Q3 2025 Dream Industrial Real Estate Investment Trust Earnings Call
Speaker #2: Welcome to the dream . Rate . Industrial rate . Third quarter conference call for Wednesday , November 5th , 2025 . Please be advised that all participants are currently in listen only mode and the is being recorded after the presentation , there will be an opportunity to ask questions .
Speaker #2: To join the queue , you may press star and then one on your telephone keypad . Should you need assistance during the conference call , you may signal an operator by pressing star and then zero .
Speaker #2: During this call . Management of Dream Industrial rate may make statements containing forward looking information within the meaning of applicable securities legislation . Forward looking information is based on a number of assumptions and is subject to a number of risks and uncertainties .
Speaker #2: Many of which are beyond Dream Industrial rates control that could cause actual results to differ materially from those that are disclosed in or implied by such forward looking information .
Speaker #2: Additional information about these assumptions and risks and uncertainties is contained in Dream Industrial filings with securities regulators, including its latest Annual Information Form and mDNA.
Speaker #2: These filings are also available on Dream Industrial rates website at . Dream Industrial , your host for today will be Mr. Alexander Sannikov , CEO of Dream Industrial rate .
Speaker #2: Mr. Sannikov , you may now go ahead . Please .
Speaker #3: Thank you . Good morning everyone . Thank you for joining us today for Dream Industrial REIT's third quarter . Third quarter 2025 conference call .
Speaker #3: Here with me today is Lenis Quan , our chief Financial Officer . In the third quarter , we reported healthy operating and financial results supported by strong leasing spreads and robust growth in CP Noi .
Speaker #3: For the quarter , we delivered 4.3% year over year FFO per unit growth and 6.4% comparative properties . NOI growth , driven by a 7.6% increase in in-place rents .
Speaker #3: We leased out over 250,000ft² of vacancies and newly completed developments , which lifted our in-place occupancy 40 basis points to 94.5% . A balance sheet remains strong , with conservative leverage and ample liquidity .
Speaker #3: We are advancing our capital recycling strategy across our platform . During the quarter , we completed the sale of two non-strategic assets within the dream .
Speaker #3: Summit venture , and we are firm on a disposition within the reach portfolio . In addition , we are currently underway on approximately $150 million of potential dispositions to user and investor buyers .
Speaker #3: These dispositions reflect our broader program to enhance portfolio quality and total return profile . As we redeploy this capital into accretive opportunities , including higher quality acquisitions that align with our longer term portfolio strategy .
Speaker #3: So far this year , we have acquired over $100 million of infill mid Bay industrial product with a targeted stabilized yield of over 7% .
Speaker #3: These acquisitions are representative of our broader pipeline and of the asset profile . We will continue to pursue . Recently , we completed the acquisition of a 130,000 square foot asset in Germany .
Speaker #3: The asset was acquired on a short term sale and leaseback arrangement at market rents , delivering a going in cap rate of over 8% .
Speaker #3: The asset is well located . Features . Functional design and has existing rooftop solar panels to support our ancillary revenue program . The asset has undeveloped excess land which can be activated for outside storage or expansion opportunities .
Speaker #3: In the quarter , we also completed the acquisition of a 90,000 square foot urban logistics assets in the Netherlands . The asset is within a prime logistics node with scarce supply .
Speaker #3: We acquired the property vacant and leased out the building within the first months of ownership for a five year term commencing in November at rents exceeding our underwriting , we achieved the yield on purchase price of over 8% .
Speaker #3: This leasing success is reflective of the healthy leasing and momentum we are seeing across a mid-bay portfolio in Europe , with over 2.5 million square feet of leases signed to date in our European portfolio , we continue to see healthy demand for our assets and continued rental growth in core urban locations in Canada .
Speaker #3: The occupier markets remain active and we see sustained demand . In particular for well-located mid bay infill assets . The leasing spread remained healthy in our wholly owned portfolio in Canada .
Speaker #3: We achieved around 40% spreads in Q3 when adjusted for one fixed-rate renewal this quarter. This is in line with the spreads we achieved in Q3 2020.
