Q1 2025 InterRent Real Estate Investment Trust Earnings Call
Operator: Good morning, ladies and gentlemen, and welcome to the InterRent Q1 2025 earnings webcast. At this time, all lines are in listen only.
Good morning, ladies and gentlemen, and welcome to the Interrent REIT Q1, 'twenty twenty-five earnings webcast conference call.
At this time all lines are in listen only mode.
Operator: Following the presentation, we will conduct a question and answer session. If at any time during the If you require immediate assistance, please press star zero.
Following the presentation, we will conduct a question and answer session.
If at any time during the call you require immediate assistance. Please press star zero for the operator.
Operator: This call is being recorded on Friday, May 16th, 2021.
Speaker Change: This call is being recorded on Friday May 16, 2025, I would now like to turn the conference over to Renee way. Please go ahead.
Renee Wei: I would now like to turn the conference over to Renee Wei, please. Thanks, operator. And good morning, everyone.
Speaker Change: Thanks, operator, and good morning, everyone. Thank you for joining interim rates Q1, 'twenty 25 earnings call. My name is really way director of Investor Relations and sustainability you can find a presentation to accompany today's call on the investors section of our website under Investor presentation. We're pleased to have Brad Touchy, President and CEO Curt Miller CFO.
Renee Wei: Thank you for joining InterRent REITs Q1 2025 earnings call. My name is Renee Wei, Director of Investor Relations and Sustainability. You can find the presentation to accompany today's call on the investor section of our website under investor presentations. We're pleased to have Brad Cutsey, President and CEO, Curt Millar, CFO, and Dave Nevins, COO on the line today.
Speaker Change: And they've never see Oh on the line today.
Renee Wei: As usual, the team will present some prepared remarks and then we'll open up to questions.
Speaker Change: The team will provide some prepared remarks, and then we'll open up to questions before we begin I want to remind listeners that certain statements about future events made on this conference call are forward looking in nature and as such information is subject to risks uncertainties and assumptions that could cause actual results to differ materially for more information. Please refer to the cautionary statements all forward looking for them.
Renee Wei: Before we begin, I want to remind listeners that certain statements about future events made on this conference call are forelooking in nature. Any such information is subject to risk, uncertainties, and assumptions that could cause actual results to differ materially. For more information, please refer to the cautionary statements on forelooking information in the REITs news release, NEMDNA, dated May 15, 2025. During the call, management will also refer to certain non-IFRS measures, although the NEMDNA believes these measures provide useful supplemental information about its financial performance. They are not recognized measures and do not have standardized meanings under IFRS.
Speaker Change: He was released an M D N a get it may 15 2025 during the call management will also refer to certain non ifr's measures. Although they read believes these measures provide useful supplemental information about its financial performance and not recognized measures and do not have standardized meanings under ifr S. Please see the reach and DNA.
Renee Wei: Please see the REITs NEMDNA for additional information regarding non-IFRS financial measures, including reconciliations to the nearest IFRS measures.
Speaker Change: For additional information regarding non I first financial measures, including reconciliations to the nearest ifr snyder's, but over to you.
Brad Cutsey: Brad, over to you. Thanks for today and good morning, everyone. During the first quarter, we continue to see resilience in the rental market, even as broad macro and political uncertainties remain, and short-term supply-demand dynamics continue to play out uncertainly. Our high quality portfolio performed well with opportunity to hold steady at 96.8% for the total portfolio. Approving by 10 basis points to 96.9% for the same property. reflect the proactive steps we took early on to position ourselves heading into the peak lease. which partially contributes to higher operating costs this quarter. We also delivered consistent year-over-year AMR growth of 6.2% for the total portfolio and 5% for the same properties during the month of June.
Speaker Change: Thanks, Renee and good morning, everyone.
Speaker Change: In the first quarter, we continued to see resilience in the rental market, even though the broad macro and political uncertainties remain short term supply demand dynamics continue to play out in search of Americas.
Speaker Change: Our high quality portfolio performed well with RPC holding steady at 96, 8% for the total portfolio and improving by 10 basis points to $96, 9% from the same property portfolio.
Speaker Change: That's reflective proactive steps, we took early on to position ourselves heading into the peak leasing season.
Speaker Change: Firstly, it contributed to higher operating costs this quarter well.
Speaker Change: I'll touch on that later in the call.
Speaker Change: Also delivered consistent year over year aim our growth of six 2% of the total portfolio of 5% from the same properties during the month of March.
Brad Cutsey: Healthy Occupancy and Steady AMR gains drove another quarter of solid revenue. Total Portfolio Proportional Operating Revenues grew by 1.7% year-over-year, though that growth was impacted by dispositions completed during the past 12 months, which only contributed partially, or not at all, to Q1 2025 top levels.
Speaker Change: Healthy are seeing steady a M. Our gains drove another quarter of solid revenue growth total portfolio proportion of operating revenues grew by one 7% year over year all of that growth was impacted by dispositions completed during the past 12 months, which only contributed partially or not at all to Q1 2025 top line.
Speaker Change: Year over year growth in same property was 4.7%.
Brad Cutsey: After a relatively mild winter in Q1 2024, this past winter was notably colder across a quarter of a mile. Average heating degree days across the portfolio were up 18% year-over-year, well above the five-year average. Colder temperatures and heavier snowfall drove an increase in utility, snow removal, and other weather-related expenses. We also made the proactive decision to increase marketing spend and invest early in preparing our communities for the upcoming lease and sale. These factors contributed to higher offering costs, which partially offset revenue gains and put pressure on NOI margins for the core. Same property NOI margins dipped by 110 basis points from last year but remained at a healthy 64.1% compared to Q1 levels in previous years.
Speaker Change: After a relatively mild winter in Q1, 'twenty 'twenty four this past winter was notably cold across our core markets.
Speaker Change: Average heating degree days across the portfolio were up 18% year over year, well above the five year average.
Speaker Change: Colder temperatures than heavier snowfall drove an increase in utility and snow removal and other weather related expenses.
Speaker Change: We also made the proactive decision to increase Americans spend it in the best early in preparing our communities for the upcoming leasing season. These.
Speaker Change: These factors contributed to higher operating costs, which partially offset revenue gains put pressure on the NOI margins for the court.
Speaker Change: Same property NOI margins dipped by 110 basis points from last year, but remained at a healthy 64, 1% compared to Q1 levels in previous years, we earned a solid same property NOI growth of three 1% for the quarter.
Brad Cutsey: We earned a solid same property and a wide growth of 3.1% for the quarter. Despite the impact of dispositions, the resulting smaller portfolio would deliver an FFO of $21.8 million for the quarter, reflecting a 3.3% year-over-year improvement. On a per-unit basis, the portfolio was $0.15, and an increase of 4.2% from the same period last year.
Speaker Change: The impact of disposition to result in a smaller proposal deliberate at football with $21 8 billion for the quarter.
Speaker Change: The fact that 3.3% year over year improvement on a per unit basis. Our football was 15 cents an increase of four 2% from the same period last year.
Brad Cutsey: On our last earnings call, we shared the next page of our value-enhancing disposition strategy following our annual portfolio review, which is anticipated to generate net equity proceeds of $125 million to $140 million. We're progressing well. So far this year, we've already generated $39 million in net proceeds. Dispositions. We'll share more details on those later in the These dispositions have not only strengthened the quality of our portfolio, but also allowed us to repurchase $4.8 million for 3.2% of our diluted outstanding units in Q1. Post Q1 through end of April, we repurchased an additional 1.2% of our standing units representing a 4.4% total reduction.
Speaker Change: On our last earnings call. We shared the next phase of our value enhancing disposition strategy Paula annual portfolio review, which is anticipated to generate net equity proceeds of 125 49.
Speaker Change: Progressing well so far this year, we've already generated 39 million in net proceeds through three dispositions will share more details on those later in the call.
