Thank you, Denise. Before we begin, let me remind everyone that the following discussion may include comments that constitute forward-looking statements about expected future events and the financial and operating results of CAPREIT.

Our actual results may differ materially from these forward-looking statements as such statements are subject to certain risks and uncertainties. Discussions concerning these risk factors, the forward-looking statements and the factors and assumptions on which they are based can be found in our regulatory filings, including our annual information form and MD&A, which can be [email protected].

Thanks, David. Good morning, everyone, and thank you for joining us.

Scott Cryer, our Chief Financial Officer, is also with me this morning. As we look back on 2020, I'm very proud of how our teams have responded effectively and in a finely manner to the significant challenges presented by the COVID-19 pandemic.

As we've discussed over the last few quarters, with the advent of the pandemic last March, our teams began implementing programs at warp speed, aimed at ensuring that our residents and employees remain safe and healthy, preserving capital, maintaining a strong and flexible financial position, mitigating risk and generating the best operating results possible. Looking back, I believe we were successful in achieving these objectives, generating many significant achievements during this year.

I'd like to touch on a few of these accomplishments this morning. The second wave of the pandemic last fall had an impact on our fourth quarter results, as you can see on Slide 5.

Nevertheless, revenues were up over 8% on the same quarter last year, driven by the positive contribution from our acquisitions, increased monthly rents and continued high occupancies. NOI rose 9.5%, with NFFO up approximately 12%, generating another very conservative NFFO payout ratio of just under 60% in the quarter.

Our growth also remains accretive to unitholders, with NFFO per unit up 6.2% despite the 5.4% increase in units outstanding. Turning to Slide 6.

Despite the pandemic affecting our operations for most of last year, we still achieved record financial and operating performance in 2020, a testament to the skill and dedication of our people, the stability of our asset base and the resiliency of the rental residential sector in real estate in Canada. As you can see, we generated strong increases in revenues, NOI and NFFO in 2020 compared to the prior year.

These record results once again demonstrated that CAPREIT can generate strong, stable and growing returns for our unitholders through both good and bad economic times. Over the last 23 years, we have built the team, the asset base and the operating platform that we believe will only accelerate this track record of performance as the pandemic eases in the future.

Once again, on behalf of the Board of Trustees and all unitholders, I want to thank our people for their exceptional contribution to our performance last year, and we look forward to significant increases in our key financial benchmarks over the long term.

Thanks, Mark. Turning to Slide 16.

You can see that we are clearly in a strong financial position at year-end with a conservative debt-to-gross book value and historically high liquidity. We have $750 million of liquidity available through our credit facility and cash on hand.

And in addition, we had $974 million in Canadian unencumbered properties to provide additional liquidity if ever it 9should be needed. In total, if we were to access all these sources of capital, we have available liquidity of approximately $1.9 billion.

And even if we did this, our leverage ratio would still remain a very conservative 42%. Looking at our financings in 2020, we locked in a very low interest rate of 1.84% on our total refinancings and top-ups, and we expect we will continue to benefit from the current low interest rate environment for some time.

At year-end, 99.3% of our mortgages incurred a fixed interest rate. We are also confident that debt markets and financing will remain highly available for our properties, given their stability and the strong fundamentals of the rental residential business.

As of December 31, 2020, 98.7% of our properties hold CMHC insured mortgages. At year-end, we recorded an almost $1.3 billion increase in the fair value of our property portfolio, including $600 million in fair market value gains, another strong indication of the stability of our business and the value of our properties that we bring to the unitholders.

Turning to our balance sheet on Slide 17. You can see that we continue to maintain a strong and flexible financial position at year-end, with conservative leverage of 36%, strength in covered ratios, such as an almost 4x interest coverage ratio.

And in 2020, we continue to decrease our interest costs on our mortgage portfolio to 2.56% and a weighted average term to maturity of 5.8 years. We expect to continue this trend in 2021.

Thanks, Scott. Looking back over the past few months.

As I've said in the presentation, I'm extremely proud of our teams and how they've responded to the COVID-19 pandemic. Our continuing growth and solid performance is a testament to our resiliency and ability to quickly and effectively adapt to these challenges.

I can't thank our team enough for their efforts, their professionalism and their dedication. Looking ahead, I'm confident that the programs that we've put in place will continue to generate strong and stable performance in the coming months and will contribute to even stronger growth as the pandemic eases.

A key factor in our success has been our focused asset allocation strategy, as detailed on Slide 24. On the apartment side, we continue to generate and target, I should say, value-add properties in the mid-tier segment.

