Q4 2024 Crombie Real Estate Investment Trust Earnings Call
Good morning, everyone and welcome to call Me Street's fourth quarter Conference call. At this time all lines are in listen only mode. Following the presentation. We will conduct a question and answer session. If at any time during this call. They require immediate assistance. Please press star is email freely.
This call is being recorded at the body 20, 2025, I would now like to turn the conference So Richard might be well you go ahead.
Speaker Change: Thank you good day, everyone and welcome to Crombie Reits fourth quarter and year end 'twenty 'twenty four conference call and webcast. Thank you for joining US. This call is being recorded and live audio and is available on our website at www Dot crombie thoughts yet.
Speaker Change: But it's still accompany today's call are available on the investors section of our website under presentations and events.
Mark Holli: On the call today are Mark Holli, <unk>, President and Chief Executive Officer, Cara, Cameron, Chief Financial Officer, and our EBIDTA Vice.
Speaker Change: President leasing and operations.
Today's discussion includes forward looking statements.
Speaker Change: As always we want to caution you that such statements are based on management's assumptions and beliefs. These.
Speaker Change: These forward looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements.
Speaker Change: Please see our public filings, including our management's discussion and analysis and annual information form for a discussion of these risk factors are.
Speaker Change: 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: I will now turn the call over to Mark who will begin the discussion with comments on Crumby strategy and outlook. Karen will review Chrome is operating fundamentals and discuss our financial results capital allocation and approach to funding and Mark will conclude with a few final remarks over to you Mark.
Speaker Change: Thank you Ruth.
Speaker Change: Everyone and thank you for joining us for our fourth quarter and year end call.
Speaker Change: Crombie delivered exceptional performance in 2024, achieving strong results across all operating and financial metrics.
Speaker Change: In a year, where the broader real estate sector faced complex and shifting macro dynamics, such as interest rate volatility inflation immigration and the evolving U S. Canada trade relationship our continued focus on grocery anchored and necessity based retail proved our underlying strength.
Speaker Change: Our strategy prioritize stability steady growth in our balance sheet and it is designed to deliver stable growth in any economic environment.
Speaker Change: Demand for necessity based retail remains robust and we continue to see meaningful opportunities to enhance our tenant mix and optimize our portfolio with established national retailers, including our strategic partner Empire.
Speaker Change: Our focus remains on the curation of highly desirable necessity based real estate at the heart of vibrant town expanding cities in major urban centers.
Speaker Change: This approach enables us to generate consistently strong performance across key metrics year in year out in 'twenty 'twenty four is no exception.
Speaker Change: Our operating achievements in 2024 included committed occupancy of 96, 8% amongst the highest levels in crombie history Dame asset property cash NOI growth of two 9%.
Speaker Change: Average annual minimum rent per square foot growth of three 9% and we added 225000 square feet of new leases and new and renewal spreads of nine 8%.
Speaker Change: Setting us up for solid growth in NOI and years to come.
Speaker Change: This resulted in <unk> per unit of $1 eight a six 9% increase from 2023.
Speaker Change: Our <unk> payout ratio now sits at 82, 4% and we ended the year with a debt to EBITDA ratio at 796 times I.
Speaker Change: I'm incredibly proud of our team's performance.
Speaker Change: Today I want to highlight how we look to generate long term value for our unit holders through three interconnected pillars of our building together strategy.
Speaker Change: Own and operate optimize and partners.
Speaker Change: Each of these pillars is carefully designed to ensure we operate with excellence.
Speaker Change: Originally pursue initiative and allocate capital that drive sustained growth and unlock meaningful value.
Speaker Change: First to own and operate we continue to grow our exposure to high quality grocery anchored retail properties and in 2024, we completed the acquisition of a 48000 square foot fresh go anchored site with potential for future intensification. The acquisition of a 14000 square foot Iga grocery store from Empire.
Speaker Change: And exercise our right to acquire the underlying land parcel in our existing land lease, which has a 52000 square foot sobey store.
Speaker Change: We also took the opportunity to acquire the remaining 50% of Zephyr and downtown Vancouver's West end neighborhood from our joint venture partner Zephyr is a 330 unit rental residential asset anchored with a 45000 square foot Safeway grocery store and complementary necessity based retailers.