Speaker #3: For we continue to work closely with our tenants as they implement their supply chain adjustments in response to the evolving trade dynamics . Notably , we are encouraged by the level of activity from tenants in the automotive sector .
Speaker #3: So far this year across our wholly owned and managed portfolios in Canada and in Europe , we signed over one point 8,000,000ft² of new leases , renewals and expansions , including on a bill to suit basis with automotive occupiers led by blue chip multinational names .
Speaker #3: And that is at an average spread of over 40% , with mid 3% contractual escalators , while the RFP activity has been gradually ramping up from from early Q2 2025 , and our leasing pipeline remains robust , we are seeing longer decision making timelines impacting the pace of absorption .
Speaker #3: And while our in-place occupancy increased this quarter in line with our expectations , longer lease negotiations led to a slight decline in a committed occupancy to 95.4% this quarter .
Speaker #3: Since the quarter end , however , we have signed or advanced new lease negotiations on over one point 7,000,000ft² on existing vacancies across a wholly owned and managed portfolios , leading to additional commitments turning over to our strategic pillars , partner capital formation remains a key focus for us as we are looking to grow our private partnerships revenue significantly over the next 3 to 4 years .
Speaker #3: The capital formation environment is improving as investors are shifting their focus from private credit to private to equity investments . We maintain an active dialogue with potential partners across our operating footprint , including in North America and Europe , and are encouraged by the progress we're making .
Speaker #3: Our solar program is progressing well , with two completed projects and five new projects underway in the quarter over the past year , our near-term pipeline has grown significantly .
Speaker #3: Now representing more than 120MW of additional solar generation potential in feasibility or advanced stages . We're making progress on our strategy to upgrade power capacity at select properties across the portfolio for data center uses , we completed preliminary due diligence for 13 sites across Canada .
Speaker #3: The could accommodate a critical load of over 600MW . On two of these sites , we advanced deposits to local utilities to secure 105MW of power with phased delivery over the next 2 to 5 years .
Speaker #3: Concurrently , we're in active discussions with operators and end users to explore potential value creation opportunities with the generated power capacity . Overall , we are encouraged by the progress across our key initiatives , including leasing , capital , recycling , new revenue sources , positioning Der well for the year ahead .
Speaker #3: I will now turn it over to Lenis to discuss our financial highlights.
Speaker #4: Thank you Alex . Our business continues to deliver stable and consistent growth . We reported diluted FFO per unit of $0.27 for the third quarter , 4.3% higher than the prior year quarter .
Speaker #4: The solid year over year growth was primarily driven by comparative properties . NOI growth of 6.4% for the quarter , led by 8.5% growth in Canada .
Speaker #4: In addition , lease up of existing vacancies and newly completed developments contributed to overall FFO growth . Our net asset value at quarter end was $16.74 per unit , reflecting stable investment property values .
Speaker #4: We continue to actively pursue financing initiatives to optimize our cost of debt and maintain a strong and flexible balance sheet with ample liquidity .
Speaker #4: We ended Q3 with leverage in our targeted range and net net debt to EBITDA ratio of 8.1 times to date , we have effectively addressed approximately 70% of our 2025 debt maturities in July , we closed on the issuance of our $200 million series G unsecured debentures at an all in rate of 4.29% .
Speaker #4: We will swap the proceeds to euros at an effective rate of 3.73% starting December 22, 2025. The proceeds were partly used to repay the outstanding balance on our credit facility, with the remainder earmarked towards pre-funding.
Speaker #4: Our remaining $450 million maturity is in December, and for general trust purposes, we continue to evaluate several refinancing options to address the remaining debt maturity balance. We are currently observing rates in the high 3% range in the Canadian unsecured market, with euro equivalent debt approximately 20 basis points lower.
Speaker #4: These rates are about 30 basis points lower than what we were seeing this time last year. We completed the quarter with over $828 million in total available liquidity.