These properties are acquired at well under 50% of replacement cost. We have proven our ability to invest in them to increase value and their stability is driven by their very affordable rental rates.

We also continue to like the MHC sector, a highly stable, low-risk business with very strong potential to increase cash flows. Revenues are highly stable and with residents owning their own homes, capital requirements and maintenance needs are significantly reduced.

MHC properties also provide another level of diversification within our portfolio, allowing us to enter more rural and smaller markets than a residential focus on large urban regions. Our European presence is driving significant and growing dividend and fee income.

Dividends in 2020 from ERES and IRES totaled $32.9 million. While our fee income for property management services increased 5.2% to $22.1 million.

As the only professionally managed operating platform in Europe, the opportunities for further growth and enhanced value are significant. However, we will target our exposure to European markets and keep our exposure to Europe at approximately 15%.

Another key attribute of our growing property portfolio is our focus on Canada's 3 largest and most vibrant rental markets, Toronto, Montreal and Vancouver. As you can see on Slide 25, in addition to offering quality rental accommodation in these high-demand markets, our rents constitute a very manageable percentage of total disposable income for our residents.

Our rental rates are between $1.50 and $2 per square foot are clearly affordable compared to other rental alternatives that are much more expensive. For example, Toronto, rents for new build and condo rentals are going upwards of $3 to $5 a foot.

This clearly makes our product attractive to the mass mid-tier market. Quality properties and more space at affordable rents, this is the CAPREIT value proposition.

True to this value proposition, our main growth focus going forward is on the mid-tier segment in suburban markets that offer size and affordability. With these mid-tier properties, we are providing quality suites at rates around $1.75 per square foot, far below the suburban average.

Our apartment properties contain mainly 2-bedroom homes, space that is seeing strong demand. We are also the largest owner of townhome rental properties and the second largest owner of manufactured housing communities in Canada.

Renters today want more space, and our properties provide a range of affordable options for them. Our recent acquisition in Halifax is a key example.

These brand-new properties around the downtown core contain many 2 and 3-bedroom suites with lots of living space, and they rent for an average of only $1.20 per square foot. Again, value is being created by offering quality rental suites with more space at affordable rates.

We continue to target these fundamentals going forward. Further to this point, you can see on Slide 27 that our residential suite portfolio is predominantly positioned in suburban markets around Canada's 3 largest cities.

Our presence in downtown cores is minimal. For example, you can see in the GTA that approximately 22% of our total portfolio is located in suburban GTA markets, with only 5% of the portfolio being located downtown.

Looking ahead, we will continue to build on our presence in more suburban markets or in nearby population centers with short commutes. We believe the affordability of our suites as well as its geographical allocation will continue to experience strong demand after the pandemic.

In summary, looking ahead, we are very excited about our opportunities with further growth and enhanced unitholder value. Our focus on the mid-tier sector would see increased demand for affordable, high-quality homes.

Our predominantly suburban locations outside downtown cores and our larger-sized suites, townhomes and MHC sites are meeting the needs for renters seeking more space. We are experiencing a strong pipeline of accretive acquisition opportunity and expect to see solid portfolio growth in the quarters ahead.

The continuing low interest rate environment provides significant opportunities to acquire properties with strong cap rate spreads and to reduced interest costs on our refinancing initiatives. And most importantly, as our markets return to more normal conditions, we are confident we will see another year of record performance in 2021 and going forward.

Thank you for your attention this morning, and we'd now be pleased to take any questions that you may have.

Mark, can you talk a little bit about sort of market rents and that 20% differential. I mean market rent is a bit of a nebulous term.

Can you remind us what goes into your assessment of that 20% gap?

Yes. So in our case, when we look at our in-place rents versus what we surveyed to be the opportunity in the market, that's clearly the gap.

How we do, Dean, is we're constantly ranking our quality of offering versus the quality of offerings of buildings in the immediate location, and we price ourselves accordingly, okay? So for the number 3 quality offering in competition for the local area, because apartments are a local business, we want to strive for being at least that rent level or higher.

And constantly updated on a monthly basis.

So how should we think about -- I guess, COVID kind of put us all on our heads in 2020. And your mark on turns was 8% versus the 20%.

And I guess, in 2019, it was more in the mid-teens. What should we be thinking about for 2021?

Is it going to be more of a self-regulating year around bumps on turns and maybe 2022 is more back to sort of that normal year that we would have saw sort of pre-pandemic?

Yes. I'll give you a very qualified answer because it's completely correlated to the vaccine rollout and the easing out of the pandemic, okay?

