Q2 2026 Automotive Properties Real Estate Investment Trust Earnings Call
Speaker #1: Good morning, ladies and gentlemen, and welcome to the Automotive Properties Q2 2026 Second Quarter Results Conference Call and Webcast. At this time, all lines are in a listen-only mode.
Operator: Good morning, ladies and gentlemen, and welcome to Automotive Properties REIT's 2026 second quarter results conference call and webcast. At this time, all lines are in a listen-only mode. Following management's remarks, we will conduct a question and answer session. Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the REIT's current views with respect to future events. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking information. For more information on the risks, uncertainties, and assumptions relating to forward-looking information, please refer to the REIT's latest MD&A and annual information form, which are available on SEDAR+. Management may also refer to certain non-IFRS financial measures.
Operator: Good morning, ladies and gentlemen, and Welcome to Automotive Properties REIT's 2026 Second Quarter Results Conference Call and Webcast. At this time, all lines are in a listen-only mode. Following management's remarks, we will conduct a question and answer session. Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the REIT's current views with respect to future events. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking information. For more information on the risks, uncertainties, and assumptions relating to forward-looking information, please refer to the REIT's latest MD&A and annual information form, which are available on SEDAR+. Management may also refer to certain non-IFRS financial measures.
Speaker #1: Following management's remarks, we will conduct a question-and-answer session. Please be aware that certain information discussed today may be forward-looking in nature. Such forward-looking information reflects the REIT's current views with respect to future events.
Speaker #1: Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially from those projected in the forward-looking information.
Speaker #1: For more information on the risks, uncertainties, and assumptions relating to forward-looking information, please refer to the REIT's latest MD&A and Annual Information Form, which are available on Cedar Plus.
Speaker #1: Management may also refer to certain non-IFRS financial measures. Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS.
Operator: Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please refer to the REIT's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on 14 August 2026. I would now like to turn the conference over to Milton Lamb, President and CEO. Please go ahead, Mr. Lamb.
Operator: Although the REIT believes these measures provide useful supplemental information about financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please refer to the REIT's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on 14 August 2026. I would now like to turn the conference over to Milton Lamb, President and CEO. Please go ahead, Mr. Lamb.
Speaker #1: Please refer to the REIT's latest MD&A for additional information regarding non-IFRS financial measures. This call is being recorded on August 14, 2026. I would now like to turn the conference over to Milton Lamb, President and CEO. Please go ahead, Mr. Lamb.
Speaker #2: Thank you, Morgan, and good morning, everyone. With me on our call is Andrew Kalra, our Chief Financial Officer. Our strong second-quarter performance reflects the positive impact of the property acquisitions we completed during 2025 and Q1 of this year, plus the partial contribution of the three properties we acquired in Greater San Diego and Santa Ana, California, in early Q2.
Milton Lamb: Thank you, Morgan, and good morning, everyone. With me on our call is Andrew Kalra, our Chief Financial Officer. Our strong Q2 performance reflects the positive impact of the property acquisitions we completed during 2025 and Q1 of this year, plus partial contribution of the three properties we acquired in Greater San Diego and Santa Ana, California in early Q2. Compared to Q2 of last year, our property rental revenue has increased by 22.8%, cash NOI is up 20%, AFFO has increased by 18%, and AFFO per unit diluted increased to CAD 0.263 from CAD 0.249. This represents a record quarterly AFFO per unit amount for APR, up from our prior record of Q1 this year, demonstrating the positive impact of our acquisitions and embedded growth for contractual fixed or CPI-adjusted rent increases in our net lease structure.
Milton Lamb: Thank you, Morgan, and good morning, everyone. With me on our call is Andrew Kalra, our Chief Financial Officer. Our strong Q2 performance reflects the positive impact of the property acquisitions we completed during 2025 and Q1 of this year, plus partial contribution of the three properties we acquired in Greater San Diego and Santa Ana, California in early Q2. Compared to Q2 of last year, our property rental revenue has increased by 22.8%, cash NOI is up 20%, AFFO has increased by 18%, and AFFO per unit diluted increased to CAD 0.263 from CAD 0.249. This represents a record quarterly AFFO per unit amount for APR, up from our prior record of Q1 this year, demonstrating the positive impact of our acquisitions and embedded growth for contractual fixed or CPI-adjusted rent increases in our net lease structure.
Speaker #2: Compared to Q2 of last year, our property rental revenue has increased by 22.8%, cash NOI is up 20%, AFFO has increased by 18%, and AFFO per unit diluted increased to 26.3 cents from 24.9 cents.
Speaker #2: This represents a record quarterly AFFO per unit amount for APR, up from our prior record in Q1 this year, demonstrating the positive impact of our acquisitions and embedded growth from contractual fixed or CPI-adjusted rent increases in our net lease structure.
Speaker #2: This is further reflected in our reduced AFFO payout ratio of 78.3% in the quarter compared to 80.7% in Q2 of last year, despite our distribution increase last year and issuance of REIT units through the completion of our $57 million equity offering last October.
Milton Lamb: This is further reflected in our reduced AFFO payout ratio of 78.3% in the quarter, compared to 80.7% in Q2 of last year. Despite our distribution increase last year and issuance of REIT units through the completion of our CAD 57 million equity offering last October. With our strong financial performance, the REIT's trustees have approved an increase of approximately 2% to our annual cash distribution from CAD 0.822 to CAD 0.839 per unit. Our new monthly distribution will be CAD 0.0699 per unit, up from CAD 0.0685. This increase will be effective for this month's distribution to be paid on or about 15 September 2026, to unitholders of record on 31 August 2026. This marks the second consecutive year we have implemented a distribution increase, which highlights our confidence in the stability of our cash flow.
Milton Lamb: This is further reflected in our reduced AFFO payout ratio of 78.3% in the quarter, compared to 80.7% in Q2 of last year. Despite our distribution increase last year and issuance of REIT units through the completion of our CAD 57 million equity offering last October. With our strong financial performance, the REIT's trustees have approved an increase of approximately 2% to our annual cash distribution from CAD 0.822 to 0.839 per unit. Our new monthly distribution will be CAD 0.0699 per unit, up from CAD 0.0685. This increase will be effective for this month's distribution to be paid on or about 15 September 2026, to unitholders of record on 31 August 2026. This marks the second consecutive year we have implemented a distribution increase, which highlights our confidence in the stability of our cash flow.
Speaker #2: With our strong financial performance, the REIT's trustees have approved an increase of approximately 2% to our annual cash distribution, from $0.822 to $0.839 per unit. The distribution will be 6.99 cents per unit, up from 6.85 cents.
Speaker #2: This increase will be effective for this month's distribution, to be paid on or about September 15, 2026, to unitholders of record on August 31, 2026.