Speaker #4: Combined with the growing cash flow generated by our business , we are well positioned to fund our value add and strategic initiatives , including our development pipeline , solar program and contributing to our private capital partnerships .
Speaker #4: Our third quarter performance demonstrates the resilience of our business , and we remain confident in our growth trajectory . For the balance of the year and into 2026 .
Speaker #4: Despite a slower pace of leasing in the first half of 2025 . As a result of trade tensions , we have delivered healthy organic growth supported by increasing in-place rents across our portfolio .
Speaker #4: Our FFO per unit continued to grow at a strong rate, even though we refinanced over 70% of our 2025 debt maturities early. As NOI has outpaced the higher interest expense and our in-place occupancy stabilizes, we anticipate the business to produce even stronger NOI growth, driven by contributions from stable to higher occupancy and continued growth of in-place rents for the remainder of the year.
Speaker #4: We expect the in-place occupancy to remain stable . With that , our expectation is that the pace of growth in the fourth quarter will be consistent with Q3 .
Speaker #4: We also expect that our Q3 FFO per unit run rate to continue into the fourth quarter , as such , adjusting for early refinancing of our 2025 debt maturities , we expect the full year results to be aligned with our previously communicated outlook .
Speaker #4: Looking ahead , we continue to expect a strong pace of FFO per unit growth into 2026 . Our FFO growth expectations for 2025 and 2026 continue to be predicated on current foreign exchange rates , leverage levels , and interest rate expectations , as well as expected timing of the lease up of our transitory vacancies .
Speaker #4: I will turn it back to Alex to wrap up .
Speaker #3: Thank you . Linus , we have demonstrated a solid track record of delivering FFO growth while absorbing a 200 basis point increase in our average cost of debt since 2021 .
Speaker #3: Since then , our FFO per unit has increased by approximately 30% , driven by organic NOI growth contributions from developments , accretive acquisitions , and new revenue sources such as our private capital partnerships , business .
Speaker #3: All of these growth drivers remain intact today, and we expect to continue delivering strong results for our unitholders. We will now open it up for questions.
Speaker #2: We are now opening the floor for a question and answer session. If you'd like to ask a question, please press star followed by one on your telephone keypad.
Speaker #2: That's star , followed by one on your telephone keypad . Your first question comes from the line of Sam Damiani of TD Cohen .
Speaker #2: Your line is now open .
Speaker #5: Thank you. Good morning, everyone. Congratulations on the good results and the stabilization in the leasing market. That's great to see for another quarter.
Speaker #5: Maybe just to start off , just to clarify your comments on the on the outlook for for Q4 and into next year . Just with the same property and growth , are you still expecting it to to exceed 6% for , you know , for this year and next year ?
Speaker #3: Sam , as you know , we generally don't provide guidance for 2026 at this at this point . But I'll pass it back to Lana to clarify on the 2025 outlook .
Speaker #4: Yes , Sam , we provided the build up for the full year . Growth in the in the prepared remarks , I think the commentary was that what the growth that we're seeing for Q3 would , that it would be very similar to what we would see year over year for the fourth quarter as well .
Speaker #5: Okay . And so that's clear . And just on on FFO growth , your reiterating your target . But again , you're commentary .
Speaker #5: I think last quarter was was similar or higher growth in 26 . Is there any change to that outlook .
Speaker #4: No , no I think we continue to hold that same outlook .
Speaker #6: Okay , great .
Speaker #5: All right . And maybe just on the the partnerships , Alex , you touched on that . Can you maybe give us a little bit more color on the progress and sort of status of things as you work toward a potential JV over in Europe ?
Speaker #3: It thanks for the follow up , Sam . As you know , capital formation of this nature takes takes time . We are in dialogue with lots of strategic partners .
Speaker #3: I think for us it's very important . Or as important to set up the right partnership as as it is to set up our partnership or grow that business .
Speaker #3: So we're pretty focused on the profile of the partnership and where it's going to grow . What potential it has , and that informs the the groups that we are in dialogue with and , you know , naturally , that takes some time .