Speaker Change: We were also active in recycling select assets throughout 2020 for disposing of two noncore asset that exhibited structural vacancies and higher than average maintenance capex and one low yielding future development site further enhancing the quality of our portfolio and future cash flows.
Speaker Change: And subsequent to year end, we sold one additional noncore asset totaling 188000 square feet and Saint John New Brunswick for total proceeds of approximately $3 $2 million.
Speaker Change: This asset also exhibited structural vacancy and as a result, we will increase occupancy by approximately 30 basis points all else being equal.
Speaker Change: Turning to portfolio optimization, our portfolio hold significant embedded value and our team is dedicated to optimizing our assets unlocking their most effective use and maximizing returns for our unit holders.
Speaker Change: Capital allocation plays an important role in our optimization strategy and our team maintained disciplined and prudent allocation with total capital expenditures during 2024, excluding the acquisition of Zephyr of approximately $121 million.
Speaker Change: Of which approximately 50% was allocated to non major initiative.
Speaker Change: 35% to our major development pipeline and 15% on grocery anchored acquisitions.
Speaker Change: No one major developments in 2024 included Modernizations of grocery anchored asset repurposing of existing space, such as our Burlington site, where we repurpose space to add a new farm boy grocery store and as well as land use intensification, where we added 33000 square feet of GLA to our existing centers.
Speaker Change: <unk>.
Speaker Change: At the end of 2024, our current non major development project pool has an anticipated yield on cost between six 9% and 8%.
Speaker Change: With respect to major developments, we remained active advancing sites in our development pipeline through the entitlement process.
Speaker Change: Entitlements is a strategic focus for us and offers us flexibility and optionality in how we unlock and maximize the value of these assets.
Speaker Change: Along with the ongoing construction of the Marlstone entitlements will remain the focus of our major development efforts in 2025.
Speaker Change: And lastly partnerships.
Speaker Change: Our partnership with Empire is an important component of our growth strategy. The alignment of our real estate strategy with empires operational priorities is expected to yield several mutually beneficial projects in 2025, such as acquisition development management services continued investment in modernization and new store ops.
Speaker Change: <unk>.
Speaker Change: And while we deeply value our partnership with Empire. We continue to look to expand our network of partnerships to effectively unlock value in our development pipeline, while maintaining our top quality balance sheet.
Speaker Change: By collaborating with partners, who bring expertise in specific markets and offer an additional funding sources, we expect to be able to minimize capital commitments, while creating opportunities to generate incremental cash flow for crombie.
Speaker Change: I will now turn the call over to Carol who will discuss our operational and financial results as well as highlight the solid foundation of our balance sheet Kara.
Carol: Thank you Mark and good morning, everyone.
Carol: <unk> continues to emphasize operational excellence by striking a strategic balance between stability and growth.
Carol: Throughout 2024, we maintained strong tenant retention and achieved renewal growth almost double our historical average attracted new tenants as well as tenant expansions and invested in our development program.
Carol: For our properties remains strong our team is committed to ensuring we have the optimal tenant mix to align with the evolving needs of the communities, we serve which in turn positively contribute two important performance metrics.
Carol: In the fourth quarter, we completed 171000 square feet of renewals at a year, one increase of 10% over expiring rental rate.
Carol: The team has always put an emphasis on achieving rental growth through out the duration of the lease securing a 12, 3% increase when comparing the expiring rental rate to the weighted average rental rate for the renewal term.
Carol: New leases and expansions remain an important growth driver increasing occupancy by 225000 square feet over the course of the year.
Carol: These leases had an attractive average first year rate of $23 65.
Carol: Further boosting our in place rents per square foot.
Carol: It is this leasing activity in addition to contractual rent step ups and supplemental rent for modernization investments that grew our same asset property cash NOI by two 4% in the fourth quarter and two 9% for the year.
Carol: In the fourth quarter of 2024, we achieved very strong <unk> and <unk> growth, while reaching payout ratios amongst the lowest in our history.
Carol: <unk> per unit increased seven 7%, while <unk> per unit increased six 7% driven by higher property revenue from robust leasing activity as well as acquisitions.
