Q4 2024 Granite Real Estate Investment Trust Earnings Call

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Constant: Cash NOI was up four good morning, My name is constant and I will be your conference operator today.

Konstantin: Good morning, my name is Konstantin and I will be your conference operator today.

Konstantin: At this time, I would like to welcome everyone to Granite REIT's fourth quarter and year-end 2024 conference call. All lines have been placed on mute to prevent any background noise.

Constant: At this time I would like to welcome everyone to granite Reis fourth quarter and year end 2024.

Constant: Skull.

Constant: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Konstantin: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you'd like to withdraw your question, please press star 2. Thank you.

Constant: If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you'd like to withdraw your question. Please press star two thank you.

Konstantin: Speaking to you on the call this morning is Kevan Gorrie, President and Chief Executive Officer and Teresa Neto, Chief Financial Officer.

Speaker Change: Speaking to you on the call. This morning is Kevin Gordon, President and Chief Executive Officer, and Theresa Nieto, Chief Financial Officer, I would now turn the call over to Terry you said he thought to go over a certain advisories.

Teresa Neto: I would now turn the call over to Teresa Neto to go over certain advisories. Thank you.

Teresa Neto: Good morning, everyone. Before we begin today's call, I would like to remind you that statements and information made in today's discussion may constitute forward-looking statements and forward-looking information, and that actual results could differ materially from any conclusion, forecast, or projection. These statements and information are based on certain material facts or assumptions, reflect management's current expectations, and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from forward- looking statements. The risks and uncertainties and material factors and assumptions applied in making forward-looking statements or information are discussed in Granite's material files of the Canadian Securities Administrators and the U.S.

Speaker Change: Thank you good morning, everyone before we begin today's call I would like to remind you that statements and information made in today's discussion may constitute forward looking statements and forward looking information and that actual results could differ materially from any conclusion forecast or projection. These statements and information are based on certain material factors or assumptions.

Speaker Change: Reflect management's current expectations and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from forward looking statements or information. These risks and uncertainties are material factors and assumptions applied in making forward looking statements or information are discussed in granites materials filed with Canadian securities administrators and the U S.

Teresa Neto: Securities and Exchange Commission from time to time, including the risk factors section of its annual information form for 2024 and Granite's management discussion and analysis for the year ended December 31, 2024, filed on February 26, 2025.

Speaker Change: And exchange Commission from time to time, including the risk factors section of its annual information form for 2024 and granted management discussion and analysis for the year ended December 31, 2024 filed on February 26 2025.

Teresa Neto: So Granite posted Q4 2021 results ahead of Q3 and ahead of management's expectations, largely driven by strong NOI growth, a positive impact from foreign exchange as a result of the strengthening of the U.S. dollar, and a few net positive adjustments, which I will go into detail later. FFO per unit in Q4 was $1.47, representing a $0.12 or 8.9% increase from Q3-24, and a $0.20 or 15.7% increase relative to the same quarter in the prior year. FFO per unit for fiscal year 2024 was $5.44, representing a $0.47 or 9.5% increase from Q3-23. The growth in NOI this quarter is primarily derived from strong same-property NOI growth enhanced by double-digit leasing spreads in the U.S.

Speaker Change: So granted posted Q4 2020 results ahead of Q3 and ahead of management's expectations, largely driven by strong NOI growth the positive impact from foreign exchange as a result of the strengthening of the U S dollar and a few net positive adjustments, which I will go into detail later.

Speaker Change: So per unit in Q4 with $1.47, representing a 12% or eight 9% increase from Q3, 24, and a 20 cent or 15, 7% increase relative to the same quarter in the prior year at the <unk> per unit for fiscal year, 2024 was $5.44, representing a 47 cents.

Speaker Change: We're at nine five increase from 23.

Speaker Change: The growth in NOI. This quarter is primarily driven derived from strong same property NOI growth enhanced by double digit leasing spreads in the U S and the lease commencement at previously at 308000 square foot vacant unit in the U S in the fourth quarter.

Teresa Neto: and the lease commencement at a previously 308,000 square foot vacant unit in the U.S. in the fourth quarter. NOI growth was further enhanced by a foreign exchange as the U.S. dollar was 3.5% stronger, partially offset by the euro being 0.9% weaker in comparison to Q3. Also impacting FFO this quarter were a few adjustments with a net positive impact including a $1.6 million tax provision reversal relating to the prior tax years, a $0.5 million credit to capital tax which is included in G&A expenses, and a foreign exchange gain realized on monetary assets and liabilities held or settled for $2.8 million, partially offset by a negative $0.8 million adjustment to non-controlling interest expense relating to a catch-up adjustment pertaining to the net income of our joint venture partner at our Houston development site.

Speaker Change: Hawaii growth was further enhanced by foreign exchange as the U S. Dollar was three 5% stronger partially offset by the euro being 9% weaker in comparison to Q3 also impacting I thought though this quarter were a few adjustments with a net positive impact, including a 1.6 million tax provision reversal relating to the prior tax year.

Speaker Change: We're at a point 5 million credit to capital tax, which is included in G&A expenses and a foreign exchange gain realized on monetary assets and liabilities held were settled for four to 8 million, partially offset by a negative point 8 million adjustment to noncontrolling interest expense relating to a catch up adjustment pertaining to the net income of <unk> <unk>.

Speaker Change: Joining venture partner at our Houston development site.

Teresa Neto: Excluding these specific four adjustments, FFO per unit would have been $1.41, still 4.5% ahead of Q3. ASFO per unit in Q4 was $1.25, which is $0.03 higher relative to Q3 and $0.10 higher relative to the same quarter last year. With the increase in Q3 mostly tied to FFO growth, partially offset by higher maintenance capital expenditures, higher tenant allowances incurred due to timing of leasing turnover, and higher leasing commissions primarily related to leasing activities in the U.S. and Canada, including the lease-up of two previously vacant units in the U.S. and an early lease renewal for a property in the U.S.

Speaker Change: Excluding these specific for adjustments as appropriate and it would've been $1 41 still four 5% ahead of Q3.

Speaker Change: And the Sopra unit in Q4 was $1 25, which is three cents higher relative to Q3, and 10 cents higher relative to the same quarter last year with the increase in Q3, mostly tied to episode growth, partially offset by higher maintenance capital expenditures higher tenant allowance incurred due to timing of leasing turnover and higher leasing.

Speaker Change: Commissions, primarily related to leasing activities in the U S and Canada, including the lease up of two previously vacant units in the U S and an early lease renewal for a property in the U S in the fourth quarter.

Teresa Neto: in the fourth quarter.

Teresa Neto: Ampiful related capital expenditures incurred in the quarter totaled $11.3 million, which is an increase of $6.1 million over Q3 and $5.3 million over the same quarter last year. However, for the 2024 year, total AFFO-related capital expenditures came in at $25.1 million in line with management's expectation and guidance. For 2025, we expect AFFO-related capital expenditures to come in at approximately $40 million for the year, with the increase relative to 2024 being mostly related to additional roofing and parking lot work planned for 2025, as well as additional forecasted spend on tenant allowances in support of expected new leasing activity.

Speaker Change: If it's all related capital expenditures incurred in the quarter totaled $11 3 million, which is an increase of $6 1 million over Q3, and $5 3 million over the same quarter last year.

Speaker Change: However for the 2024 year total adds a full related capital expenditures came in at $25 1 million in line with management's expectation and guidance.

Speaker Change: For 2025, we expect air for flu related capital expenditures to come in at approximately $40 million for the year with the increase relative to 'twenty four being mostly related to additional roofing and parking lot work planned for 25 as well as additional forecasted spend on tenant allowances in support of expected new leasing activity.

Speaker Change: <unk>.

Teresa Neto: Same property NOI for Q4 was strong relative to the same quarter last year, increasing 6.3% on a constant currency basis and up 8.4% when foreign currency effects are included. For 2024, Granite's 4.25% average constant currency, same property NOI growth came in at 5.9% in line with management's expectations. For 2025, we are updating our forecast for constant currency, same property NOI based on a four quarter average to come within a range of four and a half to six percent, which Kevan will address in his remarks. G&A for the quarter was $8.3 million, which was $1.1 million lower than the same quarter last year and $4.9 million lower than Q3.