Speaker #3: But as I as I mentioned in the prepared remarks , we are encouraged by the progress . And that's across the footprint . You know , we're seeing good progress in North America and good progress in , in Europe as well .
Speaker #5: Thank you . I'll turn it back .
Speaker #2: Your next question comes from the line of Brad Sturge of Raymond James . Your line is now open .
Speaker #7: Hey . Good morning . Just following up on Sam's question there . Just on the partnerships . I think you talked about maybe being seeing a little bit more traction around the Greenfield Fund or partnership .
Speaker #7: Is that still the case or you're seeing good progress across different types of investment opportunities , including core funds ?
Speaker #3: Yeah . So we are seeing most traction , I would say , across across the core plus to value add spectrum of return profile and the nature of the partnership can be can be greenfield as we call it , which means we just form capital to pursue new acquisitions .
Speaker #3: Or it can involve some seed assets as we discussed previously .
Speaker #7: Okay , that's helpful . My other question would be just in terms of capital allocation , obviously you've got , you know , potentially some capital coming back through asset sales .
Speaker #7: You know , how would you rank sort of the opportunity set in terms of redeploying into your various buckets of growth and also , your payout ratio continues to trend down .
Hey, Manu, uh, as you know, over the last decade, we've averaged at around 70 75%, uh, pretty consistently. We expect that retention ratio to carry into 2026 without any material deviations. So, yes, there will be, uh, uh, some space coming back to us, uh, but that's normal. Course, uh, for our portfolio. Um, and as far as rental spreads as, you know, we disclose the expiring rents, uh, in the mdna and we also discussed, uh, the, uh, the market rent. So, uh, we expect Market rents to be consistent with the overall, um, uh, Market rents for the respective regions, uh, for 2026 expiries. So there's no no idiosyncratic space. That is coming back to us or that is maturing in 2026.
Got it. And in that context, it should be assumed, uh,
Kind of, you know, like stable occupancy into next year.
As well.
On 2026 outlook in February, as we always do. Uh-huh?
Okay, fair enough. Okay, uh, and then looking at the
Development project, uh, would be, uh, developing specifically.
I think that was expected to be completed this quarter uh around this time uh is at least up or how is the progress on the lease up there on that property?
Um, it's, uh, it's is getting completed. Uh, it's not not, not fully, uh, fully complete. Uh, uh, so it still is underway. There's still some work, uh, happening at the site. Um, the leasing program progress has been encouraging, we see good volume of rfps for that asset, um, including for, um, smaller Footprints. The asset demises and to, uh, small units as little as 50,000 square feet. Um, all the way up to the full building. Um, this development is 2 buildings, uh, of about 200,000 square feet each. Uh, so we see our fee activity, uh, for, for the entire range. Uh, and uh, generally are encouraged by the by the feedback and the um, how the asset is positioned in the market.
Okay, good to hear that right now.
Yeah, and let me just a follow up on this uh is like the new leasing environment uh relatively softer compared to the renewal activity. Would you say?
Um, as we've commented before, we've seen uh, new leasing environment, uh, gradually improving uh throughout the second half of 20125.
Uh, following a muted first, uh, first quarter, uh, and, uh, that's reflected in the lease up that you see across our, uh, portfolio. That's reflected in our Inn Place occupancy as well. Um, and the progress on our, uh, new developments, um, is is, is is reflected in that. So we've signed a few leases this quarter within our new developments, uh, both for wholly owned portfolio. And, uh, some, uh, some of our managed developments with, with good pipeline for the balance. Uh, it's uh, it's the pipeline has actually improved uh, uh, relative to let's say August when we reported last time.
Got it. Thank you. Uh, just a last question. Uh, the federal budget was announced last night. Uh, big infrastructure spending is being proposed. Uh, do you see any read-through for your portfolio or industrial using demand in general for that?
um,
yeah, we obviously digesting the, the, the budget, uh, as everyone else is in the market, uh, 1, um, notable, uh, area where we see incremental demand is, is defense. Uh, we have already seen uh, this uh, the the uh, increased defense spending and increased sort of Defense uh, Focus translate into incremental demand for industrial and Canada in our portfolio. Uh, early signs of that, uh, and we expect to see more of it as uh, as uh, this develops.
