Q4 2025 GO Residential Real Estate Investment Trust Earnings Call
Speaker #1: I would like to welcome everyone to the GO Residential Q4, 2025 earnings call. All lines have been placed on mute to prevent any background noise.
Speaker #1: After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question, during that time, simply press * then the number 1 on your telephone keypad.
Speaker #1: I would now like to turn the call over to Maxwell Kaufmann, Chief Operating Officer, GO Residential Real Estate Investment Trust. Maxwell, please go ahead.
Speaker #2: Good morning, everyone. I'm Max Kaufmann, the Chief Operating Officer of GO Residential Real Estate Investment Trust. Welcome to GO Residential's earnings call, where we will discuss the financial results for the Q4 ending December 31, 2025.
Speaker #2: I'm joined on the call today by our CEO, Josh Gottlieb, CFO, Peter Sweeney, and our president, Matthew Keller, who are all available to answer questions after our prepared remarks.
Speaker #2: Before we begin, I want to remind listeners that certain statements made on this call relating to the REIT future outlook and anticipated events or results constitute forward-looking information as defined under Canadian Securities Laws.
Speaker #2: Although we believe such statements to be based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. In addition, we will reference certain non-IFRS financial measures, and we believe are useful supplemental information about our financial performance.
Speaker #2: For more information, please refer to the cautionary statements on forward-looking information, a description of our non-IFRS financial measures, and the risk factors in our MD&A dated March 23, 2026.
Speaker #2: As always, all remarks reference figures in US dollars unless otherwise noted. 2025 was a transformative year for GO Residential. Following the largest IPO for a REIT in TSX history, we made significant progress on our core objectives.
Speaker #2: Enhancing operational performance, maintaining disciplined financial management, and positioning the REIT for long-term accretive growth. Today, we are pleased to report yet another quarter of exceeding expectations.
Speaker #2: This comes on the back of a number of key milestones for the REIT, including an accretive refinance of the mortgage on One Each River Place, receipt of an investment-grade rating from DBRS Morningstar, the successful issuance of 325 million CAD in senior unsecured debentures, and the recent announcement of over 810 million dollars' worth of leverage-neutral transactions that are expected to be mid-single-digit accretive to both SFO per unit and NAP per unit.
Speaker #2: Between a high-quality capex-like portfolio, a strong balance sheet, and a management team with deep expertise, GO is well positioned to deliver sustainable value for our unit holders.
Speaker #2: With that, I'll turn it over to Josh to discuss our market strategy and outlook.
Speaker #3: Thank you, Max. Fifteen months ago, the team here at GO made a bold prediction: a significant buying opportunity was coming to New York City.
Speaker #3: Owners were barely surviving a cycle that saw the 2019 change in rent laws, the 2020 pandemic, the 2022 spike in interest rates, the 2023 regional bank failures, and then the prolonged period of high rates that we've seen since.
Speaker #3: We recognized that landlords were going to have no choice but to sell their free-market assets in order to cover losses in their office and affordable portfolios.
Speaker #3: We needed to be in a position ourselves to take advantage. In July of 2025, we completed our IPO in the TSX. We raised $500 million and used every dollar to pay down debt.
Speaker #3: The motivation was simple: reposition the balance sheet for growth. In the months since, we executed on a number of initiatives designed to ensure that we were ready for the buying opportunity.
Speaker #3: First, we focused on the core business. We understood that delivering on the IPO forecast was a prerequisite to pursuing inorganic opportunities. Second, we refinanced the mortgage at One Each River Place.
Speaker #3: Taking our largest near-term maturity off the table opened up significant mindshare. Last but not least, we worked with DBRS Morningstar to secure an investment-grade rating.
Speaker #3: Easy access to attractive debt would be critical to executing on these acquisitions. By the end of the third quarter, Class A luxury assets started to come to market.
Speaker #3: Our prediction played out exactly as expected with one caveat: there was a clear bifurcation between assets plus or minus 400 million in value. Larger properties were not coming with a discount.
Speaker #3: This was frankly unsurprising. They were owned by landlords with a greater ability to bear the cost of the cycle. Larger institutional funds and foreign wealth continued to play in the space.
Speaker #3: Sub-400 million in value, the picture was completely different. These owners were in trouble. They had been hit hard by the cycle and were looking to transact quickly and with certainty.
Speaker #3: Value almost felt like an afterthought. To make matters worse for them, there were no buyers. The typical players in this space were the same ones who were in pain.
Speaker #3: For us, there was only one problem: our unit price. I am not going to use this call to relitigate our unit price, other than to say, one, a comparable, albeit less attractive, PR of ours just traded at a sub-5.5% cap.
