Armin Martens - President, CEO and Trustee Jim Green - CFO Heather Nikkel - Director, Investor Relations

Michael Markidis - Desjardins Mario Saric - Scotiabank Heather Kirk - BMO Capital Markets Jenny Ma - Canaccord Genuity Matt Kornack - National Bank Michael Smith - RBC Capital Markets

Thank you, moderator. Good day, everyone, and welcome to our Q4 2014 conference call.

Again my name is Armin Martens, I am the President and CEO of Artis REIT, and with me on this call is Jim Green, our CFO; as well as Heather Nikkel, our Director of Investor Relations. So to begin with, I'd like to advise all listeners that during this call we may at times be making forward-looking statements and we therefore seek Safe Harbor.

So please refer to our website, as well as our SEDAR filings, such as our financial statements, our MD&A and our annual information form for a full disclaimers, as well as information on material risks pertaining to all of our disclosures. So again, thanks for joining us.

To begin with, then, I'll ask Jim Green to review our financial highlights, then I'll ask Heather Nikkel to comment on our operations and highlights and then I will wrap up it up and then we will go on to questions. So go ahead please, Jim,

Thanks, Armin, and good afternoon, everyone. At least by Artis standard this was has been the quietest year for us in the last several years as far as external acquisitions go.

For the year we acquired just over 200 million in income-producing properties. However, we also added approximately 50 million to our joint ventures including acquisition and development activities.

Internal growth for us has always been our focus but internal growth combined with development opportunities has become even more important for us with the slowdown in external acquisitions. As we have mentioned in prior quarters, we have been quite a bit more active in developments, we currently have over $150 million invested in projects under development, roughly 81 of these directly on the REITs balance sheet and a further 72 million in joint ventures with other developers.

As we detailed in our MD&A, the scope of projects in the planning stages is also increasing. In the current quarter we did acquired two pieces of land in Minneapolis and one in Calgary for future development, no immediate plans to start construction on those sites but they are certainly available to fund the future development pipeline We continue to demonstrate good growth in our existing portfolio, and despite a small drop in occupancy, we achieved overall growth of 3.5% in our same property portfolio for the fourth quarter, bringing year-to-date growth to 3%.

And I guess I can’t a do a financial discussion without mentioning the impacts of lower oil prices and the lower Canadian on our portfolio and we'll certainly hear more from Armin when he gets to speak a little later. We do expect the Calgary office market to suffer from the lower oil prices and lower related activity in the oil production and exploration.

The REIT has just over 18% - under 18% of our portfolio represented by office properties in Calgary and the good news for us is that that occupancy is still holding quite well and lease expiries over the next several years not that large. We had a great lift this quarter primarily in the fourth quarter from the fact that around 25% of our portfolio is in the U.S.

and the weakening Canadian dollar somewhat tied to the oil prices so it gives us a bit of a hedge clear that if oil gets worst, the dollar gets worsen and U.S. properties perform better for us.

So I’ll spend a few more minutes just touching on the highlights of the financial operations and then I’ll pass it back to Armin and Heather Nikkel as well. So spending a moment or two on the REITs balance sheet.

Total assets have risen to roughly $5.5 billion investment properties making up by far the largest part valued at over $5.3 billion. We value investment properties under IFRS at fair value and we have adjusted the cap rate slightly on a few of the assets resulting in a gain for the quarter of just over $19 million.

Currently we are not anticipating major shifts in cap rates in 2015 so we would expect this number to remain relatively small in the 2015 results. On the debt side, at December 31st we still had two series of outstanding convertible debentures, series of Gs mature in 2018 these are denominated in U.S.

dollars and performs part of our natural currency hedge for the assets we own in the United States, our series F debenture matures in 2020. Total amount outstanding in convertible debentures roughly at $188 million and at the present time we would not be anticipating, we would issue further convertible debentures.

On the unsecured debt market during 2014 we accessed the unsecured debt market for the first time and we presently have one series with the value of $200 million outstanding. We’re very pleased with that issue and expect that this source of capital will likely increase overtime reducing the amount of our secured debt and increasing our pool of unencumbered assets.

On ratios, debt to gross book value, even with the unsecured debt offering our total debt to gross book value is lower this year than it was at year end 2013. Secured mortgage debt has declined from 45.4% to 41.3% at December 31, 2014 overall debt has declined from 49% to 48.4%.

Artis does has some floating rate debt that has not been hedged in our case roughly 9.1% of our total mortgage portfolio, is floating rate debt, the majority of that is in the United States. We still believe that a floating rate component is appropriate in any debt portfolio and we’re not planning to move that number around substantially.