Speaker #2: This marks the second consecutive year we have implemented a distribution increase, which highlights our confidence in the stability of our cash flow. Further, reflecting the underlying stability of our cash flow, we were active in Q2 renewing several of our leases, including one of our dealership properties in Vancouver and one in Regina. These leases were extended by an average of 7.5 years with base rent increases of approximately 4.8%, with subsequent annual fixed rent increases.
Milton Lamb: Further, the underlying stability of our cash flow, we were active in Q2, renewing several of our leases, including one of our dealership properties in Vancouver, one of our dealership properties in Regina, which were extended by an average of 7.5 years, with base rent increases of approximately 4.8%, with subsequent annual fixed rent increases. Our VW Das WeltAuto dealership property in Montreal was extended beyond its current lease maturity of 2027 for a further six years, subject to a CPI adjustment in 2027. One of our dealership properties in Calgary was also extended by five years at rents to be agreed upon as that renewal commences.
Milton Lamb: Further, the underlying stability of our cash flow, we were active in Q2, renewing several of our leases, including one of our dealership properties in Vancouver, one of our dealership properties in Regina, which were extended by an average of 7.5 years, with base rent increases of approximately 4.8%, with subsequent annual fixed rent increases. Our VW Das WeltAuto dealership property in Montreal was extended beyond its current lease maturity of 2027 for a further six years, subject to a CPI adjustment in 2027. One of our dealership properties in Calgary was also extended by five years at rents to be agreed upon as that renewal commences.
Speaker #2: Our VW Day Source dealership property in Montreal was extended beyond its current lease maturity of 2027, for a further six years, subject to a CPI adjustment in 2027.
Speaker #2: One of our dealership properties in Calgary was also extended by five years at rents to be agreed upon as that renewal commences. We also announced yesterday that subsequent to quarter-end, we entered into a new lease in joint arrangement with a member of the DeLaurie Group, pursuant to which we've agreed to lease our 69,000-square-foot automotive dealership property located at 9088 Jane Street in Vaughan under a 16-year triple net lease, whereby the landlord has a redevelopment option after redevelopment option.
Milton Lamb: We also announced yesterday that subsequent to quarter end, we entered into a new lease and joint arrangement with a member of the Dilawri Group, pursuant to which we have agreed to lease our 69,000 square foot automotive dealership property located at 9088 Jane Street in Vaughan, under a 16-year triple net lease, whereby the landlord has a redevelopment option. We expect rent payments to commence on 1 December 2026. Concurrently, we have agreed to sell 50% interest in the property for a cash purchase price of CAD 16 million, reflecting a premium to IFRS value, with the expected closing in September of 2026. We expect to retain the remaining 50% interest of the property, and all parties have waived conditions. It should be noted that the demand for automotive facilities has allowed us to maintain a 100% leased portfolio, even though some of the properties have experienced changes in the OEM franchises.
Milton Lamb: We also announced yesterday that subsequent to quarter end, we entered into a new lease and joint arrangement with a member of the Dilawri Group, pursuant to which we have agreed to lease our 69,000 square foot automotive dealership property located at 9088 Jane Street in Vaughan, under a 16-year triple net lease, whereby the landlord has a redevelopment option. We expect rent payments to commence on 1 December 2026. Concurrently, we have agreed to sell 50% interest in the property for a cash purchase price of CAD 16 million, reflecting a premium to IFRS value, with the expected closing in September of 2026. We expect to retain the remaining 50% interest of the property, and all parties have waived conditions. It should be noted that the demand for automotive facilities has allowed us to maintain a 100% leased portfolio, even though some of the properties have experienced changes in the OEM franchises.
Speaker #2: We expect rent payments to commence on December 1, 2026. Concurrently, we've agreed to sell a 50% interest in the property for a cash purchase price of $16 million, reflecting a premium to IFRS value, with the expected closing in September of 2026.
Speaker #2: We expect to retain the remaining 50% interest of the property and all parties have waived conditions. It should be noted that the demand for automotive facilities has allowed us to maintain 100% leased portfolio even though some of the properties have experienced changes in the OEM franchises.
Speaker #2: With the new lease at 9088 Jane Street, combined with the recent lease renewal activity, we'll have no material lease expirations until 2028. I'd now like to turn it over to Andrew Kalra to review our financial results in more detail.
Milton Lamb: With the new lease at 9088 Jane Street, combined with the recent lease renewal activity, we will have no material lease expirations until 2028. I would now like to turn it over to Andrew Kalra to review our financial results in more detail. Andrew?
Milton Lamb: With the new lease at 9088 Jane Street, combined with the recent lease renewal activity, we will have no material lease expirations until 2028. I would now like to turn it over to Andrew Kalra to review our financial results in more detail. Andrew?
Speaker #2: Andrew?
Speaker #3: Thanks, Milton, and good morning, everyone. Our property rental revenue for the quarter increased to $30.2 million from $24.6 million in Q2 a year ago, reflecting growth from properties we acquired during and subsequent to Q2 last year, as well as contractual annual rent increases.
Andrew Kalra: Thanks, Milton, and good morning, everyone. Our property rental revenue for the quarter increased to CAD 30.2 million from CAD 24.6 million in Q2 a year ago, reflecting growth from properties we acquired during and subsequent to Q2 last year and contractual annual rent increases. Total cash NOI, same-property cash NOI for the quarter totaled CAD 24.8 million and CAD 21.1 million respectively, representing increases of 20% and 2.2% compared to Q2 last year. Interest expense and other financing charges for the quarter were CAD 8.1 million, an increase of CAD 1.7 million from Q2 last year, reflecting additional debt incurred to fund the acquisitions. Our G&A expenses were CAD 1.6 million for the quarter, an increase of about CAD 80,000 from Q2 last year, and in line with the REIT's expectations. Net income and other comprehensive income was CAD 18.1 million, compared to CAD 11.2 million in Q2 last year.
Andrew Kalra: Thanks, Milton, and good morning, everyone. Our property rental revenue for the quarter increased to CAD 30.2 million from CAD 24.6 million in Q2 a year ago, reflecting growth from properties we acquired during and subsequent to Q2 last year and contractual annual rent increases. Total cash NOI, same-property cash NOI for the quarter totaled CAD 24.8 million and CAD 21.1 million respectively, representing increases of 20% and 2.2% compared to Q2 last year. Interest expense and other financing charges for the quarter were CAD 8.1 million, an increase of CAD 1.7 million from Q2 last year, reflecting additional debt incurred to fund the acquisitions. Our G&A expenses were CAD 1.6 million for the quarter, an increase of about CAD 80,000 from Q2 last year, and in line with the REIT's expectations. Net income and other comprehensive income was CAD 18.1 million, compared to CAD 11.2 million in Q2 last year.
Speaker #3: Total cash NOI and same property cash NOI for the quarter totaled $24.8 million and $21.1 million, respectively, representing increases of 20% and 2.2% compared to Q2 last year.