Speaker Change: Same property NOI for Q4 was strong relative to the same quarter last year, increasing six 3% on a constant currency basis and up eight 4% when foreign currency effects are included.

Speaker Change: For 2020 for granted four quarter average constant currency same property NOI growth came in at five 9% in line with management's expectations.

Speaker Change: For 2025, we are updating our forecast for constant currency same property NOI based on a four quarter average to come within a range of four 5% to 6%, which Kevin will address in his remarks.

Speaker Change: G&A for the quarter was $8 3 million, which was $1 1 million lower than the same quarter last year and $4 $9 million lower than Q3. The main variance relative to Q3, it's $5 6 million favorable fair value variance and noncash compensation liabilities, partially offset by a $1 million unfavorable variance due.

Teresa Neto: The main variance relative to Q3 is $5.6 million favorable fair value variance and non-cash compensation liabilities, partially offset by a $1 million unfavorable variance due to corporate restructuring costs relating to the uncoupling of Granite's stapled unit structure. But that does not impact FFO or AFFO metrics. G&A expenses that do impact FFO and AFFO were approximately $0.3 million lower than Q3, which is mostly related to an approximate $0.5 million capital tax refund mentioned earlier resulting from changes in tax regulation in the state of Tennessee. For 2025, we continue to expect G&A expenses that impact FFO and AFFO are approximately $10 million per quarter or roughly 7% of revenues.

Speaker Change: To corporate restructuring costs relating to the uncoupling of granite stapled unit structure, but that does not impact SSO or ethical metrics.

Speaker Change: G&A expenses that do impact episodes were approximately <unk> 3 million lower than Q3, which is mostly related to an approximate points 5 million capital tax refund mentioned earlier, resulting from changes in tax regulation in the state of Tennessee.

Speaker Change: For 2025, we continue to expect G&A expenses that impact episodes, <unk> of approximately $10 million per quarter or roughly 7% of revenues.

Teresa Neto: Interest expense was higher in Q4 relative to Q3 by $1.5 million, while interest income also increased by $2.2 million as compared to Q3, resulting in a decrease to net interest expense.

Speaker Change: Interest expense was higher in Q4 relative to Q3 by $1 5 million. While interest income also increased by $2 2 million as compared to Q3, resulting in a decrease to net interest expense.

Teresa Neto: As previously mentioned on the Q3 call, on October 4, Granite completed $800 million bond offering into Ceres. The net proceeds from the offering were used to immediately fully repay without penalty Granite's 2025 term loan with a principal balance outstanding at $400 million, which had a maturity date of September 15, 2025. The remaining net proceeds from the offering were held in short-term cash deposits until used to fully repay Granite's 2024 term loan with a principal balance outstanding of US$185 million upon maturity on December 19. For the period from October to December 19, 2024, Granite earned interest on these net proceeds from the offering at approximately 4.33%.

Speaker Change: As previously mentioned on the Q3 call call in October for granted completed 800 million bond offering into series. The net proceeds from the offering were used to immediately fully repaid without penalty granted 2025 term loan with a principal balance outstanding of 400 million, which had a maturity date of September <unk>.

Speaker Change: <unk> 25.

Speaker Change: The remaining net proceeds from the offering were held in short term cash deposits until used to fully repay granted 2024 term loan with a principal balance outstanding of U S $185 million upon maturity on December 19th.

Speaker Change: For the period from October to December 19, 2020 for granted earn interest on the Remy on these net proceeds from the offering at approximately 433%. Therefore relative to Q3 interest expense increased due to the October 2009 debentures being outstanding at the same time as the 2024 term loan which was.

Teresa Neto: Therefore, relative to Q3, interest expense increased due to the October 29 debentures being outstanding at the same time as the 2024 term loan, which was fully offset by the interest income noted previously, resulting in a decrease in net interest costs of 0.7 million.

Speaker Change: Fully offset by the interest income noted previously resulting in a net decrease in net interest cost of $7 7 million.

Teresa Neto: Post-quarter end, on February 4th, Granite completed its inaugural $300 million floating rate note offering, which together with an existing cross-currency interest rate swap results in an effective fixed rate of 0.27% for the year of the term of the 26 debentures. Net proceeds from the offering were used to immediately fully repay without penalty Granite's December 2026 term loan with a principal balance of $300 million, which was due to mature on December 11, 2026. The refinancing is expected to save Granite approximately $0.03 per unit per annum in interest expense for the next two years. On December 31st, and prior to the completion of the refinancing in February, Granite's weighted average cost of debt was 2.74%, and the weighted average debt term of maturity was 4.3 years.

Speaker Change: Post quarter end on February four at the branded completed its inaugural 300 million floating rate note offering, which together with an existing cross currency interest rate swap, resulting in an effective fixed rate of two 7% for the year.

Speaker Change: The term of the 26 debentures net proceeds from the offering were used to immediately fully repaid without penalty granted December 2026 term loan with a principal balance of $300 million, which was due to mature on December 11 2026 the.

Speaker Change: The refinancing is expected to save granted approximately three cents per unit per annum and interest expense for the next two years.

Speaker Change: On December 31st in prior to the completion of the refinancing in February grant its weighted average cost of debt was 2.74% and a weighted average debt term of maturity was four three years.

Teresa Neto: After the refinancing, Granite's weighted average cost of debt is now 2.66%, with the weighted average debt term to maturity remaining unchanged at 4.3 years. With Granite's next maturity now in September 2026, we expect interest expense to remain stable over the next approximate two years at roughly $23 million per quarter, barring any new transactions. For income tax, Q4 2024 current income tax was $0.9 million, which is $0.8 million higher than the prior year, and $1.8 million lower as compared to Q3. The movement in current tax relative to Q4 2023 is mostly attributable to increased taxable income in Europe due to rental growth, together with the strengthening of the euro relative to the Canadian dollar, as all of Granite's current income tax is generated from its European region.

Speaker Change: After the refinancing granite the weighted average cost of debt is now two 6% to six 6% with the weighted average debt term to maturity remaining unchanged at 4.3.

Speaker Change: Ears.

Speaker Change: With granites next maturity now in September 2026, we expect interest expense to remain stable over the next approximate two years at roughly $23 million per quarter barring any new transactions.

Speaker Change: For income tax Q4, 2020 for a current income tax was <unk> 9 million, which is <unk> 8 million higher than the prior year and $1 8 million lower as compared to Q3. The movement in current tax relative to Q4 2023 is mostly attributable to increased taxable income in Europe due to rental growth together with the <unk>.

Speaker Change: Or anything of the euro relative to the Canadian dollar as olive granted current income taxes generated from its European region.

Teresa Neto: As in prior years, and mentioned earlier, Granite realized a credit to current income taxes of $1.6 million in Q4 due to the reversal of prior year tax provisions. For 2025, we are expecting current income taxes to remain at current levels at approximately $2.5 million per quarter. Also mentioned earlier, Granite realized foreign exchange gains and FFO of $2.8 million in Q4. This is a $3.6 million increase in foreign exchange gains in comparison to Q3. The items relate to the remeasurement of cash and monetary assets and liabilities denominated in foreign currencies and held in Canada, primarily as a result of the strengthening of the U.S.

Speaker Change: As in prior years and mentioned earlier granite related to credit to current income taxes of $1 6 million in Q4 due to the reversal of prior year tax provisions.

Speaker Change: For 2025, we are expecting current income taxes to remain at current levels at approximately $2 5 million per quarter.

Speaker Change: Also mentioned earlier granted realized foreign exchange gains in <unk> of $2 8 million. In Q4. This is a $3 6 million increase in foreign exchange gains in comparison to Q3, the items related to the remeasurement of cash and monetary assets and liabilities denominated in foreign currencies and held in Canada, primarily as a result.

Teresa Neto: dollar. Now looking out to 2025 estimates, granite is forecasting FFO per unit within a range of $5.70 to $5.85, representing an approximate 5 to 8% increase over 24. For AFFO per unit, we are forecasting a range of $480 to $495, representing an increase of approximately flat to 2% over 2024 and fully reflecting the expected increase in AFFO-related capital expenditures noted earlier. The FFO per unit forecast includes assumptions of some new leasing of vacant space primarily in the second half of 2025. The high end of the range reflects foreign currency exchange rates of $1.50 for the Canadian dollar to euro and $1.45 for the Canadian dollar to US dollar exchange rate.

