Q3 2025 Crombie REIT Earnings Call
Speaker #3: Good morning , everyone , and welcome to Crombie Third Quarter 2025 conference Call . At this time , all participants are in a listen only mode .
Speaker #3: 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 then zero for the operator .
Speaker #3: This call is being recorded on Thursday , November 6th , 2025 . I would now like to turn the conference over to Meghna Nair , Manager of Investor Relations at Crombie .
Speaker #3: Please go ahead .
Speaker #4: Thank you . Good day everyone , and welcome to Crombie third Quarter 2025 Conference Call and Webcast . Thank you for joining us .
Speaker #4: This call is being recorded in live audio and is available on our website at . Slides . The company today's call are available on the investor section of our website under Presentations and Events .
Speaker #4: Joining me on the call today are Mark Hawley , president and chief Executive Officer . Kara Cameron Chief Financial Officer . And Ari Barton , executive vice president .
Speaker #4: Leasing and operations . Today's discussion includes forward looking statements . We want to caution you that such statements are based on management's assumptions and beliefs .
Speaker #4: These forward looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements . Please see our public filings , including our management's Discussion and Analysis and annual Information Form , for a discussion of these risk factors .
Speaker #4: Our discussion will also include expected yields on costs for capital expenditures . Please refer to the development section of our Management Discussion and analysis for additional information on assumptions and risks .
Speaker #4: I will now turn the call over to Marc to discuss Crombie strategy and outlook .
Speaker #5: Thank you , Meghna , and good morning everyone . Crombie third quarter results showcased the strength of our strategy and the quality of our coast to coast necessity based portfolio in a dynamic environment .
Speaker #5: Our grocery anchored retail platform delivered a standout quarter . AFFO per unit , grew 11.1% year over year , while this quarter benefited from several high impact contributions .
Speaker #5: The outcome is rooted in the fundamentals of our business strategy , executing on strong leasing and tenant demand , disciplined capital allocation , active portfolio management and a focused operating platform .
Speaker #5: Results demonstrate the combination of stability and growth that differentiates Crombie as an essential retail REIT . Our strategy is built around three key pillars .
Speaker #5: Own and operate , optimize and partner , which will guide our capital allocation decisions and approach to operations . I'll frame my comments today around these pillars .
Speaker #5: First , let's discuss , own and operate our grocery anchored retail portfolio remains the foundation of our success . Our ability to consistently attract both established and emerging tenants speaks to the strength and adaptability of our portfolio and the operational excellence of our leasing team .
Speaker #5: It's this ongoing demand from a diverse and expanding tenant base that has contributed to our fourth consecutive quarter of record occupancy , leasing activities .
Speaker #5: Results were strong in the third quarter , with the spreads increasing by 13.5% over expiring leases on a weighted renewal term . Average basis .
Speaker #5: Combined with embedded rent step ups , new leasing activities and another quarter of record occupancy . Same asset property , cash and we grew by 4.6% in the quarter with a year to date now at 3.5% .
Speaker #5: This is above the upper end of our annual average target range used by management . As we've noted in the past , portfolio management remains an integral part of the own and operate pillar .
Speaker #5: We take a disciplined approach to capital allocation , continuously evaluating opportunities to acquire properties that enhance our portfolio . Over the first nine months of the year , we've been very active in this area , adding four new grocery properties to the portfolio and divesting of two non-core locations .
Speaker #5: We will continue to pursue opportunities that align our strategy and offer compelling long term returns for our unitholders , our most recent addition to the portfolio was subsequent to the quarter , where we closed an acquisition of a 3.6 acre property at Islington in the Queensway in Toronto's west end .
Speaker #5: From our strategic partner empire , Total consideration was $28.5 million , excluding closing and transaction costs . This is a newly constructed longo's anchored retail property which includes two freestanding banks totaling approximately 51,000ft² of gross leasable area .
Speaker #5: The Longo's is expected to open in the fourth quarter , with the two banks slated to open in early 2026 , as they currently finish off their leasehold improvements .
Speaker #5: Turning to our second strategic pillar optimize . We continue to unlock embedded value within our portfolio with a primary focus on non-major development projects and advancing entitlements within our major development ladder .
Speaker #5: At the end of the quarter , we had completed 50 property modernizations with Empire in advance for land use intensification properties that will add 87,000ft² of total GLA upon completion .
Speaker #5: These non-major investments have a yield on cost of 6 to 7% , with respect to our major development program , we currently have only one project the Marlstone in Halifax , under construction , which continues to track on schedule and on budget with occupancy targeted for spring 2026 .
