Change: We have a.

Speaker Change: Envelope of about $250 million last year, we spent on the lower side of what we had historically would've spent we spent around 180.

Kara Cameron: I will now hand the call over to Kara who will highlight our operational vaults and discuss our financial results, the cornerstone of our solid foundation, our balance sheet. Thank you very much Mark and hello everyone. We are pleased with our operational and financial performance in the quarter.

Speaker Change: And how we spent the money to your point was was different and historically, we've put a lot of investments in the non major development category, because we had a bit more certainty around timing and timing out cost and they had very attractive returns and so when you look at 2024, we're still leaning into non major developments.

Mark Holly: We put a lot of investments in the non-major development category because we had a bit more certainty around timing in and timing out costs, and they had very attractive returns. And so when you look at 2024, we're still leaning into non-major development. We're still in that range between $100 million and $250 million of capital being spent. And when you look at the sort of the splits between major development and non-major development, for the year, it will be slanted toward non-major.

Kara Cameron: Our strategic focus remains on value creation, prioritizing our solid financial position and prudent approach to capital allocation while advancing key initiatives. Strong leasing activity over the last 12 months, including new leases and renewals, as well as contractual step-ups, propelled same asset property cash and alloy growth to 3.4%, equivalent to an increase of $2.6 million compared to the second quarter of 2023. Looking ahead, we still expect to achieve annual same asset property cash and alloy growth in the 2-3% range for 2024, consistent with the targets we have previously communicated.

Speaker Change: We're still.

Speaker Change: In that range between 102 hundred $50 million of capital being spent and when you look at sort of the splits between major development in non major development for the year it will be slanted towards.

Mark Holly: And when you look sort of the split between major development and non-major development for the year, it will be planted towards non-major. And then looking ahead, you know, we're very focused on entitlement work, and we continue to invest in that. And when we get a little bit more clarity and certainty around the market, we have a number of projects that are on our near term pipeline that will be able to make some decisions against whether it be self-developed, search joint ventures, or to monetize. We'll start to make some decisions around that in probably the next 12 months or so.

Speaker Change: Non major.

Speaker Change: Then looking ahead.

Mark Holly: And then looking ahead, we're very focused on entitlement work, and we continue to invest in that. And when we get a little bit more clarity and certainty around the market, we have a number of projects that are in our near-term pipeline that we'll be able to make some decisions on. Whether it be self-developed or joint ventures or to monetize, we'll start to make some decisions around that in probably the next 12 months or so.

Speaker Change: We're very focused on entitlement work.

Speaker Change: We continue to invest in that and when we get a little bit more clarity.

Speaker Change: Certainly around the market, we have a number of projects that are on our near term pipeline that we'll be able to make some decisions against whether it be self develops or joint ventures or to monetize we will start to make some decisions around that and probably the next 12 months or so.

Kara Cameron: New leases, on a year-to-day basis, increased occupancy by 122,000 square feet at an average first-year rate of $25.61, boosting our in-place rent per square foot. Note worthy new leases in the quarter include five primarily necessity-based tenant expansions, totaling approximately 10,000 square feet, as well as our co-owned industrial facility, Alberta Central Kitchen Commissary, which moved into economic occupancy and commenced paying rent in June. As Mark previously mentioned, 293,000 square feet was renewed in the second quarter at a 9.6% increase for year-one over expiring rental rates, with healthy contribution from each market class.

Mark Holly: Okay, that's great. One more thing for me before I turn it back. I guess in your intro comments, you talked about your third pillar, which is, you know, your partnerships, and I think you said you wanted to grow your partnerships. So maybe just on that topic, when you said you wanted to grow, is that obviously Empire to give, and I guess the other partners that you have is that to grow with the existing partners or to potentially Somewhat near term on that one.

Unknown Executive: Okay, that's great.

Speaker Change: Okay, that's great Hartford reported turned it back I guess in your initial comments you talked about your third pillar, which is.

Mark Holly: I want to move forward to the back. I guess in your initial comments, you talk about your third pillar, which is your partnerships. And I think you said you wanted to grow your partnerships. So maybe just on that topic, when you say you want to grow, is that obviously, I'm fired to give.

Speaker Change: Your partnerships.

Speaker Change: You said you want to grow your partnership so maybe just on that topic. When you say do you want to grow.

Speaker Change: Is that.

Speaker Change: Obviously empire given I guess the other partners that you have is that to <unk>.

Mark Holly: And I guess the other partners that you have is that to grow with the existing partners or to potentially expand on new, and if the latter is there anything that's sort of, you know, somewhat near term on that. Definitely for empires, you're absolutely right. That's a given. We will continue to grow as it works for us, as we did with the Alberta Commissary Kitchen, where we have some built that. We did the Burlington Farm Boy; we're leaning into modernization development revenue services. There's a lot of great work and synergies between that, and we want to continue to grow that.

Speaker Change: Some partners or to potentially expand on new and if the latter is there anything that sort of.

Speaker Change: Somewhat near term on that front.

Mark Holly: Definitely for Empire, you're absolutely right, that's a given. We will continue to grow as it works for us, as we did with the Alberta Commissary Kitchen Warehouse. We built that, we did the Burlington Farm Boy. We're leaning into modernization, and development revenue services. There's a lot of great work and synergies between that, and we want to continue to grow that. When we look to our development pipeline on the major side, yeah, we're going to have to action some of that through joint ventures if we're acting on it. We did Marlstone on our own, but it is a very significant pipeline, and if we want to get at it effectively and efficiently without compromising the balance sheet, we're going to have to look at what partnerships may look like, so definitely something we're exploring.

Speaker Change: Definitely for empires, Youre, absolutely right Thats, a given we.

Speaker Change: We will continue to grow as it works for us as we did with the Alberta commentary kitchen warehouse and built that we did the Burlington Farm Boy, we're leaning into Modernizations development revenue services. There's a lot of great work in synergies between that we want to continue to grow that.

Kara Cameron: The team puts an emphasis on achieving rental growth throughout the duration of the lease, securing an 11.8% increase when comparing the expiring rental rate to the weighted average rental rate for the renewal term. It is this commitment to operational excellence that has led to our high occupancy ending the quarter with committed and economic occupancy of 96.4% and 95.9% respectively. While occupancy is in line with the second quarter of 2023, we saw a 20 basis point improvement in both committed and economic occupancy from the first quarter of 2024.

Mark Holly: When we look to our development pipeline on the major side, yeah, we're going to have to action some of that through joint ventures if we're actioning it. We did Marlstone on our own, but as it is a very significant pipeline and if we want to get at it effectively and efficiently, though compromising the balance sheet, we're going to have to look at what partnerships might look like. So definitely something works for us.