Speaker #3: And two, we are clearly dramatically undervalued. In any event, our team did what it does best: we got creative. On February 24, we announced agreements to acquire Ivy Tower in the Hudson Yards portfolio for approximately 380 million, nearly three weeks later, we announced agreements to acquire 7 Day and an 81% interest in 409 Eastern Parkway for approximately 440 million.
Speaker #3: All four deals were negotiated based on an implied equity value of 2370, or our NAV at the end of the third quarter. In the days and weeks since the announcement, we received a number of questions from equity and debt investors alike.
Speaker #3: Let me take a moment to address a few of them. First, why would sellers value our units at NAV? There continues to be a significant disconnect between public and private market valuations, particularly when it comes to our assets.
Speaker #3: Sellers understand that. They know our portfolio is trading at a significant discount to intrinsic value. They also recognize the quality and stability of it.
Speaker #3: Second, does transacting near a 6 cap mean that our assets should be valued the same? No. That bifurcation between assets plus and minus 400 million in value is real.
Speaker #3: Look no further than 265 E66 Street. A minority non-controlling interest in a 1980s vintage property with 40 million of acquired capex traded at a sub-4 cap on in-place NOI.
Speaker #3: If anything, that bifurcation represents a potential arbitrage as we think about capital allocation in the coming months. Third, what can we expect going forward?
Speaker #3: We are now in the middle of one of those markets that buyers can only dream of. Sellers are in pain. They need to exit, and there aren't any options.
Speaker #3: Max touched on the financial implications of our recent deals, but what he didn't say was this: sellers have been put on notice that we stand ready to transact.
Speaker #3: Since the announcements, our pipeline has grown substantially. Our inbounds are off the charts, and we are well positioned to take advantage. As we think about the next set of deals, let me provide you with the following incredibly sensitive to where my unit price sits today.
Speaker #3: After all, my cost basis is higher than 15 per unit. We always said that the first set of deals would serve as a catalyst for others to follow suit.
Speaker #3: There continues to be a real opportunity for us to transact at NAV. Second, be leveraging remains a key priority. I'd love nothing more than to accelerate our path to bringing leverage down.
Speaker #3: The unfortunate reality is that our current unit price makes that difficult. If I can over-equitize at NAV, I'll do so. Otherwise, I am only willing to do deals that are neutral to or improve leverage metrics.
Speaker #3: Looking ahead, the turn into spring marks the start of peak leasing season and a catalyst path for GO. We expect to host an investor day in the second half of Q2 and are preparing for a potential dual listing in August.
Speaker #3: With our portfolio in a strong position and a robust acquisition pipeline in hand, we are extremely optimistic about the future. Now over to Peter to walk us through the quarter.
Speaker #3: Thank you.
Speaker #1: Thank you, Josh. And good morning, everyone. I'm pleased to walk you through the financial results for GO Residential REIT's fourth quarter, and for the period since our IPO.
Speaker #1: As always, my remarks reference figures in US dollars unless otherwise noted. With respect to our quarterly financial highlights for the three months ended December 31 of 2025, we're proud to announce the following: number one, with respect to revenue, we delivered 40.8 million dollars in revenue for the quarter.
Speaker #1: With revenue adjusted of 45 million dollars, exceeding our forecast of 44.6 million dollars. Secondly, with respect to net income, net income and comprehensive income for the quarter was 21.6 million dollars.
Speaker #1: Thirdly, with respect to NOI performance, NOI adjusted was 32.6 million dollars, ahead of our forecast of 32.3 million dollars, resulting in a robust NOI margin of 72.5%.
Speaker #1: Fourthly, with respect to AFFO adjusted, our AFFO adjusted level was 14.7 million dollars, or 27 cents per unit, surpassing our forecast by approximately 4%.
Speaker #1: Fifthly, with respect to FFO adjusted, our FFO adjusted per unit level was 29 cents, versus a forecast level of 26 cents. And lastly, with respect to occupancy and rent, our committed occupancy ended the quarter at 98.5%, an average monthly rent reached 6,830 dollars per suite, which is a 2.5% increase since our IPO.
Speaker #1: These results underscore our disciplined approach to asset management and our focus on operational excellence. We remain ahead of forecast on all major performance metrics, including revenue, NOI adjusted, and AFFO adjusted.
Speaker #1: Our balance sheet remains strong and well positioned for growth. Namely, number one, our debt to GBV value, was 48.5% at year-end, providing ample flexibility for future acquisitions.