Carol: This was partially offset by higher interest expense, we ended the quarter with <unk> and <unk> payout ratios of 79, 7% and 73% respectively.
Carol: We continue to monitor costs, while simultaneously expanding revenue through development and management services.
Carol: Administrative expenses as a percentage of revenue, including property revenue and revenue from management and development services for 39% well below the four 9% in the fourth quarter of 2023.
Carol: Now turning to our balance sheet.
Carol: <unk> financial strength is built on disciplined capital management and a focus on long term stability.
Carol: Our well structured that lighter minimizing refinancing risk by staggering debt maturities, while maintaining ample liquidity and insurers financial flexibility during economic fluctuations.
Carol: We ended 2024 with available liquidity of $682 million compared to $584 million at the end of 2023.
Carol: Our unencumbered asset pool increased by 40% now at $3 $7 billion, providing crombie with enhanced optionality.
Carol: That took our fair value was 43, 6% up 60 basis points compared to Q4 of 2023, while our debt to trailing 12 month. Adjusted EBITDA was 796 times and improvement from 8.03 times at December 31 2023.
Carol: A proactive approach to balance sheet management is an important element of our solid foundation in the fourth quarter, our team advanced several priorities, reducing risk and further strengthening our financial position as mentioned on our third quarter call. We had our largest debt offering to date issuing 301.
Carol: Yeah.
Carol: Senior unsecured notes with a term of 725 years at an interest rate of 473%.
Carol: Finally from the issuance were used to repay and redeem existing indebtedness, including our $175 million series E. Senior unsecured notes bearing an interest rate of four 8% that were set to mature in January of 'twenty five.
Carol: Crombie also became the sole owner of Zephyr and assume the additional 50% of existing mortgages equivalent to approximately $89 million.
Carol: The balance of the purchase price was funded by drawing on a new unsecured bank credit facility together that that has an attractive blended interest rate of three 5%.
Carol: Additionally, in the fourth quarter, we repaid $122 million of mortgages with a weighted average interest rate of four 3% and converted our secured revolving credit facility to an unsecured revolving credit facility and increased the maximum principal amount to $550 million.
Carol: Previously $400 million.
Carol: This amendment is not expected to have a material impact on our all in rate.
Carol: These activities are aligned with our goal of achieving an upgrade to triple B med from Morningstar DVR S.
Carol: As previously communicated our requirements for an upgrade is a 60 to 40 unsecured to secured debt mix on a sustainable basis.
Carol: At the end of 2024, we stood at 61% unsecured to 39% secured.
Carol: As we enter 2025, <unk> is well positioned with minimal near term debt maturities and access to diverse capital sources, providing the flexibility to meet financing needs and to advance strategic initiatives.
Mark Holli: With that I will now turn the call over to Mark for a few closing comments.
Mark Holli: Thank you Kara.
Speaker Change: Looking ahead, we are in a position of strength with strong fundamental and key competitive advantage, including a strategic focus on necessity based grocery anchored retail complimented by grocery related industrial and mixed use properties, providing resilience and shifting economic conditions are high.
Speaker Change: High quality tenant base, delivering stable and recurring cash flows our long standing partnership with Empire that offers consistent growth opportunities and geographic diversification, which serves to mitigate the impact of regional economic fluctuations and finally, a well managed and robust balance sheet that ensures financial stability.
Speaker Change: <unk>.
Speaker Change: Before concluding I want to thank the entire crombie team for their dedication and hard work throughout 2020 for your contributions have been instrumental to our success.
Speaker Change: To our investors. Thank you for your trust and support with a high quality portfolio strong balance sheet and our focused strategy. We are well positioned to navigate current market uncertainties deliver consistent cash flow growth and create long term value for unit holders.
Speaker Change: With that we are pleased to answer any questions you may have.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question. Please press Star then the number one on your telephone keypad.
Speaker Change: Using a speaker phone. Please make sure your mute function is turned out to allow your signal a third each hour equipment again. Please press star then the number one on your telephone keypad with bullshit does for a moment to compile the Q&A roster.
Speaker Change: [laughter].
Speaker Change: Our first question comes from the line of Brad Sturges from Raymond James Your line is open.