Speaker #5: We began Pre-lease marketing during the third quarter and the early response has been very positive and in line with our expectations across the rest of our major development pipeline .
Speaker #5: We continue to advance entitlements in a very deliberate manner . This focus ensures that we maintain flexibility in timing and scale while preserving optionality at market conditions .
Speaker #5: Evolve . This patient , disciplined approach enables us to build a pipeline of entitled sites that can create sustainable value for unitholders over a multi time horizon .
Speaker #5: And our last value creation pillar partnerships . Our programmatic partnerships in Vancouver and Halifax continue to deliver contributions in the third quarter . These two partnerships generate almost half of the total $4.4 million in fee revenue we recognized during Q3 .
Speaker #5: As we noted last quarter , we expect contributions from these partnerships to be consistent each quarter as these multiyear entitlement projects advance , providing a steady baseline income stream and strategic flexibility in our development pipeline .
Speaker #5: We also further strengthen our foundational partnership with Empire Investing . $18.4 million in the quarter in store expansions and modernizations , bringing our year to date total investment to nearly $30 million .
Speaker #5: These collaborative investments enhance our properties while supporting Empire Store Modernization program , resulting in increased rental revenue for Crombie and improved store quality for Empire .
Speaker #5: It's a relationship that continues to drive value for both organizations and reinforces the strength of our portfolio . Overall , Crombie is delivering a combination of stability and consistent growth .
Speaker #5: Our grocery anchored platform provides reliable , recurring cash flow . Our optimized initiatives , in particular a non-major projects drive organic growth , and our partner approach enables us to give unitholders access to the value accretion of larger , long term opportunities while maintaining efficiency and balance sheet flexibility .
Speaker #5: With that , I'll turn the call over to Cara to review our financial results in more detail .
Speaker #6: Thank you . Mark . Our third quarter financial results reinforce the strength of our platform and our disciplined approach to capital allocation . Funds from operations for the quarter totaled $61.9 million , or $0.33 per unit , up 6.5% year over year .
Speaker #6: AFFO was $55 million , or $0.30 per unit , up 11.1% year over year . This growth reflects our strong same asset , NOI performance contributions from acquisitions and development , completions and higher fee income from our partnerships .
Speaker #6: Partly offset by increased interest expense . Let's break down that performance , starting with our revenue drivers . Property revenue in the quarter was $120.1 million , up 4.9% from the prior year , driven by three primary factors same asset , NY growth , which included several favorable leases and amendments in the quarter .
Speaker #6: Contributions from acquisitions , as well as completed development projects , management and development fee revenue grew significantly compared to the third quarter of 2020 .
Speaker #6: For delivering $4.4 million , up from $1.1 million last year . We also recognized 2.1 million in deferred revenue . That was flagged last quarter .
Speaker #6: Our team continues to execute a disciplined capital allocation strategy , concentrating our investments in assets that best support Crombie necessity based portfolio and long term growth objectives .
Speaker #6: As part of this approach , we have actively identified non-core properties , particularly those in regional markets , with persistently lower occupancy and divested them to enable redeployment of capital into higher return opportunities .
Speaker #6: This ongoing focus enhances our operating metrics , drives consistent cash flow growth for unitholders , and ensures Crombie remains well positioned for sustainable value creation .
Speaker #6: We continue to have a strong pipeline of opportunities that align with our core necessity based strategy , and we're executing against it . Subsequent to quarter end , we acquired the Queensway property in Toronto .
Speaker #6: As Mark mentioned for approximately $28.5 million , this newly constructed grocery anchored asset in a strong urban market represents the type of disciplined capital deployment that supports our growth .
Speaker #6: While maintaining balance sheet strength . On the expense side , property operating costs were $40.6 million , up modestly from the third quarter last year , but well controlled .
Speaker #6: And in line with expectations . Net property income margin remained healthy at 66.2% . General and administrative expenses were $6.5 million , or 5.2% of total revenue , including revenue from management and development services .
Speaker #6: Adjusting for unit based compensation , G&A was 4.2% of revenue . Looking at interest expense , finance costs were $24.4 million for the third quarter , up $1.7 million from $22.7 million last year .
Speaker #6: This increase is primarily due to the full quarter impact of the $300 million of unsecured notes we issued late 2020 for our debt .
Speaker #6: Metrics remain solid debt to gross fair value is 41.9% , and death to EBITDA is approximately 7.7 times our debt . Positioning is well suited to Crombie's business model .