Speaker Change: And we look to our development pipeline on the major side, yes, we're going to have to action some of that through joint ventures. If we're actioning. It we did marlstone on our own but it is a very significant pipeline and if we want to get at it.

Speaker Change: Effectively and efficiently without compromising our balance sheet, we're going to have to look at what partnerships may look like so definitely something we're exploring.

Mark Holly: Okay, and is the growth outside of MPAR with existing, or would that be exploring new, or is it both?

Mark Holly: Okay, and is the growth outside of Empire with existing customers or would that be exploring new ones, or is it a bit of both?

Speaker Change: Okay and is the growth outside of them are with existing or would that be exploring.

Kara Cameron: Normalized for employee transition costs incurred in the second quarter of both 2023 and 2024, AFFO and FFO per unit increased 7.7% and 6.7% respectively. The improvement in normalized AFFO and FFO per unit was primarily a result of our persistent focus on our primary value drivers. Our commitment to operational excellence and optimizing our assets led to higher property revenue from leasing activity and completed development. Funds. Leveraging partnerships also contributed to higher revenue, as well as increased income from equity-accounted investments largely due to the positive leasing momentum over the last 12 months at the village of Vranti Harbor.

Speaker Change: Uh huh.

Unknown Executive: Both? Wonderful.

Speaker Change: Both.

Mark Holly: Wonderful. Thanks so much. I'll turn it back.

Speaker Change: Wonderful thanks, so much I'll turn it back.

Unknown Executive: Thanks so much; I'll turn it back.

Operator: Your next question comes from Brad Sturges from Raymond James. Please go ahead.

Rob Sturges: Your next question comes from Rob Sturges, from Reverend James. Please go ahead. Hey there, just to go back quickly on the MI select loan, what would be the timing of, I guess it's going to be a stagger draw, but what would be the timing being fully deployed on that long? We're looking at early 2026. Okay, so I guess it'll match the spend of the project, so there's, you know, by the time you get closer to the completion, that's when you'd be fully drawn. Correct, got it.

Speaker Change: Your next question comes from Brad Sturges from Raymond James. Please go ahead.

Brad Sturges: Hey there. Just to go back quickly on the MLA Select loan, what would be the timing of, I guess it's going to be a staggered draw, but what would be the timing of being fully..., deployed on that law?

Brad Sturges: Hey, there.

Speaker Change:

Speaker Change: Just to go back quickly on the MLR at select.

Speaker Change: Loan.

Brad Sturges: What would be the timing of I guess, it's going to be staggered draw, but it won't be the timing being fully.

Brad Sturges: Deployed on that loan.

Kara Cameron: We're looking at early 2026.

Speaker Change: We're looking at early 2026.

Kara Cameron: Okay, so I guess it'll match the spend of the project. So there's, you know, by the time you get closer to completion, that's when you'd be fully drawn in. Correct. Got it.

Speaker Change: Okay.

Speaker Change: I guess it will match the spend.

Speaker Change:

Speaker Change: Of the projects. So there is.

Speaker Change: At the time, you get closer to the completion, that's when you'd be fully drawn.

Kara Cameron: This was partially offset by higher interest expense. We take a proactive approach to balance sheet management to minimize the impact of the current high interest rate environment through constant monitoring of the market and our weighted average term to maturity. Our normalized AFFL payout ratio was 79.4% while our normalized AFFL payout ratio was 69.1%, both improving from Q2 of 2023. General and administrative expenses were $5.4 million in the quarter or $4.7 million excluding employee transition costs.

Speaker Change: Correct got.

Speaker Change: Got it.

Mark Holly: In terms of the maybe switching gears on the leasing spreads, obviously it's been quite healthy this year.

Kara Cameron: In terms of the, maybe switching gears just on the leasing spreads, obviously, they've been quite healthy this year. With the reported numbers, I think around 10%, would those include fixed rate options? And if they do, what would be the leasing spreads for those leases without the option renewal? or the non-option renewal.

Speaker Change: In terms of the maybe switching gears just on the leasing spreads.

Speaker Change: And quite healthy.

Speaker Change: This year.

Mark Holly: What would the reported numbers, I think around 10%, with those include fixed rate options, and if they do, what would be the leasing spreads for those leases without or the non option number nulls? Alright, so they do include fixed rate renewals within that; we don't break that out separately. What I would say is that this was a fairly typical quarter and composition of our renewals, and to your point, we're in the range of around 10% year to date, and we're comfortable that we're on a glide path towards admit to high single digits for the end of the year.

Speaker Change: With the reported numbers I think around 10%, which does include fixed rate options and if they do.

Speaker Change: What would be the leasing spreads for those leases without.

Speaker Change: Or the non option renewals.

Kara Cameron: Hi Brad, so they do include fixed-rate renewals within that; we don't break that out separately. What I would say is that this was a fairly typical quarter and composition of our renewals, and to your point, we're in the range of around 10% year to date, and we're comfortable that we're on a glide path toward mid to high single digits for the end of the year.

Speaker Change: Hi, Brian So they do include fixed rate renewals within that we don't break that out separately. What I would say is that this was a fairly typical quarter and composition of our renewals and to your point.

Kara Cameron: Adjusting for employee transition costs in the second quarter of 24 and 23, general and administrative expenses as a percent of property revenue or 4% and 4.3% respectively. We proactively manage these costs and have been able to derive a new revenue stream without adding incremental expense.

Speaker Change: We're in the range of around 10% year to date.

Speaker Change: And we're comfortable that we're on a glide path towards that mid to high single digits for the end of the year.

Kara Cameron: I guess what I'm trying to get at is trying to understand what the incremental mark-to-market could be beyond the spreads you're disclosing. Obviously, that will be consistent, I guess, in future quarters that you'll have that sort of mix between... options and non-options, but I'm curious to know how much incremental mark-to-market there could be, particularly for those with the non-option rules.

Mark Holly: I guess what I'm trying to get is trying to understand what the incremental mark to market could be beyond the spread is closing. Obviously, you know, that that will be consistent, I guess, in future course that you'll have that sort of mix between options and non-options, but I'm curious to know if there how much incremental mark to market there could be for particularly for those with the non-option rules. It's a bit of a mixed bag on some of those fixed rate options; some of them are coming off of a very low rate, so the percentage could be could be high. But again, it's delivered all over the matter.

Brian: I guess, what I'm trying to get trying to understand what the incremental mark to market could be beyond.

Kara Cameron: Now, turning to our balance sheet. Our strong financial condition is marked by our steadfast focus on leverage, liquidity and a well-structured maturity ladder to ensure we have access to multiple capital sources to support our growth and operational strategies. We ended the quarter with available liquidity of $707 million and our unencumbered AFFL pool increased from $2.6 billion at Q4 2023 to $2.7 billion in the quarter of 2024. Death to growth fair value was 42.6%, down 40 basis points compared to Q4 of 2023, and our death to trailing 12-month adjusted EBITDA was 7.68 times and improvement from 8.03 times at December 31, 2023.

