Q2 2025 Allied Properties REIT Earnings Call
Thank you for standing by. My name is Jill, and I will be your conference operator. Today, at this time, I would like to welcome everyone to the Allied Properties REIT Q2 2025 earnings conference call.
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 followed by the number 1 on your telephone keypad.
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I would now like to turn the conference over to sedilia Williams president and CEO. You may begin.
Thank you, JL. And good morning, everyone. Welcome to our conference call. All highlights are progress towards 2025 goals and what we're focusing on for the remainder of the year.
Sent him by Urban Market, we're then placed to answer any questions.
We may, in the course of this conference, make forward-looking statements about future events or future performance.
By their nature. These statements are subject to risks and uncertainties that may cause actual events or results to differ materially. Including those described Under The Heading risks and uncertainties in our 2024, annual report
Materialist assumptions underpinning. Any forward-looking statements we make include those described under forward-looking statements in our most recent quarterly report.
We're focused on delivering long-term value. This includes driving Leasing and operational results development completion and strengthening the balance sheet.
The quarter end results. Reflect the resilience of our operating platform. And we're also making progress in executing our long-term strategy of portfolio optimization
First Leasing and operational results or portfolio. Continues to demonstrate strength, despite
JP and man will expand on this highlights, which include improved lease area positive staying Master, Andy, and the successful implementation of our rental residential platform.
While these deals continue to take longer to complete due to the availability of options and ongoing macroeconomic destruction, we continue to experience the shift towards improving fundamentals in urban centers with space mandates from organizations across Industries, including significant Bank mandates in the Toronto Market. We expect leasing momentum to accelerate over the next few quarters.
Second, we make progress on our development and upgrade activities.
At M Foreign Vancouver, which is currently 77% leased to three users, fixturing has commenced, and we're negotiating leases on the remaining space.
This includes a current user that's already looking to expand.
We've also agreed to acquire, the remaining 50% interest, which will close on September 30th.
There will be no cash exchange as part of this transaction.
We're pleased to be 100% owners of this product.
It aligns perfectly with our Outreach and focused and expand our urban office platform in the vibrant Mount Pleasant Vancouver. Neighbourhood enabling us to better serve the knowledge base organizations.
At Toronto House, our 8th house rental residential operating platform has achieved 48%. Lisa is meeting our ambitious targets to date.
At King Toronto, we're heading towards successful completion, alongside West Bank.
Securing the international retailer. That anchors the commercial component. Its facilitating. The lease up of the remaining space.
We're currently in various stages of negotiation with 7 retailers.
Blazing is taking place on the fourth level and we're pleased with the progress.
As construction continues, we've been able to remove some of the hoarding, providing the public with a better sense of the street level experience. It's truly a distinctive project that will Elevate the entire King West Village neighborhood on completion next year.
All the development, upgrade projects currently underway will be completed by the end of 2027.
Last, but certainly not least, our balance sheet will focus on strengthening it, keeping ample liquidity, and improving our debt metrics.
Man will outline our plan to address that coming due early next year, and we're confident in our ability to do so, optimally, given the success we've had this year in addressing maturities with minimal impact on interest expense, our disposition program of non-core assets, continues private Market valuations, remain robust, and our item press values continue to be validated.
We currently have 9 assets under sale contract totaling dollars of currency.
All proceeds will be allocated to debt reduction as part of our path to achieving a net debt to Eva ratio of Endor of under 10 times by the end of 2025 and under 9 times by the end of 2025.
Annual now elaborate on our financial results.
Management.
Thank you Cecilia. Good morning, everyone.
We are pleased with our performance, this quarter and encouraged by the emerging positive Market fundamentals, which are reinforcing our strategic Direction and operational resilience.
I'll provide an overview of a few highlights from the quarter.
approved by 121% driven in part by the successful transition of our development, completion into the rental portfolio and their continued stabilization
our average in place net, rent, for occupied square foot increased by 1% compared to the same period last year, ending in a quarter at $25.32.