Our floating rate debt totaled term debt of not demand [indiscernible] until maturity. Mentioning maturities at December 31, 2014 Artis had approximately $351 million of mortgage obligations maturing in the next 12 months to little over 15% of our total mortgage debt and we anticipate no difficulty in refinancing if the unsecured debt market remains a viable option for us we will likely issue further unsecured debt and use the proceeds to reduce the secured mortgages.

The weighted average term, the maturity on the debt is currently 3.9 years. As I mentioned before we have been gradually paying off mortgages with the goal of increasing our unencumbered asset pool meaning the December 31st fair value of the unencumbered asset pool is now 668 million including the unencumbered assets that are included in our joint ventures.

The interest rate on our debt continues to remain low and [inaudible] environment was down to a 4.4% average interest rate versus 4.1% at the prior year. There is some disclosure as the weighted average debt in the next few years continues to be above market rates and we anticipate further savings on refinancing mortgages.

During the fourth quarter, our dissent into an unsecured credit facility with the syndicated lenders available funds under the facility are 125 million no balance have been drawn at the end of the year. Moving over to operations.

Total revenues property of our income from continuing operations, just under $80 million for the quarter up from $75 million in the same quarter last year. We had some lease termination fees not that large this year, we only had 73,000 this quarter year-to-date total of a 176,000, compared to 219,000 in Q4 of ’13 and a year-to-date total of 6.5 million in 2013.

Touching on same property. As I mentioned, our same property was a growth of 3.5% bringing growth to the year to 3.0%, we're pleased that positive growth for this quarter in all segments of our properties, our asset class retail was certainly the strongest with overall same property growth at 6.1% for the quarter and 4.2% year-to-date.

Industrial segment has been a strong performer of this year although as we mentioned last quarter we did suffer a bit higher vacancy in our U.S. industrial portfolio that hurt the numbers a bit, leasing is progressing well on the space and we anticipate that filling up shortly.

Overall industrial growth is still 1.3% for the quarter and 3.2% for the year. The office sector performed very well this quarter with 3.3% growth, bringing year-to-date up to 2.3% for that sector of our portfolio.

Looking at the U.S. portfolio, same-store growth for the quarter was incredible if I want to call that 9.1% bringing year-to-date up to 6.7%, of course a great portion of that left was from the weakening of the Canadian dollar.

Strongest sector for us in the U.S. was actually our office properties followed by retail and as I mentioned we incurred some vacancy in the U.S.

industrial portfolio that actually was a little bit negative prior to the conversion to Canadian dollars. We continue to believe the U.S.

economy will outperform Canada in the next few years and we expect to see continued growth in these properties. Canada by comparison showed a good growth of 2.1% for the quarter with gains and industrial and retail offset by a slightly softer office market.

Not strong as the U.S. growth, but certainly we’re well pleased to achieve these numbers in Canada as well.

Interest coverage ratio was roughly 2.8 times for the year debt service coverage a little over 1.8 times and these remain well within any covenants given to our lenders. Net debt-to-EBITDA was just over eight times, which we’re pleased with that number quarterly calculation we just take the actual quarter and multiply it by 4.

On an EBITDA interest coverage ratio, it was 2.85 times. As I mentioned, the REIT hold a fairly significant portion of our assets in the United States, and this requires that we convert assets held in U.S.

funds back to Canadian dollars, and you’ll see that hit the income statement in a couple of places some in the actual results from operations and some in other comprehensive income. Based on what we hear from various currency experts, the Canadian dollar could weaken even further in the coming months, and if this happens, we’ll see even larger growth from our U.S.

portfolio. If you read through this segmented information provided in the December 31st financial statements, the REIT had roughly 1.2 billion of assets in the U.S.

We hold $560 million of U.S. mortgage debt and we haven’t $88 million debenture payable and U.S.

dollars and 75 million of preferred units that could be redeemable in U.S. dollars and in our opinion it gives us pretty much a natural currency hedge for about 61% of our U.S.

exposure and we have no plans to hedge the rest of the present time. Touching on the non-GAAP financial metrics, one of the key ones of course for the REIT is FFO or Funds from Operations.

We calculate that in accordance with the REALpac guidelines, we do publish an adjustment at the bottom largely because we see the analyst doing it as well to produce a FFO number exclusive of lease termination income. On a payout ratio basis, our FFO for the quarter was $0.36 producing an FFO payout ratio of 76.1% and AFFO for the quarter was $0.31 giving us in AFFO payout ratio for the quarter of 87.1% and 87.8% for the year.

Just a couple of other highlights I’ll touch on. Net asset value as I mentioned at the start we do report our investment properties at fair market value and based on that we can calculate a net asset value for trust units and after adjusting for the equity held by preferred unitholders, the net asset value to the common unit is $17.39 per unit and if we dilute that for the outstanding option it's $17.35.

