Q4 2024 Minto Apartment Real Estate Investment Trust Earnings Call
Joelle: Good morning. My name is Joelle and I will be your conference coordinator today. At this time I would like to welcome everyone to the Minto Apartment REIT 2024 4th quarter financial results conference call.
Joelle: All lines have been placed on mute to prevent any background noise. 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 then the number one on your telephone keypad. If you would like to withdraw your question please press star then the number two. Thank you.
Joelle: Before we begin, I want to remind listeners that certain statements about future events made on this conference call are forward-looking in nature. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially.
Joelle: Please refer to the cautionary statements on board looking information in the REIT news, release, and MDNA dated March 5th, 2025 for more information.
Joelle: During the call, management will also reference certain non-IFRS financial measures.
Joelle: Although the REIT believes that these measures provide useful supplemental information about its financial performance, they're not recognized measures and do not have standardized meanings under the IFRS.
Speaker Change: Please see the REIT's MD&A for additional information regarding non-IFRS financial measures, including reconciliation to the nearest IFRS measures. Mr. Li, you may begin your conference.
Speaker Change: Thank you operator and good morning. With me today is Eddie Foo, our Chief Financial Officer and Paul Baron, our SVT of Operations. Beginning on slide 3, 2024 was a very active and successful year from into a carbon REIT.
Speaker Change: We achieved strong operating performance from our high quality portfolio while executing on strategic capital allocation decisions that boosted our cash flow per unit, strengthened our balance sheets and returned capital to unit holders.
Speaker Change: On a sustained property normalized basis, we generated year-over-year growth of 5.1% in revenue and 7.9% in NOI. Normalized FFO and AMFO per unit reached record high in 2024, increasing by 12.9% and 15% respectively compared to the prior year.
Speaker Change: We significantly reduced our variable rate debt through upward refinanceings, non-core asset sales, and a CDL repayment.
Speaker Change: As a result, we ended the year with more favorable year-over-year death metrics and stronger liquidity.
Speaker Change: We build value for unit holders by increasing our annual distribution by 3%, the sixth consecutive year in which we increase distributions.
Speaker Change: Finally, we were able to pursue an attractive growth opportunity in a new market that is difficult to penetrate. In January 2025, we entered the Metro Vancouver market through the acquisition of a 50% managing ownership interest in the Longdale Square property.
Speaker Change: What's more, we're able to add this brand new property to our portfolio without deluding cash flow per unit and without issuing equity to fund it.
Speaker Change: We are proud of achieving all these milestones despite challenging market conditions that have elevated the cost of capital for the entire Canadian REIT sector.
Speaker Change: On slide four, we summarize our recent capital allocation decisions and how they have built value-free [inaudible]
Speaker Change: We generated net proceeds of approximately $102 million from non-core asset sales. We raised the total of $90.4 million from upward refinancing and we received $44 million from the repayment of the CDLs associated with Fifth and Bank in Longdale Square.
Speaker Change: We use the proceeds from these transactions to reduce veritable rate debt, buy back units, and fund on one cash flow requirements.
Speaker Change: We also continue the very disciplined approach to capital allocation. As mentioned, we completed the agreed-of acquisition of Longdale Square. We also complemented this external growth with unit purchases under the NZD program.
Speaker Change: Since November 2024, we've purchased $15 million of units, which represents approximately 3% of our public flow. The units were purchased at a significant discount to both management and consensus net at the value, which currently represents an extremely attractive use of excess capital relative to all other alternatives.
Speaker Change: Finally, equally important as the transactions we executed are the transactions we did not execute.
Speaker Change: In 2024, we waved on the right of purchase for a stabilized asset in Toronto, and in March 2025, we waved on a right of first opportunity for a development in Ottawa, both from the Minto Group.
Speaker Change: And last week, we allowed the purchase option on the island in Vancouver to expire. The convertible development loan associated with the property of $19 million, matures on April 30, 2025, and is expected to be repaid on that date.
Speaker Change: Slide five demonstrates the strong cash flow growth resulting from our strategic capital allocation decisions. As we have indicated many times in the past couple of years, we have been laser focused on translating our NOI growth into cash flow per unit growth.