Speaker Change: The strengthening of the U S dollar.

Speaker Change: Now looking out to 2025 estimates granted is forecasting <unk> per unit within a range of $5 70 to $5 85.

Speaker Change: Representing an approximate 5% to 8% increase over 24.

Speaker Change: For <unk> unit, we are forecasting a range of $4 80 to $4 95, representing an increase of approximately flat to 2% over 2024 and fully reflecting the expected increase in <unk> related capital expenditures noted earlier.

Speaker Change: The <unk> per unit forecast includes assumptions of some new leasing of vacant space, primarily in the second half of 2025.

Speaker Change: The high end of the range reflects foreign currency exchange rates of $1 50 for the Canadian dollar to Euro and $1 45 for the Canadian dollar to U S. Dollar exchange rate on the low end of the range granted is assuming exchange rates of the Canadian dollar to euro of $1 45, and the Canadian dollar to U S dollar of 140.

Teresa Neto: On the low end of the range, Granite is assuming exchange rates of the Canadian dollar to euro of 1.45 and the Canadian dollar to US dollar of 1.40. Granite will provide updates to guidance each quarter as warranted based on leasing activity executed to date. Granite's balance sheet, comprising of total assets of $9.6 billion at the end of the quarter, was positively impacted by $280 million of translation gains on Granite's foreign-based investment properties, primarily due to the 6.4% increase in the spot USD exchange rate. and 2% increase in the SWOT euro exchange rate, respectively, relative to Q3, partially offset by marginal movement in the fair valuation of Grant's portfolio with a net fair value loss of $1.5 million.

Speaker Change: Granite will provide updates to guidance each quarter as warranted based on leasing activity executed to date.

Speaker Change: Grant its balance sheet comprising of total assets of $9 6 billion at the end of the quarter was positively impacted by $288 million of translation gains on granted foreign based investment properties, primarily due to the six 4% increase in the spot USD exchange rates.

Speaker Change: And what percent increase in the spot Euro exchange rate, respectively relative to Q3, partially offset by marginal movement in the fair valuation of grants portfolio with a net fair value loss of $1 5 million.

Teresa Neto: The Trust's overall weighted average cap rate of 5.3% on in-place NOI increased 5 basis points from the end of Q3 and has increased 8 basis points since the same quarter last year. Our total net leverage as of December 31, 2024 was 32%, and net debt to EBITDA was 6.8 times, which is slightly lower relative to Q3 and lower than Q4, 2023, as a result of NOI growth, including the completion and stabilization of the majority of grants development properties. Granite's current liquidity is approximately $1.1 billion, representing cash on hand of approximately $120 million and the undrawn operating line of $998 million.

Speaker Change: The trust overall weighted average cap rate of five 3% on in place NOI increased five basis points from the end of Q3 and has increased eight basis points since the same quarter last year.

Speaker Change: Our total net leverage as of December 31, 24 was 32% and net debt to EBITDA was six eight times, which is slightly lower relative to Q3 and lower than Q4 2023, as a result of NOI growth, including the completion and stabilization of the majority of grants development properties.

Speaker Change: Granted current liquidity is approximately $1 1 billion, representing cash on hand of approximately $120 million and the Undrawn operating line of $998 million.

Teresa Neto: As of today, Granite has no borrowings under the credit facility and there are 2.4 million of letters of credit outstanding. Granite's recent refinancing will have no material impact on its net leverage, net debt to EBITDA, and liquidity position. Granite has been active on its NCIB for the three months ended December 31st, 2024. Granite repurchased 23,000 units under the NCIB at an average unit cost of $69.08 for total consideration of $1.6 million. During the year 2024, Granite purchased 667,300 units at an average cost of $68.64 for total consideration of $45.8 million. Post year end, Granite has purchased 459,100 units under the NCIB at an average cost of $68.75 for total consideration of $31.6 million.

Speaker Change: As of today granite has no borrowings under the credit facility and there are $2 4 million of letters of credit outstanding.

Speaker Change: Grant its recent refinancing will have no material impact on its net leverage net debt to EBITDA and liquidity the liquidity position.

Granite has been active on it and in CIB for the three months ended December 31, 20 for granite repurchased 23000 units under the NCI B at an average unit cost of $69 eight for total consideration of $1 6 million during the year 2020 for granted purchased 667300 units at an average.

Speaker Change: Cost of 68 64 for total consideration of $45 8 million.

Speaker Change: Post year end granite has purchased 459100 units under this and CIB at an average cost of $68 75 for total consideration of $31 6 million.

Kevan Gorrie: I'll now turn the call over to Kevan. Thanks, Teresa, and good morning. I frankly don't have a lot of prepared comments to make. I think there will be a lot of questions, so we're happy to get to that. I do want to highlight a few things about the quarter and the year for you. Beginning with same property NOI, just to highlight the fact that it increased each quarter. And in the fourth quarter, it was muted somewhat by our Utrecht property. Vacancy and non-recoverable costs and the reason why I'm highlighting it is Utrecht is a technically a redevelopment site of ours in the Netherlands And we keep it as IPP because we're not sure ultimately what we're going to do with the asset.

Kevin Gordon: I'll now turn the call over to Kevin.

Kevin Gordon: Thanks, Teresa and good morning.

Kevin Gordon: I frankly don't have a lot of prepared comments to make I think there will be a lot of questions. So we're happy to.

Kevin Gordon: To get to that I do want to highlight a few things about the quarter and the year before you.

Kevin Gordon: Beginning with same property NOI.

Kevin Gordon: Just to highlight the fact that as increase each quarter.

Kevin Gordon: And in the fourth quarter. It was muted somewhat by argue truck property vague.

Kevin Gordon: They can see in the non recoverable costs and the reason why I'm highlighting it as you track the.

Kevin Gordon: Technically a redevelopment site of ours in the Netherlands.

Kevin Gordon: And we keep it as IPP because we're not sure ultimately what we're going to do with the asset but at the end of the day, we are unable to offer term to prospects. So it does limit our ability to lease.

Kevan Gorrie: But at the end of the day, we're unable to offer term to prospects. So it does limit our ability to lease. and I just want to highlight that. It is having an impact on our Tampa Rock Vienna Y performance, but it is technically to us a redevelopment site.

Kevin Gordon: I just want to highlight that it is having an impact on our same property NOI performance, but it is technically to us a redevelopment site.

Kevan Gorrie: The final thing on St. Proppy NOI I wanted to highlight is that our U.S. portfolio generated 6.5% St. Proppy NOI growth in a quarter, which was very strong. Rent increases, just to point out again, that they naturally fluctuate each quarter for expiries within a quarter. And they're having no impact, as Teresa mentioned, on our guidance for 2025. The team also signed, I think, over 400,000 new leases and a million square feet of renewals in a quarter at an average increase of 22% over expiring rents. And to date, as noted, we have renewed just under 70% of our 2025 expiries and an average increase of almost 45%.

Kevin Gordon: The final thing on same property NOI I wanted to highlight is that our U S portfolio generated six 5% same property NOI growth in the quarter, which was very strong.

Kevin Gordon: <unk> increases just to point out again that they naturally fluctuate each quarter for expires within a quarter.

Kevin Gordon: And they're having no impact as Teresa mentioned on our guidance for 2025.

Kevin Gordon: The team also signed I think over 400000 of new leases and 1 million square feet.

Kevin Gordon: Renewals in the quarter at an average increase of 22% over expiring rents and to date as noted we have renewed just under 70% of our 2025 expires in an average increase of almost 45%.

Kevan Gorrie: And I think we remain on target for an average increase in 2025 on renewals of 30 to 35%.

Kevin Gordon: And I think we remain on target for an average increase in 2025 on renewals of 30% to 35%.

Kevan Gorrie: The third thing I wanted to highlight is our cash position. We finished the year with $126 million in cash. That is up $10 million. over 2023 despite a 3.1% increase to our annual distribution and the fact that we deployed $46 million on unit buybacks and $34 million on development in 2024.

Kevin Gordon: The first thing I wanted to highlight.

Kevin Gordon: As our cash position.

Kevin Gordon: We finished the year with $126 million in cash that was up $10 million.