We have a distribution reinvestment program in place and participation in that continues to run over 15% providing us with the source of cash flow. By tax status we believe we've met the REIT exemption in 2014 and in prior years and that we continue to meet it today.

We have a fairly high percentage of our distributions as a return of capital and that serves to mitigate or eliminate any tax should the REIT becomes subject to tax. We believe we'll be able to continue to meet that REIT exemption going forward however it's an ongoing process that has to be tested regularly.

Artis ended the quarter with almost $50 million in cash on hand and with the capacity to acquire further properties however we're being very selective in the current market. As I mentioned we have the new line of credit as further increases our liquidity position and a further update on the subsequent events is included in the notes of the financial statements.

I'll stop at there for the financial review, feel it was a very solid quarter for us - years and we look forward to demonstrating results from operations in future quarters. Turn it back over to Armin.

Hey thanks Jim. I'll let Heather Nikkel continue from our financial highlight and then I'll wrap it up.

Okay thanks Armin. A recap, we closed the quarter with 246 properties bringing our leasable areas to just over 25.8 million square feet.

During the course of the year, we acquired nine properties including two office assets, four retail and three industrial properties. The aggregate purchase price of these assets was C$52.4 million and a US$123.5 million and represented a weighted average capitalization rate of 6.92%.

In addition, we disclosed a one retail property and two industrial properties during the year. In Q4 specifically we closed on two retail acquisitions one in Calgary and one in the Twin Cities area both strategically located directly adjacent to property already owned by Artis and one industrial property in the Twin Cities area.

The aggregate purchase price of these Q4 acquisitions was C$39.8 million and US$19 million. During the quarter we disposed a one industrial asset in the Twin Cities area.

Our asset allocation year-to-date by property NOI was approximately 52% office, 24% retail and 24% industrial. Geographically, our four largest segments are still Alberta at 39%, Minnesota at 14%, and Ontario at 12% and Manitoba at 12%.

Approximately 23% of our property NOI is from U.S. properties excluding joint venture arrangement.

In Q4 about 18% of our property NOI is from Calgary office properties with the other two largest segments within our portfolio being the Twin Cities area at about 8% and one of office properties contributing about 7%. Overall occupancy at the end of the quarter was consistent with last quarter at 94.6% or 95.6% including future commitments on vacancy.

As you can see from our MD&A occupancy at our U.S. properties increased quarter-over-quarter in all asset classes.

We are pleased with these results. Same property occupancy was 94.3% at the end of 2014 which is a slight decrease from 94.5% at year-end 2013.

Overall the retail and office segments of our same properties performed well. By geographical regions, the provinces that were the strongest contributors to same property occupancy growth were Alberta, British Columbia and Saskatchewan.

Across the portfolio, the weighted average term to maturity of leases at the end of the year was 4.3 years. The weighted average term to maturity of leases for a top 20 tenants is a very healthy 6.8 years.

With regards to leasing activity, we renewed over 500,000 square feet of leasable areas during the quarter and over 1.5 million square feet over the year. The weighted average rental increase on renewals for the three months period ending December 31st was 7.2% which is a number we are very pleased with.

Weighted average rental increase on renewals for the full year was a healthy 4.2%. Our retail asset class made a substantial positive contribution to our weighted average rental increase on renewals in Q4.

Regionally renewals in Saskatchewan, Alberta, Ontario and Manitoba posted a strong quarter showing healthy list on renewal rates. Looking at the upcoming lease expiry schedule we have a manageable 14.6% of our portfolio leases expiring in 2015 of which at December 31st we already had commitments in place for 38% that announced to over 1.2 million square feet of commitments on 2015 expiries to-date plus an additional 250,000 square feet that is committed against vacant space at the end of the quarter.

With respect to our Calgary office portfolio we have 424,000 square feet of lease expiring in 2015 of which 73% has already been renewed or committed to new leases. Market rents for the Ontario portfolio at December 31st are estimated to be 4% and 5.5% about in-place rents for 2015 and 2016 respectively.

This translates to a potential revenue impact of 4.1 million over the two year period. Across the portfolio for all years and expiry our average rate in-place rent increased by $0.03 over September 30th and $0.22 over in-place rents at the end of 2013.

The increase in in-place rents is mainly due to successful negotiations on lease renewals and from rents that commenced in the period. For the total portfolio market rents are estimated to be a healthy 5.5% above in-place rents.

We consider market rent analysis to be a good indicator of growth potential for our portfolio. In our market rent estimates we do not forecast for inflation or rates are expected to be in future years.

We do review our market rents across the portfolio on an ongoing basis and revised our 2015 and 2016 Calgary office market rent estimates this quarter to reflect our best estimate of what impacts the recent decline in oil prices will have on the Calgary office market. Moving on to our developments and process in the pipeline at Q4 we had over 2 million square feet in our development pipeline in very early planning stages and nearly 240,000 square feet currently under construction.