Speaker #3: Interest expense and other financing charges for the quarter were 8.1 million dollars an increase of 1.7 million from Q2 last year reflecting additional debt incurred to fund the acquisitions.
Speaker #3: Our G&A expenses were 1.6 million dollars for the quarter an increase of about $80,000 from Q2 last year and in line with the lease expectations.
Speaker #3: Net income and other comprehensive income was 18.1 million dollars compared to 11.2 million dollars in Q2 last year the increase was primarily due to higher NOI changes in non-cash fair value adjustments for investment properties and foreign exchange gain partially offset by higher interest cost and a change in non-cash fair value adjustments for interest rate swaps.
Andrew Kalra: The increase was primarily due to higher NOI, changes in non-cash fair value adjustments for investment properties, and foreign exchange gain, partially offset by higher interest costs and a change in non-cash fair value adjustments for interest rate swaps. FFO and AFFO increased by 19.4% and 18.6% respectively compared to Q2 last year, reflecting higher rental revenue from the acquisitions and contractual rent increases. On a per unit basis, FFO increased to CAD 0.27 diluted, up from CAD 0.244 in Q2 last year, and AFFO per unit increased to CAD 0.263 diluted cents, up from CAD 0.249. We paid unitholder distribution totaling CAD 0.206 per unit in the quarter, representing an AFFO payout ratio of 78.3%. This compares with the total distribution of CAD 0.201 per unit in Q2 last year for a payout ratio of 80.7%.
Andrew Kalra: The increase was primarily due to higher NOI, changes in non-cash fair value adjustments for investment properties, and foreign exchange gain, partially offset by higher interest costs and a change in non-cash fair value adjustments for interest rate swaps. FFO and AFFO increased by 19.4% and 18.6% respectively compared to Q2 last year, reflecting higher rental revenue from the acquisitions and contractual rent increases. On a per unit basis, FFO increased to CAD 0.27 diluted, up from CAD 0.244 in Q2 last year, and AFFO per unit increased to CAD 0.263 diluted cents, up from CAD 0.249. We paid unitholder distribution totaling CAD 0.206 per unit in the quarter, representing an AFFO payout ratio of 78.3%. This compares with the total distribution of CAD 0.201 per unit in Q2 last year for a payout ratio of 80.7%.
Speaker #3: FFO and AFFO increased by 19.4 19.4 and 18.6% respectively compared to Q2 last year reflecting higher rental revenue from the acquisitions and contractual rent increases.
Speaker #3: On a per unit basis, FFO increased to 27 cents diluted, up from 24.4 cents in Q2 last year, and AFFO per unit increased to 26.3 diluted cents, up from 24.9 cents. We paid unitholder distributions totaling 20.6 cents per unit in the quarter, representing an AFFO payout ratio of 78.3%. This compares with a total distribution of 20.1 cents per unit in Q2 last year, for a payout ratio of 80.7%.
Speaker #3: The cap rate applicable to our portfolio was 6.7% at quarter-end, which was flat compared to 2025 year-end. We continue to be proactive with our debt strategy to enhance our financial flexibility. During the quarter, we increased the amount of the non-revolving portion of Facility Two by $35 million and extended the maturity date to June 2030 with the same credit spread.
Andrew Kalra: The cap rate applicable to our portfolio was 6.7% at quarter end, which was flat compared to 2025 year-end. We continue to be proactive with our debt strategy to enhance our financial flexibility. During the quarter, we increased the amount of the non-revolving portion of Facility Two by CAD 35 million and extended the maturity date to June 2030 with the same credit spread. At quarter end, 74% of our debt was fixed, with a weighted average interest rate of 4.49%, a weighted average interest rate swap term and mortgages remaining of 3.9 years, and a weighted average term of maturity of debt of 2.9 years as we continue to increase and extend our credit facilities. As at 13 August, we had a Debt to GBV ratio of 47.5%, with approximately CAD 64 million of undrawn capacity under our credit facilities and 11 unencumbered properties valued at CAD 166.7 million.
Andrew Kalra: The cap rate applicable to our portfolio was 6.7% at quarter end, which was flat compared to 2025 year-end. We continue to be proactive with our debt strategy to enhance our financial flexibility. During the quarter, we increased the amount of the non-revolving portion of Facility Two by CAD 35 million and extended the maturity date to June 2030 with the same credit spread. At quarter end, 74% of our debt was fixed, with a weighted average interest rate of 4.49%, a weighted average interest rate swap term and mortgages remaining of 3.9 years, and a weighted average term of maturity of debt of 2.9 years as we continue to increase and extend our credit facilities. As at 13 August, we had a Debt to GBV ratio of 47.5%, with approximately CAD 64 million of undrawn capacity under our credit facilities and 11 unencumbered properties valued at CAD 166.7 million.
Speaker #3: At quarter-end, 74% of our debt was fixed, with a weighted average interest rate of 4.49% and a weighted average interest rate swap term and mortgages remaining of 3.9 years.
Speaker #3: And a weighted average term of maturity of debt of 2.9 years as we continue to increase and extend our credit facilities. As at August 13th we had a debt to GBV ratio of 47.5% with approximately 64 million dollars of undrawn capacity under our credit facilities and 11 unencumbered properties valued at 166.7 million dollars I'd like to turn the call back to Milton for closing remarks.
Andrew Kalra: I'd like to turn the call back to Milton for closing remarks. Thank you very much.
Andrew Kalra: I'd like to turn the call back to Milton for closing remarks. Thank you very much.
Speaker #3: Thank you very much.
Speaker #2: Thanks, Andrew. Following our entry into the US market last year we're pleased with the progress we've made in expanding our portfolio including the US portfolio properties we now own properties in Ohio Florida and California representing leading automotive brands including Tesla Rivian and Penske Automotive Group with their Audi and VW properties this increased geographic and tenant diversity enhances the underlying strength of our portfolio and provides a broader array of acquisition opportunities for us we continue to position APR as an attractive partner to major automotive dealership groups and OEMs in Canada and the United States we are successfully executing our key objectives including expanded expanding our geographic market presence and diversifying our tenant base through a property acquisitions optimizing our portfolio and capital position with our bound property transaction and recent value enhancing lease renewals driving AFFO per unit growth and increasing our cash distributions looking ahead we look forward to building on our positive momentum supported by a growing property portfolio featuring high quality tenants providing essential retail and services locations in prime metropolitan markets in Canada and the US which GDP and population growth and attractive net lease structure and embedded fixed or CPI adjusted rental growth that concludes our remarks I'd now like to open the line for questions Morgan please go ahead.