Kevin Gordon: Over 2023, despite a three 1% increase to our annual distribution and the fact that we deployed $46 million on unit buybacks and $34 million on development in 2024.

Kevan Gorrie: And seeing as it's the fourth quarter end of the year, I wanted to highlight FFO, NAV, and NOI per unit metrics, which I hope you find helpful or useful. Over the past three years, our FFO per unit has increased by 38%. That is an annual growth rate of 11.5%, all while reducing our debt to EBITDA from 8.1 times to 7.1 times over that period. Over five years, our FFO per unit has grown 50%. That's an 8.5% annual growth rate. NAP per unit has increased or has a 5-year CAGR of 9.6%, this despite an $850M adjustment in price associated with expansion in cap rates and discounts.

Kevin Gordon: And seeing as the fourth quarter ended the year wanted to highlight <unk> NAV and NOI per unit metrics, which I hope you find them helpful or useful.

Over the past three years, our <unk> per unit has increased by 38%.

Kevin Gordon: That is an annual growth rate of 11, 5%.

Kevin Gordon: All while reducing our debt to EBITDA from eight one times to seven one times over that period.

Kevin Gordon: Over five years, our <unk> per unit has grown 58%.

Kevin Gordon: That's an eight 5% annual growth rate.

Kevin Gordon: NAV per unit has increased or has a five year CAGR of nine 6%. This despite an 850 million downward adjustment in price associated with expansion in cap rates and discount rates.

Kevan Gorrie: And finally, NOI per unit, which is something I like to track, because as we can see with some other REITs, it is possible to grow NOI dilutively. Our NOI per unit has increased for 12 straight quarters and is up roughly 46% over the past three years. That is a CAGR of 13.6%. And just to highlight the fact, the cash NOI increased by $2.4 million over the third quarter, which is $0.04 per unit.

Kevin Gordon: And finally NOI per unit, which is something I would like to track because as we can see with some other Reits it is possible to grow NOI dilutive Lee.

Kevin Gordon: Our NOI per unit has increased for 12 straight quarters and is up roughly 46% over the past three years.

Kevin Gordon: CAGR of 13, 6%.

Kevin Gordon: And just to highlight the fact, the cash NOI increased by $2 4 million over the third quarter, which is four five <unk> per units.

Kevan Gorrie: And finally, just to recognize the new development that we announced in Houston, new Build-A-Suit. on a long-term lease with a Fortune 50 company, representing the third phase of our development site in Houston.

Kevin Gordon: And finally.

Kevin Gordon: Just to recognize the new development that we analysis Houston, new build to suit.

Kevin Gordon: On a long term lease with a fortune 50 company, representing the third phase of our development site in Houston I think the team did.

Kevan Gorrie: I think the team did a fantastic job at landing this opportunity and negotiating this lease and this development at a very attractive return with income expected in late 2026. And I think as importantly, it displays very strong validation for our site and our location. And that's it on that.

Kevin Gordon: Fantastic job landing this opportunity in negotiating this this lease in this development at a very attractive return with income expected in late 2026, and I think as importantly, this is displayed very strong validation for our site and our location.

And.

Konstantin: I'll open up the line for any questions, operator. At this time I would like to remind everyone, in order to ask a question, please press star then the number 1 on your telephone keypad. If you are using a speakerphone, please make sure to lift your handset before pressing any button. We'll pause for just a moment to compile the Q&A roster.

Kevin Gordon: That's it on that it will open up the line for any questions operator.

Speaker Change: At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad.

Speaker Change: If you are using a speaker phone please make sure to lift your handset before pressing any piece.

Speaker Change: We'll pause for just a moment to compile the Q&A roster.

Mike Markidis: Your first question comes from the line of Mike Markidis from BMO Capital Markets, your line is now open. Thanks, Operator. Good morning, Kevin and Teresa. Just two questions from my end, one somewhat granular, one more high level. I guess I'll start with the granular one. Teresa, on the, I think it was $2.6 million you noted was the foreign currency gains that contributed to FFO this quarter? Yeah, that's good. 2.8 million. That's correct. 2.8. Sorry, 2.8. Okay. And I guess that's in, typically, you've got a little bit of a loss on your callers and contracts. So how do you expect that to play out going forward?

Speaker Change: Your first question comes from the line of Mike <unk> from BMO capital markets. Your line is now open.

Speaker Change: Thanks, operator, good morning, Kevin and Teresa just two questions from my end, one somewhat granular one more high level.

Speaker Change: I guess I'll start with the granular one three so on the I think it was $2 6 million of foreign currency gains that contributed to our portfolio this quarter.

Speaker Change: Yes, it's $2 8 million, that's correct sorry, two eight okay and I guess that's in.

Speaker Change: <unk> got a little bit of a loss on your callers in contracts. So how do you expect that to play it going forward I mean, I know, it's depending on currency, but.

Teresa Neto: I mean, I know it's dependent on currency, but is there anything anomalous?

Speaker Change: Was there anything anomalous yeah.

Teresa Neto: Yeah, I think that's, it was a bit of an unusual quarter. It's actually related to our term loan that we actually paid out. For accounting purposes, that loan was no longer effectively an accounting hedge, but it's still part of our net investment because it was euro swap. But the point is, it's a US-based loan and it gets translated and that, unfortunately, has to go through fair value as opposed to, sorry, through the P&L as opposed to the OCI. So you're seeing it flow through the P&L, which is a bit unusual because typically a lot of our fair value and foreign currency adjustments are flowing through OCI.

Speaker Change: I think it was a bit of an unusual quarter, it's actually related to our terminal that we actually paid out.

For accounting purposes.

Speaker Change: Loan with no longer effectively and accounting hedge, but it's still part of our.

Speaker Change: Our net investment because it was euro swaps, but the point is it's a U S based.

Speaker Change: Based loan and it gets translated and forecast to go through fair value as opposed to through the P&L as opposed to the OCI. So youre seeing it flow through the P&L, which is a bit unusual because typically a lot of our fair value.

Speaker Change: And foreign currency adjustments are flowing through OCI, but in this case it was basically not accounting hedge for a period of time until we repaid it in December.

Teresa Neto: But in this case, it was basically not an accounting hedge for a period of time until we repaid it in December. And then, of course, with the swift movement and strong movement of USD in Q4, that just sort of added fuel to the foreign currency gain effectively. But we always have monetary assets and liabilities sitting in our Canadian subsidiary, which does get translated. We try and minimize it, but it does have some swings up and down. But I think particularly because we were holding onto this term loan for this period of time in an unhedged position, it led to a larger than normal gain.

Speaker Change: And then of course with the with movement in strong movement of USD in Q.

Speaker Change: Q4 is that just sort of it.

Speaker Change: Added fuel to the foreign currency gain effectively but we always have like monetary assets and liabilities sitting in our Canadian subsidiary, which does get translated we try and minimize it but it does have some swings up and down but I think particularly because we are holding onto the term loan for the period of time in an unhedged position it led to a larger than <unk>.

Teresa Neto: For contrast, in Q3, we actually had a $900,000 loss in the same kind of category. So I say like, I wouldn't plan for any of this. I mean, I wouldn't forecast. No, and we typically don't. We typically just run it at zero. And it's usually plus or minus not that significant, which is why I asked. And can you remind me, was that in your 141X items number or like it adjusted for? No, it's excluded. It's excluded. The 141 does not include the 2.8.

Speaker Change: Normal gain for contract in Q3, we actually had a $900000 loss in the same kind of category.

Right.

Speaker Change: I wouldn't plan for any of that I mean, I wouldn't forecast anything.

Speaker Change: No. We typically don't we typically just wanted to zero and that's usually plus or minus is not that significant which is why I asked and can you remind me was that in your $1 41 X items number adjusted for it.

Speaker Change: No. It's excluded is excluded the 131 does not include the $2 8 million.

Speaker Change: Does not include the 2000, okay awesome. Thanks, and then just okay. So moving forward and looking at the guidance. Thanks for the G&A.

Speaker Change: Guidance there.

Speaker Change: Just with respect to the NOI I know you guys are expecting some lease up of vacancy in the back half of the year, but how do you expect your occupancy to traject sort of throughout the year or does it stay stable in the first half and then move higher or do you expect it to actually sort of leak a bit lower before gaining in the backdrop.