In addition we have several parcels of land being held for future development. In our MD&A we talk about properties that are held for redevelopment and new developments in process.

During the course of the year we completed three development projects totaling over 300,000 square feet of new leasable area including an industrial building in the Twin Cities area and industrial building in Edmonton and a retail building in Winnipeg. All of these projects were fully leased before construction was complete.

And with that I will turn it back over to Armin.

Thanks a lot Heather and Jim. Well first of all folks we - and we are confident meet or exceed expectation in 2015.

It continues to be our view that both the U.S. and Canadian economies performed fair to good in the year and years ahead with an increase advantage gone to the U.S.

economy and among other things this will be reflected by a stronger U.S. dollar.

Needless to say the longer oil price remain low to greater tenancy will be - a tenancy will be for the Canadian dollar to drop or stay, looking at the charts all in the $50 range is historically translated into $75 to $87 in that broad range. In terms of oil prices while just when we thought everything was on cruise control we got a significant unexpected drop in oil prices from down to the average consumer just got the equivalent of the tax cut or pay raise but there will be some losses as well.

In terms of real estate there will now be a decline in office absorption in Calgary, the magnitude of this and the consequences it will depend on the length that the oil price decline and the visibility. Now with respect to interest rates bond yields have fallen to low trading rates that we’ve ever imagined which we appreciate very much and we continue to believe there will be low range amount for several years.

The same spread remain level for five and 10 year mortgages and these could potentially narrow the liquidity continues to improve. So today five year mortgages and 2.75% to 3.0% range while 10 year mortgage in 3.75% to 3.5% range and that will bit similar in U.S.

right now. Notwithstanding our views and interest rates staying a low trading range for some time and that’s any sign of deflation will lead to [indiscernible] other intervention almost all new mortgages has been taken off by Artis as you've noticed have been 5, 7 or 10 year term so we are terming out our debt.

In terms of acquisition cap rate in Q4 well it remained level in Q3 in essence some rates are still cheap in the real estate right. A lot of capital chasing real estate deals actually continues to increase so even if interest rates were to rise someday we do not expect cap rates to move up in tandem and both the U.S.

and Canada now there continues to be a basic shortage of good real estate being brought to market and their flipside is that good real estate is the price to perfection. So for 2015 we expect cap rates to remain level for some asset classes and to fall for others but we don’t see anything pushing cap rates up.

Now a lot of our asset classes office, industrial and retail, the property markets continue to experience healthy occupancy levels in our target markets. Looking ahead, of course, we will continue to carefully monitor oil prices at the Calgary office market as this will have an effect on occupancy and rental rates.

During 2014, the Calgary office market experienced 1.2 million square feet of net positive absorption, in the first three quarters but according to CBRE if ended to forward 300,000 square feet of negative absorption. And for this full year of 2015 CBRE is now projecting negative absorption of another 400,000 square feet for the full year.

Other than that, real estate fundamentals and all of our asset classes and including industrial and retail in Alberta and all submarkets are quite solid. In terms of our portfolio performance as you've heard we feel our metrics are good.

We have a healthy gap between in-place rents and market rents, and are achieving good rental increases than same property NOI growth. Our leasing progress is good.

Our 2015 leasing program is already 15% complete as well 10% for 2016. Our portfolio continues to demonstrate a long-standing track record of an occupancy level in the 95% range, which speaks well to our management team and the reliability of our income.

Meanwhile as we pull it out significantly slowdown in the acquisition depending on the preparation of our results going forward. So for 2015, our guidance is that we will acquire between 100 million and 300 million of new properties which is basically the same as last year.

At the end of the day, value creation is the most important to actually continue to work hard to keep our buildings full, whilst bringing the rents up to market. We have been slowly but surely improving our real estate portfolio, our balance sheet, and payout ratio.

And as you can see, while delivering on our value enhancement and new development pipeline as well. Our Greenfield development pipeline has been quite successful to-date and not today including the redevelopment of the small retail center in Malmo we see the Toyes mall [ph] in Virginia, the Centrepoint office project in Winnipeg and partly several industrial project in Phoenix.

We have about $60 million of new developments under construction and about $40 million from the pipeline to start in the next 12 to 8 months. And that's our report to this quarter and this year folks, so we are pleased with the results and we are grateful for low interest rates and we are confident in our outlook.

I'll now ask the moderator now to take over and field your questions. Moderator please?

Hi, good afternoon everybody. Armin just on the $40 million that you expect to start in the next 12 to 18 months maybe just give us a little bit more color as to what entails and specifically just curious if you are expecting to gets started on any of the two sites that you have access within that figure.