Speaker Change: Beyond the trends Youre disclosing obviously.

Speaker Change: That will be consistent I guess in future quarters that you'll have that right.

Speaker Change: Our mix between.

Speaker Change: Options in non options, but I'm curious to know how much incremental.

Speaker Change: Mark to market, there could be for particularly for those with the non auction rules.

Kara Cameron: It's a bit of a mixed bag on some of those fixed rate options; some of them are coming off of very low rates, so the percentage could be high, but again, it's a little bit all over the map right now.

Speaker Change: It's a bit of a mixed bag on some of those.

Speaker Change: Fixed rate options some of them are coming off of a very low rates. So the percentage could be could be high but.

Speaker Change: Again, it's deliberate all over the map right.

Kara Cameron: Okay, no problem. And just last question on... On the capital investment deployment strategy, as you said, you've been focused a little bit more on the major developments and progressing some of the entitlement on the major developments. How do you think about the pipeline or the opportunity just from like a tuck-in acquisition perspective? You did the one deal this quarter, but the transaction market's been kind of muted, so how do you think about that, at least in the next few quarters?

Mark Holly: Okay, no problem. And just last question on the capital investment, the point of strategy, obviously, as he said, you've been focused a little bit more on the non-major development and progressing some of the entitlement on major development. How do you think about the pipeline or the opportunity just from like a tuck-in acquisition perspective, either the one deal this quarter, but the trend of the actual market has been kind of muted? So how do you think about that, at least in the next few quarters? Yeah, in terms of our acquisition, if you broke up just there at the end, are you speaking about acquisitions in the market?

Speaker Change: Okay.

Speaker Change: No problem and just last question on <unk>.

Speaker Change: On the capital investment deployment strategy.

Speaker Change: As you said, you've been focused a little bit more on the non major development.

Kara Cameron: Columbia remains committed to our goal of achieving an upgrade to triple B mid from the current triple B low for Morningstar DBRS. We are pleased to have received a try and change to positive previously stable, a reflection of the team's hard work and dedication. Morningstar DBRS cited the update reflects our strong operating results underpinned by our grocery anchored properties and our continued momentum in the stabilization of our recently completed major development.

Speaker Change: And progressing some of your entitlement on major development, how do you think about.

Speaker Change: The pipeline or the opportunity just from like a tuck in acquisition perspective.

Speaker Change: The one deal this quarter, but.

Speaker Change: The transaction market has been kind of immediate so how do you. How do you think about that at least for the next few quarters.

Kara Cameron: Yeah, in terms of our acquisition, you broke up just there at the end. Are you speaking about acquisitions in the market?

Speaker Change: Yes in terms of our acquisition you broke up just there.

Speaker Change: Thinking about acquisitions in the market.

Kara Cameron: Yeah, just talking acquisitions, what you're seeing in the pipeline, you know, are you expecting it to still be muted going forward, or are there any green shoots in terms of maybe seeing a little bit more opportunity from an acquisition point of view?

Mark Holly: Yeah, just a tuck-in acquisition where you're seeing the pipeline; you're expecting it to still be muted going forward. Is there any green shoots in terms of maybe seeing a little bit more opportunity from an acquisition point of view?

Speaker Change: Yes. This is the tuck in acquisitions, what you see in the pipeline.

Speaker Change: Are you expecting it to still be muted going forward or is there any green shoots in terms of maybe seeing a little bit more opportunity from an acquisition point of view.

Kara Cameron: An important component of our financial strength is maintaining well-latter debt maturities. For the remainder of 2024, we have $101 million of debt maturing, and in early 2025, we have a $175 million unsecured note Duke coming due. Of the remaining 2024 debt maturities, we will look to move approximately $90 million from secured to unsecured debt. We plan to maintain ample liquidity with access to multiple sources of capital and will continue to monitor the market for the best opportunities to refinance our maturing debt.

Kara Cameron: I wish I could see a bit more green shoots. Our team did a great job wrestling out a third party from the Powell River grocery anchor site, and we have some opportunities there to intensify it. So those are the things that we're looking for. The team is active, but there's nothing that's coming to the surface that we look at, and we look at the price, and it's compelling, and it also has the ability to add additional value for us over time. So those are the two factors we're looking for. But they're tough to find. We're constantly looking for it, and we do have capital available to do so if it becomes available.

Mark Holly: I wish I could see a bit more green shoots. Our team did a great job on wrestling out from the third party to Power River grocery anchored site and we have some opportunities there to intensify it. So, you know, those are the things that we're looking for. The team is active, but there's nothing that's coming to surface that we look at and we look at the price and it's compelling, and it also has an ability to add additional value for us over time. So, those are the two factors we're looking for. They're tough to find.

Speaker Change: I wish I could see a bit more green shoots.

Speaker Change: Our team did a great job on wrestling out from a third party the powder River grocery anchored site and we have some opportunities there to intensify it.

Speaker Change: So those are the things that we're looking for the.

Speaker Change: The team is active but theres nothing thats coming to surface that we look at it and we look at the price and it's compelling and it also has an ability to add additional value for us overtime.

Speaker Change: So those are the two factors, we're looking for they're there they're tough to find we're constantly looking for it we do have capital available to do it if it becomes available.

Mark Holly: We're constantly looking for it. We do have capital available to do it if it becomes available.

Kara Cameron: And in court and milestone was reached at the milestone subsequent to the quarter. We signed the commitment letter to secure CMHC financing for $105 million through the MLI select program. During the construction phase, the loan will be at a floating rate and upon completion of the project, we will confer to term financing. We anticipate closing on this financing and receiving the first advance in the third quarter.

Unknown Executive: Okay, make sense. We'll turn it back.

Kara Cameron: Okay, that makes sense. We'll turn it back.

Speaker Change: Okay makes sense I'll turn it back.

Speaker Change: Yeah.

Operator: Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star 1. Your next question comes from Mario Saric from Scotiabank. Please go ahead.

Mario Saric: Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one. Your next question comes from Mario Saric from Skolshebank. Please go ahead. Hi, good afternoon. Sorry, I wanted to come back to the same storyline discussion. So, the two to three percent that's been maintained on the tougher consular year. So, we sit back and listen to this and come think it seems like you're a bit more confident in your understanding of these spreads now, kind of roughly meant the high school digit relative to mid digit before, I believe. Going forward, the strength of your role in the environment seems pretty good.

Speaker Change: Ladies and gentlemen, as a reminder, if you'd like to ask a question. Please press star one.

Speaker Change: Our next question comes from Mario Mario <unk> from Scotiabank. Please go ahead.