Mike Markidis: is a stable in the first half and then move higher or do you expect it to actually sort of leak a bit lower before gaining in the back half? Yeah, it could. I mean, just it depends on the timing of the expiries and some of the move outs that we have. If the occupancy could go lower in the second quarter, we expect it to increase in the third and fourth quarter. Okay, I said two questions, so I'm going to keep to that. I'll turn it back. Thank you.

Speaker Change: Yes, it could I mean, just it depends on the timing of the expiry is in some of the move outs that we have.

Speaker Change: The occupancy could go lower in the second quarter.

Speaker Change: And we expect it to increase in the third and fourth quarter after that.

Speaker Change: Okay. So two questions so I'm going to keep it that I will turn it back. Thank you.

Speaker Change: Okay.

Speaker Change: Yes.

Sam Damiani: Your next question comes from the line of Sam Damiani from TD Cowen, your line is now open. Thank you.

Speaker Change: Your next question comes from the line of Sam Damiani from TD Cowen. Your line is now open.

Sam Damiani: Good morning, everyone. So maybe just to pick up where Mike left off there, on the occupancy, or actually on the same property, NOI guidance, the range, you know, aside from, I guess, the occupancy fluctuation mid-year, what scenarios would cause NOI growth to be at the lower end and also at the higher end of that guidance? Well, I would say if we were to do no new leasing it obviously, if we were to do no new leasing, we would probably miss the range, but probably not by much. To backfill what we expect to vacate this year, which is roughly a million would get us within the range of four and a half to 6%.

Sam Damiani: Thank you and good morning, everyone.

Speaker Change: So maybe just to pick up where Mike left off there on the occupancy or actually obviously appropriate in a wide guidance range aside from I guess sort of occupancy fluctuation mid year.

Scenarios would cause <unk>.

Speaker Change: Growth to be at the lower end and also at the higher end of that guidance range.

Speaker Change: Well I would say if we were to do no new leasing. It obviously, if we were to do no new leasing we would probably missed the range, but probably not by much to backfill what we expect to vacate this year versus roughly a $1 million would get us within the range of $4 five 6% same property NOI.

Sam Damiani: And if we were to we... If we were to complete a million and a half new leases, it would be in the upper end of Okay, that's helpful and I guess in the outlook statement in the MD&A, there was a comment about market rents continuing to moderate broadly.

Speaker Change: If we were to do.

Speaker Change: If we were to complete a $1 million half of new leases it would be in the upper end of the range.

Speaker Change: Okay. That's helpful. That's helpful and I guess in the outlook statement in the MD&A. There was a comment about market rents continuing to moderate broadly.

Sam Damiani: Can you maybe just expand on what the meaning of that, of throwing that phrase in? I can't remember exactly what that phrase is about, Mari, but it certainly continues to make sense for us. So when we look at our markets that we operate in, Sam, some of the markets' rents continue to move up, and some of the markets, the market rents continue to go down. So for example, of our markets, the worst performing market for rental rate growth was the GTA. which is down 6% year-over-year. The strongest markets that we had were Houston at 17%, up 17%, and Nashville's up just over 20% year-over-year.

Could you maybe just expand on what the meaning of the.

Speaker Change: That phrase in there.

Speaker Change: And the I can't remember exactly without phrases about lora.

Speaker Change: It certainly continues to make sense for us so.

Speaker Change: When we look at our markets.

Speaker Change: That we operate in some of the markets rents continue to move up and some of the markets. The rents the market rents continue to go down So for example.

Speaker Change: Our markets the worst performing market for rental rate growth was the GTA.

Speaker Change: Which is down 6% year over year, the strongest markets that we had where Houston at 17% up 17% and Nashville was up just over 20% year over year.

Sam Damiani: But overall, I think we would agree that market rents are continuing to moderate. Okay, got it.

Speaker Change: But overall I think we would agree that market rents are continuing to continuing to moderate.

Speaker Change: Okay got it and last one for me just on the Houston Congratulations on that by the way.

Sam Damiani: And last one for me, just on the Houston, congratulations on that, by the way. Just looking at the site plan, is this project situated on the parcel that was earmarked for a million square foot building? I'm just trying to figure out where this, what this building sort of represents on the plan. Correct. So you could see two smaller buildings on that parcel, which was always an option for us. We wanted to keep a million available, but I think this is the right size for that site and for that parcel in particular, 400,000 feet roughly. And does it retain like space on that parcel for another building?

Speaker Change: Just looking at the site plan does this is this project situated on the parcel that was earmarked for a million square foot building I'm, just trying to figure out where this.

Speaker Change: With this building sort of represents on the plane.

Speaker Change: Correct. So you could see two smaller buildings on that parcel, which was always an option for us we wanted to keep $1 billion available, but I think this is the right size for that site and for that personal in particular 400000 feet roughly.

Speaker Change: And does it retain.

Space on that parcel for another building or is it or is this basically going to be a lot of trailer parking on this.

Sam Damiani: Or is there is this basically going to be a lot of trailer parking? No, correct. No, it allows for it allows for another building. Okay, perfect.

Speaker Change: It allows for it allows for another building on the parcel.

Sam Damiani: Thank you.

Speaker Change: Perfect. Thank you I'll turn it back.

Brad Sturges: Your next question comes from the line of Brad Sturges from Raymond James. Your line is now open.

Speaker Change: Your next question comes from the line of Brad Sturges from Raymond James Your line is now open.

Brad Sturges: Hey, good morning. to keep on the theme of on leasing just I guess I'm curious you know since the US election and just thinking about your US markets like have you seen any noticeable change positively or negatively on kind of leasing loss of your activity and is that you know translated into more activity in certain markets you know whether it's the the Midwest or you know further south Well, I would put it this way. I think we didn't see, it wasn't as though we saw a lot of pickup immediately following the election or January. We are seeing a pickup since maybe the beginning of February.

Brad Sturges: Hey, good morning.

Speaker Change: Just to keep on the theme of.

Speaker Change: On leasing just.

Speaker Change: I guess I'm curious.

Speaker Change: Since the U S election.

Speaker Change: And just thinking about your U S markets like have you seen any noticeable.

Speaker Change: <unk> share positively or negatively on.

Speaker Change: Leasing velocity or activity in that.

Speaker Change: Translated into more activity in certain markets.

Speaker Change: Whether it's the Midwest or.

Speaker Change: Further south.

Speaker Change: Well I would put it this way I think we didn't see it wasn't as though we saw a lot of pick up immediately following the election or January we are seeing a pickup since maybe the beginning of February.

Brad Sturges: Activity has been very good. I think this is one of the only times I recall where we've had multiple prospects on all of our larger bill abilities. What we're still waiting for, though, is deal flow. We're waiting for these transactions to clear. We're waiting for tenants to sign leases. And not that we don't expect that to happen, but I think that sort of The next phase of this that we're waiting for. So activity has been strong. And we'll see, these are the important times.

Speaker Change: Activity has been very good I think this is one of the only times I recall, where we've had multiple prospects on all of our larger availabilities, what we're still waiting for those deal flow. We are waiting for these transactions to clear we're waiting for tenants to sign leases and not that we don't expect that to happen, but I think that's sort of.

Speaker Change: And the next phase of this that we're waiting for so activity has been strong.

And we will see these important times I think this is a better conversation in may.

Brad Sturges: I think this is a better conversation in May. Or in the second quarter because that'll really give us a picture of how how much the market's firming up in the US And when you think about occupancy as you head into the back half the year is Still the thought process that you'd get into the 96 plus range, maybe by the end of the year, or how do you think about that, that timing? I mean, right now, I think we would prefer to be cautious. I think we would say 95 and a half to 96. In that range, for the end of 2026, I think would be a prudent target.

Speaker Change: Or in the second quarter, because that will really give us a picture of how how much the markets firming up in the U S.

Speaker Change: Okay.

Speaker Change: And when you think about occupancy as you head into the back half of the year is it still the thought process.

Speaker Change: You would get into the 96 plus range maybe buy.

Speaker Change: At the end of the year or how do you think about that timing.

Speaker Change: I mean right now I think we would prefer to be cautious I think we would say 95, 5% to 96.

Speaker Change: In that range for the end of 2026, I think would be.

Speaker Change: A prudent.