Speaker Change: This position of not only strengthen the quality of our portfolio, but also allowed us to repurchase $4 8 million or three 2% of our diluted outstanding units in Q1.
Speaker Change: Oh SKU wanted to end of April we repurchased an additional one 2% of our standing units, representing a 4.4% total reduction in our unit count.
Brad Cutsey: We executed these buybacks as a significant discount to our IFRS-NAV, directly delivering value to our investors. In addition, these proceeds further strengthen our balance sheet, increasing our interest coverage ratio to 2.6%. Total debt to Grossberg values standing at a healthy 40.9%. 236 million in available liquidity. We will continue to take a disciplined approach to capital recycling, always prioritizing the strength and flexibility of our value. We will continue to build on our track record of prudent capital allocation with the lens of balancing near-term opportunities and long-term value creation.
Speaker Change: We executed these buybacks is significant discount to our I F. R. S N b directly to delivering value to our investors.
Speaker Change: In addition, these proceeds further strengthen their balance sheet to increase net interest coverage ratio to two six times.
Speaker Change: Total debt to gross book value of staying out of the healthy 49%.
Speaker Change: $236 million and available liquidity, we will continue to take a disciplined approach to capital recycling.
Speaker Change: These prioritized in the strength and flexibility of our balance sheet.
Speaker Change: We will continue to build on our track record of prudent capital allocation with the lens of balancing near term opportunities and long term value creation.
Brad Cutsey: Review of the current market environment is requiring a balanced approach, including an opportunistic unit repurchase. Volatile Public Market Environment and Preserving Liquidity for Long-Term Capital Strategies.
Speaker Change: We view the current market environment is requiring a balanced approach, including the opposite unless the unit repurchase.
Speaker Change: In a volatile macro environment preserving liquidity for longer term capital strategies.
Dave Nevins: Now I'll let Dave take it from here to look at some of the operating highlights. Thanks, Brad. We're seeing healthy fundamentals across our regions. Same property, AMR, continue to grow at a solid 5% pace. Overall occupancy improved by 10 basis points year-over-year to 96.9%. It dipped slightly quarter-over-quarter by 20 basis points, but stayed above our long-term average.
Speaker Change: Now I'll, let Dave take it from here to look at some of the operating highlights.
Dave: Thanks, Brad we're seeing healthy fundamentals across our regions same property am or continue to grow at a solid 5% pace overall occupancy improved by 10 basis points year over year to 96, 9% it dipped slightly quarter over quarter by 20 basis points, but stayed above our long term average with 10 year average typically at 90.
Dave Nevins: 10-year average typically at 96%. We delivered the biggest year-over-year improvement in same-property occupancy in other Ontario, with a 90 basis point increase alongside a healthy growth of 4.5% in AMR. On a quarter-over-quarter basis, the strongest occupancy gains were seen in Ottawa and Vancouver, each up 30 basis points and 10 basis points respectively. Both regions also continue to post healthy AMR growth within the same property portfolio.
Speaker Change: 6%.
Speaker Change: We delivered the biggest year over year improvement in same property occupancy and other Ontario, with a 90 basis point increase alongside a healthy growth of four 5% and ammar.
Speaker Change: On a quarter over quarter basis, the strongest occupancy gains foreseen in Ottawa and Vancouver, each up 30 basis points and 10 basis points respectively.
Speaker Change: Both regions also continue to post healthy growth within the same property portfolio.
Dave Nevins: We had a strong start to the season in Q1 as we geared up for the peak spring and summer leasing period. We executed 475 new leases during the quarter across the total portfolio, which was a 3% increase in leasing volume compared to the same period last year. We continue to capture embedded rental upside in our portfolio through turnover, albeit at a more measured pace this quarter. Since Q1 2023, we've seen outgoing rents grow at a compound annual rate of nearly 12%, while in-place AMR have increased by about 7%. This tells us the residents moving out are closer to market rent than in the past.
Speaker Change: We had a strong start to the season in Q1 as we geared up for the peak spring and summer leasing period, we executed 475, new leases during the quarter across the total portfolio, which is a 3% increase in leasing volume compared to the same period last year.
Speaker Change: We continue to capture embedded rental upside in our portfolio turnover, albeit at a more measured pace this quarter.
Speaker Change: Since Q1, 2023, we've seen echoing rents grow at a compound annual rate of nearly 12%.
Speaker Change: In place of Ammar has increased by about 7%.
Speaker Change: This tells us the residents moving out are closer to market rent than in the past.
Dave Nevins: At the same time, new residents achieved, have continued to grow at a healthy compound annual rate of 5% over the last two years. As a result, our gain on lease has naturally come down to 8.5% this quarter from 20.3% a year ago. It's a trend we're seeing across the industry as portfolios become better aligned with market rent. Trailing 12-month turnover remained steady at 24.1% and our portfolio mark-to-market gap declined to 23%, still representing significant embedded value across our portfolio. That speaks to the quality of our communities and the service we provide. It also reflects real embedded value that supports the long-term growth potential of our portfolio.
Speaker Change: At the same time, new residents achieved have continued to grow at a healthy compound annual rate of 5% over the last two years.
Speaker Change: As a result, our gain on lease has naturally come down to eight 5% this quarter from 23% a year ago.
Speaker Change: It's a trend we're seeing across the industry as portfolios become better aligned with market rates.
Speaker Change: Trailing 12 month turnover remained steady at 24, 1% and our portfolio Mark to market cap declined 23% still representing significant embedded value across our portfolio.
Speaker Change: That speaks to the quality of our communities and the service. We provide it also reflects real embedded value that supports the long term growth potential of our portfolio.
Dave Nevins: As we ramp up for peak leasing season, we proactively stepped up our marketing efforts to get ahead of demand, stay competitive, and ensure our suites stand out online. It's a focused effort to reach the right residents and keep leasing momentum strong.
Speaker Change: As we wrap up for peak leasing season, we proactively stepped up our marketing efforts to get ahead of demand stay competitive and ensure our suite standout online.
Speaker Change: It's a focused effort to reach the right residents and keep leasing momentum strong at.
Dave Nevins: At the same time, this winter brought more snow and ice than we've seen in recent years, driving up utility and other weather-related expenses. Heating degree days in Q1 were up 18% on average, including a 22% increase in Ottawa and 19% in both the GTHA and other Ontario markets. On a per weighted average suite basis, utility costs have increased 18.1% from last year to $521 per suite, reflecting a combination of increased usage and higher rates. Together these two factors push same property operating expenses up by 6.3% year over year.
Speaker Change: At the same time this winter brought more snow and ice that we've seen in recent years driving up the utility and other weather related expenses heating degree days in Q1 were up 18% on average, including a 22% increase in Ottawa and 19% in both the G T H eight and other interior markets.
Speaker Change: On a per weighted average suite basis utility costs have increased 18, 1% last year to $521 per suite, reflecting a combination of increased usage and higher rates.
Speaker Change: These two factors push same property operating expenses up by six 3% year over year.
Dave Nevins: Slide 12 breaks down the increase in utility expense on a same property basis. On the left-hand chart, you'll see that 67% of the increase came from natural gas, 23% from electricity, and 15% from water. The water increase is largely tied to stronger occupancy and more residents in our suites, a trend the industry has seen over the last few quarters. On the right-hand side of the slide, you'll see that 61% of the increase came from increased usage. driven by the 18% year-over-year increase in average heating degree days in our region. Higher average rates accounted for 24% of the increase and 19% is related to the increase in carbon taxes on natural gas.
Speaker Change: Slide 12 breaks down the increase in utility expense on a same property basis on the left hand chart, you'll see that 67% of the increase came from natural gas, 23% from electricity and 15% for water.
Speaker Change: Water increases largely tied to stronger occupancy and more residents in our suites a trend in the industry has seen over the last few quarters.
Speaker Change: On the right hand side of the slide you'll see that 61% of the increase came from increased usage.
