Dream Office Real Estate Investment Trust

Jane Gavan - Chief Executive Officer Kevin Hardy - Senior Vice President, Portfolio Manager Andrew Reial - Senior Vice President, Portfolio Manager Paul Skeans - Senior Vice President, Portfolio Manager Rajeev Viswanathan - Chief Financial Officer

Adam Waldo - Lismore Partners Alex Avery - CIBC Capital Markets Sam Damiani - TD Securities Mario Saric - Scotia Bank Mike Markidis - Desjardins Matt Kornack - National Bank Financial Neil Downey - RBC Capital Markets

Thank you, Operator, and good morning, everybody. Welcome to Dream Office REIT's third quarter conference call.

Joining me are Kevin Hardy; Andrew Reial; and Paul Skeans, our Senior Vice Presidents, Portfolio Managers, will be available to answer your questions on each of their respective markets at the end of the prepared remarks. Also with me is Rajeev Viswanathan, our CFO, who will discuss our financial results.

The current operating environment remains challenging in Alberta and it feels the environment will continue that way for 2016. However, we have to balance that against the performance of our other markets.

Toronto for instance is staying quite strong and we are fully occupied Downtown. Against, all of that backdrop, we are pleased with our financial results, which are largely in line with our expectations and very pleased with our leasing results For the third quarter our basic FFO per unit and AFFO per unit were $0.70 and $0.61, respectively, as we experienced the 1.2% quarter-over-quarter decline in NOI, largely as a results of the previously disclosed vacate by Winners at our Airport Road property.

To-date, we have completed over 2.5 million square feet of renewals and new leases commencing in 2015. We have leased or renewed about 53% of our 2016 expiries for total of about 2.1 million square feet.

To put into perspective by volume that’s over 80% of the total leasing we have down for 2015, a much further ahead in our future leasing than at the same time last year. Of the 2.1 million square feet of leasing we have already done for 2016, 1.8 million square feet represents renewals.

If that leasing momentum continues with the exception of the Winners space we could see most of our expiring 2015 space taken up. Our efforts to reach out sooner to our tenants is paying off as is overall focusing on the quality of customer service.

Our property management and leasing teams are working exceptionally hard. They are aggressive, responsive and innovative.

We are reaching out to tenants earlier than before, forming new sources of business, improving the look of our buildings and our service model, and that includes everything from improving lobbies and washroom to customer training service for everyone in our business. We have even changed the uniforms of security guards and operators ware to make the more approachable and professional, all with the view to keeping our tenants.

In keeping with our focus on retaining tenants and attracting new ones, we continued to make progress on our retail initiative. We are positioning our retail to be in-demand, delivering quality amenities, unique stores and inspiring food choices.

We are proactively sourcing new and quality retail uses, including restaurants, bespoke tailoring, coffee shops, including Sam James Coffee, Folk, Chicory, Maverick Men’s Styling and Spier & Mackay to name a few. We have also actively engaged with many first to market brands that are locally sourced, Canadian or from the U.S.

This enables us to build a retail mix that sets us apart from our competition, and we continue to look for opportunities to create unique and desirable retail space through adding density such as restaurant pass, conversion of ground floor office space to retail and the introduction of patio areas. Now turning to operations, in most of our reporting regions, we have had better physical occupancies and market average.

CBRE is reporting national occupancy of 88.2% compared to Dream Office’s in-place occupancy of 89.8% and in-place and committed occupancy of 91.6%. One exception is our Toronto Suburban Cluster where we experienced our largest anticipated vacancy for the year with the Winners vacancy Airport Road of 196,000 square feet which we talked about earlier in the year.

For the quarter, our Calgary portfolio had slight positive absorption compared to the Calgary market that overall had 100 basis points of negative absorption. In Q3, new leases totaling 332,000 square feet were completed.

This improved the 115,000 square feet in Downtown Toronto, 77,000 square feet in Montreal, 40,000 square in Toronto Suburban and 33,000 square feet in Vancouver. The largest transaction closed during the quarter included a new lease of 438 University Avenue for approximately 30,000 square feet.

The lease-up of that building is progressing nicely and we should have more done by year end. We have remained confident we will build with the lease-up of 438 University before the expiry of loyalty.

We have also completed the expansion and extension of the major tenant of 30 Adelaide Street East representing approximately 137,000 square feet for a term of 10 years. This includes the extension of 107,000 square and an expansion of 30,000 square feet into the Dream Office REIT space.