Speaker #1: Secondly, with respect to our weighted average interest rate, that rate was 4.4%, with weighted average term debt of 4.1 years. Thirdly, liquidity, as at December 31, represented 58.8 million dollars, including 2.6 million dollars cash and 56.1 million dollars in available funds on our undrawn credit facility.
Speaker #1: And lastly, with respect to our credit rating, in January, our operating subsidiary OPCO received a BBB low issuer rating with a stable trend from DBRS Morningstar.
Speaker #1: This investment-grade credit rating is a strong endorsement from one of the world's leading independent credit rating agencies, and a meaningful milestone for our company, especially as a new public REIT.
Speaker #1: This rating reflects several key strengths. Number one, superior asset quality. DBRS recognizes our portfolio of five Class A luxury residential buildings in Manhattan as rated AA low for asset quality, underscoring the stability and desirability of our properties.
Speaker #1: Secondly, strong operating performance. The rating incorporates our high occupancy levels, that being 99.5% as at Q3 of 2025, and sustained growth in average monthly rents, which have increased by over 30% year over year.
Speaker #1: Thirdly, high-quality tenant base. Our tenants have an average household income above 465,000 dollars, and a delinquency rate below 1%, supporting the predictability and resilience of our cash flows.
Speaker #1: Fourthly, experienced management. DBRS highlighted the depth of our management team and our proven track record in the New York multifamily market. And lastly, number five, while DBRS notes our leverage remains above the sector average, they also acknowledged the rapid improvement in our financial profile since our IPO, and they expect further progress as we continue to grow earnings and execute on our strategy for growth.
Speaker #1: What does this mean for GO Residential and our stakeholders? It affirms financial strength and discipline, providing confidence to lenders, investors, and counterparties. It enhances our access to the capital markets, enabling us to secure attractive terms when issuing debt or raising capital.
Speaker #1: It positions us favorably for future growth, both through organic initiatives and accretive acquisitions. Achieving and maintaining an investment-grade credit rating is a key pillar to our capital strategy.
Speaker #1: We are proud to have earned this recognition so early in our journey as a public REIT, and we remain committed to strengthening our credit profile over time.
Speaker #1: That being said, in February, OPCO completed a Canadian dollar 325 million dollar private placement of senior unsecured debentures maturing in 2029, at a fixed rate of 4.534%.
Speaker #1: These proceeds were used to repay existing indebtedness and also to support our acquisition pipeline. Yesterday, we closed a 75.1 million dollar equity offering and concurrent private placement, with proceeds earmarked to fund the acquisition of seven Daystreet together with 409 Eastern Parkway.
Speaker #1: Both of which are expected to close in the second quarter of 2026. These transactions, together with a 19 million dollar draw on our credit facility, demonstrate our ability to access both equity and debt markets efficiently, and on attractive terms.
Speaker #1: We continue to manage our interest rate and liquidity risk proactively, all property-specific mortgages are fixed-rate, and 95% of total debt is fixed as at year-end.
Speaker #1: Our disciplined approach to leverage, combined with a robust pipeline of accretive acquisitions, positions us to capitalize on opportunities while maintaining prudent risk parameters. Looking ahead, we expect the Manhattan luxury rental market to remain resilient.
Speaker #1: Supported by strong demand drivers, namely above-average population and job growth, and constrained new supply. Our mark-to-market initiative remains on track for completion by mid-2026, and we are well positioned to deliver sustained cash flow growth.
Speaker #1: In summary, GO Residential ended 2025 with strong operating momentum, a high-quality and well-leased portfolio, and the financial flexibility to pursue disciplined, creative growth. Our results reflect the strength of our platform and our commitment to delivering value for our unit holders.
Speaker #1: Thank you for your attention, and with that, I'll now turn the call back to the operator for questions.
Speaker #2: At this time, if you would like to ask a question, press star then the number one on your telephone keypad. To withdraw your question, simply press star one again.
Speaker #2: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Dean Wilkinson with CIBC, please go ahead.
Speaker #3: Thank you, and good morning, gentlemen. Josh, maybe a two-part, and I apologize for a long-winded question just around acquisitions. When you look forward, set the financial aside, what's the platform sort of capacity?
Speaker #3: How much could you grow with what you've got? And then what would you have to do to expand to sort of beyond that point?
Speaker #3: And the second part of the question more or less relates to what we're seeing in private credit. Money is coming out of private credit.
Speaker #3: I'm seeing early indications that it's not leaving the alternatives but it's going back into potentially private REITs. What do you think the implication could be for pricing if they are not out of the market now?