Speaker Change: Driven by the 18% year over year increase in average heating degree days in AR reaches.
Speaker Change: Higher average rates accounted for 24% of the increase and 19% is related to the increase of carbon taxes on natural gas.
Dave Nevins: On March 15, 2025, the federal government removed the consumer carbon tax, effective April 1. Without the carbon tax, utilities expense for Q1 would have been $0.7 million lower. If utilities expense had been flat year over year, net operating margins for Q1 2025 would have been 65.6% compared to the recorded margins of 64.1%. The removal of carbon tax is estimated to provide approximately $1 million in savings for the remainder of 2025.
Speaker Change: On March 15, 2025, the federal government removed the consumer carbon tax effective April 1st without the carbon taxes utilities expense for Q1 would have been quite $7 million lower utilities expense had been flat year over year net operating margins for Q1 2025 would have been 65, 6% compare.
Speaker Change: To the reported margins of 64, 1% the removal of carbon taxes estimated to provide approximately $1 million in savings for the remainder of 2025.
Dave Nevins: Looking at slide 13, we continue to invest in capital improvements to keep our portfolio well-maintained and stay competitive. Maintenance CapEx remains in line with historical levels, with the majority of our spending directed towards value-added initiatives to enhance our offerings and support long-term growth.
Speaker Change: Looking at Slide 13, we continue to invest in capital improvements to keep our portfolio of well maintained and stay competitive.
Speaker Change: Maintenance Capex remains in line with historical levels with the majority of our spending directed towards value added initiatives to enhance our offerings and support long term growth.
Curt Millar: I'll now turn it over to Curt to provide an update on our balance sheet. Thanks Dave. We review and assess our internal cap rates and property valuations at each quarter. This process includes input from our internal acquisitions team, external appraisers, and relevant market data. Based on recent transactions in our markets, industry reports available at the end of the quarter, and discussions with related parties, we kept cap rates unchanged this quarter and restated the cap rates in Ottawa as a result of this position acquisition. Average cap rates for total investment properties remain consistent with year-end 2024 at $4.49 This reflects an expansion of 32 basis points compared to a year ago and 67 basis points since the recent low in March of 2022.
Speaker Change: I'll now turn it over to Curt to provide an update on our balance sheet.
Curt Miller: Thanks, Steve.
Curt Miller: We review and assess our internal cap rates in property valuations that each quarter. This process concludes input from our internal acquisition team external appraisers and relevant market data.
Curt Miller: Based on recent transactions in our markets industry reports available at the end of the quarter and discussions with related parties, we kept cap rates unchanged this quarter and restated the cap rates in Ottawa as a result of disposition activities.
Curt Miller: Average cap rates for a couple of investment properties remained consistent with year end 2024 at 449%.
Curt Miller: This reflects an expansion of 32 basis points compared to a year ago and 67 basis points since the recent low in March of 2022.
Curt Millar: Our recent dispositions continue to validate our valuations and we're keeping a close eye on the transaction market as part of our ongoing assessment. As we continue to execute on our capital recycling program and deploy capital towards our NCIB, leverage has increased slightly, however this will normalize as we progress with our disposition. Importantly, we are deploying that capital to repurchase units at a significant discount to our IFRS valuation, delivering immediate accretion to unit holders and demonstrating our conviction in the long-term value of our portfolio. As a result, our debt-to-GBV at quarter-end increased by 60 basis points and remains at a healthy 40.9% at quarter-end.
Curt Miller: Our recent dispositions continue to validate our evaluations and we're keeping a close eye on the transaction market as part of our ongoing assessment process.
Curt Miller: Because we continue to execute on our capital recycling program and deploy capital towards our in CIB.
Curt Miller: Leverage has increased slightly however, this will normalize as we progress with our dispositions.
Curt Miller: Fortunately, we are deploying that capital to repurchase units at a significant discount to our I harassed valuation delivering immediate accretion to unit holders and demonstrating our conviction in the long term value of our portfolio.
Curt Miller: As a result, our debt to G. B V at quarter end increased by 60 basis points and remains at a healthy 49% at quarter end.
Curt Millar: Financing costs continue to trend down, both in absolute terms and as a share of revenue. Proportion of financing costs came in at $14.6 million or 23.2% of operating revenue this compared to $15.2 million or 24.5% of operating revenue a year. This was driven by a decline in our weighted average cost of mortgage debt to 3.31% from 3.37% just three months ago. As you can see on this slide, we've continued to methodically stagger our mortgage maturities to manage risk and maintain stability in our cash flow.
Curt Miller: Nancy costs continued to trend down both in absolute terms and as a share of revenue.
Curt Miller: Proportionate financing costs came in at $14 6 million or 23, 2% of operating revenue this quarter.
Curt Miller: Third to $15 2 million or 24, 5% of operating revenue a year ago.
Curt Miller: This was driven by a decline in our weighted average cost of mortgage debt to 331% from $3 three 7% just three months ago.
Curt Miller: And you can see on this slide we've continued to methodically stagger, our mortgage maturities to manage risk and maintain stability in our cash flow.
Curt Millar: This ongoing work to optimize our financing structure continues to bear fruit, help us turn solid top-line performance into strong earnings and bottom-line results, even with the effects of recent dis- Moving to slide 18.
Curt Miller: This ongoing work to optimize our financing structure continues to bear fruit help us turn solid topline performance into strong earnings and bottom line results, even with the effects of recent dispositions.
Curt Miller: Moving to slide 18.
Curt Millar: Earlier this year, we wrapped up our comprehensive materiality assessment to better understand which sustainability topics matter most to our business and our stakeholders. This work is helping us focus on the areas that are financially material, where we see real risk and opportunity. It also helps us take a more focused, practical approach with our sustainability efforts and you'll see that reflected in our upcoming sustainability report in the coming weeks.
Curt Miller: Earlier this year, we wrapped up our comprehensive materiality assessment to better understand which sustainability topics matter most to our business and our stakeholders.
Curt Miller: This work is helping us focus on the areas that are financially material, where we see real risk and opportunity.
Curt Miller: It also helps us take a more focused practical approach with our sustainability efforts and.
Curt Miller: You'll see that reflected in our upcoming sustainability report in the coming weeks.
Brad Cutsey: On that note, I'll turn it over to Brad to discuss our asset allocation strategy and provide any closing remarks. Thanks, Curt. Communicate at page one of our disposition pipeline back in Q3 2023. the target of $75 million in that equity process. Completed that phase as of 2-2-2024 with four communities set. These assets were sold at an average price representing a 2% premium to the combined IFRS value, generating total net proceeds of $97 million, exceeding our original target. On our Q4 2024 call, we introduced the second phase of our disposition program targeting $200 to $250 million in sales and $125 to $140 million in net equity proceeds.
Curt Miller: On that note I'll turn it over to Brad to discuss our asset allocation strategy and provide any closing remarks.
Brad Touchy: Thanks, Kurt communicated page one of our disposition pipeline back in Q3 2023, but the target of 75 million in net equity proceeds.
Curt Miller: Did that page as of Q2 2024 with four communing yourselves these out.
Curt Miller: Assets were sold at an average price represented a 2% premium to the combined I F R as value.
Curt Miller: In total net proceeds of 97 million exceeding our original target.
Curt Miller: On our Q4 2024 call we introduced the second phase of our disposition program targeting 200, and 250 million themselves.
John: And the 125, John near 40 million of net equity proceeds.
Brad Cutsey: Pleased to report that we are well on track with one disposition completing Q1 and two more set to close after the quarter. So far this year, we have completed a pay for more than $170 million in assets. position as well to meet this full year term. Due to our long-standing approach to disciplined capital recycling, we redeploy this capital in the most equitable way at the moment, buying back our own units at a meaningful discount to their intrinsic value. Since December 31st, 2024, we have actively purchased 6.7 million of our trust units, or 4.4% of our diluted float.