Speaker Change: Our normalized NOI of $100.6 million in 2024 represents a 14.6% increase from 2022.
Speaker Change: Disco pairs to an 18.4% increase and 21.9% increase in FFO and AFO per unit respectively over the same period.
Speaker Change: Our cash flow per unit has grown at a faster rate than our NOI over the last two years, and we believe this is a direct result of the capital allocation decisions that remain.
Speaker Change: Slide 6 summarizes the benefits of the Lawsdale Square transaction that closed earlier this year. Notably, we entered the Metro Vancouver market at a discount to market value. The purchase price was validated by an arms length institutional partner. The transaction was accreted to cashflow per unit. And finally, we did not issue any equity to fund the transaction. [inaudible]
Speaker Change: We received a $14 million repayment of the CDL associated with the asset, which we used to repay a portion of our revolver [inaudible]
Speaker Change: Moving to slide 7, you can see the cumulative benefits generated through our capital recycling program. This is now having fewer properties, our portfolio quality has improved significantly from where it was at the end of 2022.
Speaker Change: The average property age has declined by two years, cat-exes down significantly since we swapped older assets for new, and we have entered the attractive Metro Vancouver market while also balancing our geographic concentration and divesting our non-foradminton properties for
Speaker Change: At the same time, we have repaid all of our expensive variable rate debt which has lowered our interest costs and provides us with enhanced flexibility moving forward.
Speaker Change: I'll now invite any food to discuss our fourth quarter and full-year financial and operating performance in greater detail.
Thank you, John [inaudible]
Eddie Fu: On slide 8, same property portfolio revenue was $39.4 million, an increase of 3.5% from Q4 last year.
Eddie Fu: It's driven primarily by 5.3% increase in unfurnished sweet revenue, partially offset by lower occupancy
Eddie Fu: Lower Revenue from Furnish Suites, and Lower Commercial Revenue due to the temporary retail vacancy at Minto, Yorkville
Eddie Fu: Average monthly rent for the same property, is occupied unfurnished report folio, increased 5.5% to $1,990.
Eddie Fu: The same property portfolio normalized NOI increased 4.1% year-over-year to $24.9 million.
Eddie Fu: The increase reflected the revenue growth partially offset by higher property operating expenses.
Eddie Fu: Same property normalized NOI margin increased by 30 basis points year-over-year to 63 percent.
Eddie Fu: Normalized FFO and AFFO preunit increased 4.1% and 4.2% respectively compared to Q4 last year
Eddie Fu: Normalized AFFO pale ratio was 59.3%, a reduction of 70 basis points from Q4 last year.
Eddie Fu: On slide dying, you can find a full breakdown of our Q4 performance for both the same property portfolio and the total portfolio, as well as a breakdown of our rental rates and occupancy.
I'll move now to slide ten [inaudible]
Eddie Fu: This chart highlights the REIT's steady quarter-recorded growth in average monthly rent and are realized quarterly gain on these performance.
Eddie Fu: We continue to generate double digit gain on lease each quarter in 2024, though at a slower pace compared to 2023 levels.
Eddie Fu: Our steady performance is driven by the strong embedded gain-to-lease potential in our portfolio.
I'm sorry. I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Eddie Fu: Moving to slide 11, we signed 297 new leases in the fourth quarter, generating realized gain on lease of 11.2% representing a small sequential improvement from 10.8% in the third quarter.
Eddie Fu: We generated double digit percentage increases in Ottawa and Montreal, where there was a higher proportion of turnover among tenants with longer average length of state.
Eddie Fu: In Toronto, gain only soft and due to flattening market rooms and more turnover among tenants
Eddie Fu: and Calgary Experience Competitive Pressure from New Supply that came online in 2024.
Eddie Fu: As indicated in the lower table, the embedded game to lease potential at the end of 2024 remains strong at 13% or $18 million.
Eddie Fu: Moving to slide 12, the same property portfolio annualized turnover was 23% in the fourth quarter, a slight increase compared to Q4 last year.