Mario Saric: Hi, good afternoon. Sorry, I wanted to come back to the same story in a live discussion.

Mario Mario: Hi, good afternoon.

Speaker Change: Oh, sorry.

Speaker Change: Wanted to come back to the.

Kara Cameron: To conclude, we are well positioned to continue to reach our financial goals and proactively pursue the right opportunities at the right time.

Kara Cameron: So the two to 3% that's been maintained on the tougher comps year over year. So we sit back, and unless I'm missing something, it seems like you're a bit more confident in your lease spreads. Now kind of referencing mid to high single digits, relative to mid digits before, I believe, going forward, so the strength of the overall environment seems pretty good. So by keeping the two to 3%, acknowledging that in Q4 last year it was 4% and so on. Are you inherently implying that you expect occupancy to come down a little bit in the second half of the year, or is it just simply maintaining the 2-3%, and we'll see how it goes from there?

Speaker Change: The same store NOI.

Mario Mario: Discussions on the 2% to 3% that's been.

Speaker Change: Maintain.

Speaker Change: On the on the tougher comps year over year, So we sit back.

Mark Holly: With that, I will now turn the call over to Mark for a few closing comments. Thank you, Kara. To conclude, our strong performance in the second quarter underscores our commitment to delivering consistent results and advancing key strategic initiatives while allocating capital responsibly. Looking ahead, we remain dedicated to providing attractive returns and sustainable growth for our unit holders.

Speaker Change: If I'm missing something it seems like you're a bit more confident in your lease spreads.

Speaker Change: I'll kind of referencing mid to high single digit relative to mid digit before I believe.

Speaker Change: Going forward some of the strength of the overall environment seems pretty good so by keeping the 2% to 3%.

Kara Cameron: So, by keeping the two to three percent, the acknowledging that in Q4 last year is four percent and so on. Are you inherently implying that you expect occupancy to come down a little bit in the second half of the year, or they would just simply maintain the two to three percent?

Speaker Change: <unk> that in Q4 last year it was four.

Speaker Change: 4% and so on.

Speaker Change: Or are you inherently implying that you expect occupancy to come down a little bit in the second half of the year or is it just simply.

Unknown Executive: And with that, we are pleased to answer any questions you may have. Thank you, ladies and gentlemen. If you'd like us a question, please press star one to withdraw a question, press star two. One moment, please, for your first question.

Speaker Change: Maintaining the 2% to 3%.

Speaker Change: Right.

Kara Cameron: It's the latter, Mario. So, to your point about what we are comping versus Q4, we came off a high number. When you adjust for lease termination income from bad debt, it's 3.1. We kind of look at the range that we're in, and we think 2% to 3% is the right range that we want to continue to give. From where we sit today, it's definitely not going to be on the low end of the 2% to 3%, but we're maintaining that target. It's in our historical range, and we're pretty comfortable with maintaining it at this point.

Kara Cameron: It's the latter, Mario. So, when to your point around what we are comping versus Q4, we came off a high number when you adjust for at least termination income from bad debt is 3.1. And so, we kind of look at the range that we're in and we think two to three percent is the right range that we want to continue to give. It's from where we sit today. Definitely not going to be on the low end of the two to three percent. But, you know, we're maintaining that target. It's in our historical range, and we're pretty comfortable to maintain it at this point.

Speaker Change: It's the latter Mario so when to your point around what we're Comping versus Q4, we came off a high number when you adjust for lease termination income and some bad debt at three one and so we kind of look at the range that we're in and we think 2% to 3% is the right range that we want to continue to give.

Lauren Callanore: Your first question comes from Lauren Callanore from Desjardins. Please go ahead.

Kara Cameron: Thanks, Graffinian, everybody, and congratulations on the appointment of CFL. Thanks, Lauren. Do I know correctly that you guys are maintaining the 2-3% team property in a Y guidance? Yeah, that's correct, Lauren. So when you look at how we've been performing over the last number of quarters, and where we ended last year, we were at the 3% range. We had a really good quarter this quarter. But we're lapping some fairly strong numbers from last year. So at this point, we're maintaining our targets in that 2-3% range.

Speaker Change: It's from where we sit today, it's definitely not going to be on the low end of the 2% to 3%.

Speaker Change: But.

Speaker Change: We're maintaining that target has been our historical range and we're pretty comfortable to maintain it at this point.

Kara Cameron: Okay.

Kara Cameron: Okay, and then just on lease spreads or rent growth, when your peers during the quarter highlighted an uptick in contractual rent increases being done in this environment now outside of, obviously, the Empire leases. Are you seeing something similar in terms of a greater ability to see higher contractual annual rent bumps from your CRU tenants relative to the current rent?

Speaker Change: Okay, and then just on <unk>.

Kara Cameron: And then just on these spreads or rent growth, when your peers during the Q4 highlighted an uptick in contractual rent increases, being done in this environment now outside of obviously the empire leases, are you seeing something similar in terms of a greater ability to see a higher contractual annual rent in the box for your Syrian tenants to work this in the past? I guess the short answer is yes, but then when you look at the composition of what we're renewing each and every quarter, you know, it's about a million square feet. And on an annual basis, just on the renewal side, being almost 10 percent when you look at the five-year weighted average is 11.8.

Speaker Change: On the lease spreads or rent growth.

Speaker Change: One of your peers during the quarter are highlighted.

Speaker Change: Hum.

Speaker Change: <unk> talked for rent increases.

Speaker Change: <unk> being done.

Speaker Change: In this environment.

Speaker Change: Obviously, the Empire leases or are you seeing something similar in terms of a greater ability to see higher contractual annual rent bumps.

Kara Cameron: Okay. Is there anything you're seeing right now that gives you reason to believe that, you know, other than maybe I think a top of comp in Q4, you know, that you wouldn't be able to maintain the current trajectory at least to 3, because I believe I looked at Q3 last year, relatively similar to the same property I know I wrote for the first couple quarters. Yeah, and I feel like that Q4, to your point, we were on the higher end that kind of landed the year.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: I guess the short answer is yes, but then when you look at the composition of what we're renewing each and every quarter, it's about 1 million square feet at an annual basis.

Kara Cameron: I guess the short answer is yes. But then when you look at the composition of what we're renewing each and every quarter, you know, it's about a million square feet on an annual basis, just on the renewal side. When you look at the five-year weighted average, it's 11.8%. So historically, we're running in that one to one and a half, but when you look at recent renewals. The answer is yeah, you're starting to see a bit of a movement up, but again, I'm just cautious that it's, at this point, if you only look at the last year, it's been a million square feet. So it's going to take time to grow into that, but the short answer is yes, we're starting to see it start to move up a little bit.

Speaker Change: On the renewal side being almost 10% when you look at the five year weighted average is 11 eight.

Speaker Change: Eight.