Brad Sturges: Okay. That's great. I'll turn it back. Thank you.

Speaker Change: Target.

Speaker Change: Okay.

Speaker Change: That's great I'll turn it back thank you.

Speaker Change: Okay.

Matt Kornack: Next question comes from the line of Matt Kornack from National Bank Financial, your line is now open. Good morning, guys. Just returning to your comments on the 1 million square feet of kind of known non-renewals, I think you have 1.7 million of uncommitted. Can you give us a sense as to the geographies as to where you're having tenants not take space and maybe the prospects on that space as well? Yeah, we have 370,000 square feet remaining in Canada, 1.2 million in the US and 150,000 square feet in Europe. NNCSRG Is your thought process, from a vacancy standpoint, that all of that would be non-renewals, or?

Speaker Change: Next question.

Speaker Change: <unk> comes from the line of Matt <unk> from National Bank Financial Your line is now open.

Speaker Change: Good morning, guys. Just just returning to your comments on the 1 million square feet of kind of known non renewals at thank you.

Speaker Change: $1 $7 million of uncommitted.

Can you give us a sense as to the geographies as to where youre, having tenants not take space and then maybe the prospects on that space as well.

Speaker Change: Yes, we have 370000 square feet remaining in Canada, $4 2 million in the U S and 150000 square feet in Europe.

Speaker Change: Okay.

Speaker Change: And then your.

Speaker Change: Your thought process from a from a vacancy standpoint.

Speaker Change: All of that would.

Speaker Change: It would be non renewals or.

Matt Kornack: No, no.

Matt Kornack: I think we said we expected to renew between 80% to 85% of our expiries in 2025, which is a very strong number, but that still means we expect roughly a million square feet of expiries the tenant will not renew. And then with regards to leasing and the rent spreads, you've disclosed, I think, the 43% figure for that that has been committed to date, and I think you said 30 to 35. for the fullness of the year. Can you give us a sense as to what those spreads look like in your geographic region? I don't have them in front of me, Matt, but I think the remaining ones we have an average 20% increase overall.

Speaker Change: No no I think I think we said we.

Speaker Change: Spectrum to renew between 80% to 85% of our batteries in 2025, which is a very strong number but that still means roughly we expect roughly 1 million square feet of the priorities of the Senate will not will not renewed.

Speaker Change: Okay.

Speaker Change: And then with regards to.

Speaker Change: Leasing in the rent spreads you disclosed I think the 43% figure for that that has been committed to date and I think you said, 30% to 35.

Speaker Change: For the fullness of the year can you give us a sense.

Speaker Change: What those spreads look like.

Speaker Change: Your geographic regions.

Speaker Change: I don't have in front of me, Matt, but I think the remaining ones, we have an average 20% increase overall.

Matt Kornack: Fair enough.

Matt: Okay fair enough. Thank you.

Matt Kornack: Thank you.

Speaker Change: Okay.

Speaker Change: Yes.

Himanshu Gupta: Your next question comes from the line of Himanshu Gupta from Scotiabank, your line is now open. Thank you and good So just on the leasing theme, any tenants on the watch list here and any update on true value and basically, you know, any tenants on backups. Yeah, we don't have anyone I think on the tenancy watch list as an update for true value. We're in advanced discussions. We'll do our best.

Speaker Change: Your next question comes from the line of Himanshu Gupta from Scotiabank. Your line is now open.

Himanshu Gupta: Thank you and good morning.

Himanshu Gupta: So just wondered leasing team.

Speaker Change: Any tenants on the watch list two.

Speaker Change: And any update on true value and basically any dividends on bankruptcy watch gift.

Speaker Change: Yes, we don't have anyone I think on the tenancy watch list is an update for true value. We're in advanced discussions with two at best we do not have a signed agreement yet, but we hope we will have an update on the next call.

Himanshu Gupta: We do not have a signed agreement yet, but we hopefully will have an update on the next call. Okay, and in your 2025 guidance, do you assume like full rent from True Value for the full year? Oh, we don't have anything specific in there regarding true value or tariffs. But I think overall, we've tried to be cautious. I think we We're setting guidance at a level that we're very comfortable we will achieve or we're comfortable that we will achieve. I don't think it takes anything specific into account.

Speaker Change: Okay.

Speaker Change: In your 2025 guidance do you assume like Flovent from true value for the full year.

Speaker Change: We don't have anything specific in there regarding true value or tariffs, but I think overall, we've tried to be cautious I think.

Speaker Change: We're setting guidance at a level that we're very comfortable we will achieve or we are comfortable that we will we will achieve I don't think it takes anything specific into account.

Himanshu Gupta: Okay, fair enough. And then, you know, you mentioned tariff, and obviously, you know, the magna exposure. So any thoughts there? I see, you know, you have two special purpose properties in the GTA, Milton specifically. Have you heard anything from magna or any other? No, absolutely not. And we just completed a renewal with Magnet, it was business as usual.

Speaker Change: Got it Okay fair enough.

Speaker Change: And then you mentioned shallow well.

Speaker Change: Obviously, it'll the magna exposure, so any any thoughts there.

Speaker Change: I see you know you have to especially the focus properties in the J D.

Speaker Change: <unk> specifically have.

Speaker Change: Have you heard anything from magna or any update there.

Speaker Change: No absolutely not I mean, we just completed a renewal with magna was business as usual.

Himanshu Gupta: Just on the tariff side, I just would make a few points on that. And I mean, one is long term, I mean, the impact on, you know, industries and sectors and tenants in Canada, it's obviously going to depend a lot on the extent of tariffs and the length of time that they're in place. But we don't anticipate a material impact on our Canadian portfolio in the near term. And frankly, I'd be more concerned about tenants in markets like London and Windsor that cater more specifically to cross-border distribution. And I will make a point about Magna as well, you know, Magna started in the GTA, it's been in operation here for over 65 years.

Speaker Change: Just on the tariff side.

Speaker Change: I'll make a few points.

Speaker Change: <unk>.

Speaker Change: And I mean, one is long term.

Speaker Change: Impact on industries and sectors and tenants in Canada, its obviously going to depend.

Speaker Change: <unk> on the extent of tariffs and the length of time that they are that they are in place, but we don't anticipate a material impact on our Canadian portfolio in the near term.

Speaker Change: Frankly, I'd be more concerned about tenants in markets like London, and Windsor cater more specifically the cross border distribution.

Speaker Change: And I will make a point of a magna as well.

Speaker Change: Magna started in the GTA, it's been in operation here for over 65 years.

Himanshu Gupta: And we frankly don't anticipate that changing, particularly given that production and supply chains take several years to establish and don't change over a period of months. And then the final thing, which I think is getting missed is is the natural hedge. That is provided by our U.S. portfolio on concerns regarding tariffs between Canada and the U.S. So if there were tariffs that had a material impact on Canadian tenants or Canadian portfolios... I think there's an understanding that there would be a commensurate appreciation of the U.S. dollar against Canadian dollar, thereby increasing our income from our U.S.

Speaker Change: And we frankly don't anticipate that changing particularly given the production and supply chain takes several years to establish and don't change over a period over a period of months.

Speaker Change: And then the final thing, which I think is getting missed as is.

Speaker Change: Is the natural hedge.

Speaker Change: That is provided by our U S portfolio on concerns regarding tariffs between Canada and the U S.

Speaker Change: So if there were tariffs that had a material impact on Canadian tenants of our Canadian portfolio.

Speaker Change: I think there is an understanding that there would be.

Commensurate appreciation of the US dollar against the Canadian dollar, thereby increasing our income from our U S portfolio, thereby increasing our overall income so we found that to be a rather natural hedge.

Himanshu Gupta: portfolio, thereby increasing our overall income. So we found that to be a rather natural hedge, not that, again, as I said, we're not anticipating a particular threat against our Canadian portfolio, but just the natural hedge of the U.S. denominated income from our portfolio seems to be missed by a...

Speaker Change: Again as I said, we're not anticipating a particular threat against our Canadian portfolio, but just the natural hedge of the U S. Denominated income from our portfolio seems to be missed by a number of investors.

Himanshu Gupta: Thanks for the color on Magna.

Speaker Change: Got it thanks, thanks for the color on <unk>.