John: I'm pleased to report that we're well on track with one disposition completed in Q1 and two more set to close after the quarter.
John: So far this year, we have completed or paid for more than 170 million and that yourselves position us well to meet this full year target.
John: True to our long standing approach to disciplined capital recycling we have.
John: Redeploy this capital in the most accretive way at the moment buying back our own units at a meaningful discount to their intrinsic value.
John: Since December 31st 2024, we have actively purchased $6 7 million of our trust units or 4.4% of our dilutive float.
Brad Cutsey: meaningful discount to our IFRS net asset value. Unlocking immediate tangible value for you to hold. The proceeds of our dispositions have also helped us strengthen our balance sheet by preserving the flexibility to do what we do best, adding the value across our proposals. Tune in to slide 24. As we continue to work through what we see as returning to a more normalized fundamentals in the immediate term, we remain confident in the long-term fundamentals of the Canadian rental housing sector. Despite the current wave of completion, the number of rental and condo suites under construction in our key markets is already about 5% lower than a year ago.
John: The meaningful discount tour I F. R. S net asset value unlock an immediate tangible value for unit holders.
John: The proceeds of our dispositions have also helped us strengthen our balance sheet and preserving the flexibility to do what we do best and the value across our portfolio.
John: Turning to slide 23, as we continue to work through what we see is returning to a more normalized fundamentals in the immediate term we remain.
John: I'm confident in the long term fundamentals of the Canadian rental housing sector. Despite the current wave of completion, the number of rental or condo suites under construction in our key markets is already about 5% lower than a year ago.
Brad Cutsey: Looking a bit further out, those shares declined about 30% year-over-year in Q1, setting the stage for a more balanced market and supporting a very robust outlook in the next couple of years. At the same time, uncertainty from global trade tensions to broader economic volatility is affecting everyone. Many would be first-time homebuyers to defer an ownership decision. While affordability challenges continue to make renting the most affordable and accessible option for a growing share of the population. The multi-family sector continues to prove its resilience through all parts of the cycle, and we believe we are exceptionally well positioned, with the strength of our operating platform and the quality of our assets, giving us a clear competitive advantage.
John: Looking a bit further out those stairs declined about 30% year over year in Q1, setting the stage for a more balanced market and supporting a very robust outlook in the next couple of years.
John: At the same time uncertainty from global trade tensions to broader economic volatility is affecting everyone.
John: Many would be first time homebuyer under different ownership decisions, while affordability challenges continue to make renting the most affordable and accessible options for our growing share of the population.
John: Multifamily sector continues to prove its resilience through all parts of the cycle and we believe we're exceptionally well positioned with the strength of our operating platform and the quality of our assets, giving us a clear competitive advantage.
Brad Cutsey: At the macro level, Canada remains a resilient and attractive market relative to many global peers. The IMF recently projected Canada's GDP growth to reach 1.6% in 2025, second only to the U.S. among the G7 nations. This hello reinforces our long-term view. The Strong Fundamentals, The Supportive Sector.
John: At the macro level kind of remainder of a young and attractive market relative to many global peers.
John: We just think we had Jack became a GDP growth to reach one six and in 2025 second only to the U S. Among the G seven nations.
John: This also reinforces our long term view.
John: <unk> fundamentals to support a sector.
Brad Cutsey: In closing, we built InterRent to perform through both the up and down economic cycles. With the right portfolio, the right people, and the right strategy, we are confident to navigate this transitory period and come out stronger on the other side.
John: In closing, we built internet before them to both the up and down economic cycles with the right portfolio, the right people and the right strategy.
John: Our confidence navigate this transitory period and come out stronger on the other side.
Brad Cutsey: I'd like to thank everyone for your time and continued support.
Speaker Change: Like to thank everyone for your time and continued support with that well open it up for questions.
Operator: With that, we'll open it up for questions. Thank If you do wish to ask a question, please press star 1 on your telephone. If you wish to withdraw your question, you may do so by pressing star 2. Once again, please press star one to register for a question.
John: Thank you.
John: If you do wish to ask a question. Please press star one on your telephone keypad.
John: If you wish to withdraw your question you may do so by pressing star to again to cancel once again. Please press star one to register for a question.
Jonathan Kelcher: There will be a brief pause while questions are Our first question comes from the line of Jonathan Kelcher at TD Cowen. Your line is now open. Thanks. Good morning. First question just on the on the vacancy, I guess historically, you guys have targeted three to 4% using the higher vacancy to really drive rents. But more recently, just given some softness in the market, you have been aiming for the lower end of that range. Are you seeing are you seeing enough in the market now where you might start to take on some more vacancy in order to drive rents?
John: There'll be a brief pause while we're questions are being registered.
Speaker Change: Our first question comes from the line of Jonathan Culture at TD Cowen. Your line is now open.
Jonathan Culture: Thanks, Good morning.
Jonathan Culture: First question just on the on the vacancy I guess historically you guys have a targeted 3% to 4% I'm using the higher vacancy to really drive rents, but more recently just given some softness in the market.
Jonathan Culture: Ben.
Jonathan Culture: Aiming for the lower end of that range.
Jonathan Culture: Are you seeing are you seeing enough in the market now where you might start to take on some more vacancy in order to drive rents are we not there yet.
Brad Cutsey: Or are we not there yet? I think it's early days to tell Jonathan why we remain pretty bullish on what we've seen so far. It's still early days within the prime leasing season. I think where there is some supply coming on, we'll continue to take more of a stateful approach and in areas in which we feel comfortable that we can push the rents, we'll continue to do so. Okay, can you maybe break that down by market? I guess Vancouver's got some supply and like where, where would, in what markets would you be more comfortable taking on a little bit more vacancy to I think in the Ontario market in general is being pretty bullish so I agree with the Vancouver comment there has been some supply come on.
Jonathan Culture: I think it's early days to tell.
Jonathan Culture: Jonathan why we remain pretty bullish on what we've seen so far it's still early days with them.
Jonathan Culture: You can see them I think.
Speaker Change: Where there is some supply coming on and will continue to take more of a state full approach and then the areas in which we feel comfortable that we can push the rents will continue to do so.
Speaker Change: Okay could you maybe break that down by market I guess Vancouver has got some supply in.
Speaker Change: Where we are and what markets would you be more comfortable taking on a little bit more vacancy to push rents.
Speaker Change: I think I think in the Ontario market in general is being pretty bullish so I agree with the Vancouver comments that have been.
Speaker Change: <unk> Taman.
Brad Cutsey: I think in Ontario there's a couple of nodes, not necessarily regions, in which we might take a little more of a stateful approach, call it maybe Guelph and some other Ontario. Outside of that I think we'll take a pretty approach but I think you can continue like we take comfort in the fact that we are operating kind of in that lower range of that vacancy and you can adjust that. that kind of got through that.
Speaker Change: Hi, Thanks.
Speaker Change: Ontario, and Theres, a couple of notes not necessarily regions and which.
Speaker Change: We might take a little more of a staple approach call it maybe <unk> and some other Ontario.
Speaker Change: Outside of that I think we're all take a pretty balanced approach, but I think he can continue like we take comfort in the fact that we are operating in.
Speaker Change: The lower range of that vacancy and you can adjust as we see that kind of go through that equal season.
Jonathan Kelcher: Okay, that's helpful, I'll turn it back, thanks. Thank you.
Speaker Change: Okay. That's helpful I'll turn it back thanks.
Speaker Change: Okay.
Brad Sturge: Your next question comes to the line of Brad Sturge from Raymond James. Your line is now open. Hey guys. Starting off, I guess, continuing on with the questions around leasing and just The turnover you're experiencing as you highlight it. leases are closer to market that you experienced in Q1 in terms of the turnover, would you expect that trend? to continue the bouncy year. Are there any data points that would suggest otherwise? Yeah, I think I think it's following the same trend from what we see so far. So it's it's pretty similar going forward right now.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Brad Sturges from Raymond James Your line is now open.