Milton Lamb: Thanks, Andrew. Following our entry into the US market last year, we're pleased with the progress we've made in expanding our portfolio, including the US portfolio properties. We now own properties in Ohio, Florida, and California, representing leading automotive brands including Tesla, Rivian, and Penske Automotive Group, with their Audi and VW properties. This increased geographic and tenant diversity enhances the underlying strength of our portfolio and provides a broader array of acquisition opportunities for us. We continue to position APR as an attractive partner to major automotive dealership groups and OEMs in Canada and the United States. We are successfully executing our key objectives, including expanding our geographic market presence and diversifying our tenant base through property acquisitions, optimizing our portfolio and capital position with our own property transaction and recent value-enhancing lease renewals, driving AFFO per unit growth, and increasing our cash distributions.
Milton Lamb: Thanks, Andrew. Following our entry into the US market last year, we're pleased with the progress we've made in expanding our portfolio, including the US portfolio properties. We now own properties in Ohio, Florida, and California, representing leading automotive brands including Tesla, Rivian, and Penske Automotive Group, with their Audi and VW properties. This increased geographic and tenant diversity enhances the underlying strength of our portfolio and provides a broader array of acquisition opportunities for us. We continue to position APR as an attractive partner to major automotive dealership groups and OEMs in Canada and the United States. We are successfully executing our key objectives, including expanding our geographic market presence and diversifying our tenant base through property acquisitions, optimizing our portfolio and capital position with our own property transaction and recent value-enhancing lease renewals, driving AFFO per unit growth, and increasing our cash distributions.
Milton Lamb: Looking ahead, we look forward to building on our positive momentum, supported by a growing property portfolio featuring high-quality tenants providing essential retail and services, locations in prime metropolitan markets in Canada and the US with GDP and population growth, an attractive net lease structure, and embedded fixed or CPI-adjusted rental growth. That concludes our remarks. I'd now like to open the line for questions. Morgan, please go ahead.
Milton Lamb: Looking ahead, we look forward to building on our positive momentum, supported by a growing property portfolio featuring high-quality tenants providing essential retail and services, locations in prime metropolitan markets in Canada and the US with GDP and population growth, an attractive net lease structure, and embedded fixed or CPI-adjusted rental growth. That concludes our remarks. I'd now like to open the line for questions. Morgan, please go ahead.
Speaker #4: Thank you Mr. Lamb. We will now begin the question and answer session. If you would like to ask a question please press star then the number one on your telephone keypad to raise your hand and join the queue.
Operator: Thank you, Mr. Lamb. We will now begin the question and answer session. If you would like to ask a question, please press star, then the number 1 on your telephone keypad to raise your hand and join the queue. To allow adequate time for all participants, we ask that you limit yourself to 1 question and 1 follow-up. If you would like to withdraw your question, simply press star, then the number 1 again. Your first question comes from Jonathan Kelcher with TD Cowen. Your line is open.
Operator: Thank you, Mr. Lamb. We will now begin the question and answer session. If you would like to ask a question, please press star, then the number 1 on your telephone keypad to raise your hand and join the queue. To allow adequate time for all participants, we ask that you limit yourself to 1 question and 1 follow-up. If you would like to withdraw your question, simply press star, then the number 1 again. Your first question comes from Jonathan Kelcher with TD Cowen. Your line is open.
Speaker #4: To allow adequate time for all participants we ask that you limit yourself to one question and one follow-up. If you would like to withdraw your question simply press star then the number one again.
Speaker #4: Your first question comes from Jonathan Kelcher with TD Cowen. Your line is open.
Speaker #5: Thanks. Good morning.
Jonathan Kelcher: Thanks. Good morning.
Jonathan Kelcher: Thanks. Good morning.
Speaker #2: Good morning.
Milton Lamb: Good morning.
Milton Lamb: Good morning.
Speaker #5: First on this this deal with Dallari. Can you maybe give a little bit of color on like why you're selling 50% interest what the landlord redevelopment option how like how that would work.
Jonathan Kelcher: First, on this deal with Dilawri, can you maybe give a little bit of color on why you are selling a 50% interest, what the landlord redevelopment option, how that would work?
Jonathan Kelcher: First, on this deal with Dilawri, can you maybe give a little bit of color on why you are selling a 50% interest, what the landlord redevelopment option, how that would work?
Speaker #2: Yeah sure. The thought process is you know it follows on what we've been saying for a while. We love the underlying dirt it's an automotive zone property that has good demand and it was trying to balance our ability in the future to potentially do mixed use redevelopments plus the desire obviously to get strong income and have a strong tenant.
Milton Lamb: Yeah, sure. The thought process is it follows on what we have been saying for a while. We love the underlying dirt. It is an automotive-zoned property that has good demand. It was trying to balance our ability in the future to potentially do mixed-use redevelopment, plus the desire, obviously, to get strong income and have a strong tenant. It is a bit of a trade-off for flexibility. If you do a flashback almost 10 years, we bought this property for just over CAD 17 million. Have certainly had a nice 10 years with it, including some good rental growth. Now being able to take CAD 16 million, which for 50%, which almost equals what we bought it for originally, get some good income and maintain some of that flexibility in the future. It worked very well to get that balance.
Milton Lamb: Yeah, sure. The thought process is it follows on what we have been saying for a while. We love the underlying dirt. It is an automotive-zoned property that has good demand. It was trying to balance our ability in the future to potentially do mixed-use redevelopment, plus the desire, obviously, to get strong income and have a strong tenant. It is a bit of a trade-off for flexibility. If you do a flashback almost 10 years, we bought this property for just over CAD 17 million. Have certainly had a nice 10 years with it, including some good rental growth. Now being able to take CAD 16 million, which for 50%, which almost equals what we bought it for originally, get some good income and maintain some of that flexibility in the future. It worked very well to get that balance.
Speaker #2: So you know it's a bit of a trade-off for flexibility you know if you do a flashback almost 10 years we bought this property for just over 17 million have certainly had a nice 10 years with it including some good rental growth and now being able to take 16 million which for 50% which is almost equals what we bought it for originally get some good income and you know maintain some of that flexibility in the future it it worked very well to get that balance.
Speaker #2: Certainly, now is not the right time to be leaning into redevelopment, so this allowed us to straddle both worlds of good income and good underlying value.
Milton Lamb: Certainly, now is not the right time to be leaning into redevelopment. This allows us to straddle both worlds of good income and good underlying value.
Milton Lamb: Certainly, now is not the right time to be leaning into redevelopment. This allows us to straddle both worlds of good income and good underlying value.
Speaker #5: Okay. And I'm guessing your ability to get that redevelopment—so like if in four years or something you want to do it—you'd be able to just do so.
Jonathan Kelcher: Okay. I am guessing your ability to get that redevelopment on, so like if in 4 years or something you want to do it, that you would be just able to do so?
Jonathan Kelcher: Okay. I am guessing your ability to get that redevelopment on, so like if in 4 years or something you want to do it, that you would be just able to do so?