We show strong, leasing activity against the sport. We leased over 588,000 square feet, including 75,000 square feet of expansions from existing users. Our least area is now an 87.2% and our year to date retention ratio set at 69% modestly. Below our historical average.
We are also seeing our shift in user behavior with larger management in place and longer distances on new leases and renewals.
That's 1 of commitment reflects growing confidence in the market and in our portfolio GP will expand further on this later?
While we have seen short-term pressure on SFO, and ASO per unit. Mainly due to higher interest costs, from the 2024 Acquisitions. We are pleased to have solid lead, make solid leasing progress in these properties. That will meaningfully contribute to our growth in the future.
We're finalizing the lease type of 4. Full Flows at 400 West Georgia, which will be 100% lease. A significant Milestone leasing at Toronto, house is getting strong traction with 222 residential units. Lease these results, reaffirm the quality of our assets and the strength of demand in our key Urban markets.
Our development projects are making excellent progress with only 3. Ground up projects, remaining up to close to value is down to 6.8%. Compared to 11.4% last year. The remaining coffee complete is 119 million with the majority of this to be invested by the end of 2026.
Has of December 31st 2023. We had ground up and Redevelopment projects that were expected to contribute 90 to 103 million in stabilized, noi on completion.
As of June 30th 2025 completed projects, have contributed 60 million based on this quarter's annualized noi.
With the leaf of Toronto house and rent commencement. At N4 in Vancouver, there will be incremental annualized. Noi of 3 million in the second half of 2025 and another 10 million expected in 2026. We will achieve stabilized, noi on these projects throughout 2027 and 2028 subjects to the successful Lisa of any vacancy.
The debt capitalization impact on noi is approximately 50% on stabilized projects.
Capitalized, interest is expected to reduce by 20% in q1 2026 compared to this quarter.
About sheet and deleveraging efforts are a top priority.
We are firmly committed to reducing our net debt to EBITDA, to build 10 times by year-end and below 9 times by the end of 2026.
This will be driven by three key initiatives. First,
Focusing on operations, by leasing our organic portfolio. Stabilizing our 2024 Acquisitions and completing our development projects. Second, our disposition program will remain on track to guide us. Approximately 300 million in non-coal asset sales.
This year. As of today, we have 200 million under contract and these transactions will close in the second half of 20125. Third, the monetization of our loan receivables at 150 West Georgia. This process is underway with 14 perspective, groups, evaluating the opportunity. We are still targeting a December 2025, close.
At corner, end a liquidity remains strong, with 635 million available on our Institute of credit facility.
I think.
Truth is we also saw Moody's which role the analysis and rating and our spread Titans in the secondary Market.
Looking ahead, we have 850 million of debt maturing in early 2026.
A portion of this will be repaid as part of our deliberation plan with approximately half expected to be refinanced.
We have optionality in addressing the refinancing, including both secured and unsecured financing. Although our preference is to continue our unsecured dementia program.
We've been significant progress in the first half of the year just by Metro economic and geopolitical uncertainty. We still have more work to do, but we remain confident in our strategies, in our platform and in our building to deliver long-term values, thank you for your time. Today, I'm now passing over to JP
Thanks man.
In Q2, we continue to experience, strong conversion rates, robust, extension activity, and a shift towards larger space requirements, among prospective users despite the uncertain. Macroeconomic environments.
Following the close of the quarter. We've observed a noticeable increase in our leasing pipeline as more and more organizations. Reaffirm that the office is the principal venue for creativity and connectivity.
In Q2 our lease area remains stable and outperforms each of the urban submarkets, in which we operate except for Vancouver, where we are, making great progress in addressing acquired vacancy.
We remain extremely encouraged by the number of existing users in our portfolio that can continue to require more space.
In Q2 75,000 square feet of new leasing activity represented, expansions of 50% increase compared to the previous quarter.
We are also encouraged by our improving retention rate which year to date is 69% closer to our historical average of 70 to 75%.