In January, Dream Office will be moving to Scotia Plaza replacing all of the remaining space formerly occupied by Visa. This is a reflection, the scale of our portfolio and our ability to quickly accommodate our tenants need.

Further, gives us a great opportunity to showcase Scotia Plaza to our prospective tenants with new open contemporary space. In the third quarter, we completed nearly 700,000 square feet of renewals with the majority of the transaction taking place in Toronto Downtown and Suburban, each representing 245,000, respectively, and the renewals of the National Bank space in Montreal.

In Toronto Suburban we completed the 10-year renewal for 112,000 with the Blue Chip corporate covenant at an average rent of $26.10 per square foot, a 25% increase to expiring rents and a 15% spread to market rent. The average market rent for the deals completed in Toronto suburban was $21.39 per square foot and 11% spread to expiring rents.

In downtown Calgary, we completed six renewals totaling 24,000 square feet and six new deals totaling 22,000 square feet. We continue to highlight that our average tenant size in Calgary is smaller at 8,000 square feet and generally doesn’t compete with a large floor place coming on the market either in the new builds or the large sublet space.

We’ve now completed almost 84% of our 2015 expiries and 32.5% of the 2016 expiries or over half if you take out our expiry at First Tower. In suburban Calgary, we saw modest activity in the third quarter with two renewals for 7,000 square feet and three new deals totaling 8,000 square feet.

In suburban Calgary, we’re through our 2015 expiries and 18.50% through the 2016 expiries. We remain focused on driving occupancy and within this competitive leasing environment, our leasing cost has been higher than we’ve seen historically.

Based on renewals and new leases commencing in 2015 relative to commencements in 2015, we’ve seen an increase in average leasing cost for 2015 by about 25%. That equates to roughly 50 days of free -- an additional 50 days of free rent, which seems to us to be a rational choice between vacancy and certainty.

Values for real estate in downtown Toronto are very strong and we believe we have an irreplaceable portfolio of assets. And we feel very confident about leasing those buildings.

In contrast, Alberta has been getting weaker. This quarter will recognize an overall decline in the value of our assets to $58 million.

A decline in the value of our Alberta portfolio of $146 million is partially offset by gains in downtown Toronto. Our assets in downtown Toronto account for almost one-third of our NOI with our downtown Toronto IFRS NAV approximating two-thirds of the current unit price.

Excluding our net assets in Alberta, our units still trade around a 25% discount to IFRS NAV. And we remain focused on narrowing that valuation gap.

We’ve been selling assets with the goal of buying back units. To date, we’ve sold 154 million of assets and we purchased 3.8 million units.

During the quarter, we sold two properties for proceeds of $57 million at an average cap rate of 6.5%. In November, we completed the sale of four properties in Quebec for proceeds, net of adjustment of $95.1 million, representing a cap rate of 6.8% and slightly above book.

We have another $50 million under contract which should close in the first quarter of 2016 and a pipeline for an additional $100 million that’s in various stages of negotiations. Sales are generally completed in line with our IFRS valuations.

And these assets were the ones we’ve identified as non-core to our business. We’ve been working on strategies to increase the value of the business in the public market with the combination of selling assets, reducing debt and buying back stock, we believe we can reduce the valuation gap.

And we continue to look at and explore options to drive value. We have more to report once we finished our business planning sessions with our board.

I’m now going to turn the call over to Rajeev to provide an overview of our financial results.

Thanks Jane and good morning. I’ll start up with some comments on our third quarter results followed by a few details on the fourth quarter.

Lastly, I'll provide an update on our balance sheet activities before turning it back over to Jane. The Trust posted financial results for the quarter in line with our expectations.

Diluted FFO per unit of $0.69 is $0.03 less than $0.72 in Q2 2015, which excludes the impact of the reorganization cost in FFO but includes the unit issuance. The $0.03 difference versus Q2 of 2015 was attributed to three items primarily, about a $0.01 a favorable one-time items into Q2; another $0.01 related to vacates in Q3 namely Winners and the Visa space at Scotia Plaza, regarding the Visa space, Jane has already mentioned that that is now spoken for; another $0.01 related to asset disposition.

Turning to comparative NOI, a decline by $1.3 million or 1.2% and $1.7 million or 1.5% versus prior quarter and Q3 of 2014 respectively. The decrease was primarily driven by the occupancy decline to 89.8% at the end of the quarter versus 90.8% last quarter and 91% from Q3 of 2014.