Brad Sturges: Hey, good morning.
Speaker Change: Good morning.
Speaker Change: Just maybe want to start off and I apologize if I missed the.
Speaker Change: The comment, but just wanted to get your.
Speaker Change: Your sense of what you would expect for same property NOI growth for 2025.
Speaker Change: Yeah.
Speaker Change: So Brad if you sort of look at what we've been always targeting our target ranges have been in the 2% to 3% range and then when you sort of look back at how we have been performing over the last couple of years in 2023 were at 3% in 2024 were two 9% and so we've been able to stay in those range of two to three.
Speaker Change: But I've, obviously been on the high end of it and we expect to deliver the same type of results we've been delivering in the last couple of years going forward.
Speaker Change: And driving that new leasing activity that we continue to do that we talked about in the prepared remarks. The renewal spreads that are in his team had been able to accomplish it sorry, non major investments into Modernizations landry's intensification.
Speaker Change: Contractual rent step ups that we have that partnership that we've been able to drive through Empire.
Speaker Change: So that's why we're comfortable and confident that we can continue to be consistent and the same asset NOI.
Speaker Change: Sounds good and just I guess on the theme of of where.
Speaker Change: Renewal rent growth there.
Speaker Change: You touched basically about 10% on renewals for last year.
Speaker Change: Do you think you'd be consistent again in that range for 2025.
Speaker Change: Particularly for what's left to do.
Brian: Good morning, Brian sorry.
Brian: We are seeing some healthy demand.
Brian: For this year.
Brian: And even from last year is that momentum we believe will carry through in 2025 are in initial discussions over the last month and a half into this.
Brian: This year are very positive.
Brian: I believe we will continue to we've always said.
Brian: Mid to high I believe would be in the high single digits.
Brian: And over 500 last year or two of the quarters.
Brian: Hard over 10% I believe we'll see a similar trajectory here.
Speaker Change: And just from an occupancy perspective like no.
Speaker Change: Major Nonrenewals as expected this time or would you continue to expect to be sort of in the 96% plus range for occupancy this year.
Speaker Change: But we're excited with where we are today at 96, 8%, we've always said, 96% to 97% as our sort of full occupancy what were seeing.
Speaker Change: Thing, though is particularly with some of these strategic dispositions and the healthy demand is we're going to we believe continue to stay in that higher end of the range. We're within striking distance of an all time high.
Speaker Change: We believe we can continue to work towards.
Speaker Change: Higher occupancy as we move forward through the year.
Speaker Change: What I will tell you is that the team is proactively managing.
Speaker Change: Our tenant watch list and what.
Speaker Change: What we're seeing is a lot of productivity.
Speaker Change: We've a lot of the tenants that might.
Speaker Change: Leave us we will be able to replace with significantly higher rents as well. So we're seeing more demand than we are seeing forecast departures and we believe that those forecasts departures we plan around and we believe we can actually.
Speaker Change: Make a.
Speaker Change: And increase NOI with those as well.
Speaker Change: Brad one thing that I've just talked about.
Speaker Change: Some highlights.
Speaker Change: Highlights as where we sit today at 96, eight and that are typical ranges our target ranges are like 90 697.
Speaker Change: We're pretty bullish as we go through 2025 that we're gonna be definitely on the high side of that and maybe even pushing through 97 as we work through the year.
Speaker Change: It's coming from two sides already highlighted is coming from the leasing activity that we're able to do plus some strategic dispositions of non core assets that have been in our portfolio as we continue to.
Speaker Change: Prune, the lower bottom feeders of our portfolio.
Yeah.
Speaker Change: And just on that like is there a target in mind in terms of the strategic dispositions or is it more of an opportunistic call called.
Speaker Change: Call It program.
Okay.
Speaker Change: And so we evaluate our entire portfolio, we look the top top performers and how do you keep them top and then we evaluate the bottom Peters and sort of what is it going to take to move as we look through that as we think about our strategy of owned and operated is what what you own and how do they contribute.
Speaker Change: We're consistently looking at the bottom heaters and do we want to inject capital to optimize it do we want to manage through the maintenance capex or is it better served to push it out to the market. We haven't we have a few additional properties that we've got our eyes on that we're evaluating now and making some decisions. So it is a little bit of opportunistic, but because of how the market.