Occupancy with slightly lower compared to the last four quarters [inaudible]
Eddie Fu: We are using tactical promotion, marking campaigns, and a targeted renewal program across the portfolio to drive occupancy.
Eddie Fu: Calvaries had annualized turnover of 42 percent, the highest of all our markets, as a birder is a non-run controlled market. Closing occupancy there was 93.1 percent.
Eddie Fu: Annualized turnover for Ottawa remains steady compared to last year at 24% while closing occupancy of 96.5% declined from recent highs due to rental apartment completions.
Eddie Fu: In Montreal, turnover was seasonally slow at 15%, but demand remained steady, leading to strong closing occupancy of 96.5%
Eddie Fu: In Toronto, annualized turnover was in line with Q4 last year at 18 percent. Closing occupancy declined to 95.1 percent, reflecting a large increase in rental supply through 2024 primarily from condominiums.
Mark Arendt has flattened as that supplies absorb.
Eddie Fu: Overall, clothing occupancy for the same property portfolio was 95.8% and average occupancy was 96.3%
Eddie Fu: On site 13, we provide an update on our commercial and inferners sweep portfolios.
Eddie Fu: Revenue from commercial leases decreased by 48.6% in Q4 last year, primarily reflecting the temporary retail vacancy in Minto, Yorkville.
Eddie Fu: We are an active negotiations with the new tenant for the space and expect least payments to begin in 2026.
Eddie Fu: We have leased the portion of the vacant commercial space at the car law, with leased payments expected to begin in the middle of this year.
Eddie Fu: Since Q4 2023, we have converted 15 furnished streets to the unfurnished portfolio, including 9 Edmond to Yorkville.
We are assessing additional potential suite conversions this year.
Eddie Fu: Normalized same property portfolio operating expenses increased by 2.5% over Q4 2023, primarily due to higher property operating costs partially offset by lower utility costs.
Eddie Fu: Normalized property operating costs increase 9%, mainly due to higher repair and maintenance costs and annual salary in which increases.
Eddie Fu: There was also a drop in the average electricity rates in Calvary.
Thank you.
Speaker Change: In 2024, we repositioned 48 suites and generated an average ROI of 9.2%
On slide 16, we have provided our key debt statistics.
Our maturity schedule remains balanced.
Speaker Change: As of December 31, 2024, the weighted average term to maturity on our term debt was 5.04 years with a weighted average effective interest rate of 3.61%.
Speaker Change: Subsequent to urine, all of the variable rate that on a revolving credit facility was repaid.
I'll now turn it back over to John .
John: Thanks Eddie. On slide 17 we provide the current status of our development pipeline. The intensification at Rich Grove and Leslie York Mills continue to progress with stabilization of the projects expected in Q2, 2026, and Q1, 2027 respectively.
John: On the CDL properties, we continue to maintain a very disciplined approach to capital allocation when it comes to evaluating our purchase options.
John: As mentioned, we completed the Longdale Square acquisition in January , and on February 28th, we allowed the purchase option on the Highland property and Vancouver to lapse.
John: CDL associated with the property of approximately $19 million, mature as on April 30th of this year, and we expect it to be repaid at that time.
John: Stabilization of Beachwood is expected in the back half of the year, and the purchase option for that property expires on December 31, 2025.
I'll conclude with our business outlook on slide 18.
John: We believe that the long-term fundamental supporting Canadian urban rental housing demand remain in place.
John: There is an acute housing shortage in Canada, and the relative affordability of renting versus owning makes it highly attractive to millions of Canadians.
John: Having said that, there are a number of factors that have recently introduced some uncertainty into our industry. These factors include incoming supply in certain markets, a threat of tariffs, a temporary pause in positive net immigration, and political uncertainty both in Canada and globally.
John: However, we are proud of our strong operating and financial performance in 2024. We have taken many steps to improve our balance sheet, increased cast flow, and high grade our portfolio, which will help us navigate near term uncertainty and positions as well for long term success.
John: Finally, I would like to extend a heartfelt thank you to Paul Baron for his exceptional service and contributions to the REIT
John: This is the last earnings call before taking over as Chief Financial Officer for the Minto Group and we wish him the very best on this exciting step in his career.