You will notice in our MD&A with the increasing disposition activity, we have added comparable property operating metric disclosures this quarter. So now turning to our diluted FFO per unit of $0.69 for the quarter versus $0.71 in Q3 of last year, the decrease which is really about $1.06 but rounds to $2 is attributed to about a $0.03 decrease from comparative NOI and asset dispositions, that’s offset by about a penny from interest savings and an increase in FFO from our investment in Dream Industrial, with the remainder from the G&A savings relates to the reorganization, net of the dilution impact from 4.85 million units issued to Dream Asset Management.

With respect to our investment property values as Jane mentioned, we recognized the fair value loss of $58 million in the quarter. The decrease was driven by valuation decreases in Calgary in Western Canada, with the decrease in Western Canada really coming from our Edmonton road due to changes in leasing and market rate assumptions, along with cap rate expansion amounting to $133 million or $146 million if you look at Calgary and Edmonton only.

That is partially offset by cap rate compression in Toronto downtown where we’ve recorded an $89 million fair value gains. A detailed continuity on our investment property valuations by segment is provided in our third quarter MD&A on pages 17 and 18.

Now for context, our Alberta portfolio comprised of Calgary and Edmonton has been written down year-to-date about a $197 million and $300 million since January 1, 2014, or 10% year-to-date and 15% since January 2014, to reflect increasingly competitive market conditions. If you were to take our IFRS NAV, removing everything west of Ontario, that would approximate where we are trading at right now.

Looking ahead to the next quarter, we expect our in-place occupancy to be marginally higher than the 89.8% where we ended the quarter, with our comparable NOI also being marginally higher Q4 relative to Q3 2015. Once you factor in asset dispositions, offset slightly by interest expense savings, FFO should be flat versus Q3.

Now, turning to the balance sheet. Our leverage ratio is consistent with prior quarters at 48% net debt-to-gross book value and an average net debt-to-EBITDA of 7.7 times.

Along with undrawn amounts on our lines of $185 million at quarter end and over $750 million of unencumbered assets, our liquidity remains strong. In the quarter, we replaced or discharged $102 million of mortgages bearing 4.21%, with a $118 million at 2.96% for an average term of five years.

Subsequent to the quarter, we replaced or discharged $47 million of mortgages at 5.15% with $63 million at 2.89%. For the fourth quarter, we have a $164 million of contractual maturities including the mortgages done after the quarter, which we expect to payoff for the combination of mortgages at our lines, so net-net, we expect to be flat on proceeds with a reduction in rates across primarily five-year mortgages.

Through Q3, we purchased just under 3.3 million units at $24.98 under our NCIB, with an additional 475,000 units subsequent to the quarter at $21.40, resulting in year-to-date unit buybacks totaling 3.8 million units or $92 million in aggregate. As Jane mentioned, subsequent to quarter end, we also closed on $95 million of asset sales related to four properties in Quebec, the net proceeds of $41 million, paying down our lines which have been used under interim basis to finance our NCIB.

And with that, I will turn it back to Jane.

Thanks, Rajeev. Let’s open it up for questions.

Yes. Good day.

Question for you with respect to the potential range of options for closing the quite wide valuation gap between the market value and the public market in NAV, are you considering more aggressive actions than the normal course issue bid, such as Dutch tender or other kinds of accelerated share -- pardon me -- accelerated unit repurchase program?

We’re looking at every strategy right now to see what we can do to bridge the gap for valuation. Currently focused on calling the portfolio, selling the assets that don’t work, I mean that really what we’ve been focused on.

And I think we’ll consider things as we go forward.

Can you be more specific at all as to the range of options been considered?

We’re going to have our board strategy sessions at the end of the year, so I think we’ll have more to report as we start the New Year. But I mean, I think every good idea is open to us at the moment.

You can see from our trading price, it’s disappointing to say the least. And I think we’re looking at every options to bridge that gap.

Thank you very much.

Thank you. And just -- you clearly achieve the lot of leasing so far with respect to your 2015 and 2016 expiries.

But I just hoping you could help me out and go over some of the bigger moving parts, the known expiries, when they actually expire, what the rents are and I guess what the leasing status is?

Sure. Why don’t we go through each of sort of the big ones and the guys can speak too specifically.

So you can start with Kevin on the Toronto and the big Toronto ones?

Good morning, Alex. It’s Kevin Hardy.