Yeah, that's good question and I am looking at into phase II/III of the part we are selling industrial in Phoenix and then Houston we are on both of our projects are on hold of course are office development project and industrial but I am optimistic that industrial will get that the start of the first phase in next 12 to 18 months. I expect the industrial market not be effectively the office market will be.

And I can't help it, I want to add in the Houston, market in Houston it counts much more diversified for example then in the Calgary economy.

Okay, that’s helpful. Thank you.

Just obviously on your 2015 Calgary lease expiries you guys have done a great job there you got I think over 70% of the space committed. If I remember correctly AMEC could you may be give us update did they renew or did you have to backfill that space?

Yeah, that came to have in last quarter of 2014. I guess we can’t give you specific on that so in that short - the 250,000 square foot lease but negotiation period with AMEC we did negotiate new lease along with term lease rather with that with one parcel [ph] another engineering firm so what happened with in the case of AMEC not to speak others they wanted to renew just for one year at a time instead of triggering two year renewal option, we want a longer term and we want a different direction, we’re able to paying a very good credit engineering company for 5.5 year term.

Now the rent went from $25 down to $20, but there is a decline in the rent. But we glad we did that deal, it’s basically an added deal for us and then we’ve got 5.5 years of term that will buy a good chunk of time.

So we’re grateful for that, I will now - the major exposure in terms of leasing for the whole REIT for 2015 and that’s done behind us at that for now the rest of our leasing profiles is pretty benign and we think very manageable. That's notwithstanding that and in Calgary we’ve got to work extra harder.

We believe there has been both for that in the Calgary office market back in 2008 and 09 when we went to real recession only $40 and there is over building we came through that we had some drop in same-store NOI growth in the Calgary office portfolio, but collectively Alberta gave us positive results in terms of organic growth and back in ’09 and ’10. And we expect again that we’ll do over lock more diversified trade and used to be in our leasing team Calgary stronger than ever before as well and build up well and we've been practicing for lease renewals.

So it is well it is but we feel we’re in very good shape to handle to weather the storm with the Calgary office market.

Okay, that’s good color, thanks. And just maybe just with respect to the downtime you expect from a main equity and volumes moves in how long will that property be offline from that lease I guess from NOI perspective?

Yeah, it’s six months Jim.

It’s about six months, yeah.

Okay.

But expires end of August and then six months for early 2015 and then the lease kicks in but that’s also when the term kicks in 5.5 years beginning 2016.

Okay. And last question for me before I turn it back.

So obviously the uncertainty in the Calgary office market is quite clear and you’ve guys have seen well positioned to face those challenges. I was wondering if you give me a sense of although it’s early days, if you’ve seen any slowdown and leasing within industrial and retail in Calgary and maybe greater Alberta, it’s only those several months or maybe give us a little bit of color on that.

Yeah, so that’s we just have lot anything I would literally get, we’re getting rental increases for retail properties across the Board in Alberta including Fort [ph] were a 100% occupied with the spotlight [ph] retail. And so again it still have almost a 100% tenant retention rental increases down to grand prior year and Calgary at any reach out properties we have from an exceptionally well low traction wise at all.

Industrial the same in all us just find the big lease-up and access in there [indiscernible] on there. I’m expecting that if there another shoot of drop it will be industrial not retail and it was some tension there, but right now we’re not seeing any occupancy level that organic growth and both industrial and regional and all market that we’re in Alberta are right on track with no one.

No real tenants call that’s in same having trouble with making payments and they need some more time stuff like that.

Okay. That’s very helpful.

Thanks very much.

Hi, good afternoon.

Hello.

Just coming back to the equities two questions. Could you tell us where they're relocating two and then is Worleyparsons taking up all of the space going forward?

Yeah, so the new tenant Worleyparsons taking up all 250,000 square feet basically in as of these, but I think we’re getting them a little bit - very nominal. And AMEC join when they went down the road, I’m not sure, which probably I’m not sure I should want to say and I think I believe they did get their one release term that they want.

As I mentioned in my case he had an option to renew for three years we expected them to trigger and both in sort of standard procedure but the pressure is hard for just a one year renewal and we went the other way that nobody used to go and I think we did the right thing under the circumstances.

Okay. And can you remind us how much you put into the building in the last five years with respect to the lease capital?

No, I don’t, the last five years.

In the last five years nothing --. AMEC been longer than that.

They have been in for five years plus two years and they’re just is an - in the last three years. They will beat by next year there is been in our space for seven years.

So when we sign them up for six years ago let say there was an allowance we gave them, but I doubt within the range of $25per square foot at that time. We can get to that, the only check we would have written to them would have been six year ago when we first moved in.

Okay. That's good.

Then next question just with respect to Winnipeg, I noted the industrial and the office occupancy was down by 200 basis points quarter-over-quarter the committed is higher than where the in-places. So what I'm wondering if there is anything specific towards down the Winnipeg on the margin.