The average rental rate in the same period was up 3.1%. When comparing the ending to Starship base,
and up 13.2%, when comparing average to average,
The observed moderation and rental rate growth upon renewal is in line with our expectations and reflects the anticipated impact of increased Supply, a message, we have been communicating for several years.
Tour activity continues to be strong.
Tour activity in our rental. Portfolio was up 13% from the prior quarter and up 21% from the prior year Industries represented by touring organizations continue to be technology, media Professional Services, education and medical uses.
At the end of last quarter, we reported we had 1.3 million square feet of leasing activity under negotiation, or at the prospect stage, including 684,000 Square ft of new leasing activity.
In Q2, we completed 588,000 square feet of leasing activity, including 400 and 7,000 square feet of new leasing resulting in a 60% conversion rate.
at the end of this quarter, we had 1.2 million square feet of leasing activity under negotiation, or at the prospect stage of which 60% represents new leasing opportunities and 40% represents renewals
I'll now provide a brief overview of each market.
In Montreal, we continue to observe strong demand from users with larger space requirements. There are currently 10 prospective groups with mandates greater than 50,000 square feet. Considering space in our portfolio, including 2 groups, representing a total of 150,000 square feet with which we are an advanced discussions. We also continue to see strong demand from existing users with large mandates to expand because of increased
Using utilization.
Most of our vacancy in Montreal is concentrated at last seen a portfolio of assets located between Old Montreal and griffith town.
Comprising 8 buildings totaling more than 1.2 million square feet, there are currently 5 prospective groups with mandates between 12,000 and 100,000 square feet considering these options at last. These prospects represent the technology, professional services, and medical sectors.
In Toronto, the Kitchener, we continue to see an increase in demand from respective users with larger space requirements. There are presently 34 users with mandates greater than 10,000 square feet touring. Our portfolio, including 9 groups, representing a total of 130,000 square feet with which we are in advanced discussions.
Existing users looking to expand.
We are pleased to report that we completed 5 of those expansions.
And are currently in discussions with 12 other users looking to increase their Footprints representing 70,000 square feet of new leasing activity.
Of the 12 users looking to expand 11. Our technology firms.
At Toronto house. We are very pleased with our residential leasing efforts. As we are almost 50% least.
In particular, we have observed, an increase in leasing activity.
We have three existing users who recently expanded, and we are in active discussions with a tech user looking to lease upwards of 50,000 square feet.
We are also an advanced stages of a renewal with a large Tech firm that represents the largest maturity in 2026 across our national portfolio.
In Calgary, we continue to see an increase in the size of mandates in the market. As there are currently 6 perspective, organizations with requirements in excess of 10,000 square feet. Evaluating options in our portfolio, including 3 groups representing a total of 30,000 square feet with which we are in advanced discussions.
At vintage Towers. We experience the large, no non-renewable totaling, 45,000, square feet. In Q2 that we have been communicating for several quarters. We're pleased to report that we have backfilled 2/3 of the space and continue to see stronger activity on the remaining availability.
Vancouver Remains the strongest leasing Market in Canada. There are presently 8 users with mandates between 10,000 and 50,000 square feet, evaluating space in our portfolio, including 3 groups, representing a total of 130,000
square feet with which we are in advanced discussions. We are also engaged in discussions with 4, existing users looking to expand representing 40,000 square feet of leasing activity at 400 West Georgia. We are now flying licensing agreement with an education user for the remaining baking space totaling 64,000. Square ft.
We expect possession in September of 2025.
While the uncertain macroeconomic, may impact leasing activity in the near term. We remain confident in our ability to outperform the market in each City, due to our concentration of distinctive, Urban workspace and in many Rich, Urban environments, and the strength of our operating platform as validated by our net promoter score, which is 150% higher than our peer average. I will now turn the call back to Cecilia.
Thanks, JP.
Before we jump to questions, I want to reiterate my confidence in our portfolio and our team.