Speaker #3: And could that put you in running into competition, but at the same point, justifying the value and highlighting the differential between sort of the unit value and NAV?
Speaker #4: Hey, Dean. How are you? Thanks for joining. So, Dean, on your first question, I think, and we've kind of outlined this, since the IPO, that we felt that we can double in size without any real growth on the expense side for us running the company.
Speaker #4: That's kind of what we built for, and that's how we're positioning that. Dean, if you could ask the second question again, that would be helpful.
Speaker #3: Just in terms of money is coming out of private credit, it looks like it's gravitating towards going back into private REITs, right? And they don't have to worry about mark-to-market fluctuations on a daily basis.
Speaker #3: If we do see money go there, do you think that that is going to effectively put a bid more into the assets that you're looking for?
Speaker #3: Might make it more competitive, but at the same pace, it serves to underpin the values of the stuff that you've bought and you already own.
Speaker #4: Hey, Dean, thanks for the question. I think, listen, the flow of funds into private REITs is probably a good thing for this stage generally.
Speaker #4: In terms of competition on the ground, I think we've established here that the team has a real significant competitive advantage when it comes to potentially looking at assets out in the market.
Speaker #4: The significant number of deals that we're looking at currently are, for the most part, off-market. And so, frankly, we don't see that flow of funds as necessarily impacting our ability to transact in the near term.
Speaker #4: In fact, we remain confident as ever in terms of the acquisitions that we think we can execute on in the coming months.
Speaker #3: Okay, that's good. Just last one for me. Has changes around the FAIR Act kind of seen an upward pressure on the net effective rents?
Speaker #3: And how do you see that kind of unfolding as we get one or two years through the roles of those things? Because to me, it seems like something that's actually going to grow rents, not peel them back.
Speaker #4: I'll take this one, Dean. Matt Keller here. A little bit of background on the FAIR Act is that it required landlords to cover brokerage fees.
Speaker #4: For both tenants and on the landlord side as well. What we've seen thus far is that it has put upward pressure at the lower end of the housing market as those landlords that were accustomed to having their tenants pay the fee are now passing that cost along to the tenants themselves.
Speaker #4: I'd like to emphasize that in our forecast, as well as in our Q4 numbers, we accounted for those costs being a landlord cost. Thus far, we have not seen a tremendous amount of upward pressure in our market.
Speaker #4: That being said, I'm sure a rising tide will lift all those.
Speaker #3: That sounds reasonable. I will hand it back. Thanks, guys.
Speaker #4: Thanks, Dean.
Speaker #2: Your next question comes from Kyle Stanley with Des Jordan's Capital Markets. Please go ahead.
Speaker #3: Thanks. Morning, guys. Just on the 440 million of acquisitions announced last week, I'm just wondering, can you give us a bit of a breakdown on the component that is rent stabilized and how you see that playing out in the eventuality of a rent freeze?
Speaker #4: Sure, Dean. So as we think about it, and I'll take you properly through sorry, Kyle. I'll take you properly through property real quickly. So Ivy Tower was the first deal.
Speaker #4: Then we've got about 64 units that are affordable. The balance of the 320 units or so are free market. At Hudson, it's an interesting tax abatement.
Speaker #4: It's actually a 10-year tax abatement that burns off in 2029. Until it burns off, 100% of the units are rent stabilized. But they'll grow at a rate of the RGB plus 2.2%.
Speaker #4: Once the abatement burns off in '29, everything becomes free market. So as a consequence of, let's call it, a bit of a gap to market that exists there today, plus the RGB plus 2.2%, we feel confident that you should model out, let's call it, normalized market rate growth on that property.
Speaker #4: And then come 2029, you'll also just get an additional bump when they're 100% free market on a go-forward basis. For day in 409, both of them are subject to 35-year tax abatements.
Speaker #4: I believe that they're in years 6 and 7 respectively. During the course of the tax abatement, 70% of the units at each of the properties are free market.
Speaker #4: 30% are affordable. And so those affordable units during the course of the tax abatements will simply grow at inflation. 70%, obviously, just model out, let's call it, normalized rental growth.
Speaker #3: Okay. So very similar to what we'd be looking at for the copper buildings, I guess, on the two most recent acquisitions. Is there a gap to market in those?
Speaker #4: Sorry, Kyle, just to be clear, just to be clear on day in 409, the 70% is not rent stabilized. It's free market.
Speaker #3: Okay. Okay. Fair enough.
Speaker #4: So the tax abatement there is a bit different. Than at copper.
Speaker #3: Gotcha. Okay.
Speaker #4: Thank you for that.