Speaker Change: I'm pleased to welcome Michelle Callaway at the new SVP of Property Operations, and we look forward to introducing her to all of you.
John: That concludes our prepared remarks. Operator, please open the line for questions.
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please, for a star followed by the one on your touch tone phone?
Speaker Change: You will hear prompts that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speaker phone, please let the hand that before pressing any keys.
One moment. Please, for your first question.
Speaker Change: Your first question comes from Jonathan Kelcher with TD Cowan. Your line is now open.
Jonathan Kelcher: Thanks. Good morning. First question, just, I guess similar to your peers, your occupancy did dip in Q4. Can you maybe let us know what you're seeing now and what you sort of expect into the spring leasing season?
Jonathan Kelcher: Jonathan, it's Paul speaking. So we did see some softness in the market in December and January , most notably in Toronto and Calgary. During this time, we really focused on price discovery, utilizing both promotion and pricing in the non-rank control portfolio.
Speaker Change: The good news is that as we have seen demand pick up, as we've kind of come to the tail end of February and into March, so we are seeing green shoots as we approach the spring leasing market.
Speaker Change: I guess on giving up the option on Highland, can we assume that the money coming back in?
Speaker Change: The end of April will be mostly focused on the NCIB.
Hey Jonathan, John here.
Speaker Change: Yeah, to give you a bit more color, I think, you know, the property is not stabilized yet. And remember, we actually extended this option already back in May of last year. So, so as we approach this one, you know, it's not stabilized yet occupancy is still below 50%.
Speaker Change: So we decided to wave so we could access the CDL proceeds at the end of April and our intention would be to use some or most of those proceeds to buy back units.
Speaker Change: The alternative would have been to extend it probably to the end of the year or so and then just not have access to that cash so
Speaker Change: So we thought it made sense to take that when we could. And once the project is stabilized probably in Q3 or so, we can always reassess and see if it makes sense to purchase it.
Speaker Change: Okay, and then one more quick one, the development opportunity you talked about passing on an Ottawa, was that, was that a CDL deal?
Speaker Change: Most likely, we could have invested direct equity, but that doesn't make sense financially right now for us, and even the CDL right now, I think.
Um, um,
Speaker Change: It just didn't make sense for us to do another CDL right now. I think some of the feedback we've been getting from the market and kind of what we observe is I think the overall size and scale of the CDL program, just relative to our overall size is quite large.
Speaker Change: and I think it makes sense to let some of these roll off and reassess once market conditions change.
Okay, thanks, I'll turn it back.
Thanks, Darwin.
Speaker Change: Your next question comes from Brad Sturges with Raymond James. Your line is now open.
Hey guys, good morning.
Brad Surgis: Just want to, I guess, maybe start on the leasing side of things, you know, the commentary being at least in a couple of markets like Toronto, like, market rents, flattening out a bit. Just, can you give a sense of what you're seeing today in terms of...
Brad Surgis: asking Rantz and how they're trending to start the year heading into the spring season.
Brad Surgis: Yeah, Brett, it's Paul speaking. So, Toronto, really a similar story to what we spoke about last year.
Brad Surgis: that new condo supply coming into the market. Overall, in the Toronto area, we've gone through the numbers in 2024, it was about 29,000 units.
Brad Surgis: That's the greater Toronto and Hamilton area. Moving into 2025, it's 30,000 units again, so still seeing pressure from that side of the market.
Brad Surgis: By way of asking rates, as we've started the year, we're somewhat flat.
Brad Surgis: Where we have seen some pricing adjustments is on the unregulated side where I would say it's very sweet specific at our 39 Niagara property in Toronto are only unregulated property in that market.
Brad Surgis: In the rank-controlled portion of the portfolio, we're leveraging promo, no more than a month at any of the properties So, and as we talked about we had seen lead traffic kind of pick up across our markets as we move into March
Thanks for watching!
Okay, so, you know, the-
Brad Surgis: The leasing spreads you're getting per on turn has been, you know, kind of consistent in the last couple of quarters, low double digits, that kind of a trend you expect to continue to start this year.