I wouldn't call anything that you see in the numbers a strong trend at this point other than the strong results you're seeing from us. But I wouldn't read too much into rent.

And I'll tell you why. As we've all gone through this pandemic, and I mean all the apartment community has gone through it, we've really struggled to find -- how to find residents when there are no residents there for certain situations.

So I call it -- like we've been fighting on lowering rents, incentives and improvements. The reality is people just aren't moving.

They're staying at home. There's been this massive household consolidation going on, okay?

We don't know the numbers, Dean, but there's more kids living with their mom and dads right now than ever before a Canadian history. And that's not a trend either, okay?

God, I hope not.

We believe that in -- and September is a magic month, okay, or as we get closer to September. And the reason why is that's when the government is calling for a vaccine rollout to be substantially complete, and that's when there's a return to school and that's when we believe things will start to get back to normal.

I believe that, that marks the beginning of what we're going to see in terms of new trend. So if everything stays the way we think it's going to stay today and it could move around, I think we could see back-to-normal rents probably in Q4 of this year and most likely Q1 of next.

And what I'm talking about, like pre-pandemic rent levels if not higher. And the reason I say that, again, strange effects are going on in the marketplace, we've seen home value prices surge, so the affordability for home ownership has actually grown significantly during this pandemic because you've seen even further acceleration in home price valuations and a decrease in rents.

So the gap is the largest gap we've ever witnessed.

And Dean, just to bring the gap between, let's say, last year being 2019 at 13% or 14% on turnover versus 20% for the portfolio, we do see that the higher the gap between market and in-place rent, the less likely people are to leave. So we actually have more built up demand in older leases that are higher mark-to-market.

So that's kind of -- that bridges the gap between our turnovers and our mark-to-market.

Yes. No, that does truly make sense.

And then my second question, and it might not be one that you can answer. I guess there has been some growing concern around just the veracity of these new variants.

Do you have an ability to track the incidences of positive case counts in your buildings? And have there been any sort of outbreaks or anything?

Or is that just -- is that something that's maybe a little too invasive to track?

No, no, no. No, it's -- we have the ability to track it.

We don't have the information. It's tracked by public health, okay?

So for privacy reasons, we don't know what's going on. But public health guidelines across the country are basically the same.

When declaring an outbreak in an apartment building, there has to be more than 3 cases. And we've only had 2 of those that breached 3 and very short-lived.

People who were quarantined were fine. So we do know, but we only know through public health.

And the incidence of outbreak has been virtually nonexistent.

Okay. Fair enough.

Very minimal. I'm sure we had more flu cases in the past.

We certainly aren't aware of any guest.

On vacancy, you guys are still doing pretty well. But what are your thoughts on sort of letting it drift a little bit higher over the course of pandemic?

And at what point would you start pushing occupancy?

Well, it's a little bit of science and a little bit of art. Because if you play the vacancy game too soon, you can really get behind and it's very, very hard to catch up, okay?

And in the context of the pandemic, if the return to normal is expected to be September and that isn't quite right, then you've lost your leasing season because you get low lease velocity in January. So you've really only got fourth quarter to make up all the ground you've lost with accumulating vacancy, okay?

So I -- my mind has changed on this because I'm the one that's been saying don't call a trend. It's not a trend, it's a pandemic effect.

And I believe that wholeheartedly. So when it comes to holding out for value, we'll be more inclined to do that over the second and third quarter, because our numbers aren't too bad and we don't have that many properties that need to catch up.

And I really feel confident in the case of CAPREIT. If you look at the 10 buildings that we've got trouble in, the majority of those are student university-focused buildings, and they will fill up quickly.

So we will hold off on value offering on those for sure.

Okay. Yes, you painted a pretty compelling picture of what you guys are expecting in September.

Maybe just switching gears to acquisitions. Are there any other big portfolios out there that are in your wheelhouse?

There are. We'll be -- we'll remain restrained on value and what we pay.

We've got a very refined sophisticated acquisition department, the team does a great job, and we'll stick to our modeling. The market will determine what the market will pay always, but I'm never upset when we lose a deal.

It's just validation that we're sticking to our disciplined approach.

Okay. And are there any markets where you're really seeing more opportunities than others?

I would say if the pandemic has taught us and moved our mind to is space. And so probably that the result in -- continued focus on suburbs, as I said in the presentation, and some open mindedness to smaller markets.

And by smaller markets, I mean plus-200,000 population markets. We've seen how incredibly resilient those markets have been in the pandemic.

And I think that if people have more flex work option, they'll be more likely to move themselves into those markets.

Sure. And then just one last one from me.