Speaker #6: Our income stream is exceptionally stable , anchored by long term leases with necessity based retailers , which gives us great cash flow , visibility with over 97% of our total debt at fixed rate , we're largely insulated from interest rate volatility .
Speaker #6: This stability enables us to be very comfortable with our current leverage , while maintaining financial flexibility . We ended the third quarter with approximately $676 million in liquidity between undrawn credit facilities and cash .
Speaker #6: Our fair value of unencumbered asset pool is over $3.8 billion . We've deliberately positioned our debt profile for flexibility , unsecured debt represents 61% of our total debt , with a weighted average term of 4.3 years for our fixed rate debt , we have no significant maturities until 2026 , and those are well staggered .
Speaker #6: Our payout ratios for the third quarter were 67.3% of FFO , and 75.8% of AFO . After many years of holding the distribution flat , while we reinvested in growth , we increased our annual distribution by $0.01 per unit last quarter , even post increase , our payout ratio remained very conservative .
Speaker #6: Same asset cash NOI grew 4.6% in the third quarter and 3.5% year to date , reflecting strong leasing fundamentals and occupancy gains across the portfolio .
Speaker #6: Looking ahead , we continue to see our 2 to 3% long term annual average target range as the appropriate framework for our same asset .
Speaker #6: NOI business planning . To summarize , the third quarter was yet another quarter of steady , dependable performance for Crombie . We're hitting our strategic targets , producing consistent financial results and managing our balance sheet to support both stability and measured growth .
Speaker #6: With that , I'll turn it back to Mark for some closing remarks .
Speaker #5: Thank you . Cara . Before we open up to questions , I want to emphasize that it is a disciplined execution of our strategy and the Crombie team that is driving performance .
Speaker #5: We're focused on owning a central real estate at the heart of communities , managing our assets and capital with discipline and investing and partnering strategically for growth .
Speaker #5: We're delivering consistent performance while building a stronger , more flexible platform for the long term . We thank you for your time . And with that , we're happy to take your questions .
Speaker #3: Thank you . Ladies and gentlemen , we will now begin the question and answer session as a reminder . In order to ask a question , please press star followed by the number one on your telephone keypad .
Speaker #3: And if you would like to withdraw your question , simply press star one again . We will pause for a moment to compile the Q&A roster .
Speaker #3: Thank you . Our first question comes from the line of Lauren Kalmar with Desjardins . Please go ahead .
Speaker #7: Thanks . Good morning everyone . Just on the Etobicoke property . You guys bought in October . Just was wondering what percentage leased is this ?
Speaker #7: And can you give us a rough idea of a stabilized cap rate on the deal ?
Speaker #8: Good morning . Lauren . Yeah , we're pretty proud that we're able to acquire that . It is 100% leased . So it is the Longo's and the two freestanding bank pads .
Speaker #8: The Longo's is going to go into operations later this quarter . And the two banks are going to be early January , February to be operating in terms of how it was structured .
Speaker #8: We built that as a developer on behalf of Empire , and that investment was about 23 , $24 million . And then after we completed the investment , which we were earning a fee on , we then acquired the real estate , the underlying real estate , which gave us the total cost of 28 million .
Speaker #8: So that number would show up in our nonmajor development pipeline in the mDNA , which gave us a yield on cost between 6 and 7% .
Speaker #8: If you're thinking about it from a cap rate perspective , if you take a look at in the mDNA under Victum and sort of how we're trending on Victum and our asset class , we're in that range on a cap rate .
Speaker #8: So at the end of the day , we got a great development yield and a great cap rate .
Speaker #7: Okay , perfect . And I guess that kind of leads to my next question . Are should we just be looking at the non-major developments to see if there are any other projects like this in the pipeline that you guys could acquire in the presumably not too distant future .
Speaker #7: ?
Speaker #8: In the near term ? Yes . So we have one other project . It's a greenfield in Quebec , and we have a joint operation partner there that we're developing it with , and it will be another food store , grocery anchored asset in just outside of Montreal .
Speaker #7: Sorry . And just to be clear , you guys are developing this on behalf of Empire .
Speaker #8: You got it .
Speaker #7: Okay , perfect . Thank you . And then , you know , the balance sheet seems to be in good shape . Things are firing on all cylinders , but the you know , you're still trading at a pretty wide discount to Nav , especially when you look at your your sponsored peers .
Speaker #7: I'm just wondering , have you guys thought about unit buybacks at all . ?