Speaker Change: But we also are looking at it from a viewpoint of can we invest and get it up the ladder.
Speaker Change: As we called out during the fourth quarter, and we did sell two underperforming which will contribute.
Speaker Change: Economic occupancy by 30 basis points.
Speaker Change: And then subsequent to quarter, we sold another one which should contribute again and so that's an example, where we are deciding to dispose and not take on use our capital in more effective ways.
Speaker Change: There are some in our portfolio that we believe the investment in the capital through non major is the most effective approach.
Speaker Change: Both.
Speaker Change: Yes.
Speaker Change: Hey, Thanks, I'll turn it back.
Speaker Change: Okay.
Speaker Change: Our next question comes from the line of Myles sorry from Scotiabank. Your line is open.
Speaker Change: Good morning, and thank you for taking my questions.
Speaker Change: I wanted to focus a bit on <unk>.
Speaker Change: Recycling.
And just specifically maybe an update on.
Speaker Change: Any monetization plans that zucker, our loyal goalposts, we should think about the possible monetization of broadview.
Mario: Good morning Mario.
Mario: So I heard correctly, you were asking about Zephyr, and Broadway and commercial but broadly asking about.
Mario: Dispositions and capital recycling.
Mario: Yes, more and more of a focus on.
Mario: What goalposts of what items, we should think about with those two assets.
Mario: Sure.
Speaker Change: Sure well, we just brought in Zephyr, David Street into the portfolio.
Speaker Change: As we talked about it last quarter, we think that that is a crown jewel and it can contribute long term to cash flow growth. So it is not on the radar for disposition at this point in time.
Speaker Change:
Speaker Change: On specifically Broadway in commercial we continue to work with our partner through entitlement.
Speaker Change: Once we get through entitlements, we will review.
Speaker Change: Where the market is in terms of construction cost capital requirements, we have to go into development.
Speaker Change: D P permits so theres still work to be done there.
Speaker Change: When we look at the entire pipeline.
Speaker Change: <unk> and sort of how do we manage the optimization of our major loan pipeline.
Speaker Change: If you look at the history.
That pipeline was upwards of 26 today. It was upwards of 33 I think it was so we've developed.
Speaker Change: Three which are the three that we have today, we have one under construction and we sold three so we use the pipeline to manage our sources and uses and to drive cash flow. So for the major projects that we have today at this point there is no anticipation at least in the near term that we're going to dispose of either one of those assets.
Speaker Change: Got it okay.
Speaker Change: Okay.
Speaker Change: If I then the intention is to own 100% of sector going forward.
Speaker Change: No not at this point mirror.
Speaker Change: Okay.
Speaker Change: Then just.
Speaker Change: On the entitlement process I think last quarter, you mentioned you expect to be in the first half of 'twenty five.
Speaker Change: And commercial is that still.
Speaker Change: The expectation I asked because I did see the construction tendering disclosed pushed into 2025.
Speaker Change: Yes, we pushed it up from 25% to 26% because that's just the reality that we're in right. Now we are still anticipating to be able to get that in front of counsel and get that entitlement approved in the front half of 2025 and then it just it takes time to get from entitlement into.
Speaker Change: The development permits to get ready for construction. So we just moved that out to be more realistic of the timeframe. We talked about in the first half, it's likely going to be sometime in the second quarter.
Speaker Change: Okay.
Speaker Change: And then just two more on my end.
Speaker Change: The CBRE Q4 cap rate survey noted a pretty notable decline in Halifax until cap rates across most retail categories.
Speaker Change: <unk> coverage was flat quarter over quarter, but were there any notable transactions in the market.
Speaker Change: What made you revisit your portfolio comprehensive machines.
Speaker Change: Hi, Mario its Kara nothing in the Halifax market right now I was at a state stable asset portfolio in that market are largely grocery anchored and so we didn't see any cap rate expansion in that market on our specific assets.
Speaker Change: Okay.
Speaker Change: Broader market.
Speaker Change: The activity that Youre seeing.
Speaker Change: So just cap rates in the broader market or coming down.
Speaker Change: You know there are definitely different cap rate expansion that we're seeing and in certain markets.