Speaker #3: Okay. Okay. Thank you. That is helpful. Just secondarily, obviously, this is a transition or the first acquisition in Brooklyn. Just would love a high-level your thoughts on the Brooklyn market, what took you there, just to better understand what's going on in Brooklyn.
Speaker #4: Yeah. Brooklyn's an incredibly strong market. There's a whole part of the world of folks that prefer to live in kind of brownstone Brooklyn to kind of the best areas of Manhattan.
Speaker #4: It's a market that we want to be in. It's a market that we know a lot of owners that are looking to transact. 409 is a beautiful asset.
Speaker #4: Well-built. And gave us a great opportunity to kind of enter into the marketplace. But it's a very established market in Brooklyn. There are very mature neighborhoods that we want to own in.
Speaker #4: There's certainly parts of it that you could argue are a bit overbuilt, but we won't be focusing in those areas for the time being.
Speaker #3: Okay. Fair enough. And then just kind of a last one here, just looking at your existing portfolio, you've kind of reiterated the 10% mark-to-market by the end of your IPO forecast period, which is the end of the second quarter.
Speaker #3: Obviously, AMR is up 2.5% since the July IPO. Assume that maybe slow down or at least flat rent in the fourth quarter was seasonal.
Speaker #3: Just want your thoughts on how you see AMR growth progressing in the first and second quarter. Obviously, we're towards the end of the first quarter here now.
Speaker #3: So would love your an update on how first quarter leasing was. Was it impacted by similar weather seasonality? Just an overall outlook on what happened in the first quarter.
Speaker #4: Kyle, I'll take that. Matt Keller, again. One thing I'd like to point out is that in Q4, what you're seeing is also we've taken a lot of measures in terms of when we let our leases expire so that most of our leases expire during the higher better leasing time of the year.
Speaker #4: So that's also playing into what you're perceiving in those Q4 numbers versus Q3 growth. That being said, right now, we are very excited with where the market is.
Speaker #4: And Q1, we expect to be very, very strong.
Speaker #3: Yeah. Kyle, we always
Speaker #5: said that the 10% was going to be achieved over the course of the first year. I think we were also clear that there would be some seasonality in that number.
Speaker #5: So if you just think about it during the fourth quarter, we're an off-peak leasing season. So fewer units are turning. Those that turn, turn a little bit differently.
Speaker #5: I think now as we're making our way through Q1, and then obviously into Q2 and peak leasing season, that's why we have the confidence to tell you that we'll hit that 10% marker by the end of the second quarter.
Speaker #3: Okay. Thank you very much. I'll turn it back.
Speaker #2: Your next question comes from the line of Mike Marquitez with BMO Capital Markets. Please go ahead.
Speaker #3: Thanks, operator. Just to follow up on Kyle's line of questioning there. So if I hear you guys understanding, or properly, the 2.5% is the AMR growth that you've disclosed since July.
Speaker #3: And during the first year, you're expecting to get to 10. So should we infer that we're going to see 7.5% AMR growth in Q1 and Q2?
Speaker #3: Goodbye.
Speaker #4: Yes. That's exactly what we're saying, Mike. So once again, just you have the seasonality. You have a smaller number of units turning. So prior to the IPO and then I think we've done a good job in, let's call it, the last six or seven months, we made a concerted effort to make sure that the significant majority of our units turned during peak leasing season.
Speaker #4: As a consequence, in December, with smaller units turning, and I will also provide the additional color that a larger number of the units that did turn during the quarter sat at 685 in copper, we're obviously the gap-to-market is a bit narrower.
Speaker #4: It's no surprise that we see the AMR numbers sitting where it's at. That being said, as you kind of turn into, let's call it, 1Q and 2Q, not only do you have a larger number of units turning, you also have a larger number of units turning at the upper East Side properties.
Speaker #4: That's 1 East River Place. That's 1 and 2 Sutton. And so you could expect the AMR number to grow significantly in the next two quarters on a go-call.
Speaker #3: Okay. And then just thinking about it, because obviously the AMR that you have doesn't include the impacts of the copper, necessarily. So what would be the rough flow-through of AMR growth to actual total revenue?
Speaker #3: Assuming occupancy neutrality.
Speaker #4: So copper's obviously broken out into two buckets. You've got the affordable bucket that effectively grows at inflation and the balance of rent stabilized. I think there at this point on copper, you're pretty much close to normalized rental growth.
Speaker #4: So there you're probably seeing something closer to 4%. 4 or 5%.
Speaker #3: In the first half of 2026?
Speaker #4: Correct.