Speaker #9: Hi , Lauren , it's Kara . Yeah , that's always on our radar in terms of assessing whether something like an NCIB would be in our purview right now .
Speaker #9: It doesn't make sense to us . We do have a drip in place and a discount on the drip that produces some solid cash flow in the of equity for us .
Speaker #9: So we like that for right now . But it's always on our radar .
Speaker #7: Okay . Thank you very much . I will turn it back .
Speaker #10: Thanks .
Speaker #3: Once again , if you would like to ask a question , that is to press Star one on your telephone keypad . Thank you .
Speaker #3: Our next question comes from the line of Brad Sturgis with Raymond James . ahead .
Speaker #11: Hey . Good morning . Maybe just on the on development side . Just looking at the moral stone . I think , you know , you're slated for completion mid next year .
Speaker #11: Just . Would you be at a stage where you're doing pre-leasing today and maybe just walk through where that would be ?
Speaker #12: Morning , Brad . It's Ari . We started our pre-leasing towards the end of October , so we have a kiosk set up at our Scotia Square property adjacent to the milestone , as well as the model
Speaker #12: suite that's situated there as well . So Pre-leasing has Please go started . Website is up . We are starting to do the initial intake of applications and we're very hopeful and very enthusiastic about the response .
Speaker #12: So far from the early days of our Pre-leasing program .
Speaker #11: And I guess from a stabilized yield perspective , it doesn't look like your estimates or your range has changed . I guess given where Halifax rents are trending , I guess on the new build side , like is there been material movement in where you expect pro forma rents to be ?
Speaker #8: No . Brad . So our underwriting versus what we're seeing in the market , we're pretty much in line . And so our yield on cost , as we've called out , is still at the four and a half to 5.5% range .
Speaker #8: We're still on budget, with a little bit of contingency left. So it might be slightly under budget when this closes out. We're pretty happy.
Speaker #8: And as already called out , we started the pre-leasing the intake has met our expectations , which is a positive sign . You know , Halifax has a market relative to other markets across the country , at least in our view , is kind of held in there much better in terms of the rental market .
Speaker #11: Okay , just the last question , in terms of the I know it's a small exposure for for you guys , it's on the residential side , you know , occupancy vacancies ticked up just a touch .
Speaker #11: Just can you walk through what you're seeing I guess within the few assets you do on , on the , on the multifamily side .
Speaker #11: And sort of your expectations for going forward .
Speaker #12: Sure . We are focussing on prioritizing occupancy right now . So we did have a slight dip in this quarter that is primarily related to one property that had multiple expiries within the quarter .
Speaker #12: Very happy with where we had our turnover ratio for that property in the quarter . So we started early with respect to notices to tenants to gauge interest , and we were able to to really I would say manage the the expiry cliff quite well , notwithstanding the fact that we some , some vacancy occur and , you know , there's not a big expiry profile for the balance of the year .
Speaker #12: Very happy with where we had our turnover ratio for that property in the quarter . So we started early with respect to notices to tenants to gauge interest , and we were able to to really I would say manage the the expiry cliff quite well , notwithstanding the fact that we did see So we're hoping to see that climb back up as we close out 2025 .
Speaker #12: And all of that should translate into the NOI expectations that we have for the properties . As a whole . But again , the focus is on delivering occupancy at this point in time , given the state of the market , we believe we've got some of the best assets situated in their respective geographies .
Speaker #12: But we are seeing that softness throughout and we're managing through it .
Speaker #11: I guess that turnover you saw in Q3 , that would be more just like typical seasonal turnover . You would expect going forward in Q3 relative to , yeah , okay .
Speaker #11: Sounds good . I'll turn it back . Thank you .
Speaker #3: Your next question comes from the line of Sam Damiani from TD Cowan . Please go ahead .
Speaker #13: Thanks and good morning , everyone . And just on the leasing spreads , we're quite strong this quarter . I'm just wondering was there anything unusual that drove the sort of meaningful step up in your leasing spreads ?
Speaker #12: Morning , Sam . This was a fairly typical quarter for us , albeit a little bit smaller on the square footage side . But it is something that we've seen continually over the last four quarters .
Speaker #12: So this is our fourth quarter at double digits . You know , for us , we're we're seeing that demand continue to come in .
Speaker #12: We experienced that with the recent ICC conference that we had earlier in October . We had over 100 meetings with both existing tenancies as well as new tenancies , both to Canada .
Speaker #12: But also to our portfolio . So there's just a lot of demand for open air grocery anchored shopping centers , primarily right now .