Have you guys seen any increase in demand in the townhomes and MHC sites as a result of the pandemic or a sustained increase, I guess?

Totally sustained.

Mark, maybe just following up on Lorne's question. When you talk about acquisition opportunities in smaller markets, can you give us a sense for which markets you might be considering?

Like would those be in Ontario, Québec or across the country?

Yes. We've been pretty open.

We like the Ottawa market as an example. It's pretty much -- take any market across Canada that's got a population of, call it, 200,000 people and we would just look to see what the opportunities are in those markets in terms of supply growth and demand.

And in terms of acquisition volume, would it be fair to say you're targeting something in line with what we've seen in 2020 or perhaps a bit more?

Yes. I think that's fair.

Like we really have this like disciplined approach to valuation and bid in the market, and what happens happen. So what's been consistently revealing itself is that we're successful about 5% of the time.

And if we continue to be successful 5% at the time, given 300 deals of underwriting last year, we'll probably see ourselves in the same kind of space of acquisition. It wouldn't be unreasonable to assume $400 million to $800 million of acquisitions, but it's really hard to say.

Well, what you're doing certainly seems to be working. And maybe just changing gears to your letter to unitholders, you had talked about some growth opportunities in your MHC business to increase revenues.

Could you give us some color on what that might entail?

Well, what the pandemic has also taught us is that the whole topic of affordable home ownership is on the minds of every government pretty much everywhere. So we know that the MHC market offers a very affordable homeownership option for people.

And so it's our intention to build on the development and intensification, I should say, of our existing MHC sites and look to get into developing new MHC sites. It's the one area of development that I believe is underserviced and underappreciated, and it's an area that we have high expertise in.

Great color. And maybe a question for Scott in terms of the fair value marks in the quarter.

Can you talk a little bit about what drove the higher normalized NOI assumptions? And where you're seeing the most cap rate compression in your portfolio?

Yes, for sure. I mean, I think realistically, we came into Q1 with some very strong cap rate compression, and we are cautious on that.

And obviously, in underwriting valuations in Q2 and Q3, we are, again, very cautious on what we were projecting from a stabilized NOI point of view. So I think really it's reflective in Q4, more confident having been in this for a year, that maybe our underwriting on the NOI side was too conservative.

And then the cap rates that -- I mean, we continue to see incredible cap rate compression. I wouldn't say -- I would say we think it's going to continue.

Obviously, the interest rate environment is a huge driver of that as well as the asset class, which is showing its resilience. So Q4 -- the majority of it for the year was a cap rate compression, but it was about 2/3 cap rate compression and about 1/3 stabilized NOI impact.

As far as where the compression is greater, definitely kind of the GTA and Ontario market would probably be where we saw the strongest compression.

That's great color. And maybe one more from me, and I'll turn it back.

We're about two months into 2021. Has there been any material improvement or deterioration in the rental markets so far this year?

I would say, moderate deterioration. It's directly related to case count, is all I can say, but it's not as severe as case count.

So we can see that our traffic obviously slows down with case count, increases and improves when case count drops off. The second wave has been faster and probably just a far more quiet market because it was built on top of the slowest quarter of renting in the year first quarter.

So I'm expecting improvement in Q2. But all of this is in the context and backdrop of CAPREIT incredibly strong results.

Like we're still, as I said in the presentation, bad debt at year-end stood at 0.6% and vacancies are obviously strong and still achieving increases on turnover.

All right. Scotiabank.

Just a couple of follow-on questions. Maybe first off, on the 20% mark-to-market.

It's probably hard to quantify. But within that number, what would you estimate would be the required kind of CapEx spend per suite to get that 20%?

Or are you saying that 20% is simply the gap to market rent as the condition of the unit stands there?

I'd just go to traditional numbers, Mario. If you want the pre-pandemic spend on in-suite, I would apply those kind of assumptions as being the normalized way of getting out that mark-to-market.

The mark-to-market is just a very difficult number right now because we believe that the market isn't truly indicative of what the market is because of the pandemic. And this is why I keep saying be very careful about looking at trend.

There's the difference between pandemic effect and trend. And I think in the case of CAPREIT, you'll see a very, very fast reversal, which, again, it won't reverse with the trajectory of that change forever.

It's just the end of the pandemic effect will result in a very quick normalization.

Okay. And I recognize that the student population in your portfolio as well, you mentioned roughly about 10 buildings.

But I do think that one of the reasons why multifamily, yourselves included, we have -- there's been a little bit of pressure recently in terms of unit prices, the market uncertainty with respect to the vaccine rollout efficiency that the prime minister has laid out. You mentioned kind of September being the target date for the government.