Hey Brad, John Lee here um...
Speaker Change: I think, as Paul mentioned before, we have been pretty focused in January and February .
just around.
Improving Occupancy by Offering Promotion and Price Discovery
Speaker Change: What we're seeing today is definitely a little bit of a contraction from where we are today, on the Gain to Least [inaudible]
Speaker Change: Thanks. And last question, just a lot more snow this year, closer weather, like would you expect a little bit of compression on the margin at least to start the year? But how do you think about it for the full year in a one margin?
Speaker Change: Yeah, look, unfortunately, and I think we touched on this on the last call, where we were describing how the weather really impacts our margin and...
Speaker Change: based on my back and my arms in terms of how much snow I've shoveled in February , it's been a lot and so the comp...
Speaker Change: A, there's been a lot of snow relative to a normal year but it's been a lot of snow and removal relative to last year
Speaker Change: which was very, very low. So I think you can see at least in Q1, I think we were expecting margin compression. Overall, for 2025, I think, you know...
Speaker Change: We're looking at kind of low to mid-single digit revenue growth and I think on a spent side it's probably in that mid-single digit range so it's likely flat to slightly down 24 to 25
Speaker Change: And I don't think that should surprise anyone, just given the weather that we've been seeing, but we're trying to be as transparent as we can.
Yeah, that's helpful. I appreciate that. We'll turn it back.
Thanks for having me. I appreciate it.
Speaker Change: Your next question comes from Kyle Stanley with Desjardins. Your line is now open.
Thanks, guys.
Speaker Change: Based on the competition in the market that you just talked about, and it seems like there is, as you mentioned, a focus on renewals a little bit, how do you think your portfolio turnover trends in the year are more of the same? Could we see it go a little bit higher?
Speaker Change: Yeah, it's a good question. I think each market is a little unique and even within that each individual property. I think broadly we've tracked a little higher than we've thought initially, so I think in and around the same Kyle, plus or minus a percent likely.
Speaker Change: Okay, fair enough. And then my other question just relates to your CAPEX budget, you know, down I think over about 10% in 2024, you know, what are you looking at for CAPEX in 2025?
Thanks, John here. So, I think-
Speaker Change: Just based on some of the projects that are coming down the pipe for some of our properties, it's probably going to take up a little bit. It's kind of what we have forecasted from kind of where it is this year.
Speaker Change: Not not a ton like in that single digit range, but just given some of the larger projects we have, we're going to start this year. It's probably going to take up a little bit.
Speaker Change: Okay, fair enough, and I polited one last one, just on Rich Grove, in terms of timing of initial occupancy and when that may start beginning to contribute, you know, should we think late this year or is that more of a 2026 event?
Speaker Change: In terms of rituals, contribution like that, the project will stabilize in 2026 and that's when we think that that's we'll be contributing to revenue and OI.
Okay, thank you for that. I will turn it back.
Speaker Change: Your next question comes from Saran Srinivas with Kornack Securities. Your line is now open.
Thank you all for your good morning, guys.
Soran Sriniva: Most of my questions have been answered. I just had one on Montreal. I've never seen a good leaving there and all the countries being slowly trending up in that market. Looking ahead, would you say there's probably where you see it stabilise or are there some more games that kind of come from that sort of market?
Soran Sriniva: Yeah so it's a good call out and certainly you know a shout out to the team and Montreal they've been working really hard and you're seeing it come through in those occupancy numbers.
So above 96 96
Soran Sriniva: We're seeing steady demand in that market, so I don't think we're going to see huge occupancy growth in that market but
Soran Sriniva: We are working at heart. As many know, it's a significant renewal year there as well with some of the guideline increases that have come out. So really quite optimistic on Montreal.
Dr. Kornack.
Speaker Change: Alright, thanks for the call, congratulations, and I'll turn it back [inaudible]
Thank you, Cy.
Speaker Change: Your next question comes from Mario Saric with Scotiabank. Your line is now open.
Mario Surik: The 95.8% at your end was a bit lower than the Q4 average. How would the occupancy look, I guess before start picking up in March, back in late January , kind of February , relative to the 95.8? Like then you continue to see downward pressure on it.