Speaker #12: And they're really drawn to the fact of , you know , the fact that we're obviously got the best anchor on site , but also what our development team has been able to pull off with respect to delivering these had opportunities and intensification opportunities .
Speaker #12: Doing our best to value engineer these projects . And , you know , Victor and his team have done a really nice job of being able to tuck in some opportunities because , I mean , I tell by our occupancy , we're near full .
Speaker #12: So we're just continually looking to optimize the portfolio . And what we're also seeing in our portfolio . Some of these 100 plus meetings is a bit of a diversification as well .
Speaker #12: In grocery anchors . So we added to our occupancy this quarter a brand new state of the art 20,000 square foot provincial health clinic in Nova Scotia .
Speaker #12: We also added some other service users that traditionally , you know , we're not seeing in our portfolio . So again , that's not exactly on the renewals , but I think it speaks to the health and the vibrancy that we're seeing in our portfolio currently .
Speaker #13: Oh , that's great . Caller . Thank you . Thank you , Ari . And I just I just as you look out to 2026 how are you feeling about sort of that 2 to 3% same property or same asset .
Speaker #13: NOI growth . It's just seems like Crombie has potential to to tip above that 3% range . I'm just wondering how you feel about that .
Speaker #8: Good morning Sam , it's Mark . We're feeling pretty good . So if you look at our year to date number , we're at three and a half .
Speaker #8: We printed a 4.6 which I think is outstanding for the team . And it's showcasing the strategy and the work that the team is doing to deliver against it .
Speaker #8: We're also got a nice little tailwind in retail in sort of that demand and supply imbalance , and we're capturing the wins on that .
Speaker #8: We're disposing of non-core assets that were , you know , legacy and structurally deficient deficient . So all the all the all the pillars of our strategy are working .
Speaker #8: I would say on a if you close out 20 , 25 , I would look at where we are year to date in 2023 is a good indicator of how we see the year ending out in terms of 2026 .
Speaker #8: We have an internal target for ourselves , which is in that 2 to 3% range . We see ourselves being on the high side of that for next year .
Speaker #13: Okay , that's very helpful and just on on the milestone that , you know , does reach completion next year and hopefully stabilization quickly thereafter .
Speaker #13: Does Crombie have the appetite to to start a new a new residential development in the near term after that .
Speaker #8: We definitely take a long term view in mind . And we definitely look at it through a lens of partnerships . We have two active ones on the go , so as milestone .
Speaker #8: Gets stabilized , we have two others in that market , which is Barrington and Brunswick , and we have a partnership there with Monty's .
Speaker #8: And so we're actively working against it . And if the window is right and the underwriting is sound as we look at the longer term , we will look at greenlighting projects , but we look at it as a whole investment of allocation of capital .
Speaker #8: So near term versus long term . So today we've been more focused on nonmajor investments . And that is really driving same asset and really driving FFO growth .
Speaker #8: But we also look at major . And today major is all about entitlements so that we have the flexibility . As you called out , Sam , when the window opens , we can take advantage of it .
Speaker #13: Okay . That appreciate that last question for me , just on the Queensway acquisition . Well , I guess development really I mean , that site , I think it's been somewhat dormant for quite a few years , and all of a sudden obviously got activated within the last year or so .
Speaker #13: I guess . What prompted the sort of greenlight of that for that project , after whatever it might have been a decade , that it was kind of just sitting there .
Speaker #8: Yeah , it used to be an active warehouse at one point in time for Empire and and then over time it got subdivided into two parcels , front end and back end .
Speaker #8: And there was a lot of dialogue in highest and best use . And at the end of the day , grocery anchored in that pocket is going to is the highest and best use .
Speaker #8: So there was underwriting done and market conditions were right . And as you probably read , most grocers are in in expansion mode .
Speaker #8: And so they're capturing a little pocket of the market that they can drive value for . So we're really happy to greenlight it with them .
Speaker #13: Okay . That's helpful . Thank you very much . And I'll turn it back .
Speaker #3: Your next question comes from the line of Giuliana Thornhill with National Bank financial . Please go ahead .
Speaker #14: Hey guys . Good morning . Just wondering on the retail occupancy in a touching kind of an all time high . I'm just wondering kind of where the , the gains were located was mostly in your enclosed mall portfolio and really like how sustainable do you think this is ?
Speaker #12: Morning . The occupancy levels are very healthy where we are right now . You know , we've always said that 97 is probably top end of the range .