Speaker #2: Yeah. It's not four years. There's a minimum term, and then at that point, with appropriate notice—which certainly, if you're going through planning, it's easy to give significant notice—we can go ahead and look at doing a redevelopment.
Milton Lamb: Yeah. It is not 4 years. There is a minimum term, and then at that point, with appropriate notice, which certainly if you are going through planning, it is easy to give significant notice, we can go ahead and look at doing a redevelopment.
Milton Lamb: Yeah. It is not 4 years. There is a minimum term, and then at that point, with appropriate notice, which certainly if you are going through planning, it is easy to give significant notice, we can go ahead and look at doing a redevelopment.
Speaker #5: Okay. And I guess, just in order to get Dallari to agree to that, that was the quid pro quo—selling the half interest in the property.
Jonathan Kelcher: Okay. I guess just in order to get Dilawri to agree to that was the quid pro quo, was selling the half interest in the property?
Jonathan Kelcher: Okay. I guess just in order to get Dilawri to agree to that was the quid pro quo, was selling the half interest in the property?
Speaker #2: I don't know if I love that word because of good old Trump, but yeah, I mean, it was the balance between having flexibility. Obviously, there's investment that has to go into the property as they kind of put the new OEM in place, so it worked very well that, you know, if there is that underlying—or I'd really like to think, when there is that underlying—higher and better use, that we can do it together, both win, and then hopefully there'd be a relocation of any new tenant, or potentially have that tenant stay within the new redevelopment complex.
Milton Lamb: I don't know if I love that word because of good old Trump. But, yeah, it was the balance between having flexibility. Obviously, there's investment that has to go into the property. As they kind of put the new OEM in place. So it worked very well that if there is that underlying, or I'd really like to think when there is that underlying higher and better use, that we can do it together both when and then hopefully there'd be a relocation of any new tenant, or potentially have that tenant stay within the new redevelopment complex.
Milton Lamb: I don't know if I love that word because of good old Trump. But, yeah, it was the balance between having flexibility. Obviously, there's investment that has to go into the property. As they kind of put the new OEM in place. So it worked very well that if there is that underlying, or I'd really like to think when there is that underlying higher and better use, that we can do it together both when and then hopefully there'd be a relocation of any new tenant, or potentially have that tenant stay within the new redevelopment complex.
Speaker #5: Okay. Thanks. I'll I'll turn it back.
Jonathan Kelcher: Okay, thanks. I'll turn it back.
Jonathan Kelcher: Okay, thanks. I'll turn it back.
Speaker #4: Your next question comes from Serran Srinivas with ATB Corner Mark Capital Markets. Your line is open.
Operator: Your next question comes from Sairam Srinivas with ATB Cormark Capital Markets. Your line is open.
Operator: Your next question comes from Sairam Srinivas with ATB Cormark Capital Markets. Your line is open.
Speaker #6: Thank you, everybody. Good morning, guys. Following up on the line of questioning on the Bond Leasing Milton, just to clarify, the $16 million or so you paid for the property—that's for the 100%, correct?
Sairam Srinivas: Thank you, operator. Good morning, guys.
Sairam Srinivas: Thank you, operator. Good morning, guys.
Milton Lamb: Good day.
Milton Lamb: Good day.
Sairam Srinivas: Following up on Taner's line of questioning on the Vaughan leasing. Milton, just to clarify, the CAD 16 million or odd you paid for the property, that's for the 100%?
Sairam Srinivas: Following up on Taner's line of questioning on the Vaughan leasing. Milton, just to clarify, the CAD 16 million or odd you paid for the property, that's for the 100%?
Speaker #2: Sorry. It was $17 million—we bought it for just over $17 million in 2016 for 100%. And yes, now we're selling 50% for $16 million, or the equivalent of $32 million for 100%.
Milton Lamb: Sorry, CAD 17 million. We bought it for just over CAD 17 million in 2016 for 100%.
Milton Lamb: Sorry, CAD 17 million. We bought it for just over CAD 17 million in 2016 for 100%.
Sairam Srinivas: Okay.
Sairam Srinivas: Okay.
Milton Lamb: Now we are selling 50% for CAD 16 million or the equivalent of CAD 32 for 100%.
Milton Lamb: Now we are selling 50% for CAD 16 million or the equivalent of CAD 32 for 100%.
Speaker #6: That is amazing math. Thank you. And just kind of looking at the acquisition pipeline now, obviously, you guys have been active in the U.S. and Canada as well.
Sairam Srinivas: That is amazing math. Thank you. Looking at an acquisition pipeline now, obviously you guys have been active in the US, and Canada as well. How would you characterize the pipeline in terms of your geographic dispersion?
Sairam Srinivas: That is amazing math. Thank you. Looking at an acquisition pipeline now, obviously you guys have been active in the US, and Canada as well. How would you characterize the pipeline in terms of your geographic dispersion?
Speaker #6: How would you characterize the pipeline in terms of your geographic dispersion?
Speaker #2: I'm sorry, can you repeat that?
Milton Lamb: Sorry, could you repeat that?
Milton Lamb: Sorry, could you repeat that?
Speaker #3: Pipeline geographic.
Operator: Pipeline geo-
Andrew Kalra: Pipeline geo-
Sairam Srinivas: So just
Sairam Srinivas: So just
Speaker #6: So, just looking at your pipeline of acquisitions and the spread between the US and Canada.
Milton Lamb: Oh
Milton Lamb: Oh
Sairam Srinivas: looking at your pipeline of acquisitions and the spread between the US and Canada.
Sairam Srinivas: looking at your pipeline of acquisitions and the spread between the US and Canada.
Speaker #2: Yeah. Last quarter, $1.42 was not looking that attractive. We love getting the income at $1.42. You know, we think—we're watching that dollar resettle back into the high $1.30s, $1.39 and change now.
Milton Lamb: Last quarter, CAD 1.42 was not looking that attractive. We love getting the income at CAD 1.42. We think we're watching that dollar resettle back into the high 130s, 139 and change now. There's a bit of a balance there and I've always found the summer, I say this with a bit of a smile, most dealers enjoy their summer. So we look forward to the back half of the year when often there's more M&A and more deals that do occur. The balance between the two, we like some of the GDP and population growth markets in the States, especially in that Southeast, kind of through the Southwest. It'll be interesting. There's a balance on where we want to see growth. There's certainly more opportunities when we're looking at both sides of the border. So we're looking forward to the back half of the year.
Milton Lamb: Last quarter, CAD 1.42 was not looking that attractive. We love getting the income at CAD 1.42. We think we're watching that dollar resettle back into the high 130s, 139 and change now. There's a bit of a balance there and I've always found the summer, I say this with a bit of a smile, most dealers enjoy their summer. So we look forward to the back half of the year when often there's more M&A and more deals that do occur. The balance between the two, we like some of the GDP and population growth markets in the States, especially in that Southeast, kind of through the Southwest. It'll be interesting. There's a balance on where we want to see growth. There's certainly more opportunities when we're looking at both sides of the border. So we're looking forward to the back half of the year.