Mario Surik: We did see a little downward pressure still above the 95 mark, but still a little bit of downward pressure before we come back in February and March.
Mario Surik: Okay, and then on the same story, Revenue, kind of expectations for 25. I think you mentioned Kyle Loathe in the single digit. That's a down a bit relative to kind of the expectations last quarter. Is that primarily a function of
Lower than expected occupancy, or lower than expected blended rent growth
Mario Surik: I think it's a little bit of both. To be honest, Mario, I think our occupancy today is probably a little bit lower than what we thought it would be back when we talked to you guys last November .
Speaker Change: Not a ton, but just a little. And, as Paul said, you know, we are seeing some nice green shoots based on some of the strategic decisions that we made.
Speaker Change: through January and February and their early part of March. So it's a little lower I think there and then again as I said, the game to lease is probably a little bit lower too. Kind of in that mid to high single digit is kind of what we're thinking potentially for Q1.
Speaker Change: extrapolate that for the rest of the year, I think.
Speaker Change: You know, maybe it's conservative, but like that's kind of how we're kind of thinking about the rest of the year is that kind of low to mid single digit revenue growth.
Speaker Change: You know, also, we've got, you know, some headwinds on the commercial side, not headwinds, but a temporary vacancy impact in 25 uniquely. And then our furniture suite business is probably, you know, we're at best, we're thinking flat. So then when you add all that together, that's kind of how we get to...
That will be just that.
Speaker Change: Got it. Okay. And then maybe for Paul, just coming back to the archipelago and see.
Speaker Change: and the green shoes that you're referencing. One of your peers kind of alluded to the notion that
Speaker Change: Underlying demand is very strong, but there is price sensitivity, so offering incentive is resulting in higher conversion of clothing ratios. Would you say that's a similar observation for your portfolio on the incentive for kind of marketing?
Adjustment that you're making [inaudible]
Mario Surik: Yeah, we would share that same sentiment, and it's different by each market, but certainly seeing more of that, so I think you've articulated that well, Mario, and certainly it's consistent with our peers.
Okay. My last question, maybe for John .
Mario Surik: Obviously the the modern environments, very volatile, but as you sit here today, do you foresee Minto being a net buyer or seller of assets in 2025?
Mario Surik: I look, I think we're going to be pretty flat. Like I think everything will be kind of just incremental on the margin. You know, we don't have any active asset sales at the moment.
Mario Surik: Having said that, we're always kind of flabbergasted at some of the office or the interest we get on some of our assets, especially when you compare the pricing of that interest to where we're trading, not just us but everybody.
It's It's [inaudible]
Mario Surik: I guess we would be opportunistic on the asset sale front.
Mario Surik: And the reality is that we'd probably take those proceeds if we got any and probably the best thing we can do at the moment would be to buy back some shares.
Mario Surik: But to the extent there's still excess capital over that, just given the constraints of how many shares we can buy. I think we would consider...
Mario Surik: with potential acquisitions. Obviously, there are some directly in front of us with some of the Minto group opportunities, but I think we're going to be quite disciplined and exercise the same prudence that we have on the stuff that we've looked at already. Okay, so...
Mario Surik: It's kind of a long-winded answer, Mario. I think we're not sure, but it's not saying we're not sure. I think it will depend on capital market conditions, but I don't think it's going to be sort of a large absolute number one way or the other.
Paul: We got it. Okay. Thank you. Thank you, Mario.
Speaker Change: Your next question comes from Jimmy Shan with RBC Capital Markets. Your line is now open.
Jimmy Shen: Just to follow up on the last comment, you mentioned seeing some interest in some of the pricing that you're seeing on your aspect. Can you share some of those metrics?
Speaker Change: Well the metrics, I think what I can share is there in line or above our book nav.
Speaker Change: But, you know, one of the constraints we have, it's kind of matching that capital with using the proceeds. As I said, we're constrained on the NCIB in terms of how much we can buy and then, you know, lining up potential purchases hopefully at higher cap rates.
Artifical, especially when we're our size.