Speaker #12: And we passed that now . So very happy with our results . We're still seeing additional interest in not just in closed enclosed mall in Saint John's is performing exceptionally well , but really the the inbounds are coming primarily in our open air portfolio .
Speaker #12: Again , we're we're near full there . So we're looking to see how we can accommodate them . Shuffling some tenants around trying to accommodate expansion plans as well as like I said earlier , add some intensification through the addition of pads as well .
Speaker #12: So I would say it's quite well rounded in the retail sector .
Speaker #14: And what's kind of the opportunity there on the on pad intensification ?
Speaker #12: We've got over two dozen properties in our portfolio that are identified for intensification . Those are all in various stages of development . Some are more near term , some are longer term , some require municipal approvals and entitlements .
Speaker #12: Some require lease controls to to be worked out with tenants . And we work on those as we go through our renewal process .
Speaker #12: But so they're all various stages . But there are quite a number of opportunities in front of us . And a lot of tenant demand for those opportunities .
Speaker #14: And then just there's a pretty large uptake in the new modernized modernization projects . I'm just wondering , where are these mostly located within your portfolios in the West or East ?
Speaker #8: They're coast to coast , which is , you know , we always are very proud of and tout being a coast to coast REIT because they're basically right at the heart of the communities where the people are .
Speaker #8: So there's no one concentration market or province . It is really coast to coast . .
Speaker #14: And would you say it's fair that this is kind of in response to like more competitive pressures with more grocers looking to kind of expand their footprint just kind of revitalizing your properties ?
Speaker #8: We've had our program in place , at least our investment portion of modernizations for many , many years . So this is nothing .
Speaker #8: This is not a new program that we've had . We've had it in place and running for 6 or 7 years now .
Speaker #14: Okay . Thanks .
Speaker #3: Your next question comes from the line of Mario Saric from Scotiabank . Please go ahead .
Speaker #15: Hi . Good morning . Maybe a maybe an out of the box question for you or comment on the iCSC meetings . Pretty significant hundred meetings plus .
Speaker #15: Just curious what would that been like last year .
Speaker #12: I would say it was around 75 last year. So, I've been here now seven years. This is my fifth iCSC, given COVID, and this is by far the most attended meeting—the highest meeting attendance we've had in my tenure here.
Speaker #15: And would it be your sense that that was the case for the industry overall , or . I think , Mark , you mentioned coast to Coast a couple of times .
Speaker #15: You know , is which which I think is maybe underappreciated with the portfolio is the coast to coast nature of the portfolio . Now seeing strategic benefit in terms of tenant discussions .
Speaker #12: It is so the tenants that we're talking to , by and large , are nationals and they're opportunities in vector markets and other urban areas , seems to be pretty tapped out .
Speaker #12: So in some cases , so for us really we're able to add to their store network plans . So we have quite a few tenants throughout that are looking to add significant store counts to their portfolio .
Speaker #12: And they're just not able to do that predominantly in the major markets . And we're able to accommodate them throughout . It also helps them as well with their , you know , store growth .
Speaker #12: And and we're able to do it in some municipalities that have shorter timelines in order to complete them . So I think that that is another big benefit for them into why they're looking at our portfolio .
Speaker #15: And with occupancy relatively full , there isn't much space for them . Outside of I guess , talked about some some potential pad additions .
Speaker #15: How do the how do the market rents in , let's say , some of the secondary markets look relative to required development yields in order to satisfy that demand ?
Speaker #12: Our experience over the last 18 , 24 months is we're pushing renewal rates . We're pushing new store rents that are similar in the geographies where we're operating .
Speaker #12: So I wouldn't say that it's that drastic of of a spread between obviously mixed use or quite a bit different , but there's not much .
Speaker #12: And you can see that show up in our numbers when you take a look at the renewal rates that we're we're pushing out , you know , from a geographic basis .
Speaker #15: Okay . And then when we look out into 26 or maybe even 27 and 26 , you have 5% of your leasing maturing , 27 closer to seven .
Speaker #15: So they're not big numbers relative to peers , but just curious whether over the next couple of years , are there any known vacancies that you're aware of ?
Speaker #15: Any unusual opportunities to really boost rent on low , in-place , expiring rent ? Just anything out of the ordinary that you'd like to highlight ?
Speaker #12: No , Mary , I say that next year is a fairly typical renewal year for us in some ways , it's looking , you know , fairly optimistically in the sense that we don't have a lot of office next year , we don't have a lot of fixed rate renewals next year .