Our Urban portfolio is not only unique but strategically positioned for the future. I say this as Canadian cities are increasingly concentrating into centers of creativity, Innovation and opportunity and urban workspace, plays a critical role in that making Allied well positioned to meet the growing demand. Our team is focused.
Patient and confidence that our fundamentals will ultimately be recognized.
We are now pleased to answer any questions.
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Your first question comes from the line of Jonathan culture of TD Cowen. Your line is open.
Thanks, uh, good morning. Um, first first question, just on the, um, the outlook for, for 2025, I guess your target is for ffo to be down 4% from last year, um, just based on the first half of this year that would that would imply a pretty good step up in in ffo over the back half of uh of 25. So like how did the first half track internally um versus that expectation?
And what, what are you seeing? That gives you confidence to sort of maintain that Target.
Sure. Yeah, so the first half of the year,
Um and what gives us confidence that I'll ask him to to outline the path forward. Um but what gives us confidence is the momentum that we manage JP just just outlined in the market but may I why don't you just go through the pathways? Yeah Jonathan so some of the key drivers that we're going to have in the second half of the year which is the first stabilization of Toronto housing. 400 West Georgia, disposition proceeds to pay down debt to reduce into 6%.
No, actually revenue. That's going to be in the second half.
Out. That's currently in our list of 87.2%. That would be productive in the second half and again,
Okay, that's, uh, that that's helpful. And you're so I guess a lot. The organic growth is is sounds like this. The the thing that is not guaranteed and everything else sounds like pretty, pretty sure. Is that how to think about it?
Yeah I mean nothing's guaranteed but we see a path to achieving our targets at the end of 2025 and that's what we remain focused on.
Okay, and then secondly JP you gave a whole bunch of of stats which is very helpful, but at the beginning, I guess you said the and we've seen articles on this that there's there's been a, a pickup in demand. Um, more recently is, is, are the stats. You gave as of the end of June or or are they current
Um, I guess that's my first question that I have a follow up on that.
At the end of Q2 Jonathan we were working on 1.2% represented, new leasing activity, subsequent to the quarter end. We've seen that number increase by a couple hundred thousand
Okay, um, that's helpful. And then is that, um, I guess everybody's seen them, the articles and, and with financial firms. What are you seeing? More of an increase from other sectors, and, and maybe...
Are there any markets? Geographic markets that are seeing more versus others.
We're seeing an increase in demand across all sectors and all uh markets Jonathan as a function of more and more organizations regarding back to an office Centric model, which is increasing utilization. And in terms of man, and the availability of high-quality space, is declining with no new Supply, uh, coming online after 2026 and subsequently falling in line with near historic lows, and as such organizations recognize that the window is narrowing,
To secure the states of space.
Okay. Thanks I'll uh, I'll turn it back.
Your next question comes from the line of Lauren Kalmar of the Capital Markets. Your line is open.
Thanks, good morning, everybody. Um, maybe just sticking with the target.
Obviously, you guys kept your 90% in place, occupancy, Target, and you mentioned, um, I believe it's up to 400 West Georgia, and a couple other of, or some positive momentum, and beliefs in front. But could you maybe give us a bit of a bridge as to how you kind of get from that 85 to 90 in the next couple quarters?
Well, it'll be through continued Lisa and pushing the office. Let's see accordingly.
Okay, so are there any, I guess, known, um, outside of, you know, I guess the West Bank? Uh, sorry, the, um, West Georgia isn’t necessarily 100% known, but outside of that, is there any other kind of...
Known occupancy Catalyst, that that you're that, uh, you're expecting over the back half of the year, or is it really just relying on, um, you know, the leasing momentum and and whatever leasing activity gets done in the back half?
Lauren. We continue to see positive momentum in all markets, across all sectors in my remarks earlier. If I touched on each City and made reference to the total square footage which which which we're in advance discussions and the ever increasing increasing pipeline that I made reference to and responding to Jonathan. Gives us confidence that we'll continue to see positive momentum.