Speaker #2: There's a bit of a balance there and you know I've always found the summer I say this with a bit of a smile most dealers enjoy their summer so we look forward to you know the back half of the year when you know off often there's more M&A and more deals that do occur the balance between the two you know we we like some of the GDP and population growth markets in the states especially in that southeast kind of through the southwest it'll be interesting.
Speaker #2: There's a balance in where we want to see growth. There are certainly more opportunities when we're looking up both sides of the border, so we're looking forward to the back half of the year.
Speaker #6: That's great, Milton. Thank you for the call. I'll turn it back.
Sairam Srinivas: That's great, Milton. Thank you for the color. I'll turn it back.
Sairam Srinivas: That's great, Milton. Thank you for the color. I'll turn it back.
Speaker #4: Your next question comes from Brad Sturgis with Raymond James. Your line is open.
Operator: Your next question comes from Brad Sturges with Raymond James. Your line is open.
Operator: Your next question comes from Brad Sturges with Raymond James. Your line is open.
Speaker #5: Hey. Good morning.
Brad Sturges: Hey, good morning.
Brad Sturges: Hey, good morning.
Speaker #2: Good day.
Milton Lamb: Good day.
Milton Lamb: Good day.
Speaker #5: Just sort of going back to the bond property in terms of the new lease with the Dallari affiliate. I'm wondering if you could give a bit of...
Brad Sturges: Just going back to the Vaughan property in terms of the new lease, with the Dilawri affiliate. Wondering if you could
Brad Sturges: Just going back to the Vaughan property in terms of the new lease, with the Dilawri affiliate. Wondering if you could
Milton Lamb: Yep
Milton Lamb: Yep
Brad Sturges: give a bit of color just on the new rent versus prior rents.
Brad Sturges: give a bit of color just on the new rent versus prior rents.
Speaker #5: A bit of color just on the new rent versus prior rents.
Speaker #2: You know, we talked about the rent starting on December 1st, so that's already public. You know, there's some money that has to go into it.
Milton Lamb: We talked about the rent starting 1 December, so that's already public. There's some money that has to go into it. The rents are nicely above when we acquired this property and they continue to grow. They grew nicely over the last 10 years. Not a significant difference. Again, there's probably a bit more, sorry, a bit of flexibility in there because of the redevelopment clause. But it's not materially different than what we would've looked at previously.
Milton Lamb: We talked about the rent starting 1 December, so that's already public. There's some money that has to go into it. The rents are nicely above when we acquired this property and they continue to grow. They grew nicely over the last 10 years. Not a significant difference. Again, there's probably a bit more, sorry, a bit of flexibility in there because of the redevelopment clause. But it's not materially different than what we would've looked at previously.
Speaker #2: The rents are nicely above when we acquired this property, and they continue to grow. They grew nicely over the last 10 years—you know, not a significant difference. Again, there's probably a bit more, sorry, a bit of flexibility in there because of the redevelopment clause, but it's not materially different than what we would have looked at previously.
Speaker #5: Okay. And then it would be similar to other Dallari leases with, like, a 1.5 percent fixed.
Brad Sturges: Okay. It would be similar to other Dilawri leases with like a 1.5% fixed price?
Brad Sturges: Okay. It would be similar to other Dilawri leases with like a 1.5% fixed price?
Milton Lamb: Yeah. Outside of the one clause that we talked about, it's very much a standard Dilawri lease.
Milton Lamb: Yeah. Outside of the one clause that we talked about, it's very much a standard Dilawri lease.
Speaker #2: Yeah, it's very much—you know, outside of the one clause that we talked about—it's very much a standard Dallari lease.
Speaker #5: Yeah, makes sense. Okay. And then just looking at the other lease extensions, could you give a bit more color in terms of when those extensions would be effective?
Brad Sturges: Yep. Makes sense. Okay. Just looking at the other lease extensions, could you give a bit of more color in terms of when those extensions would be effective?
Brad Sturges: Yep. Makes sense. Okay. Just looking at the other lease extensions, could you give a bit of more color in terms of when those extensions would be effective?
Speaker #2: The two that we have talked about, the increase that was announced, those were effective—I mean, we announced them before. It was just coming up with the formula, so those are already in place. The other ones are early to mid next year on when they would actually kick in. We've received the renewal notices, but the actual increases and new lease rates would be, call it, mid next year.
Milton Lamb: The two that we have talked about, the increase that was announced, those were effective, we announced them before, it was just coming up with the formula. So those are already in place. The other ones are early to mid next year, on when they would actually kick in. We have received the renewal notices, but the actual increases and new lease rates would be, call it mid next year.
Milton Lamb: The two that we have talked about, the increase that was announced, those were effective, we announced them before, it was just coming up with the formula. So those are already in place. The other ones are early to mid next year, on when they would actually kick in. We have received the renewal notices, but the actual increases and new lease rates would be, call it mid next year.
Speaker #5: The ones that are already effective, we've seen much of an impact in the quarter, was that at sort of the end of the quarter.
Brad Sturges: The ones that are already effective, have we seen much of an impact in the quarter, or was that at sort of the end of the quarter?
Brad Sturges: The ones that are already effective, have we seen much of an impact in the quarter, or was that at sort of the end of the quarter?
Speaker #2: No, these were rollovers from the original IPO, so that was done in July of 2015. Most of the rent increases with regards to the original portfolio are in July or August, so they'd be in Q3.
Milton Lamb: No. These were rollovers from the original IPO, so that was done in July of 2015. So most of the rent increases with regards to the original portfolio are in July or August, so they would be in Q3.
Milton Lamb: No. These were rollovers from the original IPO, so that was done in July of 2015. So most of the rent increases with regards to the original portfolio are in July or August, so they would be in Q3.
Speaker #5: Perfect. Okay, I'll turn it back. Thank you.
Brad Sturges: Perfect. Okay. I will turn it back. Thank you.
Brad Sturges: Perfect. Okay. I will turn it back. Thank you.
Speaker #2: Thank you.
Milton Lamb: Thank you.
Milton Lamb: Thank you.
Speaker #4: Your next question comes from Zemin Lu with DissJardens. Your line is open.
Operator: Your next question comes from Zemin Lu with Desjardins. Your line is open.
Operator: Your next question comes from Zemin Lu with Desjardins. Your line is open.
Speaker #6: Thanks. Good morning. So just a follow-up on the one property. I'm just wondering whether you can disclose, like, the estimated cap rate on the new 16-year lease?
Zemin Lu: Thanks. Good morning.
Zemin Liu: Thanks. Good morning.
Milton Lamb: Good day.