Speaker #12: So I would say that's why all indicators are that the current glide path we're on is one that we expect to maintain in the short term .
Speaker #12: Looking into 2027 , it is a little bit larger than 2026 . But again , we will start chipping away at , you know , some of those renewals into 2027 .
Speaker #12: To the extent that we have any concerns , we're not airing any of those now . We're working with tenants . I would say that , you know , we're we're continually updating the watch list like there's nothing that strikes out right now in terms of the 2026 or 2027 expires .
Speaker #12: That we're currently , you know , significantly concerned about .
Speaker #15: Okay . And then just last one for me , just on Broadway and commercial . Any updated thoughts on timing on full entitlement enactment and what may happen at that property going forward ?
Speaker #8: Hey , Mario , it's Mark . We're we're looking Q1 Q2 for full enactment . And , you know , we're working with municipalities , you know , refining it and getting it through .
Speaker #8: So Q1 Q2 is is our , our best estimate at this point in time . And on the go forward . It's looking at the window in terms of how the underwriting looks and the role that we'll want to play as we look at the underwriting .
Speaker #8: Look , the Vancouver market is soft and and so as we look at the underwriting , we have to make sure that it works for us and our partner .
Speaker #8: So more to come on that in 2026 . But again , the first step is to get enacted .
Speaker #15: Okay . That's it for me . Thank you .
Speaker #3: Your next question comes from the line of Tal Woolley from CIBC Capital Markets . Please go ahead .
Speaker #7: Hey , good morning . I had to step .
Speaker #16: Off the call for a brief second . So I apologize if some of this stuff's been answered and just let me know if it has .
Speaker #16: First of all , we got a new CEO at Empire yesterday . Just wondering if that would presage any board changes or anything at Crombie .
Speaker #16: Maybe you can speak a little bit about your relationship with Pierre and any changes that may portend for Empire strategy .
Speaker #8: Good morning Tal . Yeah , and so I'm really happy that you asked the question , and I personally want to congratulate and the rest of the Crombie team , management team , the board has also congratulated Pierre Saint Laurent on his recent appointment .
Speaker #8: I think it's excellent for Empire . Pierre is a 35 year vet of Empire , has been overseeing most divisions of that organization over his 35 years , and so I think it's a great person to come in after .
Speaker #8: Michael Medline , who I also want to congratulate and acknowledge who's been there for nine years , ran through three strategies and is leaving the company in a great spot from where it started .
Speaker #8: And when he joined in 2017 . And I'm confident Pierre is going to take it . And even go higher . So we're really thrilled .
Speaker #8: We have great relationships with Empire . They are strategic partner and we see that continuing going forward .
Speaker #7: Okay .
Speaker #16: And I just wanted to talk about two of the larger non-retail or sorry Non-grocery anchored retail assets in the portfolio just at Scotia Square .
Speaker #16: I'm wondering if you can talk a bit about , you know , the performance in the market , how you're looking , you know , the outlook for the next couple of years with that asset .
Speaker #12: Sure . The Halifax office market has been one of the standouts nationally , and Scotia Square is continuing to beat the market downtown occupancy for us is very healthy and above what we're observing from other Peninsula based offices there .
Speaker #12: So the the connectivity that Scotia Square offers , the Pedway access , the largest parkade in downtown Halifax and all the other amenities it has with the food court and everything else are really contributing to to this being , you know , the magnet downtown .
Speaker #12: Obviously , we're adding the microphone to it , but we're also adding some significant tenancies that are in our economic in some part .
Speaker #12: And committed occupancy and others that are also going to be driving a lot of additional foot traffic to the shopping center . And , you know , we continue to be the first call , I believe , for many tenants that are looking for office space in Halifax .
Speaker #12: So we're we're seeing that gradual recovery in office throughout . And we're pretty pleased right now with where Scotia Square . It's obviously we'd like to see occupancy tick up a little bit more , but the team has done a fantastic job .
Speaker #8: The one thing I'll add there, Tal, is office occupancy is up almost 340 basis points year over year, and part of that is because we sold the Moncton office.
Speaker #8: We did that earlier this year , which had chronic vacancy and something that we didn't see the value for us to invest in .
Speaker #8: But somebody else to take on . And because of that transition , it's taken that distraction away . And the team is even more focused in on what we have at HDL , Scotia Square .
Speaker #8: And as already called out , we've committed occupancy is ticking up and it is the first call . It is center ice for the town .