Yeah on the office, you must call about 220 - that is the RBC building it is the RBC building at Winnipeg they had office at Winnipeg. And we knew when we brought that building in the lease was coming up renewal and that they would be renewed substantially but ultimately they gain some space so that's what happened.

They gave us back two floors time to seven year lease for the couple of lifts in between and we invest a lot of money in their premises. So that's what happened there and that's space is on the market up not for lease.

So that was what the cause there. Industrial there was a property under development now and interesting that we brought back that's about 40% lease that we took it back into inventory that so that kicked up our vacancy rate.

Perfect. Okay but in terms of the overall market fundamentals things that you're pretty stable for both process.

Yeah it’s very stable there is not much absorption right on the Calgary and the way - where the - market but no there is no decline in the industrial market there is some absorption I wouldn't call strong but there is some absorption. The market is in good state shape here.

Okay. And then lastly with respect to capital deployment where you sitting on $50 million of cash doesn't seem sort of the sound like 2015 is going to be a very active acquisition and the relatively flat year-over-year.

Few people know the Alberta market as well as you guy did. So I'm wondering given that the dislocation in the market doesn't make sense to start buying in Alberta are we too early for that have you seen any change in valuations, the expense that assets have traded to a first $50 or over the course of - what are your thoughts there.

So that's a fair question. If your buying opportunities is anyone can't I think it should be in Alberta then the challenge we did the conundrum is that vendors dig their heels and we get this Mexican standoff if you want the vendors if they don't get at least close to the price expectations they won't sell they won't transact.

I'm expecting in Alberta for the very good real estate the cap rates will still won't change because investors they have a long-term view. The BB plus, we don't say that we're all okay but not necessarily [indiscernible] AA.

It could be some price movement and we're keeping we're looking for that we're actually looking for that.

So you'd characterize yourself as a net buy in Alberta in 2015?

Yeah this is not the time to be selling in Alberta if you don't need to and we don't need to. We continued to believe in the longevity of the all in energy markets.

Whatever there is an old saying all industry what goes out has to come up eventually supply will come down and the match, the demand and real estate change in the pricing. So we believe in that buyers and not selling its assuming we don't see the point when we had excited.

And we're in very good shape we never had balance sheet that's more liquidate more flexible embedded in today. And we expect another good year so there will be patience with acquisitions to vendor capital we just don't still need to do raising the capital right now.

We like our liquidity position the cash balance, the ability to underline a credit and to make some good strategic acquisitions that we know will be accretive.

And does the buyback look more interesting to you today than the last couple months that you've referenced the 17.35 IFRS evaluations or sitting in - discount to that.

Yeah it does. We just won't respect our balance sheet our liquidity and our market cap.

Looking ahead we - deeper estimate clear to us that it's fast to get at the next level of investment grade rating from BBB low to BBB mid, we need to just get bigger and all of our metrics are just fine. So that's still the direction we want to go.

Right now if you talk to you get your people at your back they'll tell you that the biggest demand to get is BBB mid and BBB high and not triple B low. And investors are looking for liquidity.

So in three as - that BBB we still very committed to improving on that.

Okay, thank you.

Just a follow up to a little bit on Mario's line of questioning. Last quarter it sounded a little bit like you’re looking to get increase your rating to the U.S.

and maybe lighten up on what’s on Canada. Would you consider now going in the reverse direction and maybe crystallizing some gains that you’ve made from your U.S.

expansion to put the capital back in Canada and in the Western particularly?

Yes for sure, that’s on the table but the flipside it's all about the moment, at this moment we feel that real estate fundamentals are still better than the U.S. and the outlook is still better than Canada and we think that the trend line for the currency is still stronger for the U.S.

you know we can call bottom of the top right. So we don’t want to…it would be a good time to take money off the table without a doubt the flipside is we're confident that the U.S.

dollars are at a good trend line it will stay level or it will get stronger and the U.S. economy fundamental still outperformed Canada at least a little bit.

I mean it was a little bit different I guess the last time you went to the low oil price where you were aggressively looking to add to other geography to minimize the weighting cluster in Canada are you comfortable with where you are now and is that a part of the thought process that sort of mitigate in the West?

Yeah not to get - I’ll try to answer to that, years ago we were 80% out weighted in Alberta and 5% Calgary office back in 08, 09 and then after that we got diversified into GTA into ROI [ph] and went into the states and also very good reasons if they have GTA didn’t perform as well as - but it’s definitely on a good track now and ROI [ph] doing well for us. Our diversification to the United States has been a win-win for us as well so we still look to diversify in a bit more that to - you might see us actually growing in Alberta and increasing our position there in fact in a cautious way but we still like the U.S.

market we like the GTA market and the auto market as well.