Zemin Lu: So just a follow-up on the Vaughan property. I am just wondering whether you can disclose the estimated cap rate on the new 16-year lease.
Milton Lamb: Good day.
Zemin Liu: So just a follow-up on the Vaughan property. I am just wondering whether you can disclose the estimated cap rate on the new 16-year lease.
Speaker #2: Yeah. We don’t tend to— we already own the property. That’s— I love the back math, because that’s basically asking us to tell you what the net rent is. So, no, it’s not disclosed.
Milton Lamb: Yeah, we do not tend to disclose cap rate, and certainly in this case when we already own the property. I love the back math because that is basically asking us to tell you what the net rent is. So, no, it is not disclosed.
Milton Lamb: Yeah, we do not tend to disclose cap rate, and certainly in this case when we already own the property. I love the back math because that is basically asking us to tell you what the net rent is. So, no, it is not disclosed.
Speaker #6: Okay. Okay, thanks. So, after this sort of 50% interest, are you contemplating any other dispositions in the near term?
Zemin Lu: Okay. Thanks. After this sale of the 50% interest, are you-
Zemin Liu: Okay. Thanks. After this sale of the 50% interest, are you-
Milton Lamb: Yep
Milton Lamb: Yep
Zemin Lu: contemplating any other dispositions in the near term?
Zemin Liu: contemplating any other dispositions in the near term?
Speaker #2: This was a special circumstance with a high-quality property and the desire to get income and maintain the redevelopment optionality. Short answer is, we like our portfolio.
Milton Lamb: This was a special circumstance with a high-quality property and the desire to get income and maintain the redevelopment optionality. Short answer is we like our portfolio. We still remain at 11 years, 100% leased and 100% rent payment. We never say no to look at anything, but right now we have nothing contemplated.
Milton Lamb: This was a special circumstance with a high-quality property and the desire to get income and maintain the redevelopment optionality. Short answer is we like our portfolio. We still remain at 11 years, 100% leased and 100% rent payment. We never say no to look at anything, but right now we have nothing contemplated.
Speaker #2: We still remain at 11 years, 100% leased, and 100% rent payment. We never say no to looking at anything, but right now, we have nothing contemplated.
Speaker #6: Okay, that's helpful. Yeah, I'll turn it back. Thanks.
Zemin Lu: Okay. That is helpful. I will turn it back. Thanks.
Zemin Liu: Okay. That is helpful. I will turn it back. Thanks.
Speaker #2: Thank you.
Milton Lamb: Thank you.
Milton Lamb: Thank you.
Speaker #4: Once again, if you would like to ask a question at this time, please press star, then the number one on your telephone keypad. Your next question comes from Jimmy Shan with RBC Capital Markets.
Operator: Once again, if you would like to ask a question at this time, please press star, then the number 1 on your telephone keypad. Your next question comes from Jimmy Shan with RBC Capital Markets. Your line is open.
Operator: Once again, if you would like to ask a question at this time, please press star, then the number 1 on your telephone keypad. Your next question comes from Jimmy Shan with RBC Capital Markets. Your line is open.
Speaker #4: Your line is open.
Speaker #7: Thanks. On the various extensions and early renewals, I was just curious if you could provide a bit of background and context for doing that.
Jimmy Shan: Thanks. On the various extensions and early renewals, I am just curious if you could provide a bit of background and context for doing that. Is it more tenant driven? Is it you being proactive? Just trying to understand that a little bit more.
Jimmy Shan: Thanks. On the various extensions and early renewals, I am just curious if you could provide a bit of background and context for doing that. Is it more tenant driven? Is it you being proactive? Just trying to understand that a little bit more.
Speaker #7: Is it more tenant-driven? Is it you being proactive? Just trying to understand that a little bit more.
Speaker #2: Kind of both. Certainly some of them it was option periods other ones had demand to either if they relocated if we didn't get the renewal then we had backup demand so they stepped up and renewed it's it's partly that we're now hitting some of the maturity on the original 11 to 19 year deal certainly on the day source the VW we originally said one of the the terms was fairly short but we had very strong confidence that they would renew and to no surprise they renewed so it's it's a bit of what was anticipated and we've been working with them to kind of hit the numbers and get that in place so it's it's it's partly that you know what I kind of like is a the backup demand and b in a number of cases the dealer group have used this for other OEMs as opposed to the original one so even when you're seeing transition within the property the dealer community likes to hold on to these assets because they can use them to achieve other franchises it kind of goes to supporting our backstory that we've kind of talked about for the last 10 11 years.
Milton Lamb: Kind of both. Certainly some of them, it was option periods. Other ones had demand, either if they relocated, if we did not get the renewal, then we had backup demand, so they stepped up and renewed. It is partly that we are now hitting some of the maturity on the original 11 to 19-year deal. Certainly on the Das WeltAuto, the VW, we originally said one of the terms was fairly short, but we had very strong confidence that they would renew. To no surprise, they renewed. It is a bit of what was anticipated, and we have been working with them to kind of hit the numbers and get that in place. It is partly that. What I kind of like is, A, the backup demand, and B, in a number of cases, the dealer group have used this for other OEMs as opposed to the original one.
Milton Lamb: Kind of both. Certainly some of them, it was option periods. Other ones had demand, either if they relocated, if we did not get the renewal, then we had backup demand, so they stepped up and renewed. It is partly that we are now hitting some of the maturity on the original 11 to 19-year deal. Certainly on the Das WeltAuto, the VW, we originally said one of the terms was fairly short, but we had very strong confidence that they would renew. To no surprise, they renewed. It is a bit of what was anticipated, and we have been working with them to kind of hit the numbers and get that in place. It is partly that. What I kind of like is, A, the backup demand, and B, in a number of cases, the dealer group have used this for other OEMs as opposed to the original one.
Milton Lamb: Even when you are seeing transition within the property, the dealer community likes to hold onto these assets because they can use them to achieve other franchises. It kind of goes to supporting our backstory that we have kind of talked about for the last 10, 11 years.
Milton Lamb: Even when you are seeing transition within the property, the dealer community likes to hold onto these assets because they can use them to achieve other franchises. It kind of goes to supporting our backstory that we have kind of talked about for the last 10, 11 years.
Speaker #7: Okay, that's helpful. Then just a quick follow-up on the Vantai. So what is that minimum term before you can contemplate redevelopment?
Jimmy Shan: Okay. That's helpful. Then just a quick follow-up on the Vaughan site. What is that minimum term before you can contemplate redevelopment?
Jimmy Shan: Okay. That's helpful. Then just a quick follow-up on the Vaughan site. What is that minimum term before you can contemplate redevelopment?