Speaker Change: where if you don't execute it properly or with the right timing, it can really impact our performance and so we're very cognitive of that and we're, you know...
Speaker Change: I think if we do something we're going to do our best to try to match fun things but it's not easy kind of when you're
Speaker Change: You know, the buyer's necessarily interest rates and so it's just there's quite a bit of market uncertainty and risk that kind of impact the duration of these negotiations and transactions and so we're trying to be just thoughtful about it all Jimmy and it's
It's not always easy to line up.
OK.
Speaker Change: And just on the use of proceeds then, so after the quarter, you would have gotten the proceeds from Castle View, the launch day alone, and then the Highland Loan as you mentioned, so combine those would be somewhere in the range of 70 million, maybe because less than that, so should we assume...
Almost all of those are going to go to NCIB.
All right, let me just clarify some of those numbers, I think.
Speaker Change: With the first two things that you just talked about in terms of the asset sale and the Lawnsdale CDL.
Speaker Change: Those closed in the mid to end of January , and with the NCIB that we've used in Q4 and through the first couple of months in the Q1, that kind of nets out.
Two about zero
Speaker Change: In terms of the revolver amount, so like no cash, no revolver after we do all that, and then to the extent we have the Highland CDL, which isn't paid until April 30th.
Speaker Change: So I'm on after Q2. That's when we'll get a little injection of cash. Well we know that's coming so I think you can expect those to be active on the NCIB between now and then as well.
Speaker Change: Okay, so just to clarify, at the end of the quarter, Q4, you had 25 million some odd.
Um...
and on the credit facility.
Speaker Change: So essentially what you're saying is that's going to be paid off.
Speaker Change: Yeah, it was paid off at the end of January , but we used the law of some of the cash that we had to buy back units.
Okay, that makes sense.
We're good. Okay, thanks.
Thanks to me.
Speaker Change: Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Matt Kornark, with National Bank Financial. Your line is now open.
Matt Kornark: Good morning guys. Just with regards to the demand side of things, obviously we're living in a highly uncertain period of time at this point, but
Matt Kornark: Traditionally speaking, I think this would likely lead to higher propensity to rent over owning and we saw a bit of that in terms of transaction activity in the GTA and elsewhere, I guess
Speaker Change: Alberta may be the best case study for you guys, but are you starting to see kind of less propensity to buy your own or move out and how should we think of your higher rent portfolio and a little bit more economic sensitivity versus kind of this trend towards more renting versus owning
Speaker Change: Yeah, maybe I can go first, just as it relates to Calgary.
Speaker Change: So, Calgary really, the new supply that came online last year, particularly in the core as it impacts our portfolio but about 2000 units in the core more broadly about 5000 units.
Speaker Change: of Rental. That's really what we're impacting our portfolio. At the end of Q4, there's just over a thousand units left to absorb for those new projects.
Speaker Change: We anticipate that will be absorbed in Calgary by Q3 or Q4, so I'd say the most noise might be caused by that, that said we would in that market still see purchase to home as one of the top three reasons for moveouts.
Speaker Change: I'll be likely a live defect to your point, so don't have great data at this point, but agree with your conclusion that the uncertainty and volatility should help the business. Maybe I'll hand off the second part of the question to John here.
Speaker Change: I think that's kind of how we're thinking about it. There's more uncertainty in the market today.
John: in terms of what's going to happen with a whole bunch of different things. I think folks may defer the decision to make large purchases, including homes.
John: So I agree that's helpful for the rental side of things and that's what we expect but we haven't seen anything yet too early to kind of tell you what we're seeing on that specific front I think
And in terms of kind of more exposure, like, like...
Look, I would say that there are-
John: I'd say given our end point, for sure, we are seeing more sensitivity to price.
John: And that's why we've been working hard in January and February and to now.
John: to see where that price point is, so that we can...
Speaker Change: Get some positive momentum going in our occupancy and our portfolio and as Paul said you know we're seeing some pretty nice green shoots right now and hopefully we can continue that momentum into the leasing season.
And, um...
Speaker Change: And, you know, we offer a really strong product offering too, so...