Speaker Change: Markets.
You know, particularly in the Ontario.
Speaker Change: Market, but comparatively to what are you know what we've looked at Oh excuse me sorry, one second.
Speaker Change: I'm sorry, it does that relate to what we've been seeing across our portfolio, we haven't seen any major changes.
Speaker Change: Cap rates one of the things that we do want to highlight in our cap rates. This quarter was really the acquisition of JV Street, we removed that from our joint venture portfolio and brought it into our Combi portfolio and so we did see.
Speaker Change: That move within the quarter and so that has shown a bit of a cap rate change for us, but that's really the explanation so not much cap rate compression overall.
Speaker Change: Okay. Okay My last one.
And we're getting tax that were having some entercom travel and that we might be breaking up. So that's why I apologize I stopped in the middle there, but just wanting to make sure that you can hear us clearly.
Speaker Change: Definitely youre coming across loud and clear my last one.
Speaker Change: Now let me elaborate.
Speaker Change: [laughter].
Speaker Change: And the April payout ratio was sub 80% in Q4 is there a specific level, where the board would like to see before considering potential distribution growth.
Speaker Change: Yes.
Speaker Change: Yes scenario distributions.
For Crombie is on it's definitely being talked about at the management level and having dialogues with our board around it we're fortunate enough that we're now at a payout ratio.
Speaker Change: We're more comfortable to have those dialogues. It has moved quite significantly from where it was a year ago to where it was two years ago.
Speaker Change: At this point, we continue to look at sources and uses and how to best deploy.
Speaker Change: Our investments, but it is a dialogue that we're having.
Speaker Change: Okay. That's it for me thank you.
Speaker Change: Thanks Maria.
Speaker Change: Our next question comes from the line of Ben <unk> from Deutsche Bank Capital markets. Your line is now open.
Speaker Change: Hi, good morning.
Speaker Change: Hmm.
Speaker Change: We understand that I am part of opening roughly 40, new stores in 'twenty, four and perhaps plans towards double digit growth in 'twenty one.
Speaker Change: I was just wondering to what extent do you expect Colombia to participate some cars growth growth in Kuwait and appointment of Brian They involve any new developments, you've heard and transportation were greenfield.
Speaker Change: Hi.
Speaker Change: Empire is you know is one of our <unk>.
Speaker Change: Core strategic partners and how we grow our business.
Speaker Change: And as we've talked about in the prepared remarks, we overlay our strategic plans and their priorities and see where we can drive some value for crombie and throughout 2024, we will showcase that we invested $30 million and Modernizations, where we improved many of our shopping centers across the country.
Speaker Change: We repurpose space to add a new farm boy into the Burlington market, which marks empires, <unk> 50, a farm boy and our fourth of the portfolio, we added new food lands into markets like Mount Forest participated in a commentary buildout in Calgary.
Speaker Change: We bought three sites one absolutely came from Empire's we called out and so we are.
Speaker Change: Focused in on grocery anchored it is at the core of our business. We will continue to partner with Empire, where it makes sense for crombie.
Speaker Change: Most of the investments that we make will come through acquisitions and through non major developments and if you look at the total capital that we plan to invest in 2025.
Speaker Change: We've always talked about a target range between 150 and $250 million each year.
Speaker Change: And if you reflect back on 'twenty, three or 'twenty, four and how we split that capital allocation.
Speaker Change: We have about 15% to 20% of it goes to acquisitions.
Speaker Change: About.
Speaker Change: 48% to 50% goes to non major and the rest goes to major and we only have one major project on the go which is tomorrow stone and the rest goes through entitlement work. So.
Speaker Change: Empire is so we talked about is a very strategic partner for us. It helps drive our key metrics and we will continue to focus as they continue to grow we'd hope to continue to grow with them.
Speaker Change: Yes, thanks for the color.
Speaker Change: Some other questions.
Speaker Change: Note that the pharma retailer PV March closed all stores across the country and I believe our Columbia has one P relocation.
Speaker Change: Okay.
Speaker Change: <unk> closed store.
Speaker Change: Right. So yeah. That's correct, we only have one that's our location in the fourth.