Thank you, guys, and I'll turn it back.
Your next question comes from the line of Mike Maher. Marquez of BMO Capital markets. Your line is now open.
Thanks operator. Um,
Alex, it's good to see I guess the progress on the data center initiative. I think you said 2 deposit, put down. So when you get to help us understand, um, I guess stage Delivery 2 to 5 year timeline. But how does that work? You put a deposit down who actually funds the infrastructure. I guess, I'm trying to get a sense of how the capex will build as you continue to get more and more.
um,
approvals at the municipal level for power.
Thank you, Mike. Yeah. So, so far the, uh, the C, the deposits, that we Advanced our refundable deposit, this just secures our place in the queue and, uh, allows us to engage with occupiers, um, on, uh, definitive timelines with definitive power, uh, capacity and, and delivery schedule. Uh, as we advance the, uh, infrastructure work for these sites, then it will require incrementally more Capital, uh, to, uh, then, uh, have more firm, uh, visibility into Power timelines. And, um,
And then well, the big Capital outlay will be obviously the construction itself. So uh what our priorities are right now is to, um,
A lease on a power shell basis, uh, so that we can, uh, continue uh, investing Capital, uh, with uh, with greater certainty of the revenue, uh, of the revenue side of the equation.
Okay. And then if, if it's not um, you know, if its 2 to 5 years out in terms of stage delivery, does that mean that substantial Capital isn't really in the pipeline for 2026 and really 2027 at this point?
Not for 2026.
Could be for 2027, depending on how quickly we advance some of these projects.
Okay. And then just as your contemplating, I know a lot of things in the air but um it sounds like you want the gate with, with occupiers on the uh, on the site. I mean, is this something where you would potentially build on spec basis or no, would you have to have a
A user lined up.
Uh complete spec development would be unlikely uh at this point. Uh so we'll we'll want to secure uh some components of the revenue at least uh, to to proceed.
Okay.
Thanks for that. Um, just lasts 1 for me before I turn it back. Um, you know, obviously a lot of focus on building the private Capital Partnerships, you said that you gave us good color in terms of what the demand profile looks like in terms of the core and, uh, or core Plus, and, and value add. I was just curious. Um, you know, you guys have been pretty quiet in the US. Um, ever since performing me,
Usj is that market? Something that's on your uh on your radar screen at all? Or is it highly unlikely in the next 12 to 24 months?
Yeah, thank you.
For the question, Mike, it actually is on the radar. Uh, incrementally. More now than let's say earlier, uh, this year. Um, you know, for the last uh,
Couple of years, let's say we haven't really seen, uh, strong opportunities in the US and that's why the partnership also hasn't been growing. Uh, we are, uh, focusing a little bit more on growing that vehicle now and seeing good, uh, good reactions from, uh, from potential investors. And, uh, also are starting to see more interesting opportunities, uh, in the US as, uh, fundamentals. Start improving, uh, in certain certain markets. Um, so um, I don't expect us to
Do anything sizable, but definitely incrementally. We’re looking at, uh, uh, growing, uh, that part of the business.
That's great. That's up for me. Thanks very much.
Your next question comes from the line of Kyle Stanley. If the Jordans, your line is now open.
Thanks uh, morning everyone.
Maybe just going back to uh Mike's questions on the on the data center side. I mean you know clearly data center investment is is very topical today. It's, you know, every every second article we see is something about AI or data center investment.
Has anything changed from when you first brought this up? As as you know a strategy last year your investor day in terms of, you know your desire to invest in this asset class or, you know, maybe the the pace at which you expect it to become a part of the portfolio. Just just given, you know, this, this enhanced Focus.