Okay, fair enough. Um, and then just flipping to the um,
Acquisition of the remaining 50% from Westbank out in the OR for the Vancouver office development. Um, you guys have now done, you know, I think 3 of the 4.
Uh, projects. You've had, you bought them out of um, King Tron. I've asked about before, I'm just wondering, is there any change in your outlook, as to whether or not you'd have to take that in as well?
No, we we fully intend to continue working alongside West Bank, at King Toronto and to complete the project alongside West Bank.
Okay. Um, and then, just the last one. I know you guys talked year to date about retention. 2021 was obviously pretty solid. Q2 came down a bit. Can you maybe give us some color on what happened there? And how you expect that trend over the balance of the year?
Balance of the maturities, we continue to work on.
Fair enough. Thank you very much for the color. I'll turn back.
Thank you.
Your next question comes from the line of Brad Sturgis of Raymond James. Your line is open.
hey, uh, good morning, um, just falling on the same line of questioning around, uh, Leasing and and um,
uh, potential, uh, upside a recovery on occupancy, just, in terms of
The commentary. Obviously, there is some, uh, uh, potential demand, uh, Improvement through the return to office mandates. Just I guess, 1 of the headwinds you guys have seen of latest timelines, to complete deals have been long, do you think with the new mandates you'll start to see, timelines, starting to shorten up or, or what would be the Catalyst to to normalize on the negotiation front?
Yeah, I think we see opportunities to shorten some of those timelines. I think, the user that we're finalizing negotiations with, at 400 West charges a great example, they need to be in the space by September, um, and, you know, we'll be finalizing that favored over the next couple of weeks. So that's 1 example where we're able to, um, capitalize on the need for certain organizations to, you know, they have urgency. And and we have space that we can provide um, for them to occupy sooner rather than later. So we see the opportunity for
For, for more situations like that.
But we'll see how Q3 plays out, and we remain cautiously optimistic.
So, at this point, it's probably wait and see until how the fall kind of starts to trend, but potentially we could start to see those timelines start to.
To narrow a bit.
Exactly.
Okay.
And in terms of, uh, 400 West Georgia, um,
I guess occupancy is potentially could be in September. When would the rent commenced? And then how should we think about the term? And, uh, the associated? Um, leasing costs, uh, with uh, with that lease.
Right, commencement would be January 2027.
Term. The terms are
Reflective of the market.
Uh I I guess I mean more like in terms of the the length of term of of that lease and then uh so and then just to clarify the the leasing costs would be more in line with Market.
Um,
market levels at this point.
Yes, 10 years, leasing cost in line with Market.
Great. I'll turn it back. Thank you.
Thanks.
Your next question comes from line. Of M, cornack of National Bank Financial, your line is open.
Hey guys, um just with regards to uh the leasing that you're seeing right now. I mean, it sounds like tour activities up and and and people are considering your space. Would you say the bulk of that is tenants looking
To relocate in the market to relocate in your own building or or is that new kind of space to the market. I'm just trying to think if somebody moving to your building from another building or are they kind of new to the space and maybe they bring down the overall vacancy rate across the market?
It's a function of tenants seeking high-quality assets to offer great workplace experiences, requiring, in many cases, an increase in their footprint because of higher utilization. There are a couple of organizations with which we're working who have not maintained an office presence, and they are now wanting to introduce enough to a centric model. So, Matt, it's a reflection of a number of different variables.
Steph makes sense and then uh then just on on the accounting front. Uh, there's for a few quarters. You'd kind of see straight line rent grind down. Is that
Is there anything to that? Or is that dynamics of of leasing maybe free rent periods? I'm not entirely sure.
So Matt, the straight line went converted to Cash Ring. That's why same as it in. Oi is out this quarter. It's mostly from our development pipeline in particular, um properties. Like 20 dry off and said everything will be there.
Rent, until January of 27, is that correct?