Speaker #2: It's it's not announced and they've asked us not to announce it but you know in the in the near future I don't see that land value being at a level that I anticipate it will be once this market matures and gets back to having you know true residential mixed use value
Milton Lamb: It's not announced, and they've asked us not to announce it. But in the near future, I don't see that land value being at a level that I anticipate it will be once this market matures and gets back to having true residential mixed-use value.
Milton Lamb: It's not announced, and they've asked us not to announce it. But in the near future, I don't see that land value being at a level that I anticipate it will be once this market matures and gets back to having true residential mixed-use value.
Jimmy Shan: But certainly, was it a 16-year lease? Is it a 16? Yeah, 16-year lease.
Jimmy Shan: But certainly, was it a 16-year lease? Is it a 16? Yeah, 16-year lease.
Speaker #7: Certainly. Was it a 16-year lease? Is it a, yeah, 16-year lease?
Speaker #2: Yep.
Milton Lamb: Yep.
Milton Lamb: Yep.
Speaker #7: It'll be shorter than sixteen years.
Jimmy Shan: It'll be shorter than 16 years.
Jimmy Shan: It'll be shorter than 16 years.
Speaker #2: Oh yeah, yeah. Very much so.
Milton Lamb: Oh, yeah. Yeah. Very much so.
Milton Lamb: Oh, yeah. Yeah. Very much so.
Speaker #7: All right. Thanks.
Jimmy Shan: All right. Thanks.
Jimmy Shan: All right. Thanks.
Speaker #4: Your next question comes from Juliano Dornhill with National Bank. Your line is open.
Operator: Your next question comes from Giuliano Thornhill with National Bank. Your line is open.
Operator: Your next question comes from Giuliano Thornhill with National Bank. Your line is open.
Speaker #6: Thanks. Good morning everyone. I just want to ask about the the Vantai as well. I'm wondering kind of can you give us some more description on who the old tenant was maybe the OEM there and and their rationale for leaving the site?
Giuliano Thornhill: Thanks. Good morning, everyone. I just want to ask you about the Vaughan site as well. I am wondering, can you give us some more description on who the old tenant was, maybe the OEM there, and the rationale for leaving the site?
Giuliano Thornhill: Thanks. Good morning, everyone. I just want to ask you about the Vaughan site as well. I am wondering, can you give us some more description on who the old tenant was, maybe the OEM there, and the rationale for leaving the site?
Speaker #2: Yeah, it was BAF which got acquired by Lithia, so Lithia BAF within Audi. Audi has—they did extremely well there. It was 60-odd thousand feet; they wanted to expand, and so they've moved their location around the corner and done a new build. I got to say, it's a beautiful building, and that left this opportunity available.
Milton Lamb: Yeah. It was Pfaff, which got acquired by Lithia, so Lithia Pfaff within Audi. Audi did extremely well there. It was 60-odd thousand feet. They wanted to expand, so they've moved their location around the corner and done a new build. I got to say, it's a beautiful building. That left this opportunity available.
Milton Lamb: Yeah. It was Pfaff, which got acquired by Lithia, so Lithia Pfaff within Audi. Audi did extremely well there. It was 60-odd thousand feet. They wanted to expand, so they've moved their location around the corner and done a new build. I got to say, it's a beautiful building. That left this opportunity available.
Speaker #6: And are you aware of, or can you disclose, the new OEM that will be put in place by Dilawri as well?
Giuliano Thornhill: Are you aware of the, or can disclose the new OEM that will be putting in place by Dilawri, as well as?
Giuliano Thornhill: Are you aware of the, or can disclose the new OEM that will be putting in place by Dilawri, as well as?
Speaker #2: We are aware they're asking not to disclose it, as similar to Tesla, they often—you know—dealers like to be able to announce it, because it's a bit marketing, a bit promotional, when they do announce it. So we don't want to take away that fanfare from them.
Milton Lamb: We are aware. They're asking not to disclose it. It's similar to Tesla. Dealers like to be able to announce it, because it's a bit marketing, a bit promotional when they do announce it. So we don't want to take away that fanfare from them.
Milton Lamb: We are aware. They're asking not to disclose it. It's similar to Tesla. Dealers like to be able to announce it, because it's a bit marketing, a bit promotional when they do announce it. So we don't want to take away that fanfare from them.
Speaker #6: Yep. Yeah. Absolutely. And then just on the on the the modeling I know it closes September so will you be recognizing straight line rent for the first bit until the and then cash rent on December is that the the lease will be working?
Giuliano Thornhill: Yep. Yeah, absolutely. Then just on the modeling, I know it closes September, so will you be recognizing straight line rent for the first bit and then cash rent on December? Is that how the lease will be working?
Giuliano Thornhill: Yep. Yeah, absolutely. Then just on the modeling, I know it closes September, so will you be recognizing straight line rent for the first bit and then cash rent on December? Is that how the lease will be working?
Andrew Kalra: It is going to be small. We will recognize straight line September, and then the cash will be coming in 1 December.
Andrew Kalra: It is going to be small. We will recognize straight line September, and then the cash will be coming in 1 December.
Speaker #1: So, yeah, we'll recognize it's getting small. We'll recognize straight-line in September, and then the cash will be coming in December 1st.
Speaker #6: Right. Okay. Perfect. All right, I'll turn.
Milton Lamb: Right.
Milton Lamb: Right.
Giuliano Thornhill: Okay. Perfect. All right. I will turn it back.
Giuliano Thornhill: Okay. Perfect. All right. I will turn it back.
Speaker #1: But when we do close it within September.
Andrew Kalra: When we do close it within September.
Andrew Kalra: When we do close it within September.
Speaker #2: Yeah.
Milton Lamb: Yeah.
Milton Lamb: Yeah.
Speaker #6: Yep. Absolutely.
Giuliano Thornhill: Yep. Absolutely.
Giuliano Thornhill: Yep. Absolutely.
Speaker #2: But obviously, it's not reflected in the Q2s; that'll be reflected in Q3.
Milton Lamb: But obviously, it's not reflected in Q2s. That will be reflected in Q3.
Milton Lamb: But obviously, it's not reflected in Q2s. That will be reflected in Q3.
Operator: That concludes our Q&A session. I will now turn the conference back over to Milton Lamb for any closing remarks.
Operator: That concludes our Q&A session. I will now turn the conference back over to Milton Lamb for any closing remarks.
Speaker #4: This includes the Q&A session. I will now turn the conference back over to Milton Lamb for any closing remarks.
Speaker #2: That's great, everyone. Thank you very much, and enjoy the rest of the summer.
Milton Lamb: That's great, everyone. Thank you very much, and enjoy the rest of the summer.
Milton Lamb: That's great, everyone. Thank you very much, and enjoy the rest of the summer.
Operator: This concludes today's call. Thank you for attending. You may now disconnect, and have a wonderful rest of your day.
Operator: This concludes today's call. Thank you for attending. You may now disconnect, and have a wonderful rest of your day.