September is also the start of the new school year. So just maybe a couple of points here, a couple of questions.

Number one, within your portfolio of international students, when they do come into the country for the school year, is it typically well in advance of September? Or do you typically see them come in kind of August, start of September?

It would be August. We'll have -- end of July, first week of August, we'll know exactly where we're at with the situation.

And your view...

I can't -- sorry, I can't say it enough. Like first of all, we've got 10 buildings.

So in CAPREIT's case, we're talking about 6 to -- you could argue 8 because buildings that are just in the downtown core always have students, but 6 that are direct. And we're talking about 700,000 foreign students returning to the country.

And then unlimited, we don't know -- sorry, you can't -- not unlimited, we can't quantify the double cohort effect of kids that didn't go to university that did courses online last year that are going to reenroll this year. And then the biggest one, by far, is the household consolidation line.

And maybe I'm using the wrong words, it's just kids living at home with mom and dad that are not going to stay there. And anecdotally, I think we all have friends that have teenagers, 20s or early 30, kids at home right now that aren't looking to stay and they're only home for safety reasons.

And that release of consolidation of households, I think, is going to be profound. The other -- even though we're not core-core, I very much am of the belief that you'll see a really pronounced recovery in the core across the country once it's safe to live there.

I mean the cities have become anti-lifestyle when cities have grown and urbanized because of their lifestyle offering. So the exact reasons why young people live in the big cities has become the exact reason you don't want to be there because of the deadly pandemic effect, anti-lifestyle.

Yes. I appreciate that.

So when -- I guess, the catalyst is really when the universities and colleges kind of determine when in-person classes will commence. Like in your view, do you -- like, do you view that as the government hitting their targeted vaccination program, is that sufficient for universities to commence in-person classes in September?

Or any thoughts on when we might get clarity on that front.

Yes. Like this is unconfirmed, it could be checked.

Universities are starting to announce now in-class learning. And I could have this wrong, but I was told yesterday, McGill was either about to announce or had announced the return to in-class in September, and that's a positive sign at this early stage.

I think we'll get real good clarity at the universities in the next quarter.

Perfect. I mean that's -- .

Maybe shifting -- just one quick question on the MHC discussion. Do you have a broad kind of sense in terms of timeline with respect to potentially kind of formulating your MHC strategy over the next like 3 to five years?

Yes. So what we will be doing, what CAPREIT has been doing is been adding somewhere in the neighborhood of 50 to 70 homes per year to our existing MHC portfolio by in-fill.

What we are doing, hopefully in the spring, it's all permit pending on our existing lands, is looking at developing out -- intensifying the development on 4 locations. I'm hoping that gives us an additional 100 homes.

And we're actively trying to understand the zoning process. That's the single biggest stumbling block to rolling out affordable ownership in Canada, is finding land that we can have zoned for this use.

But politically, the people we've been engaging with has had a remarkably positive response. And so we're hopeful.

We've got a track record of doing it, plus it's the second largest in Canada, and there's been very little MHC development in this country for decades. And I think there's plenty of room for capacity.

Right. So would it be fair to say unlikely a 2021 event, but also unlikely something that you have to wait for 5 years more in terms of...

Yes. It won't be five years, but we hope to give examples and evidence of our ability to develop these communities in 2021.

That's my hope, to get some actual intensification going on in our existing sites.

Okay. My last question is just on the distribution.

So in the -- I believe, in 2019, you announced the distribution increase with Q4 results. The pandemic, obviously, took over 2020.

In the past, you've announced distribution increases as part of the AGM more often than with Q4 results. I'm just curious in terms of what the Board thought process is on the distribution and whether it's simply a timing issue or whether it's kind of a legacy approach in terms of how '21 transpires.

Yes. We're incredibly proud of the fact that not only are we lowering guidance on our distribution range, we've now moved it from 60% to 70%, we're touching the bottom of that range, as I said in the presentation.

And the Board feels very comfortable that we're moving in that direction. It's great stability.

We are going into a second wave. We're moving with caution, obviously, when these kind of decisions are made.

But it's clear that we have the capacity to consider that option.

Just to follow-on to Mario's question on the MHC front. It sounds like if you do pursue some of the infill or intensification opportunities that could be on your own.

But if you're going to maybe start a more -- a larger formal program, would that still be potentially with a partner?

Well, we haven't gone as far as to announce partnerships yet. But when it comes to apartment transactions, it's just -- what CAPREIT's thinking there, we've been very comfortable with buying apartment buildings in the final stages of construction or the early stages of lease up when we can properly assess rents and we derisk the development costs.