Speaker #3: Okay. But the entire flow-through, the way you disclosed your AMR, I guess what I'm getting at is are you expecting on the same property basis the effect of if we take your revenue today and assume no change in occupancy from the '96-'9 that's in place, and we get to a run rate at the beginning of Q3, is that your revenue is up 7.5% or is the flow-through would be less than that?
Speaker #4: The flow-through will necessarily be less than that because you still write the 7.5% that you're referencing is at a point in time that will be let's say in Q2 of 2026, right?
Speaker #4: So you're not going to have a full year of that 7.5% reflected in our numbers. I hope that answers your question.
Speaker #3: Yeah. I think it does. Okay. And then just there was some new revenue adjustments this quarter. Can you just remind us? I mean, half backstop makes sense.
Speaker #3: The normalization of rent concessions. Can you remind us what that is? Is that effectively all the rent concessions in the portfolio, or we're just trying to understand what exactly that refers to again?
Speaker #4: Sure. So I'll touch on the half backstop real quickly. On the half backstop, that one is just frankly a product of the fact that as the, let's call it, half contract is onboarded, the revenue is coming via the backstop and under IFRS accounting rules.
Speaker #4: You just have to account for it as an adjustment as opposed to through revenue directly. In terms of the rent concessions, I'll turn it over to Peter.
Speaker #6: Hey, Mike. Good morning. So with respect to the concessions, Mike, they represent what we describe as normalized recurring adjustments only because these are burning off concessions that were in the portfolio when the REIT went public last summer.
Speaker #6: And I think we said at the time that it was going to take us somewhere between 12 and 24 months to have all of these existing concessions burn off over that time frame.
Speaker #6: Keep in mind that we don't provide concessions any longer in the portfolio. And so it was appropriate to account for these things as adjustments back because as these units are or as these concessions are burning off and the tenants are either renewing or refunding new tenants for those units, there aren't any new concessions being provided.
Speaker #6: So we're getting the full value of a 12 or a 24-month full stream of payments. And so what these things are again is just a burnoff of those older leases as they're maturing over the first year or so of the REIT's life.
Speaker #3: Okay. And you're not offering any concessions today. So that mark-to-market is and that effective spread? Assuming including the burnoff, or no, the growth in your portfolio is 10% MTM plus the burnoff of the legacy incentives?
Speaker #6: Just to be clear, we are not offering concessions anywhere except for at the copper, whereas we've discussed in the past, we had the dynamic of very high legal rents which in certain cases are greater than the clearing market rent.
Speaker #3: Right. No, I understand that. And I guess the normalization includes the copper in that case or does not?
Speaker #6: Sorry. Yeah. Mike, the 10% growth rate that we referenced does not include the normalization of the portfolio's absence of rent concessions.
Speaker #3: Okay. I got a few other questions, but I'm going to turn it back to the queue. And guys, congrats on the quarter. Perhaps we could take this offline.
Speaker #3: Peter, sweeney. After the call. Thank
Speaker #6: Yeah. Thanks, Mike.
Speaker #1: Your next question comes from the line of Janna Gallen with Bank of America. Please go ahead.
Speaker #5: Thank you. Good morning and congrats on a great fourth quarter and very busy first quarter. As we're approaching the peak leasing season, I was curious if you could kind of share where portfolio occupancy is today.
Speaker #5: And what renewal rate do you guys are sending out on average? And maybe how does this compare to the same time last year?
Speaker #6: Matt Keller here. Currently, we're seeing occupancy on the Upper East Side at 98.5%. And at Murray Hill, we are currently at 99%. Our average renewal rates are being executed at an 8.5% rent increase compared to prior tenants.
Speaker #6: And on the Upper East Side, we're achieving greater than 10%.
Speaker #5: Great. Thank you. And just curious on this forward pipeline of opportunities in the market. We did notice that the average rental rates on the recent acquisitions are a little bit below where the IPO portfolio average monthly rate was.
Speaker #5: Just kind of curious if the forward pipeline would still target the very high end or a little bit lower or curious if you're trying to kind of just diversify that average price point a little bit.
Speaker #2: I mean, we're still going to be focused on class A luxury at the end of the day, but so long as it meets let's call it those qualitative characteristics, it just becomes a question of the math.
Speaker #2: I don't think necessarily we're going to be married to a specific threshold on AMR. I think the question is, is does the deal pencil in the right way?
Speaker #2: Is it going to drive the right accretion? Is it going to write is it going to have the right financial impact? So I think as you think about the properties that we just acquired, or announced acquisitions for, so Ivy Tower, Day, 409, the Hudson Yards portfolio, these are the types of assets that fit very well in line with our current assets, both from a tenancy and asset quality perspective.