Brad Sturges: Hey, guys.
Speaker Change:
Speaker Change: Just starting off I guess, continuing on with the questions around leasing and just right.
Speaker Change: The turnover you're experiencing as you highlighted I guess the leases are closer to market that you experienced in Q1 in terms of the turnover would you expect that trend.
Speaker Change: Do you continue the balance of year are there any data.
Speaker Change: Gotta points that would suggest otherwise.
Speaker Change: Yeah, I think I think it's following the same trend from what we see so far so it's a it's pretty stepmother going forward right now.
Speaker Change: Okay.
Brad Sturge: Okay, maybe switching gears just to the Asset Disposition Program, I think last quarter you talked about $135 million of deals either closed or pending, 5 million, that's closed. So I guess on the remaining 70, kind of what stage is that in? Has there been any impact at all from some of the market uncertainty? No, I mean, as you can see, we've kind of increased what's in paper since the last quarter. So everything is on target and we're quite happy with how that disposition program is playing out. So there's nothing that has happened with the kind of noise surrounding the Trump tariffs and whatnot that's caused us to have any concern.
Speaker Change: Okay.
Speaker Change: Maybe switching gears just to be our asset disposition program I think last quarter you talked about.
Speaker Change: $135 million of deals either closed or pending.
Speaker Change: $5 million, that's close so I guess on.
Speaker Change: The remaining 70 kind of what stage is that and is there been any impact at all from some of the market uncertainty of late.
Speaker Change: No I mean, I know you can see we've kind of increased what's been paper.
Speaker Change: Since our last quarter.
Speaker Change: So everything is.
Speaker Change: Is on target and we're quite we're quite happy with how that disposition program is playing out. So there is nothing that has happened with the kind of noise surrounding.
Speaker Change: The Trump tariffs and whatnot, that's caused us to have any catch up.
Speaker Change: Yeah.
Brad Sturge: I guess transactions have been done in a few different markets. Do you continue to see that sort of more opportunistic across the portfolio or is there any? plan to be a little bit more targeted folks. Yeah, no, I mean, our assets that we've earmarked for disposition haven't changed at all, Brad. We remain the same disciplined approach to earmarking which assets that we've earmarked for those dispositions. As we alluded to in previous calls, they're across the regions and they're assets which for different criteria reasons that we've earmarked and they have not changed. So, you'll continue to see that kind of sprinkle through our four-quarter meetings.
Speaker Change: And I guess transactions have been done in a few different markets. You can see you can see that sort of more opportunistic across the portfolio or is there any areas.
Speaker Change: Do you plan to be a little bit more towards a focus.
Speaker Change: Yeah, No I mean, our our attitude is that we've earmarked for disposition haven't changed at all Brad we.
Speaker Change: We remain the same disciplined approach to earmark and which assets are earmarked for those disposition.
Speaker Change: We alluded to in previous calls there are across the region there.
Speaker Change: Their assets, which for a different criteria reasons.
Speaker Change: And they have not changed so.
Speaker Change: You'll continue to see that kind of cycle through a poor core regions.
Brad Sturge: All right. Thank you.
Speaker Change: Perfect. Thank you.
Mario Saric: Your next question comes to the line of Mario Saric from Scotiabank. All right, good morning, and thank you for taking the questions. I just wanted to... Want to stick on the revenue side. How did Q1 occupancy and occupied rent come in relative to internal expectations coming into the year? Thank you. I think it came in fairly well, Mario, I think we're really happy with how we performed in Q1. I think we showed being able to maintain stability and whatnot in what would be a little tougher environment has served quite well. Okay, and then I think you were the only apartment rate that saw an uptick in your newly spread in Q1 versus Q4, albeit Q4 was a bit lower relative to peers.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Mario <unk> from Scotiabank. Your line is now open.
Speaker Change: Hi, good morning, and thank you for taking the questions just wanted to.
Speaker Change: Just want to stick on the revenue side.
Speaker Change: How how did Q1 occupancy and occupied rent come in relative to internal expectations commute.
Speaker Change: And then they came in fairly well.
Speaker Change: We're really happy with how we performed in Q1.
Speaker Change: I think we should maintain our stability and whatnot and what would be a little tougher environment.
Speaker Change: How does serve quite well.
Speaker Change: Okay, and then I think you're the only apartment REIT that saw.
Speaker Change: The.
Speaker Change: Uptick in your newly spread in Q1 versus Q4, albeit Q4 was.
Speaker Change: Lower relative to peers.
Brad Cutsey: I think Dave mentioned you're kind of seeing similar trends in Q2. I'm just wondering if you can maybe expand a little bit on whether you're seeing that newly spread in occupancy thus far in Q2 continue to be. I will say, historically, Q2 versus Q1, you always see an increase in vacancy, and that's just the very seasonality and nature of the leasing season, at least in the markets that we are. So you've got to be careful to kind of have to adjust through the normal seasonality of the leasing. Listen, we remain constantly quite optimistic with this leasing season, quite honest.
Speaker Change: Dave mentioned, you're kind of seeing similar trends in Q2 I'm. Just wondering if you can maybe expand a little bit on whether youre seeing that new lease spread.
Speaker Change: Occupancy those forward in Q2 continued them up.
Speaker Change: I will I will say historically Q2 versus Q1, you always see.
Speaker Change: The increase in vacancies and that's just the various seasonality in nature.
Speaker Change: The leasing season at least in the in the market. So we are so so you've got to be careful.
Speaker Change: You kind of have to adjust through.
Speaker Change: No seasonality.
Speaker Change: Were you, saying listen we remain costly quite optimistic with this leasing season quite honest coming into this.
Brad Cutsey: Coming into this, we weren't really sure what to expect, and I'm really proud of the team taking the approach that we have, making sure that our properties are ready for the leasing season. We did spend a little more on the marketing spend to make sure that we were generating the lease so that, given what demand was out there, that we would capture it. I think the results show that InterRent did capture them and capture them pretty good relative to the industry, and I see no reason why we shouldn't be able to continue on that trend.
Speaker Change: We weren't really sure what to expect.
Speaker Change: We are proud of the team taking the approach that we have got it.
Speaker Change: Making sure that our properties are ready for the leasing season, we did spend a little more on the marketing spend to make sure that we were generating that given what demand was out there that wood basket I think the results show that.
Speaker Change: Capture them and kept them pretty good relative to the industry and I see no reason why we shouldn't be able to continue on that trend so as far as the lepton rents and hopeful that will be a need to kind of stabilize.
Brad Cutsey: So as far as the left-on rents, I'm hopeful that we'll be able to kind of Okay, and this may be a more difficult question to answer. But if you look through your portfolio, and we're just focused on asking rents in the market. Broadly speaking, like what percentage of your portfolio would you say you're starting to see asking rents start to come up? And what percentage would be stable? And like what percentage of the portfolio would you say asking rents are still coming down a little bit? And this is a broader perspective. I'm not going to – off the top, I can't necessarily give you in those percentage terms. What I will say is either way, either on the positive or on the negative, the variance to where our asking rents kind of have been, where it's been trending, they're not significant moves.
Speaker Change: People loved on rents in the mid to high single digits.
Speaker Change: Right.
Speaker Change: And this is maybe a more difficult.
Speaker Change: For you to answer, but if you look through your portfolio and we're just focused on asking rents in the market.
Speaker Change: I can broadly speaking like what percentage of your portfolio would you say youre starting to see asking rents start come up you know what percentage would be stable and like what percentage of the portfolio.
Speaker Change: Would you say marketing, our asking rents are still coming down a little bit.
Brian: This is Brian.
Speaker Change: Got it.
Speaker Change: Off the top I can't necessarily give you in those percentage terms, what I will say is either way either on the positive or on Monday.