On [indiscernible] payout ratio over the last several years I was just curious to get your thoughts on distribution increase on total payout ratio?

Yeah they keep moving the goal post Heather, remember the good old days when we had a payout ratio of 120 and our debt was 60% and we’re told to get your payout ratio down to 100 and the debt down to 55% and start increasing the distributions and we said we love to see our debt got about 45% and our payout ratio grow between 80% to 85% before we push that button.

Okay and in terms of the unsecured debenture market and availability even on cheap mortgage financing are there opportunities in either with your conversions on your mortgages to pick anything like any opportunities - the rates?

How do you think Jim?

Not a lot right now Heather and I think the first date where we can take out the convertible debentures at par is generally 2016 you may see through that in 2016 by our math it’s generally not worth seeing that prepayment suddenly on mortgages to take over that secured debt or they’re not that part of the market that they don’t make sense to do that. But we have enough maturities in the next couple of years I think we’ll just do it as they mature.

And so the 350 that you bought this year is that related to the front or the backend?

It’s a little more skewed to the frontend.

Thank you very much.

Thanks. Good afternoon everyone.

Looking at the market rent disclosure for Calgary so looks like you guys revise the market rents down for 2015 like you said but I just want to get some more granularity on how that was calculated recognizing that there is lot of efforts that go into it. With the Worleyparsons lease is that factored into the new market rent number for 2015 and then also with the in-place rent number for 2015 it looks like it didn’t’ changed much from last quarter so is that the number for what's left to renew the 25% expire in 2015 or does that still include the AMEC number?

The expiring in-place leases would still be based on full leases including AMEC because it does expire this year and yes the Worleyparsons new rent was factored into the market rents so that’s at least a portion of the decline in the market rents was factoring in the deal that was done with Worley and then we just sort of someone hold the rents down couple bucks a foot just to be conservative not because we have any evidence of that happening but we are just looking to be a bit more conservative on it?

We do look get feedback of course on a daily basis sometime from our leasing team and our management team on these kinds of things.

Okay so if the AMEC numbers included in-place and the Worleyparsons in the market does that suggest that the mark to market would still be positive on the 25% that’s left to renew or potentially renew?

You mean just for the Calgary office?

Yeah.

Since that last cycle of 08, 09 when rents were $25 they all came down a lot so we had a lower benchmark now but I don’t have that number off hand I'll just ask Heather to look, we would have disclosed this or - not sure.

We could follow up offline if that’s better.

Sure yeah.

Okay. So my next question is with regards to the U.S.

strategy you guys are not 25% of NOI with your self-imposed limit of 30 so just looking at the currency movement which obviously impacts the percentage and then combine with your acquisitions being quite weighted towards the U.S. in 2014 is there any thought to revisiting what’s that 30% limit at this time?

Sure, It's just a quarter or two ago you have heard me say that $10 slides down by $0.80 that's a good time to revisit of course the pause button in the U.S. acquisitions could be so if there is a currency gain ahead from here I don’t think it’s going to be big as a gain we’ve just experienced saying certain part down $0.80 I don’t think we're going off from $0.80 to $0.60 but I am still of that opinion that the U.S.

dollar is on a positive trend line it was $0.01 to $0.05 and fundamentals are a long-term positive trend along with their economy but things are good in the U.S. right now almost nowhere else and you compare the U.S.

economy to the G7 countries. So we are still prepared to invest more in the U.S.

and get up to 30% we're not in contrast to go in other direction and I don’t see how that’s get into 30 to 50 for example. Flipside is we have to be a bit opportunistic if a good opportunity comes up in Alberta or elsewhere in Canada target markets will be glad to invest there.

And just to remind us the 30% is really just self-imposed right there is no approval or anything you need to get to change that or is that tentative from the floor level?

It just softens from the broad level it's not my declaration.

Okay. And then my last question is with respect to the same property NOI growth outlook it was a good number for 2014 with currency helping that obviously do you have an outlook for 2015 given the higher number to get U.S.

and then combine that with the Calgary office market outlook?

Jim told me not to give guidance and I think last year I gave broad numbers I think that reflects 1% to 3% positive and Calgary office as we expect would be negative or vacancy increase another 1% to 2% to next year to two, bottom off but in Alberta we know our industrial that would perform well and we're in good shape that all other markets so collectively we'll be positive. And then we will see what exchange rate does for us in terms of the next after burner effect but we compare well to the Canadian [indiscernible]

Okay, great. Thanks a lot.

Hi, guys. Armin just going back to your comment with regards to DBRS and the rating to get a BBB what sides are they actually looking for in order to get to that threshold.

Yeah not a spokesperson so DBRS but - 0.5 billion.

Okay. And then in terms of the U.S., the Ontario portfolio the same property results for Q4were a bit weaker.

Was that the result of the single asset or a number of assets?