Um, thanks Kyle. We continue to see, uh, additional data points that reinforce reinforce the thesis, uh, and, uh,
As you know, we're not buying land to build data centers. We are looking at it, at least, for now more from a high stand. Best use perspective for existing uh, existing sites and existing assets.
and uh,
So far. Oh, everything we've seen. Uh, especially with the uh level of capex that goes into uh uh AI uh facilities or AI. Um uh,
Powering data centers is, uh, encouraging for the thesis.
Okay, thanks for that. Um, maybe just as you kind of are working through current, leasing discussions, has next year's review of usmca come up at all. Our tenants concerned is it, maybe impacting the term they're looking at, uh, for new leases just like any commentary on the impact. This is either having or not having it all. Um, as as you're doing releasing today,
Um, we are not really seeing, uh, that impacting leasing decisions in terms of, uh, how occupiers are thinking about their, uh, their Footprints. Um, it it, it rarely rarely comes up as a, as a discussion point.
Asking for longer lease terms, as they are looking to invest in their space, and they need term security. We've seen a little bit more of that over the last.
3 to 6 months.
Okay. That's encouraging. Uh, just the last 1. Um, you know, recent broker Market stats, highlighted softness in Montreal, I think, you know, this was probably expected in an influenced by the Amazon departure this year. Just love your thoughts on, you know, the state of the leasing environment in Montreal, you know, how you see your portfolio evolving through maybe the the soft patch and and when you'd expect that market to to firm up a little bit,
Yeah. So in Montreal, it's a, it's a bifurcation, uh, between a larger Bay and smaller Bays small to mid-day, uh, facilities. Uh, we see, uh, ongoing, uh, demand and, uh, leasing spread strength and spreads are strong, uh, for Midday Leasing. And that's reflected in our stats. This quarter. So adjusted for a fixed rate, renewal that we mentioned in the prepared. Remarks are spreads in Montreal, or in Quebec, where 50%, um, which are, you know, pretty healthy relative to last year or the prior prior periods. Um, and when it comes to the larger Footprints, that's where we see more Supply. That's most of the Amazon, uh, sublet footprint is is, uh, or all of it is is larger Bay facilities. And, uh, we're seeing a bit less demand. Uh,
For, uh, those kinds of footprints, and that translates into maybe softness in that segment of the market.
um, most of our portfolio is addressing kind of small to mid May, uh requirements and is uh is is seeing good traction when it comes to new Leasing and when it comes to renewals
Okay, thanks for that. I will turn it back.
Again, if you'd like to ask a question please press star, followed by 1 on your telephone keypad that star followed by 1 on your telephone keypad. Your next question comes from the line of Matt cornick of National Bank Financial. Your line is now open.
Hey guys. Um, just quickly on, on the market. Rent trajectory, it looks like Western Canada's improving Toronto's, kind of stable, uh, and Montreal is in a little bit of pressure, albeit off some pretty lofty highs. Um, so, so, how should we think about, from from your earlier? Comment, it sounds like you're expecting those levels to kind of stick at current levels. But, uh,
When when should we expect or do you think there is an inflection coming in Market rents over the next year or 2?
well uh, Matt broadly, we uh, maintain the
The Outlook that uh, Market rents, uh are driven by the overall trajectory of of availability rates in any given market. And so as we see uh, continued absorption in uh, in
in the GTA and Calgary and over time in Montreal, um, we, we expect to see obviously overall availability rates stabilizing and start training downwards and that's when we expect to see the inflection point. Overall, in terms of Market rent, development in the meantime, uh, and I think it's important to highlight is uh even in today's environment that uh you know, is arguably uh softer than let's say 3 years ago. Uh we are signing Lisa's routinely with 3 3 and a half percent escalators um for you know 3 to 10 year terms and uh that continues to be uh very much part of the leasing equation for Canada.