Parents to where our asking rents kind of have been where its been trending theyre not significant moves. So we take comfort in that now that is what it is is.
Brad Cutsey: So we take comfort in that. Now, that is what it is. It also means they're not significant moves on the upside. But where we are seeing a little bit of slippage, they're not significant at this point. I think the biggest area where we've maybe seen a little tougher market from an asking rent perspective is Vancouver, but Vancouver is less than 5% of our NOI. And I think that's more of a supply-based phenomenon. I think once some of that supply is absorbed, you may see a setup quite well for rent pressures to come back in that market.
Speaker Change: It also means theyre not significant moves on the upside.
Where are we are seeing a little bit of slippage does not significant at this point.
Speaker Change: The I think the biggest area, where we may we've seen a little tougher market basket perspective is Vancouver, but banks, who were less than 5% of our NOI.
Speaker Change: And I think that's more of a supply base phenomenon than that I think are.
Once some of that supply is absorbed here you may see.
Speaker Change: We are set up quite well for rent pressures to come back and in that market. So we are absolutely quite a cautiously optimistic with.
Brad Cutsey: So we are actually quite cautiously optimistic with the markets that we're in right now.
Speaker Change: The markets that we're in right now.
Brad Cutsey: Okay, so wrapping it all up, based on the commentary, how do you feel about the prior kind of 5 to 6% same store revenue? Expectation for 2025 given you came in I think closer to five in Q1. Is that still a reasonable range to think about? Yeah, I think of it, I think, I think we're, I think it is still a reasonable range. I think Q1 is always a wild card and we'll know more through as we kind of go through Q2 and Q3, but I think that still is very much a reasonable range.
Speaker Change: Okay. So wrapping it all up based on the commentary how do you feel about the prior kind of 5% to 6% same store revenue growth.
Speaker Change: Our expectation for 'twenty fives, giving you came in I think closer to five in Q1 is that still a reasonable range to think about it.
Speaker Change: Yeah, I think I think we're I think it is a reasonable range I think Q1 is always a wildcard.
Speaker Change: Well Nomura through as we go through Q2 and Q3, but I think that's still that's very much a reasonable range.
Mario Saric: Okay, that's it for me. Thank you.
Speaker Change: Got it okay. That's it for me thank you.
Michael Markidis: Your next question comes to the line of Mark Markidis from BMO Capital Markets. Your line is now open. Thanks. Thanks, operator. Good morning, everybody. Very useful slides. A couple questions just on how you're thinking about, you know, you mentioned the leasing spreads coming in. Do you expect turnover to slip? I mean, if a lot of your turnover has been in the higher rent, you know, lapping sort of more recent market rents, I guess, or things that are closer to market rents, as that sort of starts to cycle through. Are you thinking if your market rents don't slip that maybe your turnover starts to decline in the next sort of back half of 2025 or 2026?
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Mark <unk> from BMO capital markets. Your line is now open.
Speaker Change: Okay.
Speaker Change: Thanks, operator, and good morning, everybody.
Speaker Change: Useful slides a couple of questions just on how you're thinking about them.
Speaker Change: You mentioned the leasing spreads coming in.
Speaker Change: Do you expect turnover to slip I mean, if there's a lot of your turnover has been.
Speaker Change: In the in.
Speaker Change: And the higher rent.
Speaker Change: <unk> sort of more recent.
Speaker Change: Market rents I guess or things that are closer to market launch does that sort of starts to cycle through.
Speaker Change: Are you thinking if your market rents don't slip that maybe your turnover starts to decline.
The next sort of back half of 'twenty five 'twenty six.
Brad Cutsey: I'm not sure we're going to see overall turnover start to decline, Michael, I think we've been pretty stable here, and if anything, you might see, given some of the immigration trends, you might actually see a turnover up a little, but I think you did hit on the keynote, I think Thank you, everyone. Thank you. Take care, everyone. The, you know, might see a little more turn people close on market, more transient, and some of that temporary residence is part of that more transient, meaning they came in two years ago, so they're a little closer to the market.
Speaker Change: I'm not sure we're going to see overall turnover start to decline Michael I think.
Speaker Change: We've been pretty stable, there and if anything you might see given some of the immigration.
Speaker Change: Trends you might at T C L.
Speaker Change: Up a little but I think you did.
Speaker Change: On the keynote I think.
Speaker Change: The.
Speaker Change: You might see a little more term people close up market more of a trend yet, but its some of that temporary residents.
Speaker Change: There's probably a lot more try again, meaning they came in two years in adulthood are little closer to the market.
Brad Cutsey: But I will say there's always a natural life cycle within the existing tenant base that just had that natural turn. So you still do have a natural rate of turn of people that are much lower rents that will help contribute to the lift on rent.
Speaker Change: But I will say, there's always a natural lifecycle within the existing tenant base that just add not okay. So you still do have a natural rate of turnover of people that are at much lower rates that will help contribute to the lyft direct.
Brad Cutsey: Okay, and just this may be semantics, but trying to understand the nuance when you talk about the flow of immigration, do you mean an uptick in people leaving or an uptick in people coming? No, I think the temporary students finish their permits and they're not getting permanent residence status either. Right, okay, got it. And then just with respect to, I sense, you know, you do give us vacancy and rebates as a line item in the MD&A, but any color you can give us around sort of the use of incentives and how we should be thinking about that with respect to the 8.5% AMR growth, or sorry, leasing spikes, I would imagine that's a gross, not a net figure.
Speaker Change: Okay, and just this might be semantics, but I'm trying to understand the nuances. When you talk about just the flow of immigration you mean, an uptick in people, leaving or an uptick in people coming in.
Speaker Change: No I think it's temporary students finish their families and they're not getting a permanent resident status easily.
Speaker Change: Right. Okay got it and then just with respect to I sense it.
Speaker Change: You gave us a vacancy and rebates as a line item in the MD&A, but any color you can give us around sort of the use of incentives and how we should be thinking about that with respect to the eight 5%.
Speaker Change: Our gross leasing.
Speaker Change: The leasing spread because I would imagine that the gross not net figure please.
Brad Cutsey: I think, you know, we're using incentives, you know, in different areas where we want to capture, you know, some more occupancy, while the leads are there to make sure that we're making full advantage of it. So we've been very, very careful in how we do it and, you know, it's very strategic how we place it between from, you know, community to community. So just making sure that we're focused on keeping the occupancy levels where we're comfortable with.
Speaker Change: I think you know we were using incentives in different areas, where we want to capture some more occupancy while the leads are there to make sure that we're that we're taking full advantage of it. So we've been very very careful in how we do it and it was very strategic can't replace it.
Speaker Change: Between from community to community, So just making sure that we're focused on keeping the occupancy levels where are you.
Speaker Change: Comfortable with.
Brad Cutsey: Okay, and but do you expect that the level would be kind of higher moving forward in the next couple of quarters and therefore the amortization would pick up for the next few quarters? Transcripts provided by Transcription Outsourcing, LLC. Okay, that's really helpful. Thanks so much. Thank you.
Speaker Change: Okay, but do you expect that the level would be kind of higher moving forward in the next couple of quarters and therefore, the amortization would pick up over the next few quarters or.
Speaker Change: Just trying to get a sense of how we should be thinking about the trend and I think I think we're at a pretty good trend.
Where it is today.
Speaker Change: Don't see it.
Speaker Change: Charlie increasingly from today.
Speaker Change: Like I said.
Speaker Change: We're early in our guidance he didn't but like I said, we're pretty optimistic with what we've seen so far.
Speaker Change: So from a modeling perspective, I think you can get.
Speaker Change: At the event.
Speaker Change: Run rate that you're looking at right now.
Speaker Change: Okay.
Speaker Change: Really helpful. Thanks, so much.
Speaker Change: Thank you.