Speaker Change: We were proactively already speaking with prospective tenants for that space well in advance of the filings so.
Speaker Change: There is a chance that that property could.
Speaker Change: It could be released before the before the claim is done but.
Speaker Change: In advance of that we are speaking with numerous tenants and we're looking to see a.
Speaker Change: Healthy lift on that space once.
Speaker Change: Economic occupancy.
Speaker Change: Okay.
Speaker Change: For the color.
Speaker Change: Last one for you on your assets.
Speaker Change: Asset sales, we've noticed that the per square foot pricing.
Speaker Change: Could we go after absorbing <unk> third property for February is pretty low.
Speaker Change: I'm wondering like besides the structural vacancy in high Capex.
Speaker Change: Whether you could give us more detail.
Speaker Change: More color on why.
Speaker Change: Hello.
Speaker Change: Sorry, you were breaking up a little bit on why the prices are low for what.
Speaker Change: Okay.
Speaker Change: Cost per square footage basis.
Speaker Change: For those three properties sold.
Speaker Change: Oh in terms of the properties that we sold at the prices at which we sold them at.
Speaker Change: Yes, yes.
Speaker Change: The price per square footage.
Speaker Change: I believe.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Amyris and Riverview, both had as we talked about structural vacancy challenges high maintenance Capex that we are looking at.
Speaker Change: And we had some tenants that were coming up that we knew had to be.
Speaker Change: Exited or planning to exit and then we are going to be looking at.
Speaker Change: And grow that asset and so those have been some of our weakest performing locations in our entire portfolio and we were fortunate enough to find a buyer that is willing to buy them and to do major investments in it locally to try and bring those back. So that's why you're seeing the prices that we were selling them out for that opportunity let Kara.
Interject and give a little bit more color on that.
Kara: Hi, Yes, one of the items too if you look at our disclosure it actually is a bit misleading because on the stabilized income that is reflective of the priory Eric's and while we did have some vacancies in those properties. This year. It actually was a drag on income so it's not it's not a one to one <unk>.
Kara: Terms of what we were able to achieve from a disposition on those properties.
Kara: Yeah.
Kara: Okay. Thank you I'll turn it back.
Kara: Okay.
Speaker Change: Our next question comes from the line of semi aside from CIBC. Your line is now open.
Speaker Change: Thanks, Good morning, I wanted to touch a firstly on the same property numbers in the quarter. That's a very small portion, but just didn't know that industrial it was down in the quarter was there anything kind of transient there and does that go right back to normal levels going forward.
Speaker Change: Hi, Sumit.
Speaker Change: No.
Speaker Change: It will come back to normal levels. The same outside NOI numbers that we have recorded this quarter.
Speaker Change: For more of a year basis, that's going to be more representative.
Speaker Change: Okay.
Speaker Change: And then just one more for me if I'm following up on Zafar. It looks like the plan there is to hold onto that asset and can you walk us to the NOI or any other upside potential you see with that asset.
Speaker Change: Sorry, you broke up there, where we are having some polycom issues here, what asset where you're referring to.
These fr.
Speaker Change: Okay.
Speaker Change: Just.
Speaker Change: In terms of the Zephyr in terms of what was the question regarding <unk>, Yeah, just to walk through the NOI or upside potential you see there.
Speaker Change: Yes, so the.
Speaker Change: Ari and his team today, it's running around.
Speaker Change: 93% 94 of Occupancies, we've had a number of tenants that were on longer term stays that are turning over.
Speaker Change: We talked about that last quarter.
Speaker Change: So we're getting some nice to mark Mark to markets on that.
Speaker Change: In terms of Port there was about 2022 in total.
Speaker Change: Eight of them have nine.
Speaker Change: Finally reached exploration and theyre going into a month to month, which will have a nice lift or.
Speaker Change: If they renew we will get a nice mark to market on it to 14 that were previously done and we did get a healthy changeover on it.
Speaker Change: When we look at the asset Thats, where its long term growth profile, we think really highly of it it's in a.
Speaker Change: Highly desirable area of Vancouver, there is.
Speaker Change: Almost no new construction going on in that market occupancy.
Speaker Change: Has fluctuated a little bit on that but our rent has been absolutely stable and actually have slightly improved.