Kara Cameron: So, historically, we're running in that one to one and a half, but when you look at the recent renewals, the answer is, yeah, you're starting to see a bit of a movement up. But again, I'm just cautious in that it's at this point, if you only look the last year, it's been a million square feet. So, it's going to take time to grow into that, but the short answer is yes, we're starting to see it starting to move up a little bit. Yeah, okay.

Kara Cameron: So we're going to be comping a little bit in the back half. But there's nothing that we're kind of looking at in the business that gives us any concerns. You've seen sort of the great work that the leasing and off-stream has done, and on renewal growth and new leases and how we're driving value within the business. So at this point, there's nothing that we're looking at that gives us some pause, but we're just maintaining that outlook at this point.

Speaker Change: So historically, we were running in that one to one and a half but when you look at the recent renewals.

Unknown Executive: Okay, fair enough.

Speaker Change: The answer is yes, youre starting to see a bit of it movement up but again I'm just cautious saying that it's at this point if you only look at the last year, it's been a million square feet. So it's going to take time to grow into that but the short answer is yes, we're starting to see it starting to move up a little bit.

Kara Cameron: Yeah, okay. And then just last question, shifting over to the residential portfolio, we'll talk to you sequentially, but Davey was down a little bit in the quarter of a quarter. Can you just maybe highlight some trends that you're seeing in each property?

Speaker Change: Okay, and then just last question shifting over to the residential portfolio will do.

Kara Cameron: And then just last question, shifting over to the residential portfolio, we'll do cock it to the next piece, sequentially. The dating was down a little bit quarter of a quarter. If you need to highlight some trends that you're seeing into property. Yeah, for sure, certainly Ari can give a little color on each property, just talking at the high level of the three properties. We're really pleased with their performance. You know, Rontage has got into stabilization last quarter, and so we're tired to get it there. And on Davy Street, it's a bit of a balancing act between rental spreads and occupancy, but you know, if you look at each of the assets, work please, Ari can give a little bit of a color about what he's seeing on sort of the change of the profile on the Davy.

Unknown Executive: And then on the development fees, obviously, a pretty stellar quarter there.

Speaker Change: Sequentially.

Kara Cameron: Can you maybe give us an idea of how you expect the balance of the year to evolve in terms of the fees and maybe, and what for 25 as well, or some rough guidance? Yeah, we had a weight of terrific quarter, 2.1 million. Really, what is what we're trying to do when we talked about this for a few quarters is trying to streamline that. And at this point, it's really based on deal structure and timing of recognition.

Speaker Change: The Dayton, but down a little bit quarter over quarter can you just maybe help.

Speaker Change: There's some trends that youre seeing in your property.

Kara Cameron: Yeah, for sure. Certainly, Ari can give a little color on each property. Just talking at the high level about the three properties, really pleased with their performance. You know, Bronte just got into stabilization last quarter, and so we've worked hard to get it there. And on Davie Street, it's a bit of a balancing act between rental spreads and occupancy. But if you look at each of the assets, we're pleased Ari can give a little bit of color about what he's seeing in terms of the change in the profile on Davie Street.

Speaker Change: Yes for sure.

Speaker Change: Or he can give a little color on each property just talking at the high level of the three properties really pleased with their performance.

Speaker Change: <unk> just got into stabilization last quarter, and so we worked hard to get it there.

Speaker Change: And on the JV Street, it's a bit of a balancing act between rental spreads and occupancy, but if you look at each of the asset.

Kara Cameron: And we're trying to smooth that out so that we can clip it along at a consistent level quarter based on status of project completions. For the balance of the year, I would look to probably Q1 as a bit of a proxy to how you can model out the back half of the year. And for 2025 and beyond, I think where we landed the year in 2023 at $3.4 million is a fairly reasonable number. But as we talked about, this is a very early program that we're sort of leaning into. The team is doing a good job, but it's early days.

Speaker Change: We're pleased he can give a little bit of a color about what he's seeing on sort of the change of the profile on the JV.

Kara Cameron: So, what we're seeing is generally a slight slowdown in our activity, and we're hearing us insistent with many of our peers. Despite that, we're still seeing numbers take up. The blip you're seeing at Davy is really a surrender of 22 leases that we had on a bulk sale that was expected in our forecast, and those were done in the early days in 2021 of lease-ups. So we'll lease those back up at today's current rates, and that might take a little bit of time, but we're feeling pretty good about where that will trend. Okay, and what's your expectation in terms of where the current market rate is versus that bulk rate in the early 21?

Speaker Change: So what we're seeing is generally.

Kara Cameron: So, what we're seeing is generally a slight slowdown in touring activity, and we hear that's consistent with many of our peers. Despite that, the blip you're seeing at Davey is really a surrender of 22 leases that we had on a bulk deal. That was expected in our forecast, and those were done in the early days of 2021 lease ups. So we'll lease those back up at today's current rates, and that might take a little bit of time, but we're feeling pretty good about where that will trend.

Speaker Change: Slight slowdown and tour activity and we're hearing that is consistent with many of our peers despite that.

Speaker Change: We're still seeing numbers tick up.

Speaker Change: <unk>.

Speaker Change: Blip Youre seeing at Davy is really.

Speaker Change: Ah surrender of 22 leases that we had on a bulk deal.

Speaker Change: That was expected in our forecast and.

Speaker Change: And those are done in the early days in 2021 of lease up so we will lease those back up at today's current rates and that might take a little bit of time, but we're feeling pretty good about where that will trend.

Kara Cameron: Okay, sorry not. And then just last one for me, I believe you talked about there's some like 300 banners for space right now. Has that changed at all? I know there's been some softer retailer earnings. Just wondering if you're seeing any change there. Yeah, we talked about just the healthiness of the retail portfolio. Ari, who's with us today, certainly give a lot of color on all the great work his team is doing in that class.

Kara Cameron: Okay, and what's your expectation in terms of where the current market rate is versus that bulk rate in early 2020?

Speaker Change: Okay.

Speaker Change: What's your expectation in terms of where current market rate is versus the bulk rates.

Speaker Change: Only one.

Kara Cameron: I don't have that in front of me. I'd be guessing on a keger there. So, Mary, if you look at the entire portfolio, you know, where we're running at about 380 a square foot, that's sort of what we kind of give guidance on on the composition of the whole portfolio. We don't give individual assets, but Ari's point. You know, we're seeing a fairly healthy keger on Davy Street, and why are we seeing a healthy keger and Davy Street is what he was talking about on sort of those corporate stays they're turning over. So, you're seeing a bit of softening and occupancy, which comes back to that balancing act between occupancy and rental.

Kara Cameron: I don't have that in front of me, so I'd be guessing at a CAGR there.

Speaker Change: I don't have that in front of me.

Speaker Change: I would.