Jimmy Shan: Your next question comes from the line of Jimmy Shan at RBC Capital Markets. Your line is now open. Thanks. So first, just on the carbon tax, I think you mentioned it was $700,000 in the quarter. What would it be roughly for the year? For 2025 to 2024, the full year carbon tax was about 1.3, Jimmy. And then 2025, with the quarter that's passed, plus our expected budget for the future quarters, we end up at about 1.6. 10. And that's on a proportionate basis.
Jimmy Shan: Your next question comes from the line of Jimmy Shan at RBC Capital markets. Your line is now open.
Speaker Change: Okay.
Jimmy Shan: So first just on the carbon tax I think you mentioned it was 700000 in the quarter what would it be roughly for the year.
Jimmy Shan: For 2025.
Jamie: For the full year carbon tax was about 1.3 Jamie.
Jamie: And then 2025 in the quarter, that's passed plus our expected budget for the future quarters.
Jamie: Ended up at about one point.
Jamie: One six.
Jamie: Okay.
Jamie: Okay.
Jamie: And that's on a proportionate basis.
Jamie: Okay.
Jimmy Shan: So in terms of your comment about same-property revenue, so how would you think about same-property NOI growth and for the year? when you consider the savings in carbon tax. I believe you said 5-6% revenue growth, is that, so it should be better than that? Yeah, well, I think if you just if you just look at Q1 and you sort of take out the seasonality from how cold it was, and you take out not even the full carbon tax, but just the increase in carbon tax year over year, your Q1 margin last year ends up like your Q1 margin this year ends up being right around the same, even 10 basis points better when you sort of factor out those two elements.
Jamie: So in terms of your comment about same property revenue how would you think about same property NOI growth for the year.
Jamie: When you consider the savings and carbon tax.
Speaker Change: I believe you said, 5% to 6% revenue growth is that it should be better than that.
Speaker Change: Yeah, well I think if you just if you just look at Q1, and you sort of take out the seasonality from how cold It was and you take out not even the full carbon tax.
Speaker Change: The increase in carbon tax year over year.
Speaker Change: Your Q1 margin last year ends up like your Q1 margins this year as it being right around the same 10 basis points better when you sort of factor out those two elements.
Jimmy Shan: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Jimmy Shan: And then my second question is just on capital allocation, obviously you're a lot more active on the buyback and you're selling. Selling Assets at a Faster Pace, and then I think you also paused most of the developments. I don't know, I think that's new to me, but I could be wrong there. So those are all fairly new-ish initiatives.
Speaker Change: And then my second question is just on capital allocation.
Speaker Change: I see you're a lot more active on the buyback and he was telling you.
Speaker Change: Selling assets artist a faster pace.
Speaker Change: And then I think you also pause most of the development I don't think that's new to me, but it.
Speaker Change: I could be wrong there.
Speaker Change: So those are all fairly new ish initiatives in my mind to close that gap I was wondering what other initiatives would with management and the board would be considering at the moment to further close the entity.
Brad Cutsey: In my mind, to close that NEV gap, I was wondering what other initiatives would management and the board be considering at the moment to further close the NEV gap? I think the announcement around the pause on some of the development, I think we did last Q on the Q4 call. So what we said is that the properties we're working on, we'll make sure to sort of put away properly in the research we were doing and make sure that when the time comes, if it comes, and the market gets better, we can take them off the shelf in a very clean fashion.
Speaker Change: But I think the announcement around the pause on some of the development I think we did last Q on the Q4 call.
Speaker Change: So what we said is that the.
Speaker Change: Properties, we're working on we'll make sure to sort of put away properly and in the research we were doing to make sure that when the time comes if it comes in the market gets better we can take them off the shelf in a very.
Brad Cutsey: We're finishing up the one that we have a 25% in with our partners in Ottawa, 360 Laurier. And, I mean, the NCIB activity, we started that and announced that we got more aggressive late last year, and we've stayed on that path of almost maxing out on a daily basis the amount of purchases under our NCIB.
Speaker Change: Clean fashion.
Speaker Change: We're finishing up the one that we have a 25% and our partners in Ottawa 360 Laurie.
Speaker Change: And I mean, the NCI activity, we started that's announced it.
Speaker Change: Got more aggressive.
Late last year with kirker stayed on that path.
Almost maxing out on a daily basis, the amount of purchases under our in CIB.
Sairam Srinivas: Okay, thank you. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Sairam Srinivas: Your next question comes from the line of Sairam Srinivas from Cormac Securities. Your line is now open. Thank you, Alberta. Good morning, everybody. Just looking at 360 Laurier, you know, obviously it's scheduled for completion in Q3 this year. I mean, think about, you know, the economics right now versus when you unrolled the original plans for the development. How do they compare? Can you give us some color on that?
Speaker Change: Your next question comes from the line of Serene Cernovich from Cormac Securities. Your line is now open.
Serene Cernovich: Thank you operator, good morning, everybody.
Speaker Change: 60.
Speaker Change: <unk> lawyer.
Speaker Change: You know obviously, it's scheduled for completion in Q3 this year.
Speaker Change: When you think about you know the economics right now versus when you enjoy TV a plan sponsor's development, how do they compare can you give some color on that.
Sairam Srinivas: We, we haven't given disclosed any of the color on on that development. But it is MIT, TEAMS, Leeward IRR, and Better. And we're in that with a 25% interest. um when you kind of compare that um to well quite honestly it like we were already in and in something we've committed to and to go see through but We are quite happy with that, especially relative to the experience we've had with the state, so that gave us a lot of comfort to kind of go forward with that conversion. And that's, that's great. But then, I mean, just looking at disclosure, I guess you guys mentioned that it's now fully capitalized and you expect some excess equity being repatriated.
Speaker Change: We.
Speaker Change: We haven't given disclose any of the color on that development.
Speaker Change: But it is.
Speaker Change: Mid teens, Unlevered IRR and better.
Speaker Change: And we're in a with a 25% interest.
Speaker Change: Hmm.
Speaker Change: When you kind of compare that.
Speaker Change: Two well quite honestly.
Speaker Change: We were already in and something we've committed to and still see through but.
Speaker Change: We are quite happy with that especially relative to the experience we've had but the slate. So that gave us a lot of comfort to kind of go forward with docs Bergen.
Speaker Change: Yeah.
Speaker Change: And that's that's that's great.
Speaker Change: And then I mean, just looking at the stores are I guess, you guys mentioned that it's now could be capitalized when do you expect some extra that keeping the bad to you too.
Sairam Srinivas: Are you able to kind of quantify what that repatriation would look like? You're referring to the loan in regards to, so we were able to put ACLP financing on that with CMHG. Right. Based on the financing, based on the financing we were able to do, we were able to pull back $2 million of our proportionate investment into it, so $2 million for us. And from this point in, there's really no cash strike from that property, as all the funding is done through the CLT mortgage. That is great.
Speaker Change: Are you able to kind of quantify what that irritation would look like.
Speaker Change: Okay.
Speaker Change: You're referring to.
Speaker Change: The loan.
Speaker Change: In regards to so we were able to put ACL P financing on that with CMA Chi.
Speaker Change: Based on the finance based on the financing we were able to do.
Speaker Change: We were able to pull back $2 million of our our proportionate investment Intuit, So 2 million for us.
Speaker Change: And from this point and there's really no tax drag from that property has all the funding is done to the <unk> mortgage.
Speaker Change: That is great. Thanks for the color code I'll turn it back.
Sairam Srinivas: Thanks for the call, Kurt.
Speaker Change: Thank you.
Dean Wilkinson: Thank you.
Dean Wilkinson: Your next question comes from the line of Dean Wilkinson at CIBC. Your line is now open. Thanks. Morning, guys. Brad, just a question on the NCIB. I mean, you're more active than you've ever been on that. And it looks like you're going to continue to be so. If the valuation gap persists, would you consider flexing the balance sheet to, you know, go even harder on that? Or are there other ways you're looking at sort of dealing with that differential? I think we're just going to continue to look at where the thresholds are. A lot of it will depend on the success and the timing of the disposition program.