Correct. So it'll start rebuilding again.
And fixing starting in Q3.
Okay, so as you do some of this, Lisa, we'll see it more in ASO than ASO.
Um and then just quickly on on the Vancouver. Purchase did you guys with your partner? Look at taking that to the market or or was it just a logical purchase on your part to own the full 100%? Yeah, it was logical for us to take over the
Okay, thanks guys.
Thanks.
your next question comes from the line of
Pardon your next question comes from the line of gaurav mathur of Green Street. Your line is open.
Thank you, thank you. And good morning everyone. Um, on the 300 million of non-core asset sales. Um what would the average occupancy of the assets be currently?
It's very low.
Okay.
and and, and
Right? And would be fair to say that, you know, the sale of these assets would potentially help in meeting the uh, year-end occupancy goal.
They're not currently included in our lease area. There's an asset health for sale so it's not part of the occupancy or lease area calculation currently. So no, I wouldn't have any impact on that.
Okay, great. And then just switching to uh, 150 West Georgia. And while there are multiple options for monetization there, would 1 of those options be an outright sale and if so, what are the potential buyer pool look like?
Well, it is an outright sale.
We'll get us the optimal outcome which would be to have our loan being repaid, in full by December 31st of this year.
Um, thank you.
For that. And and is there uh could you provide any color on the potential buyer pool?
Not at this stage.
It's well underway and we're
Okay, thank you for that. Uh, I'll turn it back to the operator.
Thanks.
Your next question comes from the line of Pammy beer of RBC Capital markets. Your line is open.
Thanks good morning. Um JP I think you know you mentioned some comments around utilization um can you maybe just talk about what trends you're seeing in your portfolio through Q2 and whether the uh the utilization Trends have actually uh continued or have they changed uh in uh through July.
Yeah, probably they continue to improve. As you know, Western Canada, Calgary, and Vancouver have let their Eastern counterparts improve in utilization throughout the past number of years and continue to perform exceptionally well in that regard. We're now seeing Toronto and Montreal improve utilization at similar levels, and that's driving demand, as we articulated earlier.
And so, what would those levels be for Toronto and Montreal, like roughly a percentage range? Or...
We're nearing 80%.
Okay. And that's um if you were to compare that to again, going back to maybe 2019. Uh, how would that Stack Up?
I it it represents approximately 3 to 4 days a week in the office, as, you know, Tommy organizations, including your own, or increasing their, their, their mandates.
Um, as there's widespread recognition that the office Remains the principal venue for creativity and connectivity. So we expect friends around you and the patient to continue to improve in our view. There's really no longer a question around utilization, organizations are returning and that's driving demand and will continue to do so,
Got it. Um, just coming back to that 90% occupancy, I guess expectation. By year end, how much of that is coming from, um, some of the development leasing that starts to kick in and the second half of the Year versus say, um, you know, assumed lease up of other vacant space.
um, the development lease up, wouldn't have a material impact for me, because we would be adding
The space to the numerator and the denominator. So mathematically, it just doesn't have that much impact. It's really the 4 things that Nan outlined.
Then just uh there was uh I guess the the additional disclosure on the development noi that's that's helpful. Um, you know, you mentioned another 10 million of contributions in contributions in 2026 for a couple of projects. Uh I think that gets you to maybe 70 million ish um, next year. So for the remaining 30 million or so or maybe 20 to 30 million and and relative to your total range, what are some of the largest spaces that that relates to
Its what primarily in the Redevelopment um portfolio um palmy. So RCA and Montreal uh a 100001 and portions of CCMS in Montreal as well. That would be the largest uh portions of buildings and read up.
And with the expectation there, are you seeing any traction that maybe gives you some confidence that 2027 is a reasonable expectation for some of that space to get leased up, or does it shift more to 2028?
I think, actually, the 2027 timing is going to prove to be perfect.
The way that the market is moving.
Okay, I will I'll turn it back. Thanks so much.
Thank you.