Makes sense. And then this quarter I mean the the hit to kind of committed occupancy was mostly in western Canada, it sounds like you've got
Part of that space spoken for but can give us a sense as to the Dynamics there and the timeline on kind of getting back because you had really high committed occupancy in Q2 in that portfolio. Yeah, Dynamics are remarkable. Uh, we, uh, we got indeed some space back about 100,000 ft in in Edmonton. Uh, and that was, uh,
Late late summer, early fall. And within a month, we relied the entire 100,000 square feet to 2 occupiers and uh, they will be both commencing in force quarter, uh, so that that committed occupancy will go for that for that particular, uh, asset and um, in Edmonton overall. We'll go back up uh, within within a couple of months.
Okay, that's helpful. Um and then interesting, and a little counterintuitive in terms of the auto uh demand that you're seeing what would be the rationale for for them, taking that space at this point. And is it a relocation or is that a new space in the market?
Uh, some of the net new space, uh, some of it is, uh, optimizing, uh, their supply chains across North America. Some of it is uh, net, new entrance into Canada.
Uh, for Tier 1 Automotive. That's in our managed portfolio. We just signed a 200,000 square foot lease with a tier 1, uh, Automotive Group. Um, um, we've expanded a couple of, uh, multinational, uh, uh, uh, OE OEM, uh groups. Uh, so it's it's, it's a, it's a, it's a range. But, uh, mostly driven by, uh, ongoing kind of, uh, optimization of Supply chains when it comes to Automotive sector.
And and generally good credits, I assume. But uh what what sort of terms on those leases?
Range from 5 to 10 years. Uh, very good credits. Uh, so these are Tier 1, uh, pilot Tier 1 groups, or, or or, uh,
Bluechip uh, multinational, uh, oems.
Okay, fair. Um, and then just lastly, a technical 1, um, the tax on the European portfolio. Um, it it was a bit higher. It's a, it's a little over a million dollars. This quarter is that, is that a new run rate because the euro is, uh, appreciated or, or should be expected to kind of come back down to kind of 750,000.
So that's yeah, the tax there. It's um there's a little bit coming from the US and a little bit from the from the year from Euro. It's probably a decent. It's a it's a decent run rate, we would have had maybe some lower credits from the prior quarter so I would probably say in and around that range is a decent, run rate. You know, obviously as we grow our income in Europe, um, that will that will, uh, that will size accordingly as well. Um,
Okay, perfect. Thanks and uh congrats on a solid career. Yes.
Thank you, Matt.
Question comes from the line of tell woolly of CIBC your line is now open.
Hi, good morning everybody.
Uh, just on the data center um, strategy. I I'm just can we call these Pilots or is this really like the official start of the strategy?
um, uh,
It depends on your definition for pilot. Uh, but uh look the way we think about it is we are uh making progress on uh a few tangible opportunities uh in terms of securing power and uh maybe the official start of the strategy will be as we uh firm up, the revenue model, then we can uh credibly uh talk about uh how replicable.
Uh, any given, uh, project is, and, uh, then it becomes more of a program.
And the current sites right now. Those are largely uh vacant assets or development land. Can you just talk a little bit about the current sites? You're looking at uh the 2 sites uh for which we advance. The deposit are both existing uh existing assets. You know, they're solid buildings. Uh but the data center, uh potential is far stronger uh from a return standpoint.
Um, we have generally Redevelopment rights or uh, very short leases uh on on these sites, allowing us to then uh tangibly pursue uh data center strategies for these assets.
Got it and then also to can you give us an idea of like how we should think about? Like I'm not exactly familiar with like when you guys want to acquire power like that process and how much is there a cost to walk through that?
Yeah, so so, uh, the when it comes to, uh, the process of acquiring power, it's very specific to each utility specific to each location. Uh, that's why, uh, you know, we shortlisted 13 sites of the 13 sites. You know, some are some are getting, uh, 2 power faster. Uh, but you know, the the rest of the sites are still uh, very much on the list and we are uh, continuing to advance the the dialogue there. Um,
Comment on, on on that. Uh, but we will definitely provide the details as we make progress.
Perfect. Um, I was in earlier question about the Koosman renegotiation coming up ahead, and I appreciate you're talking to clients.
You know, you're not, uh, maybe hearing much from them, I guess I'm just wondering more. What is your, uh, internal base case about how to how you guys are thinking about how that might impact leasing activity.