Speaker Change: I'd be guessing on a CAGR there.

Kara Cameron: But yes, there's been a lot of great groups looking to grow their portfolios. No real change. No, we're seeing a lot of interest in our open air grocery anchor portfolios. So a lot of QSR, a lot of value retailers. And they're really coming to us because of the football that we're seeing out of our grocery anchors at those properties. So a lot more tenants are gravitating towards that asset class. So we remain really optimistic about the growth profile we have in that asset class.

Kara Cameron: So, Mario, if you look at the entire portfolio, you know, we're running at about 380 a square foot. That's sort of what we kind of give guidance on, the composition of the whole portfolio.

Speaker Change: Some area if you look at the entire portfolio.

Speaker Change: We were running at about 380, a square foot.

Speaker Change: That's sort of what we kind of give guidance on the composition of the whole portfolio, we don't give individual asset but to <unk> point.

Kara Cameron: We don't give individual assets, but to Ari's point, you know, we're seeing a fairly healthy kegger on Davey Street. And why are we seeing the healthy kegger on Davey Street? Because what he was talking about on sort of those corporate stays, they're turning over. So you're seeing a bit of softening in occupancy, which comes back to that balancing act between occupancy and rental. And so while they're coming off, and they're in our forecast, we're going to lease them back up, and we'll hopefully get a nice little kegger on them, as they were done in 2021. They were done in 2021, when we were actively working to lease it out.

Speaker Change: We're seeing a fairly healthy CAGR on.

David Street: David Street, and why are we seeing a healthy CAGR and David Street is what he was talking about on sort of those corporate stays they are turning over so youre seeing a bit of softening in occupancy which comes back to that balancing act between occupancy and rental and so while they're coming off and they were in our forecast or at least in back up and we'll hopefully get a nice little CAGR on them as they were done <unk> 2021.

Kara Cameron: And so, while they're coming off and they're in our forecast, we're going to lease them back up, and we'll hopefully get a nice little keger on them as they were done in 2021. They were done in 2021 when we were actively working to lease it up.

Unknown Executive: Okay, fantastic. Thank you everybody for the color. I will turn it back.

David Street: They were done in 2021 of them, where we're actively working to lease it up.

Unknown Executive: Thanks, Laura.

Unknown Executive: Okay.

Speaker Change: Okay.

Unknown Executive: Good for me. Thank you.

Mike Markidis: Your next question comes from Mike Markidis from BMO Capital Markets. Please go ahead. Thanks, operator.

Unknown Executive: Thank you very much.

Barry: Thanks Barry.

Sumayya Hussain: Your next question comes from Sumaya Sati from CIBC. Please go ahead. Thanks. Good morning. I wanted to touch on your modernization program to spend on that. They pick up a bit this quarter. Do you know if you're seeing me a bit more color? Are these one-off assets? Or do you, I think typically, address groups or tranches of assets at a time, and do they entail conversion of banners or renovations, or are all debuff?

Operator: Your next question comes from Sumayya Saeed from CIBC. Please go ahead.

Barry: Your next question comes from Sumit.

Speaker Change: From CIBC. Please go ahead.

Kara Cameron: Cara, congratulations on the permanent appointment. Can you just remind me, I know there are advantages in BMO. I'm glad it's great to see you financing. But what the particular advantages are with this particular loan from a rate or LTV perspective, and there are any gifts on your partner's overseas that way. Yeah, so I think that there's quite a few advantages on the on the right side of things with this MHC in short, and the MRI select really does have some advantages, especially for our milestone, which is really, I think, doing well on the accessibility.

Sumayya Saeed: Thanks. Good morning. I wanted to just touch on your modernization program, the spend on that. It did pick up a bit this quarter. Can you just give me a bit more color there?

Sumit: Thanks, Good morning wanted to touch on your modernization program the spend on that did pick up a bit this quarter.

Sumit: Can you just give me a bit more color. There are these one off assets or do you.

Speaker Change: I think typically drives groups our tranche is off.

Kara Cameron: Are these one-off assets or do you, I think, typically address groups or tranches of assets at a time and did entail the conversion of banners or renovations are all of the above?

Speaker Change: Assets at a time and did entail kind of version all banners. Our renovations are all de Boer.

Kara Cameron: Yes, Sumayya, it's the last, it's all of the above. The modernization program, as we work with Empire on it, is a mixed bag. Some of them are larger investments that you would see on the front of the house and the exterior of the box. Others may be just back of house improvements. Some of them might be maintenance requests and requirements, so it is a mixed bag. For us, it's about the dollar that we're investing versus the number, and so we're really happy they were able to make that investment of $25 million.

Mark Holly: Yes, Sumaya. It's the last. It's all debuff. The modernization program, as we work with Empire on it, is a mixed bag. Some of them are larger investments that you would see at the front of house and the exterior of the box. Others may be just back-of-house improvements. Some of them might be maintenance requests and requirements. So it is a mixed bag. For us, it's about the dollar that we're investing versus the number. So we're really happy they were able to make that investment of $25 million. We have historically talked about those ranges being at 68 percent yield.

Sumit: Yes.

Speaker Change: So it's the lost at all of the above.

Speaker Change: The modernization program is as we work with Empire on it is a mixed bag. Some of them are larger investments smaller that you would see it front of house and exterior the box others, maybe just back of house and <unk>.

Kara Cameron: We've talked about it being cancer and certified upon completion. And so that really helps us out in getting favorable rates. We ended up about middle tier in that MRI select program. And so, yeah, during construction, we are looking at having a floating rate until the end of construction. And that's going to be about 160 basis points above our lender's cost of debt. And that lender's cost of debt will loosely follow the overnight rate for us. And so the MRI select program has benefits when we look at affordability, accessibility as well as climate compatibility. And we did very well on the accessibility as well as the climate compatibility.

Speaker Change: Movement some of them might be.

Sumit: Maintenance requests and requirements. So it is a mixed bag.

Sumit: For us it's about the dollar that we're investing.

Sumit: Versus the number and so we're really happy that we're able to make that investment of $25 million. We have historically talked about those ranges being and you're about 6% to 8% yield and so that's something that as we've talked about on major developments, we want to lean in and Modernizations are a nice little project for us.

Kara Cameron: We have historically talked about those ranges being in that 6% to 8% yield, and so that's something that, as we've talked about non-major developments, we want to invest in, and modernizations are a nice little project for us.

Mark Holly: That's something that, as we've talked about on major developments, we want to lean in and modernize our very nice little project for us.

Mark Holly: Okay, and what does that pipeline look like? I guess, given your relationship with Empire, you would have, I guess, a visibility into a targeted number of stores. Is that a fair bit of look at it? Yes and no, because some of it is tranches and some of it is things that they bring to our attention later in the program, but they have their own program, their renovation program. And so where we're able to line ourselves up on our assets that they want to renovate, we get a little bit of line of sight, and those are those one-offs, but these bulk ones, we don't get as much line of sight on.