Speaker Change: Order over quarter, So we do see it growing over.
Speaker Change: Over the next number of years, which is why we're really excited that we were able to buy the other 50%.
Speaker Change: Okay got it.
That's all I had I'll turn it back thank you.
Speaker Change: Yeah.
Speaker Change: Again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.
Speaker Change: Our next question comes from the line of Frank <unk> from BMO capital markets. Your line is open.
Frank: Good morning, guys.
Speaker Change: Just wanted to follow up on <unk> question on broader retail sector over the last couple of off market as we've seen some retailers see the operations that require us or closing some stores.
Speaker Change: While warmer are playing out of the $6 $5 billion expansion part.
The overall retail fundamentals are very strong and just wondering what are the opportunities and challenges do you guys see we think our current portfolio and tenant mix or the near to medium term.
Speaker Change: Hi, good morning.
Speaker Change: Seeing a lot of demand and I think we're also seeing a lot of creativity and optionality by the tenants that are within our portfolio. So we expanded a number of.
Speaker Change: Discounters pet stores within our portfolio so.
Speaker Change: You know, we're near full and so are many of our peers. We are seeing tenants now start to think about different space configurations.
Speaker Change: That's going to bode really well for our portfolio. So the incoming though we're getting are quite robust, we're just coming back from.
Speaker Change: <unk> Conference last month, where we had a record number of meetings. So I think all that to say is that particularly in grocery anchored essential needs retail and the demand is quite high.
Speaker Change: That's great to hear and.
Speaker Change: Thanks for the color. That's all my question I'll turn it back.
Speaker Change: Yeah.
Speaker Change: Our next question comes from the line of Matt <unk> from National Bank Financial Your line is open.
Speaker Change: Good morning, everyone, just maybe to follow up on Frank's questioning there are you seeing any differences in terms of <unk>.
Speaker Change: Different geographies across the country or is it pretty universal in terms of the situation and also you mentioned a watch list I think some of your peers have been saying that they're they're pretty small watch lists and.
Speaker Change: But could you give us a sense as to what types of tenants would be on that watch list.
Speaker Change: Sure.
Speaker Change: So I'll answer your second part first so our watch list is quite small we're updating it constantly.
Speaker Change: Leveraging both anecdotal broker.
Speaker Change: Broker feedback as well as analytical information.
Speaker Change: But.
Speaker Change: Like I said, we're proactively managing that watch list tenants or the tenant types. We're seeing in our watch list are predominantly discretionary based tenancies. We don't have a lot of those in our portfolio are the ones that are in our portfolio are generally our concern would be more chain wide failures than issues specific to our.
Speaker Change: <unk>.
Speaker Change: With respect to Regionalisation I would say that.
Speaker Change: It's not just urban locations, where a coast to coast organization, and we're having discussions with tenants from Newfoundland all the way through BC.
Speaker Change: Particularly in our grocery anchored sites.
Speaker Change: Okay perfect I appreciate that color and then maybe just quickly for Kara.
Speaker Change: We noticed a little bit of an uptick in the amortization of deferred financing costs this quarter, but there's been some moving parts of Zephyr moving out of the JV.
Speaker Change: JV portfolio into the a fully owned was there also some kind of.
Speaker Change: Early repayment to the accelerated amortization.
Speaker Change: The bonds that you repaid or is that number for deferred financing costs, a pretty good proxy for what it should be in subsequent quarters.
Speaker Change: No you've got it it was for a pull forward of some mortgages that we paid off.
Speaker Change: As we've noted before we are chasing that trickled in men and in order to get a positive 61% unsecured we did pull forward some mortgages and repay debt.
Speaker Change: In the year, leading to some extra deferred financing costs that we did not anticipate too.
Speaker Change: B there is there a one time event okay.
Speaker Change: Okay. So I think it was roughly a million of incremental cost. This quarter can we take all of that out or should we take a portion of it out.
Speaker Change: You can take that out okay perfect. Thank you.
Speaker Change: Yeah.
Speaker Change: There are no question at this time please continue.
Speaker Change: Thank you for your time today, and we look forward to updating you on our first quarter call.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: This concludes today's conference. Thank you for participating you may now disconnect.
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