Speaker #2: They pencil in the right way in terms of the math, simply because the AMR is a little bit lighter, does not necessarily mean that we're going to turn or buy an eye to it.
Speaker #5: Thank you. And then maybe one last one for Peter. Just curious, you've been in the market with the private placement, and in the market for different mortgage or secure debt just kind of curious what you're seeing out there.
Speaker #5: It's been a pretty volatile interest rate environment year to date. If you can just kind of give a range and different terms that you could potentially be looking at for putting debt on these new acquisitions.
Speaker #6: Yeah. Jan, it's Josh. I'll just jump in just on secure debt, at least in the US. We continue to see both Freddie Mac and Fannie Mae aggressively pursuing opportunities.
Speaker #6: A number of life co's as well. CMBS spreads are tighter because there are a number of residential-only pools that people are going out there with.
Speaker #6: So it's kind of changed the quality of the pools and the risk that comes with it. I'd say that from an agency perspective, with everything going on, you still see spreads in the low pool, 100s over the five-year or the seven-year or the 10-year.
Speaker #6: And there's always interesting buy-down options if you want to go that route. But it's a very strong debt market with all the volatility. We have not seen any change there.
Speaker #5: Great. Thank you so much.
Speaker #1: Your next question comes from the line of Hinanshu Gupta with Scotiabank. Please go ahead.
Speaker #3: Thank you. And good morning. So it's been a few months since the mayor elections. What are your new expectations with respect to any changes in RGB rent guidelines?
Speaker #3: And any other proposals being you're hearing with respect to property taxes or any other item?
Speaker #6: Yeah. Himanshu, at the moment, there is no clear policy path that's being pushed forward. I think that the mayor and I think that the folks around him, including at the different housing agencies, recognize that the lower end of the rent stabilized world, there's a clear issue with it within that entire sector, right?
Speaker #6: In the traditional pre-war housing, there's vacancy that's stacked up. And while the threat of a rent freeze certainly sounded good in an election, in reality, from a quality of life perspective, it's going to present a lot of challenges as violations stack up, as the faults stack up, etc.
Speaker #6: So it's very hard to know where that actually ends up. Again, it doesn't have a direct impact on the numbers that we've put forward and we've kind of touched on that, I think, too many times at this point.
Speaker #6: But that's we don't have an update as far as where I think that's going to go. Further, as far as property tax reform, I think that was more of a threat than anything.
Speaker #6: And we don't see that moving forward. That would, in effect, tax all homeowners and that's certainly wasn't a promise of his campaign. So I don't know for the time being that we have any clear direction on the policies.
Speaker #6: Having said that, I'm not sure anyone in the the city hall does either.
Speaker #3: Got it. Okay. Well, that's helpful. And then sticking to Mundani here, any change in the pricing expectations you have seen? I mean, obviously, you gave some prepared remarks on sub-400 million dollar transaction versus others.
Speaker #3: Have you seen the transactions which you have done more discounts you have received in the market because of these uncertainty right now?
Speaker #6: Yeah. I wouldn't say that there's a Mundani impact to valuations. Himanshu, to be quite honest with you, certainly folks in New York have been spending less and less time as this as a talking point.
Speaker #6: In reality, he hasn't had a major effect positive or negative. I think that they're just trying to figure out how to govern. It's just not something that in the headlines at the moment when you think about long-term investing in real estate.
Speaker #3: Got it. Okay. That's helpful. Maybe the last question is with respect to other revenues. I think that's increased a fair bit versus the IPO forecast.
Speaker #3: So first line item was there was a lease termination income. I think 0.8 million. Is that one-time in nature Peter?
Speaker #6: I've had this discussion on lease termination amounts many times in my professional career. Real estate and as much as we'd like to think of these amounts, as so-called one-time items in the often appear in our financial statements as such, the reality is that they appear repeatedly and continuously.
Speaker #6: And that's just the nature of the beast. So I think you have to model it that way. Himanshu, if you're modeling, this type of revenue source, it may come from a different angle in our case.
Speaker #6: But I think you should expect to see repeatedly this type of anomalous type opportunity or anomalous type revenue impacting our financial results.
Speaker #3: Okay. And okay. So thanks for that. And then there's a new line item called other revenue from services. 0.7 million. Is it some new service being provided or a recurring nature of income?
Speaker #6: It's a collection, frankly, of four or five different things that we aggregated into that line item. And unfortunately, at least for now, we had to put it below the line but I think it's fair to say, again, from a modeling perspective, as we approach the balance of the year, certainly by the time we get to Q4 of this year, these types of amounts will and should be included above the line.