And our track record at buying those apartment buildings at good cap rates is strong, okay? And we think for whatever development profit we could be saving by developing apartment buildings, our existing strategy has been a good one.

And so we'll be very open to applying the same thinking when it comes to MHC development. The -- CAPREIT is, you've heard me say, I believe one of Canada's greatest REITs.

And we've done a fantastic job of adding value in in-place income opportunities and don't proclaim to be development experts. And we would always, as everything, proceed with caution here.

So it's being thoughtful, mindful and planned in our approach to a development program. What we need right now is political will.

And once we feel there's political will on the rezoning process, then we will consider how to proceed with the strategy. But it's a hyper-fast strategy, Brad.

Once you have zoning, it's not like building an apartment building. You're building land infrastructure, as you know.

And then the homes are manufactured and brought in quite quickly. So the development cycle is hyper-fast relative to apartments.

Got it.

Because everything's geared around zoning.

Yes. I guess in the past, too, capital recycling has been more opportunistic than anything.

Could this year or going forward, could you be a little bit more active from an asset location perspective? Or is it still going to be very opportunistic?

I think it's the new CAPREIT to take a hard look at where we think we created, from our perspective, the most amount of value. And if somebody else sees more value in that opportunity then that line, but we're extremely open-minded today.

And it's not really a change of thinking, it's more of the size of the platform. And we're big enough that we don't need to just grow, and -- but we're -- we have a great track record of doing that with acquisitions.

So again, our acquisition team, it's a big team, it's a great team, and they do a wonderful job at analyzing our existing properties and qualifying opportunities to look at disposal. But I wouldn't call any of this a major deviation from strategy, it's just building what's worked.

So I'd say the same thing with MHC development. We're easing into it, probably with more conviction than apartment development.

And when it comes to dispositions, we're open-minded and no fundamental change in strategy there. Open to recycling capital.

One quick technical one here and a couple high-level ones. Just on your -- I know, Mark, you don't want us to dwell too much on leasing spreads over the past -- the spreads over the last few quarters.

Just a technical question. Are the impacts of the inducements included in that spread?

Are you lowering it? Or is that something inefficient to you?

Scott, you can answer the question. I'm not sure I get it technically correct, but rent?

Yes, Yes.

Yes. The turnover numbers or the mark-to-market would not include any level of incentive.

So -- yes, that's not incorporated. We do have good disclosure on kind of the levels of incentives that have increased this year a little bit.

We are starting to move away from them. And I think we talked about being more comfortable with vacancy, which, to some degree, inducement is just a level of vacancy.

But yes, excluded.

Mike, if I can address that point, because what you're raising is actually an important point. And this is going to sound a little bit confusing because it's not a trend environment, okay?

So what we found was incentives weren't working. Like it's just not moving the needle.

And lowering rents really isn't moving the deal either. So what we didn't know is the duration of this pandemic.

And what -- the conservative approach that CAPREIT always takes is how long is this going to go on for and we have to hold our revenues intact. And so we tried to combat that with traditional tools like rental rate adjustment, incentives, and quite frankly, not effective in the long run.

There's just people not moving, as I said, because of the pandemic. So Scott just alluded to it.

We're taking a very hard look now that we believe that our prime minister is giving us good guidance on September, we have something more solid we can work towards. And we'll be reviewing those very, very carefully.

Despite the fact that traffic will be probably more impaired over the next few weeks than they were -- than it was in the first wave of the pandemic, we won't be as open to using those tools as we were.

Okay. So if I understand you, in the short term, we're not likely to see that number increase as quickly as it did in the last couple of quarters?

There's always the regulation, I guess?

Yes. There's a 12-month run rate on some of those incentives.

So they have to bleed off. But yes, the rate at which you're using, you're totally right, that is unlikely to continue at the same rate.

Okay. Which leads to my next question, a clarification, can you remind us from a rent allowable guideline increase perspective, I know you've only seen three months in Ontario, you're able to -- it doesn't factor into your -- like you're able to burn those off next year, correct?

Was there -- or are you restricted? There was a rent control .

Sorry, Mike, I couldn't quite hear you, if you could repeat that question.

Yes. No, I'm just trying to make sure I'm clear on the maximum allowable increase being set at 0% next year in Ontario and to the extent that you've used incentives.

Is it 3 months? Or like what's the rules again on that in terms of can you burn off -- if someone -- you gave someone in 2, 3 months, are you allowed to burn that off and let this count as an increase under the guideline?

We don't use our incentives that -- I know what you're referring to, but we do not use our incentives that way. There's -- and Scott, you can give more color to it.