Kara Cameron: Okay, and what does that pipeline look like? I guess, given your relationship with Empire, you would have visibility into a targeted number of stores. Is that a fair way to look at it?

Speaker Change: Okay, and and what does that pipeline look like I guess, given your relationship with <unk> you would have I guess visibility into a targeted number of stores is that a fair way to look at it.

Sumit: Yeah.

Kara Cameron: Yes and no, because some of it is tranches and some of it is things that they bring to our attention later in their program, but they have their own program, their renovation program, and so we're able to line ourselves up on our assets that they want to renovate. We get a little bit of line of sight, and those are those one-offs, but these bulk ones we don't get as much line of sight on.

Speaker Change: Yes, and no because some of it is tranches and some of it is things that they bring to our attention.

Kara Cameron: Okay, wonderful. And then when you go to fix that out, when it converts to a fix rate, is the spread, is there any advantage there, or is there a, just trying to get a sense? Yeah, there will be an advantage there as well. Hopefully more to come on that when we come out of the construction phase and go to fix, we'll be able to give a bit more color on what that looks like. And we're just not getting guidance on that right in the moment. Okay, fair enough.

Sumit: Later in the.

Sumit: Their program, but.

Sumit: They have their own program their renovation program and so where we're able to line ourselves up on our assets that they want to renovate we get a little bit of line of sight.

Sumit: And those are those one offs, but these bulk ones, we don't get as much line of sight.

Kara Cameron: Okay, that's all from me. Thank you.

Sumit: Okay. That's all from me thank you.

Sumayya Hussain: Okay, that's all from me. Thank you.

Mark Holly: Okay, so I mean, the existing business is doing well. Maybe the rate environment is getting a little bit better. Mark, I know that when you sort of in your, I guess it was early days in your tenure, but in your initial stages of your tenure, you wanted to be very cautious in terms of the mental capital that you wanted to put out into development at one period of time versus maybe where Crombie's been in the past.

Ruth Martin: And there are no further questions at this time.

Ruth Martin: And there are no further questions at this time. I will turn the call back over to Ruth Martin for closing remarks.

Sumit: And there are no further questions at this time I will start the call back over to Martin for closing remarks.

Ruth Martin: I will start to call back over to Ruth Martin for closing remarks. Thank you for your time today, and we look forward to updating you on our third quarter call in November.

Mark Holly: But I guess from a step-change perspective, just with programs announced, such as an online selector or any of the other incentives that are out there to try and spur construction and maybe improving it on the right side, does that make you want to get maybe a little bit more aggressive in terms of putting capital into the ground? Well, we typically give a guidance around is, you know, we have a humble of about $250 million last year.

Ruth Martin: Thank you for your time today, and we look forward to updating you on our third quarter call in November.

Martin: Thank you for your time today, and we look forward to updating you on our third quarter call in November.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.

Martin: Yeah.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you.

Speaker Change: Ladies and gentlemen. This concludes today's conference call you may now disconnect. Thank you.

Mark Holly: We spent on the lower side of what we would historically would have spent. We spent around 180 and how we spent the money to your point was different than historically. We put a lot of investments in the non-major development category because we had a bit more certainty around timing in and timing out cost and they had very attractive returns. And so when you look at 2024, we're still leaning into non-major developments.

Mark Holly: We're still in that range between $102 and $250 million of capital being spent. And when you look at sort of the split between major development and non-major development for the year, it will be planted towards non-major. And then looking ahead, you know, we're very focused on entitlement work and we continue to invest in that. And when we get a little bit more clarity and certainty around the market, we have a number of projects that are on our near term pipeline that will be able to make some decisions against whether it be self-developed search joint ventures or to monetize. We'll start to make some decisions around that in probably the next 12 months or so.

Mark Holly: Okay, that's great. I want to move forward to the back. I guess in your initial comments, you talk about your third pillar, which is your partnerships. And I think you said you wanted to grow your partnerships. So maybe just on that topic, when you say you want to grow, is that obviously, I'm fired to give. And I guess the other partners that you have is that to grow with the existing partners or to potentially expand on new and if the latter is there anything that's sort of, you know, somewhat near term on that.

Mark Holly: Definitely for empires, you're absolutely right. That's a given. We will continue to grow as it works for us, as we did with the Alberta Commissary Kitchen, where we have some built that. We did the Burlington Farm Boy, we're leaning into modernization development revenue services. There's a lot of great work and synergies between that and we want to continue to grow that. When we look to our development pipeline on the major side, yeah, we're going to have to action some of that through joint ventures if we're action it.

Mark Holly: We did Marlstone on our own, but as it is a very significant pipeline and if we want to get at it, effectively and efficiently, though compromising the balance sheet, we're going to have to look at what partnerships might look like. So definitely something works for us. Okay, and is the growth outside of MPAR with existing, or would that be exploring new, or is it both? Both?

Unknown Executive: Wonderful.

Unknown Executive: Thanks so much, I'll turn it back.

Rob Sturges: Your next question comes from Rob Sturges, from Reverend James, please go ahead. Hey there, just to go back quickly on the MI select loan, what would be the timing of, I guess it's going to be a stagger draw, but what would be the timing being fully deployed on that long? We're looking at early 2026.

Unknown Executive: Okay, so I guess it'll match the spend of the project, so there's, you know, by the time you get closer to the completion, that's when you'd be fully drawn. Correct, got it.

Unknown Executive: In terms of the maybe switching gears on the leasing spreads, obviously it's been quite healthy this year. What would the reported numbers, I think around 10% with those include fixed rate options, and if they do, what would be the leasing spreads for those leases without or the non option number nulls? Alright, so they do include fixed rate renewals within that, we don't break that out separately. What I would say is that this was a fairly typical quarter and composition of our renewals, and to your point, we're in the range of around 10% year to date, and we're comfortable that we're on a glide path towards admit to high single digits for the end of the year.

Unknown Executive: I guess what I'm trying to get is trying to understand what the incremental mark to market could be beyond beyond the spread is closing, obviously, you know, that that will be consistent, I guess, in future course that you'll have that sort of mix between options and non options, but I'm curious to know if there how much incremental mark to market there could be for particularly for those with the non option rules. It's a bit of a mixed bag on some of those fixed rate options, some of them are coming off of a very low rate, so the percentage could be could be high, but again, it's delivered all over the matter. Okay, no problem.

Unknown Executive: And just last question on on the capital investment, the point of strategy, obviously, as he said, you've been focused a little bit more on the non major development and progressing some of the entitlement on major development. How do you think about the pipeline or the opportunity just from like a tuck-in acquisition perspective, either the one deal this quarter, but the trend of the actual market has been kind of muted, so how do you think about that, at least in the next few quarters?