Speaker #8: It has the the highest concentration of parking . It's got the pedway system . It's got the the food court . So we're pretty happy with its performance .
Speaker #8: And it is , in our view , from all the metrics we've seen , it outperforms all the other offices in that market .
Speaker #16: Okay . And then just wondering if you could give a update to on Avalon Mall as well .
Speaker #12: Avalon mall has been just firing on all cylinders . We were experiencing really strong traffic , double digit traffic growth year over year .
Speaker #12: The team there has just done a tremendous job of engaging with the community to drive traffic , which is helping tenant sales . We're seeing very healthy groc levels .
Speaker #12: Occupancy is in the mid to high 90s . It'll be near full over Christmas with temps leasing as well . So the tenant demand is still there , albeit less than open air for sure .
Speaker #12: But Avalon Mall , I would say is performing very well . Like I said , tenant sales traffic , all current metrics are pointing the right direction for us .
Speaker #8: The other benefit is that it's the only enclosed mall in Newfoundland. So if you want to come to this market, you're coming to us, and the team has done an excellent job of capturing that.
Speaker #8: And engaging with all the retailers . And so as as we have turnover , we already have a roster of those that want to come in .
Speaker #8: While we might be near full , we already have backup plans to if something goes down , we have a replacement at a higher rate .
Speaker #16: And you have no major anchor transitions there that you need to work on .
Speaker #12: No .
Speaker #16: Okay . And then you know , this question has come up . You know , like before , over the course of Crombie history .
Speaker #16: But , you know , there at least has been some mall trades over the last couple years , like is Avalon , you know , you still see that as a core holding for the company going forward .
Speaker #8: Our core is grocery-anchored. Avalon Mall has been a nice asset for us. We made a significant investment in it in 2018.
Speaker #8: Ish . Those are now performing . It's performing exceptionally well because of some of that investment . It's got great cash flow for us , but it is not core to what we are , which is grocery anchored .
Speaker #8: But we like the asset . As Ari talked about it , occupancy is high . We're getting the right turnover when we need the right turnover .
Speaker #8: Growth rate . So we'll continue to manage the asset and focus on the metrics that drive that business .
Speaker #16: And then I guess like longer term , I mean it's a bit of a harder question to answer . But like you're for some of the mixed use stuff like we went back five years like this was , you know , one of the things that , you know or sorry , five plus years that , you know , mixed use development was the excess density was , you know , a big part of the story .
Speaker #16: Obviously , the environment has changed . Do you get the sense that , like , over the next decade , that that is going to be a bigger piece of the puzzle going forward ?
Speaker #16: Or do you want to keep it sort of as you've structured it now with , you know , one , maybe two on the go , a couple of entitlement partnerships that sort of seems to be maybe the way forward as opposed to a more aggressive plan sometime in the future .
Speaker #8: Yeah . If you step back and go back , you know , six , seven years , we had the pipeline was in around 33 .
Speaker #8: And since then we developed three . We have one under construction . We sold the rest and we used the proceeds to help fund those investments .
Speaker #8: Plus into our grocery anchored . As we look at the platform today and going forward , we have the long term in mind .
Speaker #8: So that is absolutely how we look at the business long term . And right now we need to get these projects entitled . And then once we get them entitled , we have that flexibility on what role we want to participate in .
Speaker #8: Again , it's back to sources and uses of capital and making sure that we're driving the best returns for our unitholders and in some cases , that will be to partner and develop in other cases , that might be change the percentage ownership that we have .
Speaker #8: In other cases , it might be to monetize it , but we do keep that flexibility open . And today I think what we stood up is exceptional because we are the ones that are driving the entitlement value and we're getting paid for that .
Speaker #8: And when we get them entitled , then we can create the optionality to to look at what we can do with them . So the way that we focus on the business today is not a mandatory the shovel will go in the ground .
Speaker #16: Got it. Okay. Thanks very much, everybody.
Okay, got it. And uh, last 1 for me, um, I kind of missed the warns, the answer. Lawrence question on Queensway. Um, can you just remind us for? I guess my benefit for my knee, how that worked was, how to develop. I, I understand you guys Managed IT. Um, did you fund the development on your balance sheet, or how did that work? Exactly.
Yes, we did.
Um, so we funded
Land, uh, from Empire. It's a total of $28 million.
Okay.
But uh, that's great. Thanks so much.
And at this time, we have no further questions. I would like to conclude the Q&A session. In today's conference call, we would like to thank you for your participation. You may now disconnect your lines at this time. Have a pleasant day, everyone.