Given your experience this year.
Um, we think that the this longer decision, uh, timelines are likely going to stay until their certainty, on that front. Uh, what we are seeing though is that decisions are happening. They just happening at a slower pace, so then our pipeline keeps building and keeps growing and, uh, as it grows, uh, to, you know, a large enough, uh level, then we will see consistent flow of, uh, signed commitments and, uh, we can very much operate in that environment. Um, but you know, we expected that longer decision timeline, uh, phenomenon is here to here to stay until there's clarity.
And on a partner capital or partnership capital side, um,
You know, have there been any real impediments that you found, kind of working through the process right now? Just in terms of, like, is it market conditions or other things that have maybe slowed this process down?
uh, there's been a lot of changes for, uh,
In terms of how many, uh, global pension funds are organized, uh, over the last, uh, 12 to 24 months, uh, lots of changes in terms of how they think about real estate, relative to, uh, overall real assets portfolios. And, um, that has impacted just capital formation processes. Uh, broadly, it's kind of well documented that capital formation, uh, timelines have been, uh, longer over the last 2 to 3 years, uh, than normal. And so we're starting to see, uh, that changing. We're also starting to see, uh, groups, uh, shifting focus back to, uh, equity investments from credit investments. And so, all these things are likely going to be helpful for, uh, what we are trying to achieve.
Perfect. I appreciate the caller. Thanks, everyone. Thank you so much.
Our next question comes from the line of Tammy, the analyst at RBC Capital Markets. Your line is now open.
Thanks. Good morning. Um, you mentioned uh Alex that the pipeline is growing from a leasing standpoint. You know how much of that 1.7 million square feet. I think you mentioned in terms of leases that are in progress, how would that compare to perhaps, you know, some of the recent quarters and how much of that do you see as you know, likely getting done?
um,
the it is, I would say it's uh,
50% to 70% larger in terms of, uh, deals that are sitting in the pipeline. So, um, yeah, it is, it is a notable increase.
Um, when it comes to, uh, the conversion rate, look, uh, these are all tangible requirements. Uh, and so, uh,
We, uh, we expect that. Um, many of them will convert is just a question of time. Uh, a lot of groups are being very cautious when it comes to new Footprints. They want to, if its 3 L's, they want to make sure that they have, uh, their contract secured, uh, when it comes to, uh, end users. Uh, it takes, uh, quite a bit of approvals internally to get, uh, things going. Uh, there are some leases that we signed, uh, this quarter for new developments that have been in negotiations for, for 6 months. So, yeah. They they do convert, uh, the commitments do get signed. It's just
Takes, uh, takes longer to, to get there. Hence, the pipeline is growing.
And then just to clarify, none of that or is any of that 1.7 million square ft in your committed occupancy, numbers.
No, not yet. None of it, right? Okay.
Um, and then just, um, coming back to the, uh, the comment around dispositions. The 150 million. What what's the sense of timing here? And you can maybe just uh, provide some uh caller around the geographic mix.
I think, if I recall, some of that might be Saskatchewan. But just, if you can provide an update on that, that'd be great.
and then, just just, lastly, um,
On the European JV, I think, um, you mentioned potentially seating.
Some, you know, some of that potential JV or JVS, um, with some of your existing portfolio. So, how much would you consider perhaps Vending in and what sort of retained interest um, would you be considering
I think, uh, it's it's a bit early to comment. Well, we are seeing generally is more interest than in a 50/50 JV, uh, in
In Europe. Um, so uh, that from a stake standpoint that is, uh, more likely than, uh, any other stake. Uh, as far as the Quantum of a potential, uh, seed portfolio, that that is uh, uh, a little bit too early to comment on
Okay. Thanks very much. I'll turn it back.
Uh this concludes the question and answer session, I would now like to turn the conference back over to Mr. Senica, for any closing remarks
Thank you for your interest and support of Dream Industrial REIT. We look forward to reporting on our progress next quarter.
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