Sorry do you mean by NOI or by occupancy?

By NOI.

Okay.

Yeah I will get back on I think with one property.

Yeah occupancy really could be related to one property so.

Yeah I mean there is something it's actually less - industrial where ABD was a major - they shrunk, rest that space it's another in on good credit tenants. And then that's one example where NOI came down temporarily than until space is released.

And I'm thinking might have been concur the office property as well. But we can get back to you offline on that.

Yeah no reason and I'm sorry the 201 West Street that if it has been reclassified as a development project would it impact same property numbers or not.

It would not.

Okay. But in terms of that project and what's going on there the downtime is only really two quarters right?

That's correct yeah it was actually supposed to be shorter than that but we get delayed of it's getting the building permits in place so it will be Q2 of '15 before that kicks in. but it is fully leased.

Okay great. That's it from me, Thanks.

Thank you. On your refinancing comments in the MD&A based on what you see right now what kind of savings do you expect to generate from the refinancing in terms of the like.

Yeah it is I guess Yash depends a little bit on how we refinance it whether it's unsecured debt or secured with certainly be is cheaper to date and unsecured in some points in the past they've been similar. The weighted average for us that's ruling in 2015 is about 4.42% and 3.91% in 2016.

If we did an unsecured debenture we probably expect the rate to be 3.5 plus or minus a bit if we do it as secured it will be less than that.

Yeah it's going to be depending on whether we - come to temptation the asset. The longer to term the higher the rate I think you might have recall five year - rate is 3.0% and the money about 3.5% in the mortgage might that it is good potential saving that in the --.

And the unsecured debentures at least 25 premiums to that five years money we go unsecured. And then it depends again on the tender as well.

But there is a saving therefore and it ranging from 100 points to 150 points.

Okay. Are these maturities spread across the year or like they're front loaded in 2016 like if you could throw any color around that.

There are little hue to the first half of the 2015 that these don't know that in front of me actually think of that 350 is going to be roughly 200 in the first half and 150 in the second half.

Okay. That’s good and just way back to Calgary office.

The 160 bps decline in occupancy during the quarter. Is it related to AMEC lease or was there something else?

No that wouldn't AMEC because there is still an occupancy. So it would be other phases

And the small tenants right.

Yeah.

Okay and what is this affected by the recent oil price decline or was it like just noise.

I think - that would have been the best of my it's a combination of tenant shrinking in size on moving but many of the shrinking right --.

Yeah that's correct.

The through that they've I think the response to the decline oil prices I felt it can very swift in in Calgary they didn't wait a quarter or two.

Okay. And now based on what you see like the worst case where do you think your occupancy could go by the end of 2016 I know it's very hard to predict but you must be doing some kind of sensitivity analysis either actually using them all or mentally so if you could provide some color there?

Yeah, so mentally I have not mentioned before we are expecting at our Calgary office portfolio the vacancy to increase by another 1% to 2% between now and the end of 2016.

1% to 2%.

That’s a little bit broad but again it depended on quickly oil prices recover. And we expect an increase in vacancy before it levels off.

Okay. That's good color, Thank you very much.

Thank you. I just want to pick up on Yash's comments Armin you have been pretty you have pretty clear view on where the U.S.

dollars are going U.S. real estate fundaments interest rates what is your base case for the price of oil?

Yeah, there is still a lot of report out there suggesting all they go down to 40 before it starts recovering I don't want to see that record rigs that are idle now but 400 rigs that are idle in North America a little record - oil industry than ever before. I believe we have seen the oil industry has not much the banks respond very quickly to the decline prices shut things does down in terms of new production we know they all are the shale oil wells they only decline at an accelerated rate I am optimistic that we will see by the third quarter, fourth quarter, of this year we will see a supply come down to match demand possibly with low interest rates and low gas prices and demand increases as well that always have as well but I expect better equilibrium and better pricing.

So I think $50 range is little and I think we see some at the end of this year.

Okay, and if you're wrong I mean it is possibility that oil goes down from here and stays low for extended period of time like what are you doing to shield the portfolio from such an event?

We'll continue to work heard - first of all[indiscernible]top dollar continuing to diversify but a lot depend on crystal ball I think one year down turn oil prices with all stay in the $50 range for all of this year that's not a problem we've seen that moving before. Two years it would be bad and as long-term structural decline it would be terrible for the Calgary office market it is what is and then you have to work your way the other things happening at new constructions for a while and things down to often then you've got that - as you know but 18% of our NOI comes in Calgary office that is our asset and that is also liability and balance sheet, where oil is going but I am not in the [indiscernible] long-term structural [indiscernible].

Okay, thank you.

Well, thank you very much, moderator. Thanks, everyone for joining us.

Have a great weekend and great reporting season. Talk to you as soon as we can.

Take care