Unknown Executive: Yeah, in terms of our acquisition, if you broke up just there at the end, are you speaking about acquisitions in the market? Yeah, just a tuck-in acquisition where you're seeing the pipeline, you're expecting it to still be muted, going forward, is there any green shoots in terms of maybe seeing a little bit more opportunity from an acquisition point of view? I wish I could see a bit more green shoots. Our team did a great job on wrestling out from the third party to power river grocery anchored site and we have some opportunities there to intensify it.

Unknown Executive: So, you know, those are the things that we're looking for. The team is active, but there's nothing that's coming to surface that we look at and we look at the price and it's compelling and it also has an ability to add additional value for us over time. So, those are the two factors we're looking for. They're tough to find. We're constantly looking for it. We do have capital available to do it if it becomes available. Okay, make sense.

Unknown Executive: We'll turn it back. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one.

Mario Saric: Your next question comes from Mario Saric from Skolshebank. Please go ahead. Hi, good afternoon. Sorry, I wanted to come back to the same storyline discussion. So, the two to three percent that's been maintained on the tougher consular year. So, we sit back and listen to this and come think it seems like you're a bit more confident in your understanding of these spreads now, kind of roughly meant the high school digit relative to mid digit before I believe.

Mario Saric: Going forward, so strength of your role of the environment seems pretty good. So, by keeping the two to three percent, the acknowledging that in Q4 last year is four percent and so on. Are you inherently implying that you expect occupancy to come down a little bit in the second half of the year, or they would just simply maintain the two to three percent.

Kara Cameron: It's the latter, Mario. So, when to your point around what we are comping versus Q4, we came off a high number when you adjust for at least termination income from bad debt is 3.1. And so, we kind of look at the range that we're in and we think two to three percent is the right range that we want to continue to give. It's from where we sit today. Definitely not going to be on the low end of the two to three percent. But, you know, we're maintaining that target. It's in our historical range and we're pretty comfortable to maintain it at this point.

Kara Cameron: Okay. And then just on on these spreads or rent growth, when your peers during the Q4 highlighted an uptick and contractual rent increases, being done in this environment now outside of obviously the empire leases are you seeing something similar in terms of a greater ability to see a higher contractual annual rent in the box for your Syrian tenants to work this in the past? I guess the short answer is yes, but then when you look at the composition of what we're renewing each and every quarter, you know, it's about a million square feet and on an annual basis, just on the renewal side, being almost 10 percent when you look at the five-year weighted average is 11.8.

Kara Cameron: So, historically, we're running in that one to one and a half, but when you look at the recent renewals, the answer is yeah, you're starting to see a bit of a movement up, but again, I'm just cautious in that it's at this point, if you only look the last year, it's been a million square feet. So, it's going to take time to grow into that, but the short answer is yes, we're starting to see it starting to move up a little bit.

Unknown Executive: Yeah, okay.

Kara Cameron: And then just last question, shifting over to the residential portfolio, we'll do cock it to the next piece, sequentially. The dating was down a little bit quarter of a quarter if you need to highlight some trends that you're seeing into property. Yeah, for sure, certainly Ari can give a little color on each property, just talking at the high level of the three properties, we're really pleased with their performance. You know, Rontage has got into stabilization last quarter, and so we're tired to get it there.

Kara Cameron: And on Davy Street, it's a bit of a balancing act between rental spreads and occupancy, but you know, if you look at each of the assets, work please, Ari can give a little bit of a color about what he's seeing on sort of the change of the profile on the Davy. So, what we're seeing is generally a slight slowdown into our activity, and we're hearing us insistent with many of our peers, despite that, we're still seeing numbers take up.

Kara Cameron: The blip you're seeing at Davy is really a surrender of 22 leases that we had on a bulk sale that was expected in our forecast, and those were done in the early days in 2021 of lease-ups, so we'll lease those back up at today's current rates, and that might take a little bit of time, but we're feeling pretty good about where that will trend. Okay, and what's your expectation in terms of where current market rate is versus that bulk rate in the early 21?

Kara Cameron: I don't have that in front of me. I'd be guessing on a keger there. So, Mary, if you look at the entire portfolio, you know, where we're running at about 380 a square foot, that's sort of what we kind of give guidance on on the composition of the whole portfolio. We don't give individual assets, but Ari's point. You know, we're seeing a fairly healthy keger on Davy Street, and why are we seeing a healthy keger and Davy Street is what he was talking about on sort of those corporate stays they're turning over.

Kara Cameron: So, you're seeing a bit of softening and occupancy, which comes back to that balancing act between occupancy and rental. And so, while they're coming off and they're in our forecast, we're going to lease them back up and we'll hopefully get a nice little keger on them as they were done in 2021. They were done in 2021 when we were actively working to lease it up.

Unknown Executive: Okay.

Unknown Executive: Good for me.

Unknown Executive: Thank you.

Unknown Executive: Thank you very much.

Sumayya Hussain: Your next question comes from Sumaya Sati from CIBC. Please go ahead. Thanks.

Kara Cameron: Good morning. I wanted to touch on your modernization program to spend on that. They pick up a bit this quarter. Do you know if you're seeing me a bit more color? Are these one-off assets? Or do you, I think typically, address groups or tranches of assets at a time and do they entail conversion of banners or renovations are all debuff? Yes, Sumaya. It's the last. It's all debuff. The modernization program, as we work with Empire on it, is a mixed bag.

Kara Cameron: Some of them are larger investments that you would see at the front of house and the exterior of the box. Others maybe just back-of-house improvements. Some of them might be maintenance requests and requirements. So it is a mixed bag. For us, it's about the dollar that we're investing versus the number. So we're really happy they were able to make that investment of $25 million. We have historically talked about those ranges being at 68 percent yield. That's something that, as we've talked about on major developments, we want to lean in and modernization our very nice little project for us.

Kara Cameron: Okay, and what does that pipeline look like? I guess, given your relationship with Empire, you would have, I guess, a visibility into a targeted number of stores. Is that a fair bit of look at it? Yes and no, because some of it is tranches and some of it is things that they bring to our attention later in the program, but in they have their own program, their renovation program. And so where we're able to line ourselves up on our assets that they want to renovate, we get a little bit of line of sight, and those are those one-offs, but these bulk ones, we don't get as much line of sight on.

Sumayya Hussain: Okay, that's all from me, thank you.

Ruth Martin: And there are no further questions at this time.

Ruth Martin: I will start to call back over to Ruth Martin for closing remarks. Thank you for your time today, and we look forward to updating you on our third quarter call in November.

Unknown Executive: Ladies and gentlemen, this concludes today's conference call.

Unknown Executive: You may now disconnect. Thank you.