But some people use those incentives, we don't do that. So the guideline is on the existing rent and that's it.

It's just straight line. So if your rent was $1,200 and you were able to get a 1.4% guideline increase, government's saying 0, it's 0 for the year.

You can't offset it with any sort of other number in Ontario.

Okay. Just with respect to regulatory concern, there's been some intervention and obviously, unprecedented times, unprecedented measures like governments to intervene.

When we come out of the pandemic, is your thought process that, that pressure will sort of abate somewhat? Or are you expecting to have more regulatory concern as we emerge from the pandemic?

Well, it's an interesting question because traditionally, if you go into disturbed economic times, which we all thought we were going to, haven't seen real evidence of that yet, you would expect to see rents recede and political pressure ease off. But what we've had happen here is this low interest rate environment has really, as I said, accelerated the homeownership market to clearly heated levels.

And so there's no political pressure to that arena. There should be, but there's not, okay?

And so where the political pressure then moves is to rental. So I think it has a lot to do with the anxiety levels of, number one, people that are frozen out of the homeownership market that feel trapped by that.

And how bad the recession, if there is one, is on people. But when you look at our collection rate, and yes there's government assistance, it's been quite strong.

So there's not that evidence of government intervention even being necessary at this point. It's, I think, just been highlighted because there's a lot of anxiety out there, and understandably so.

When there's uncertainty, these issues all escalate. But government seems to understand the only real solution to what we're talking about here is supply, and they do seem to understand that.

And I'm hopeful that the anxiety is just calm.

Okay. And that's actually a great segue into my last question.

Just we've talked about undersupply, even now, but leading up to the pandemic and how that's causing rental rate inflation or market rent inflation. But you've also talked to the fact that new supply comes on and it is in that $3 to $5 per square foot range in select markets where you're not sure what the leasing demand is for some of that product.

So I guess, given that, that you can only deliver a certain cost, what's got to give? I mean how do we address that going forward?

I think there needs to be creativity. And that's why I used the manufactured home ownership as an example.

I think the problem is that we've all been trying to solve the affordable housing problem by looking at how we can make concrete buildings half price, and there is no way to do that. And as a result, there's been very little progress made.

You can't build something for half price, so how do you charge half price rents? And that is the heartbeat of why CAPREIT is such a great value offering, is because we're buying income which really creates a valuation of less than 50% of replacement cost.

And that is why we're so strong. But I don't think there's a clear-cut answer as to how we get out of this without high government conviction and possibly intervention to solve the zoning issue.

It's all about at the length of time for zoning. It's just far too long for the -- population ambitions that the federal government has does not align with the conviction to zone at the municipal level.

And quite frankly, I feel bad for the provinces, they tend to be stuck in the middle of the problem that they regulate. So it is a bit of a complicated issue that needs government unity.

And if we're going to move through a period of growing our population, as I think we should, we need to have strong housing policy that's led at a federal level that can coordinate the thinking and activities of provincial and municipal governments. It's a dislocation between those three level of governments, which has made our portfolio so valuable.

And it's a dislocation and unity of those three governments, which will help ease the supply problem.

Maybe just sort -- I may have missed this earlier, but you kind of quoted that $400 million to $800 million of acquisitions in 2021. Would it be fair to say that, that would be more skewed towards Canada at this juncture in terms of where you're seeing the opportunities?

Yes. Yes.

And yes, when I quoted that number, I'm quoting the Canadian acquisitions.

Oh, Canadian, okay.

It really is a tough one. You've probably seen in our investor deck, we have that little pyramid that shows how many deals we underwrite and how many transactions that we do, and quite frankly, our success rate is not so impressive.

But when you look at the dollar value of that success rate, during a pandemic year we put on the $700 million of acquisitions into the portfolio. Year before, it was over $1 billion.

So we're incredibly disciplined. Our true strength is our ability to cover the country and underwrite so many deals with a disciplined approach.

So I would just look at that track record in 2019 and 2020, and I can't see a reason why it would be different in 2021. But you don't know, a, what's going to come to the market, and you don't know how much froth is going to be out there for multifamily assets given what's happened during the pandemic.

So we'll stay disciplined, but I'm hopeful that we can continue to find value. But if we can't find value, we've got a great portfolio and I'm not driven to grow.

And just to add that we are still very bullish on Europe and to support ERES in their growth. If strong opportunities happen.

I mean, I think from a capital point of view, we like the European market. And then you'll see some of the slides, our ability to hedge the FX and create incredibly low interest rates levered up to close to 100%, makes our European strategy extremely accretive.