Himanshu Gupta: And now maybe the last question is on the U.S. markets, and specifically if I look at Indianapolis, Indy there, or Memphis. I mean, would you say these two markets continue to be soft? And this is where you have some vacancy, so we'll have to wait for those markets to get better before you show up better, do you think? A few things I would say that can we just start with the six and a half percent St. Propiona Y growth for the fourth quarter. I'll start there. That's a pretty good number. I think by any by any measure.

Speaker Change: And now maybe the last question is on the U S market and specifically if I look at Indianapolis.

Speaker Change: Our Memphis.

Speaker Change: Would you see these two market continues to be soft.

Speaker Change: This is a you have some vacancy so we'll have to wait for those markets to get better before you show up but lease inquisitive.

Speaker Change: A few things I would say that can we just start with the six 5% same property NOI growth for the fourth quarter.

Speaker Change: So let's start there thats a pretty good number I think by any measure two as I didn't share the middle I heard in the and I heard Memphis, and I would say Memphis is actually doing doing quite well.

Himanshu Gupta: Two is I didn't hear the middle. I heard Indy and I heard Memphis and I would say Memphis is actually doing quite well. Indy, we still have our availability there. The activity on both the buildings has picked up. But again, we still need to see some actual leasing being done. So I would agree that Indy is softer right now, but Memphis has been a strong market for us. I think the past six months and we expect it to continue to be healthy in 2025. I didn't hear the middle.

Speaker Change: Indeed, we still have our availability there be activity on both the buildings has picked up again.

Speaker Change: We still need to see some actual leasing being done so I would agree that indeed.

Speaker Change: Is softer right now, but Memphis has been a strong.

Speaker Change: Strong market for Us I think the past six months and we expect it to continue to be healthy in 2025, I didn't hear the middle.

Himanshu Gupta: Yeah, no, I spoke about those two markets only. And in fact, like Nashville continues to be rather strong.

Speaker Change: Yes, no I spoke about those two markets.

And then the follow up was like Nashville continues to be rather small, but on the other side I use of night that you'll take a bit longer to fill those two properties, which is.

Himanshu Gupta: I mean, on the other side, are you surprised that you're taking a bit longer to fill those two properties? Not really, because I mean, we're holding it. These are, we consider these to be prestige and industrial. And we are, you know, looking for a premium in rents there. So yes, and no, we would have thought it would have been leased by now. But at the end of the day, we are not the lowest cost alternative in the market. And we're not trying to be. So I think we can afford to be for the right tenant and the right deal.

Speaker Change: Not really because we're holding it. These are we consider these to be prestige.

Speaker Change: Industrial and we are looking for a premium and rents there so yes, and no we would've thought it would've been leased by now but at the end of the day, we are not the lowest cost alternative in the market and we're not trying to be so.

Speaker Change: I think we can afford to be patient for the right tenant and the right deal.

Himanshu Gupta: And I that's part of the reason why it's taking longer than maybe some other properties would. Go ahead. Fair enough. Thank you.

Speaker Change: And that's part of the reason why it's taking longer than maybe some other properties.

Speaker Change: Got it.

Pammi Bir: And I'll... Your next question comes from the line of Pammi Bir from RBC Capital Markets.

Speaker Change: Thank you and I'll turn it back.

Speaker Change: Your next question comes from the line of Bob <unk> from RBC capital markets. Your line is open.

Pammi Bir: Your line is open. Thanks.

Pammi Bir: Good morning. Just maybe sticking with the whole tariff discussion, are you seeing any of your U.S. tenants starting to maybe build inventory levels? You mentioned, you know, pickup in activity. Just curious if you're seeing any of that take hold. No, I don't think there's anything. I mean, we're paying obviously paying more attention to our US tenants than we normally would in a sort of environment like this, but we're not seeing any specific reaction to tariffs. Yeah. And yeah, okay.

Speaker Change: Thanks, Good morning.

Speaker Change: Just maybe sticking with Dol tariff discussion are you seeing any of your U S tenants.

Speaker Change: Starting to maybe build inventory levels, you mentioned pick up in activity just curious if thats, if youre seeing any of that to take hold.

Speaker Change: No I don't think Theres anything immediate.

Speaker Change: Obviously paying more attention to our U S tenants than we normally would.

Speaker Change: And the sort of environment like this but we're not we're not seeing any specific reaction to tariffs.

Speaker Change: Yes.

Pammi Bir: And then just coming back to Kevin, your comment about the occupancy dip in Q2, or just maybe more generally, just want to confirm, is this really more specific to the US or is it, you know, maybe a little in Canada, a little bit in Europe? Yeah, it's just based I think it's more the US is based on, you know, the expiries that they're expected to occur over 2025. Okay, and I think, I think you said 95 and a half to 96%. But did you say by the end of 25 or 26? Well, sorry, I meant 2025.

Speaker Change: Yes, okay.

Speaker Change: And then just coming back to Kevin your comment about the occupancy dip in Q2, just want or just maybe more generally.

Speaker Change: Wanted to confirm is that is this really more specific to the U S or is it.

Speaker Change: Maybe a little bit Canada sort of in Europe.

Speaker Change: Yes, it's just base I think it's more of the U S is based on the Expiries.

Speaker Change: They are expected to occur over 2025.

Speaker Change: Okay and I think.

Speaker Change: I think you said 95, 5% to 96%, but did you see by the end of 'twenty five or 'twenty six.

Speaker Change: Oh, sorry, I meant 25, and then 2020.

Pammi Bir: I meant 2020. Okay. All right.

Speaker Change: Okay Alright.

Pammi Bir: Just last one for me on the on the Brantford site. What kind of interest have you seen in terms of building out or any built to suit inquiries on some of the remaining land? We've had a few, I think, Mike, they've kind of been smaller, right, recently, sort of in the $100,000 to $200,000. Yeah, yeah, we've had a few but nothing that sort of advanced to a serious stage.

Speaker Change: Just last one for me on the on the <unk> site.

Speaker Change: Interest have you seen in terms of building out or any build to suit inquiries on some of the.

Speaker Change: The remaining land there.

Speaker Change: We've heard a few I think Mike they've kind of been smaller rate recently is sort of in the 100 to 200000, yes.

Speaker Change: Yes, we've had a few buttons, but nothing that sort of advance to a serious stage yet.

Pammi Bir: And I guess to maybe just clarify, you're not looking to start anything on spec in any of your markets at this point, are you? No. Great. Thanks very much.

Speaker Change: And I guess to maybe just clarify youre not looking to start anything on spec and any of your markets. At this point are you.

Speaker Change: No.

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

Pammi Bir: I'll turn it back.

Sumayya Syed: Next question is from the line of Sumayya Syed from CIBC. Your line is open. Thanks. Good morning. First, a bit of a clarification on the AFFO guide. We mentioned there are some additional spend on tenant allowances. Is that just based on the sheer size of the... Pipeline or generally more allowances than you would have done or a combo of. First of all, I think the majority of the increase is actually tied to maintenance capex, so roofing and parking lot work. Yes, we are projecting higher tenant allowances relative to 24, about $5 million more, but I think it's more tied to the fact that we do have some vacancy.

Speaker Change: Next question is from the line of <unk> from CIBC. Your line is open.

Speaker Change: Thanks, Good morning.

Speaker Change: First a bit of a clarification on the <unk> guide so there is a.

Speaker Change: You mentioned there are some additional spend on tenant allowances.

Speaker Change: Is that just based on the sheer size of the leasing pipeline or generally more allowances and you would've done or a combo of both.

Speaker Change: First of all I think the majority of the increase is actually tied to maintenance capex, so roofing and parking lot work.

Speaker Change: Yes, we are projecting higher tenant allowance in July.

Speaker Change: <unk> to 'twenty for about $5 million more but I think it's more tied to the fact that we do have some vacancy we're not in the past in the past where over 99% occupied but we do have some vacancy and new leasing and typically the tas youre going to be higher with new leasing, especially with new leasing so it's not so much that the.

Sumayya Syed: In the past, we were 99% occupied, but we do have some vacancy and new leasing, and typically the TAs are going to be hired with new leasing, associated with new leasing. So it's not so much that the TAs themselves are juiced up, it's more just the fact that we have new leasing on vacancy. Yeah, Sumayya, Kevan, just to point out too, we highlighted last year, with the renewal on GROTS, 5.3 million feet with no TAs, no leasing commission. So that was one of the reasons why you look at 2023. Sorry, I'm just... Yeah, it was muted.