Speaker Change: Thank you. Your next question comes from the line of Dean Wilkinson at CIBC. Your line is now open.
Speaker Change: Thanks morning, guys.
Speaker Change: Or graduate.
Speaker Change: On the NCI B, I mean, you're more active than you've ever been on that and and it looks like you're going to continue to be so if the valuation gap persists would you consider flexing the balance sheet to go even harder on that or are there other ways youre looking at.
Speaker Change: It's sort of dealing with that differential.
Speaker Change: No I think we're just going to continue to look at where the thresholds are right. So a lot of it will depend on the success and the timing of the disposition program.
Brad Cutsey: I think we have a pretty significant disposition program of $200 million and $250 million, which we feel quite confident that we're well on the way at different stages of papering and we know what the economics of those properties are. Relative to what we can buy back our unit price today, it really is a no-brainer. It's about lining up the timing as opposed to doing anything more significant. Okay, so we should think of that as leverage neutral or to the extent that you have excess capital, possibly having that that that didn't become down a tick as we go through the year.
Speaker Change: We have a pretty significant disposition program of up to 12 months.
Speaker Change: Feel quite confident that we're well on the way at different stages of paper and we know what the economics of those properties are and then relative to what we can buy back our unit price today.
Speaker Change: It's really it's a no brainer so really.
Speaker Change: Lining up the timing Deane as opposed to weeks.
Speaker Change: Doing anything more significant.
Okay. So we should think of that as leverage neutral or to the extent that you have excess capital, possibly having that that that did come down a tick as we go through the year.
Brad Cutsey: Yes.
Speaker Change: Yes.
Jimmy Shan: Okay, that's it. Thanks a lot, guys. Appreciate it. Thanks, Jimmy. Thank you.
Speaker Change: Okay. That's it thanks, a lot guys I appreciate it.
Jamie: Thanks, Jamie.
Jamie: Thank you.
Matt Kornack: Your next question comes to the line of Matt Kornack from National Bank Financial. Your line is now open. Yeah, I think maybe it's a little too early in fact, specifically, Matt. I can say, I think some of the local colleges are getting disproportionately hit by enrollments and whatnot, relative to the universities. Within our own portfolio, we've seen a decrease in exposure from 15% to close to 12%. So we have seen, we've made a little bit of a pivot and we're reaching out with what may be more conventional cohort, young professionals and empty nesters. Okay, that makes sense.
Speaker Change: Your next question comes from the line of Matt <unk> from National Bank Financial Your line is now open.
Matt <unk>: Hey, guys.
Matt <unk>: I don't know if it's too early to maybe have gleaned any of these trends, but are you seeing any kind of stability or maybe improvement in a foreign student or generally the student market I know that the Quebec universities or at least the English University. He's got a bit of a reprieve from the courts, but I don't know if that would have driven any incremental interest for a lot of problems students.
Matt <unk>: But just broadly on students.
Matt <unk>: And what you're seeing there.
Matt <unk>: Yeah.
Matt <unk>: It's a little too early and it's back.
Matt <unk>: Specifically <unk>.
Matt <unk>: I can say I think some of the local colleges are getting disproportionately hit.
Matt <unk>: Our rule of thumbs and whatnot relative to the universities.
Matt <unk>: Within our own portfolio, we've seen a decrease in exposure call it from 15% to.
Matt <unk>: Closer to 12%. So we have seen and we made a little bit of a pet visit and where it reached number what maybe more conventional coho young professionals are now empty nesters.
Okay, no that makes sense.
Matt Kornack: And just in terms of Quebec, the allowable rent increase is quite high this year. July 1st is coming up. Again, I don't know if you'd have clarity or certainty at this point, but are you finding that... possibly higher than that if you're doing CapEx or are you getting some pushback on that? So far we've been successful. It's typical year-over-year with our acceptance on the renewals. So I'd say, you know, in general, it's working out. And, you know, obviously we've got to negotiate with a certain percentage, but I think normally it's going pretty smooth as we expect.
Matt <unk>: And just in terms of say, Quebec, the allowable and rent rent increases it was quite high. This year July 1st is coming up again, I don't know if you'd have clarity or certainty at this point, but are you finding that.
Matt <unk>: People are accepting the 6% increase thats allowable or even.
Matt <unk>: Possibly higher than that if youre doing capex or are you getting some pushback on that front.
Matt <unk>: So far we've been we've been successful.
Typical year over year with our acceptance on the on the renewals. So I'd say in general it's a it's work it out and you know obviously, we've got a we've got to negotiate with.
Matt <unk>: With a with a certain percentage, but I think normally it's going pretty smoothly as we expect.
Matt <unk>: Got it.
Matt Kornack: Great, thanks guys. Thanks, Matt.
Matt <unk>: Okay, great. Thanks, guys.
Matt <unk>: Thanks, Matt.
Gaurav Mathur: Thank you. Your next question comes from the line of Gaurav Mathur. Green Street, your line is now open.
Matt <unk>: Thank you.
Speaker Change: Your next question comes from the line of Gaurav Mathur.
Speaker Change: From Green Street. Your line is now open.
Gaurav Mathur: Thank you and good morning. Just a question on the dispositions. So far that you've completed, would it be possible for you to provide some sort of a cap rate range on them? And, you know, how is that sort of trended to when you first start to sort of think through the dispositions? Yeah, hi, Gaurav. We haven't provided that level, but I can tell you it's been significantly lower than what we've been buying back in units on an applied cap basis. Okay. So that's a point. Okay, perfect.
Gaurav Mathur: Thank you and good morning, everyone.
Speaker Change: Just a question on the dispositions.
Speaker Change: Far that you've completed would it be possible for you to provide some.
Speaker Change: Some sort of a cap rate range on them.
Speaker Change: And you know how is how is that sort of trended to when you first started to sort of think through the disposition pipeline.
Speaker Change: Yeah, Hi, I agree we haven't we haven't provided that level.
What I can values significantly lower than what we've been buying back units on the applied cap basis.
Speaker Change: Okay. So that's the point.
Gaurav Mathur: And just switching gears here now, correct me if I'm wrong, but I believe in early March, there was some news reports around an activist campaign launched by Amson Farmer.
Speaker Change: Okay, perfect and just switching gears now correct me, if I'm wrong, but I believe in early March there were some news reports around an activist campaigns launched by coupons.
Gaurav Mathur: I may have missed this in your opening remarks, but since it really wasn't addressed in the press release. Is this news accurate or inaccurate?
Speaker Change: You know I I may have missed this in your opening remarks, but it really wasn't addressed in the <unk>.
Speaker Change: Press release.
Speaker Change: Is this news accurate or inaccurate.
Brad Cutsey: I think we've kept this call to the format of responding to Q2, so we're just going to leave it at that with no comments. I understand.
Speaker Change: Yeah I agree.
Speaker Change: They were kept this call.
Speaker Change: For the format.
Speaker Change: Responding to Q2.
Speaker Change: So you can see we're just going to leave it at that with no comment.
Okay.
Speaker Change: I understand thank you very much for your time I'll turn it back to the operator.
Gaurav Mathur: Thank you very much for your time.
Renee Wei: I'll turn it back. Thank you.
Renee Wei: As there are no further questions, I will return the call to Renee Wei for closing remarks. Thank you, everyone. If you have any follow-up questions, please feel free to reach out. We look forward to speaking to you in the summer for Q2. Have a good day. Thank you. This does conclude today's presentation.
Speaker Change: Thank you.
Speaker Change: There are no further questions I'll return the call to Renee way for closing remarks.
Speaker Change: Thank you everyone. If you have any follow up questions. Please feel free to reach out and look forward to speaking to you in the summer or acute care.
Okay.
Speaker Change: Thank you. This does concludes conclude today's presentation you may now disconnect.
Operator: You may now disconnect.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.