Your next question comes from the line of Tallwood, uh, Willie of CIBC Capital Markets. Your line is open.
Hi, good morning everybody.
Morning.
Um, just on the disposition pool, the 300 million? Do you have a rough estimate? Um, that we could use for the noi yield? Uh, just so we've got an idea of what to take out for dispositions going forward.
Yeah. It's about 3 3 and a half, it's pretty low because it's it's very low occupancy. Some of the buildings are actually empty.
Um, so pretty low yielding.
Great. Okay. And then uh, on the 150 West, Georgia loan balance. Do you have a rough estimate of how much of that is uh, acred interest versus principal?
We can get you that. We can get to that top.
Perfect. And then uh just a you know a broader question I guess overall um,
Operationally financially, it would seem to me like you're sort of trying to communicate this. This feels like we're sort of in the trough of this cycle. Does that is that a fair characterization of what you're trying to message to the market?
Absolutely.
Okay, that's great. Thanks very much everybody.
Thank you.
And your next question comes from the line of Mario Cerak of Scotiabank. Your line is open.
I good morning, morning morning.
Uh, I just have a uh, I guess a 2-part question on the distribution sustainability. Um, first part internally, like when you think about occupancy in, in the push to get to 90% plus, is there a specific occupancy internally that you have in mind that you need to hit in order for you to view the distribution of sustainable? Given the expected leasing costs?
Of the occupancy lease up. Uh, and then, secondly, how much time do you give yourself? Or how much time does the board? Uh, you give management before deciding on whether that all can see is achievable before you reassess the distribution?
We're very comfortable with where we're sitting at.
What we would ultimately be targeting, but we see a path to having the payout ratio moderate and ultimately, in time, get closer to what our targeted levels would be. But both management and the board.
That passed today and are comfortable with the sustainability of the distribution.
Got it. Is that path like a 2026 event, or is that a path that can take us into 2027?
Has to what sorry.
a path to sustainable distribution at an occupancy level, whatever you think that occurred to level maybe required to have a certain distribution of that or
Yeah, we see that it's sustainable today, and so with us seeing occupancy improving.
It only becomes more sustainable with the passage of time.
Okay, and then just my my my second question you highlighted.
Rightfully the, uh, the multiple articles looking at Financial Services, uh, tenants.
Asking people to come back to work more often.
Requirements. Can you maybe talk about the the indirect impact of that to leasing demand for your portfolio and whether they're actually maybe some opportunities to expand your financial services? Kind of presence going forward?
Yeah, you're right. We haven't typically had financial institutions in our portfolio. What we see is that the options available to users in the market will be soaked up. So, absorption will accelerate with these large space mandates from the banks, and that will have a trickle effect in terms of there being more urgency in the market for users to lock down space as demand drives up. This trend is representative of a broader theme that we're seeing across all sectors and markets in our portfolio.
Okay. And with I think someone else kind of asked a similar question, but with respect to the new tenant demand and your leasing discussion pipeline. How much of it uh may be coming from Suburban markets today. Uh yeah, we've seen a shift back into demand for downtown space from the suburbs. Or is that still something that is
TVC.
We have seen demand from organizations located in Suburban markets, looking to Urban centers, that continues to increase, but the nature of demand is diverse and representative of a number of different themes that we've touched on during this call. Mario.
Okay. That's it for me. Thank you.
Thanks.
There are no further questions at this time. This concludes our Q&A session. I'll now turn the conference back over to Cydia for closing remarks.
Thanks JL. And thanks everyone for attending.
The conference call, my final message is this.
We recognize the uncertainties in the broader Network economic environment, but we're encouraged by the growing signs of momentum in the cities where we operate Canada, Canadian cities and Canadians will benefit in the long term from any short-term disruptions. We may face Canadian cities in particular will emerge stronger and Allied as well positioned to benefit as a result.
We look forward to keeping you updated on our progress going forward.
this concludes today's conference call, you may now disconnect