So definitely not afraid to grow there as well.

Yes. Would there be opportunities to, I guess, further increase your interest in IRES as well?

Yes, listen, our intentions are really -- and primary focus has been in the support of ERES. And we continue to support our IRES investment and value that investment.

But looking at the track record, the support in the last couple of years, it's been welcomed by the ERES Board has been supporting that entity. And as Scott says, we really like the dynamics and deal flow opportunities in the Netherlands, and we're very happy with our IRES investment.

Okay. And maybe just another way -- circling back to the regulatory risk question.

Given the pace of vaccination that we're able to get here now in Canada, it seems like that recovery is being pushed back or keeps getting pushed back. But hopefully, we'll get a big...

Hope.

In the next month or so.

Let's hope so.

But what is your thinking maybe in terms of, I guess specific to Ontario, the possibility for the extension of that -- of the rent freeze into 2022 right now at this juncture?

I think it's hard to say. The magnitude of that -- the impact, I should say, of that rent freeze in 2021 isn't great, but it's not overly material to CAPREIT.

It's not something that we would ultimately, I guess, welcome because we have costs that are growing in residents that we need to service and employees we need to take care of. But it's not of concern to me.

I think we're in the environment where, until it's stable, it's hard to call what's going to happen.

Just had two quick questions. One on 6 properties.

Are any of those -- we also saw the announcement from McGill University. Are any of those, your assets, in close proximity to McGill?

Yes.

And I mean that one property that you have in the McGill is about as core and central to the university as you can get. So talk to kind of the quantum of vacancy in those six properties.

Sure. So hold on to your chair and remember that CAPREIT density is extremely low overall levels.

But we've been hardest hit in Halifax, Edmonton and then Montreal, okay? Those numbers in those buildings are plus 30% to 40%.

And there's really not much that can be done about that. The good news on that front is that they're going to fill up fast if September is back to in-place learning, and if the vaccine is rolled out and mom and dad are comfortable letting their kids go to school.

There'll be no lack of students -- when you're trying to catch the overall market and solve problems of that magnitude, you can't. But when you've got a returning market, it will fully return, especially with the double cohort effect that we think is out there.

We don't know for sure, but we think that there's a number of kids that didn't go way to school last year that wanted to that are going to be enrolling first year this year, as well as the foreign student effect. So I think these high vacancies bode well for CAPREIT.

I never said that before in the history of our company, but I think that it allows to get market rents and allow us to improve vacancy very, very quickly.

All right. I think that's a fair point.

I know that property, in particular, in Montreal is going to be in high demand eventually when McGill is back and you've got some near Concordia as well.

One of my favorite Canadian cities now.

And then quickly on mortgage. I mean you were able to basically term out your mortgage, 25% of your mortgage is at sub-2% for over 10 years.

It sounds like you plan on doing a fair bit. Just wondering, I mean, bond yields have moved a bit of late.

Do you have any sort of -- or what is the amount of mortgages that you kind of have locked on and at what rate at this point? And what debt can -- I mean, you don't have much variable debt to repay, but would you look at decreasing some of your existing mortgages to repay them at this point?

Yes. I mean, look, we were super aggressive and we broke mortgages and did everything we could to create as much liquidity in 2020.

I mean, definitely, spreads have come out. From that 1 80, we're looking closer to 2 20 in today, maybe 2 15.

So I mean, just on doing that in advance, we probably saved $50 million of interest versus today's rate. So we'll look at a little bit more some short-term stuff to fill in our portfolio.

And I think I did a pro forma kind of where we are focused on term for next year. But we really think being aggressive right now is the right thing to do, even if that means sitting on a little bit of cash, and the acquisition pipeline has been robust.

So we're not afraid. To be fair, we don't have much room on our line left to pay down.

We have about $100 million. But we're sitting on cash, so kind of net neutral.

So it will be utilizing cash for acquisitions, but we'll continue to be aggressive getting at those today because we don't want to miss this low rate environment.

Okay. Fair enough.

And I have to echo some prior guys, a very impressive quarter in the context of where we are today.

Thanks, Matt.

Thanks a lot. Matt.

Well, that was a great catch-up of questions, probably one of the longest question sessions that I can remember. I would just use that as a reminder that Scott and I are always available to answer questions throughout the quarter.

Please just reach out and let us know. We've done significant investor outreach and they're always there for people that are showing further interest in CAPREIT and better understanding.

So I'd like to thank you again for your time and attention today. And if you have any further questions, like I said, please don't hesitate to contact us at any time.

Thanks again, and goodbye.