Speaker Change: I think there's a decent amount of demand out there. It's not a demand issue. I think the issue is...
Speaker Change: Let's just find where that demand is comfortable with in terms of price and I think we kind of know where that is right now and hopefully it'll translate into a strong spring leasing season here.
Speaker Change: Fair enough. And I guess it wasn't too long ago that we were talking about a supply delivery in Montreal. Some challenges in that market seems like
Speaker Change: We're past that and you're back up to 96% occupancy is that kind of and that market arguably doesn't have the population growth that traditionally Toronto or her Calgary would have sorry or even Ottawa for that matter. Is that kind of
Speaker Change: How we should think about this, the temporary pressures, but arguably we'll be back to stabilized occupancy levels once the supply pipeline has been delivered.
Speaker Change: Yes, it relates to Montreal and I know that's a market, you know, very well, so we've seen continued steady demand as we've come into the new year. With those, the guideline increase this year, you know, for many in excess of 5%, we're passing through some fairly large renewal rates as well, and obviously that's consistent with expense growth in prior years and what not, so residents are understanding it as well, which is good. So don't see a significant
Speaker Change: to increase in occupancy in that market, but certainly we're working at heart and we've seen continued steady demand.
Fair enough. Thanks, sis.
Your next question comes from Dean-
Jonathan with CIBC. Your line is now open.
Dean: Thanks, morning guys. I hate to bring up the topic of the terrorist because it just seems like it's...
Dean: Your conversation is there. What do you think the impact of this could be vis-a-vis new construction and replacement costs? I mean, I can only see this kind of getting, I don't want to say out of control, but you look at residential construction costs since the first Trump administration, they're up 70-some odd percent.
Dean: How high could that go to a point where it almost forces people to rent as opposed to buy?
Speaker Change: Yeah, hey, Dean, John here. So I get yeah, I guess we can share a little bit on the tariffs.
Dean: We've done a bunch of analysis on kind of potential direct impact on.
on our portfolio here and...
Dean: and I think you nailed it like the impact that the direct impact is probably more in the on balance sheet construction that we have going on in the development.
Dean: The good news is that's two assets. The first one is Rich Grove, and we're pleased to say that for Rich Grove, all the concrete in the steel are complete.
The main mechanical and electrical equipment have all been installed.
Dean: with remaining items to be installed already on order, and all the aluminum window frames have been delivered on site. So, we don't see very much impact at all on that development, which so we're still well within the range of the public disclosure yields that we've put out.
on Leslie York Mill that's a little bit. [inaudible]
Dean: It's a little bit more complicated as there are two large phases in that development and so phase one is is close to complete and in terms from a cost perspective and so I would say a similar a similar kind of overview that I just gave for Rich Grove applies to Lesley York Mills phase one.
Dean: where we do have a little bit of exposure, I think is on phase two, where we still have to purchase some of those things that I just said, lumber is a big one, steel is a big one, and the plighting and elevators are also big.
Dean: But I would say that even at the high end of what our estimates are in terms of in terms of those potential cost increases.
Dean: We still lie within the range of the public disclosure yields that we've put out.
of 3.75% to 4.25% yield.
Dean: You know, we're kind of lucky that we are where we are with respect to that. I think our team
Dean: went through a lot of this experience through COVID to find alternative kind of input costs, supply chain alternatives.
Dean: So they're used to this and they're going to do it again and they're going to try to minimize cost but I think depending on how long these tariffs go for and which specific products these tariffs will target, I definitely think it's going to increase the...
Dean: for the per unit cost of any construction on the four sales side or for the rent side going forward, definitely.
Dean: Hopefully that kind of gives you some flavor of how we're thinking about it. Yeah, absolutely. I guess in the context of that, at 13 and change in 96 cap rate, the best thing to buy would be your own units at that point. I'll hit it back. Thanks guys.
Night, Dean.
Dean: There are no further questions that this time I will not turn the call over to Jonathan for closing remarks.
Jonathan Kelcher: Thanks operator and thank you everyone for your time and your interest and we're looking forward to speaking with everyone in May. Thanks a lot, take care.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in asset you please disconnect your lines.