Speaker Change: The Tas themselves are juiced up it's more just the fact that we have new leasing on making on vacancies.

Speaker Change: So Kevin just disappointed too we highlighted last year with the renewal on Graz, $5 3 million feet with no <unk> no leasing commissions.

Speaker Change: So that was one of the reasons when you look at 2023.

Speaker Change: Yeah, sorry.

Speaker Change: Yes. It was muted yes, we don't we didn't yet but the renewal in January there was nothing associated with it yes, yes.

Sumayya Syed: Yeah, we would, we didn't. Yeah, but the renewal in January, there was nothing associated with it. Yeah. Yeah, sorry, I meant 2024 heading into 2025.

Speaker Change: Yes, sorry, I meant 2020 forward heading into 2025, and certainly would be a difference for 2025.

Sumayya Syed: It certainly would be a difference for 2025. And then just on the development of projects, and Kevan, you kind of touched on it, it looks like the lease rate is about 65%. So for the assets that are taking longer to lease up, and noting that, you know, the rents so far have been stickier or better, but Do you think that reducing rents would actually help or is it not so much a factor of rent just kind of continued deferred? Yeah, I don't think it would. And I don't think we would need to do that. I think we're still willing to wait for the right deal.

Speaker Change: Okay got it.

Speaker Change: And then just on the development of projects and Kevin you kind of touched on it and it looks like the lease rate is about 65%.

Speaker Change: So for the assets that are taking longer to lease up in noting that the ramp so far have been thank you you are better but.

Speaker Change: Do you think that reducing rents would actually help or is it not so much a factor of Ron just kind of continued deferred decision making.

Speaker Change: Yes, I don't think it would.

Speaker Change: I don't think we would need to do that I think I think we're still willing to wait for the right deal, but I don't think it's the tenant is going to make a decision just based more on the location and the quality of building.

Sumayya Syed: But I don't think it's a tenant is going to make a decision just based more on the location and the quality of building. I don't think you're going to lose a deal over 50 cents, something Okay, and then like also in along the lines of tenant behavior, are you seeing any changes in demand depending on I I must say, I think I made the comment before, I am encouraged by the level of activity on our larger availabilities. And, you know, a few of them want half the building or a portion of the building, a few want the entire building.

Speaker Change: Don't think youre going to lose a deal over 50.

Speaker Change: Something like that.

Speaker Change: Okay and then also in along the lines of tenant behavior are you seeing any changes in demand depending on I guess different sized levels ours is the trend of deferred demand kind of even a widespread across the different I guess square footage.

Speaker Change: I must say I think.

Speaker Change: I made the comment before I am encouraged by the level of activity.

Speaker Change: Activity on our larger availabilities and.

Speaker Change: A few of them one half the building or a portion of the rebuilding if you want the entire building and I would say that there was more prospects today looking for the entire building.

Sumayya Syed: And I would say that there is more prospect today looking for the entire building than we've seen in the past. So I would say just overall, we are seeing a pickup in larger requirements.

Speaker Change: We've seen in the past so I would say just overall, we are seeing a pick.

Speaker Change: Pick up.

Speaker Change: In larger.

Speaker Change: Requirements.

Sumayya Syed: Okay, that's all I had.

Speaker Change: Alright, okay.

That's all I had thank you.

Konstantin: Again, if you would like to ask a question, please press star then the number 1 on your telephone keypad.

Speaker Change: Again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.

Matt Kornack: Your next question comes from the line of Matt Kornack from National Bank Financial. Your line is open. Sorry, two quick follow-ups.

Speaker Change: Your next question comes from the line of Matt <unk> from National Bank Financial Your line is open.

Speaker Change: Sorry, two quick follow ups.

Matt Kornack: Going to Magna, I think in the Globe and Mail last week, there was some, and this is purely hypothetical, but speculation that they could potentially sell the European auto manufacturing business, possibly to a Chinese manufacturer that would want to build in Europe. Can you give us a sense... Protections In The Lease Or What Would Happen In That Type Of Scenario? Just Out Of Curiosity. Well, just in general, I mean, you do have rights, the landlord has rights, I don't want to get into any specifics about the lease, but the landlord does have rights on the assumption of a lease or transition of a lease to a new tenant, so we certainly would have rights under the lease regarding a replacement of the credit.

Speaker Change: Go into Magna I think in the Globe Mill last week, there was some and this is purely hypothetical but speculation that they could potentially sell the European auto manufacturing business, possibly to a Chinese manufacturer that would want to build in Europe.

Speaker Change: Can you give us a sense for the <unk>.

Speaker Change: Protections in the lease or what would happen in that type of scenario.

Speaker Change: Just out of curiosity.

Speaker Change: Well just in general I mean, you have rates for landlord is right I don't want to get any specifics.

Speaker Change: When you look at least for the landlord does have rights on an assumption of a lease or transition of at least two new tenants. So we certainly would have room.

Speaker Change: Under the lease regarding a replacement of the credit.

Matt Kornack: Fair enough.

Matt Kornack: And then Someone was circulating, I'm not sure exactly who it was, that Samsung potentially has put up some space for Sublet within your portfolio. I think they're in your top 10 tenants, but you've got some lease remaining there. Any, any ideas to what you'll do with that space or prospect? No, I mean there has been some interest in the states very limited because there's still almost two years left on the But our understanding is Samsung is looking to sublease their space until the end of the term, and if we can be involved in that process, we'll be involved in that process.

Speaker Change: Okay Fair enough and then.

Someone will circulate I'm not sure exactly who was the Samsung potentially has put up some space for sublet.

Speaker Change: And then your portfolio I think they are in your top 10 tenants, but you've got to lease remaining there.

Speaker Change: Any.

Speaker Change: Any idea as to what you'll do with that space or prospects.

Speaker Change: No I mean, there has been some interest in the state is very limited because there's still almost two years left on the lease.

Speaker Change: But our understanding is Samsung is looking to sublease their space until the end of the term and if we can be involved in that process will be involved in that process.

Unknown Executive: And the asset I mean, can you give us I'm not as familiar with the I guess that Pennsylvania market, but the strengths of that market at this point, maybe leasing fundamentals. You want to You want to jump in here? I mean, it's a great building, it's a great location, and at least currently... Market Metrics are positive, so I mean there's other buildings that would be worse to get back if we end up doing that. Not overly concerned about it. We're working well with the tenants. And as Kevin said, there's still two years left. A lot of things can change by then, obviously, before we get to that.

Speaker Change: And the asset I mean can you give us I'm not as familiar with the <unk>.

Speaker Change: I guess that Pennsylvania market.

Speaker Change: The strength of that market at this point.

Speaker Change: Leasing fundamentals.

Speaker Change: Do you want to.

Speaker Change: You guys want to jump in here.

Speaker Change: I mean, it's.

Speaker Change: It's great going its great location.

Speaker Change: At least currently.

Speaker Change: The market leader.

Speaker Change: Our hospital.

Speaker Change: Other buildings.

The worst to get tobacco, we end up doing that then the.

Speaker Change: Samsung buildings.

Speaker Change: Not overly concerned about it we're working well with the tenant.

Speaker Change: Thanks Pete.

Speaker Change: As Kevin said, there are still two years left on it.

Speaker Change: A lot of things can change by <unk> by the end of August.

Speaker Change: We get to that stage, where should be inherent outside what the in place rents to market as well.

Speaker Change: Yes.

Unknown Executive: Okay, perfect. Thank you.

Okay perfect. Thanks, guys.

Konstantin: There are no further questions at this time.

Speaker Change: There are no further questions at this time, Mr. <unk> I turn the call back over to you.

Kevan Gorrie: Mr. Gorrie, I turn the call back over to you. Alright, thank you, operator. So on behalf of management and trustees, thank you for taking part on the Q4 call and we will speak to you again in May.

Speaker Change: Alright, Thank you operator, so on behalf of management and trustees.

Speaker Change: Thank you for taking part on the Q4 call and we will speak to you again in May.

Konstantin: This concludes today's conference call, you may now

This concludes today's conference call you may now disconnect.

Okay.

Speaker Change: Okay.