Speaker #6: In EBITDA or our IFRS level income, Himanshu. So for now, at least, and I think for the next couple of quarters, we may see some of these additional adjustments fall below the gap line and so that's why we're adding them back.
Speaker #6: But again, from a modeling perspective, I would continue to try to model them as we've sort of reflected them for Q4. For the remaining quarters.
Speaker #3: Okay. Yeah. And maybe just the last one. Is it a seasonality to this other revenue from services? I mean, it's quite a bit higher in Q4.
Speaker #3: Should we just extrapolate it to the coming quarters or certain revenues from Fidel or, I don't know, other services are more seasonal in nature?
Speaker #3: Still wondering.
Speaker #6: That's a good question. We don't look at it that way, at least internally. Himanshu, I guess, as time goes by, particularly when you reference Fidel, we could see some seasonality there, although even in Fidel's case, we've got a roof over that facility now, which makes it available 12 months of the year.
Speaker #6: But no, I don't think, at least from management's perspective, you would apply a seasonality factor to this.
Speaker #3: Okay. Thank you so much. And I'll turn it back.
Speaker #6: Okay.
Speaker #2: Your next question comes from a line of Jimmy Shan with RBC Capital Markets. Please go ahead.
Speaker #5: Yeah. Thanks. So just on your comment about the bifurcation of the investment market, the 400 million below and above, I'm just trying to get a better understanding as to why this bifurcation exists.
Speaker #5: You may have mentioned it in here. And also, maybe it'd be helpful if you could also talk about or answer the question in the context of the vendors that the assets you're buying from.
Speaker #5: And so kind of how these opportunities arose and why you thought those were good opportunities.
Speaker #6: Sure. So on the bifurcation, Jimmy, I think it's a product of two factors that Josh highlighted on the call. The first one is if you just think about intuitively with a lot of these larger assets, you have owners who kind of have a, let's call it, deeper pocket.
Speaker #6: And so when you're going through a long cycle such as the one that New York is going through, just having a deeper pocket allows you to kind of tread water for a longer period of time.
Speaker #6: The second component to that is, frankly, bigger institutions and some foreign wealth funds are still playing in the larger asset space. Historically, the sub-400 million dollar space, while you have some bigger players who started to play within it, it was frankly smaller private developers, smaller New York City families, and so that's kind of what's pushing the bifurcation just in terms of, let's call it, the sellers as well as the buyers that are in there today.
Speaker #6: Sub-400, you kind of have, let's call it, some owners who have, let's call it, smaller pockets and they're in a bit more pain and the buyers are just frankly not there.
Speaker #6: Sorry, remind me on the second question, Jimmy.
Speaker #5: Well, I thought you might have incorporated your answer in terms of the deals that you're doing now in terms of the vendors of those assets, whether or not the sort of the I wouldn't call it distress, but just some of the distress that could potentially be under and why they're selling.
Speaker #6: On the vendors, I mean, I think we've walked some folks through it, but frankly, there's a different story for each vendor across the board.
Speaker #6: In terms of the first two buckets, these are folks who, for one reason or another, kind of decided they needed some form of an exit.
Speaker #6: On Ivy Tower, it was someone who was looking for a little bit more of a hands-on operator who could come in and do some value-add work and we formed a partnership with that gentleman.
Speaker #6: On Hudson Yards, it's a long-term relationship, folks who kind of saw the opportunity to bend in their I'm sorry, their properties for a piece of our portfolio and frankly just believed in the long-term value of our portfolio.
Speaker #6: The second set of deals were two folks who, for one, one reason or another, kind of had to transact. They were just situated a little bit differently.
Speaker #6: They were looking to transact with certainty. I think that was the key on both accounts. And with speed. And so frankly, Josh and Mayer have built a career and a reputation around when they sign up a deal, they're going to close that deal and they're going to close that deal fast.
Speaker #6: And so the ability to really leverage that reputation in the context of both these two transactions, seven-day and 409, gave us a really significant advantage when it came to, let's call it, negotiating with the sellers and being able to lock up both transactions before they reached the market.
Speaker #5: Okay. Thank you.
Speaker #2: That concludes our questions. That concludes our question and answer session. I will now turn the call back over to Josh Gottlieb for closing remarks.
Speaker #6: Thank you. Thank you, everyone, for joining today. We appreciate the continued coverage and support. And we look forward to connecting with you next quarter.
Speaker #6: Speak soon. Thank you.