In downturn Toronto, it’s primarily two large expiries, the space at 438 and Scotia Plaza. Scotia Plaza space comes back to us.

Predominantly, in January 1, 2017 we have a number of prospects in the pipeline now pulling hundreds of thousands of square feet, very preliminary at this stage but there is gearing stage of interest but no transaction to date. But we’re very, very confident in that piece of space relative to competition that we have to lease too.

At 438, again as per 200,000 feet, we’ve already transacted on 30. That space doesn’t come back to us until the very end of 2017.

And we have not only prospects but a lot of paper on that space. And as Jane said, we expect to be transacted on a bigger piece of that before year end and then last with prior to expiry.

I’m sorry. What were the square feet at Scotia Plaza?

We’ve about 200,000 feet.

Okay.

This is Andrew Reial. In the Toronto suburbs, the biggest block we have coming back is vacant space that’s 300,000 square feet in September 2017.

We have a lot of options for that site. It could be redevelopment site for higher and better use.

As far as tour activity, we had a lot of tourist coming through, no paper or anything as of yet. And any comments would be in early 2018.

Okay. And was Winners not also Toronto suburban and I thought I heard Visa as well?

Visa is in Scotia Plaza.

So the Winner space that’s also a 196,000 square feet that came out this quarter. We have some high-probability transactions.

Right now that we’re working on that would be late ‘16 commencements, it’s not for the entire space. But we expect we’ve taken down lots of that availability in late ‘16 and early ‘17.

And when did that lease expire?

That was this quarter.

Right. Beginning a quarter, end of quarter.

End of quarter.

Hi. It’s Paul Skeans.

Just in my region we’ve got in Edmonton, the City of Edmonton at HSBC bank plays expires March next year. We’ve actually now extended them for a period of two years so that is now addressed in the medium term.

Telus Tower in Calgary we have -- that’s a non-vacate that we’ve discussed in past that’s 200,000 square feet at our share coming back April 30, 2016. And then moving forward into 2017 as we’ve discussed in the past Enbridge will be vacating Enbridge place, their leases in two trenches.

First trench of approximately 125,000 square feet comes off mid-2017, second trench, 2020.

Alex, it is Rajeev here. I just want to clarify one thing.

On the Winners, that expiry was June 30, 2015.

Okay. Okay.

So that’s fully reflected in Q3.

Correct. Yes, that was part of my prepared remarks about a $0.01.

Okay. All right.

That’s it for me. Thanks guys.

Thank you.

Thanks. A couple questions.

Good morning, guys. Just wanted to maybe get into the Calgary a bit, downtown Calgary.

Couple of buildings, 444-7th and 840-7th are two of your larger current vacancies and you’ve had them for a little while. Just give us a sense of the, I guess traffic levels, interest levels and I guess your prospects for those pieces?

Good morning, Sam. It’s Paul Skeans.

444, we’ve talked about the work that we’ve done and are doing at that asset in terms of the -- in addition of the fitness center, conference center amenity, the upgrades of the lobby and the show suite, we actually have a good pipeline of activity there. We are not in a position to speak to any of it at this point, but I think we’re optimistic, next quarter we will be able to report some good progress there.

You’re correct at 840 we do have a large block of vacancy there. We are in the process of executing the same kind of the show suite and marketing program there.

We are updating as we speak the main floor lobby and in that one, we’re going to have to work through it floor by floor.

Okay. That’s great.

Thank you. And just on the IFRS, with Juliet, I notice the cap rate assumes on Scotia Plaza, went down to 4.65 from 5.

Is that all cap rate compression or does that factor in some lower sort of near-term NOI as well?

I characterize it primarily as cap rate compression.

Okay. And just finally, looks like your DRIP participation is 40%.

If you could confirm that and if that is -- obviously pretty dilutive given the share of unit price, any thoughts on canceling the DRIP at this stage?

I think you’re about right, 40%. I have 38%.

At this point IN time on the DRIP, it’s rewarding our loyal unitholders and it’s not something that we are entertaining at this point.

Good. Thank you.

Hi. Good morning.

Just maybe on the leasing front in Saskatchewan. I’m wondering if you can provide an update on the -- both in terms of down square feet that we by the Government of Saskatchewan look to your average in terms of maturity and in terms of releasing the space and the potential upside downtown?

I guess we’ve a few big blocks coming out in 2016, the government including [current quotes] [ph]. We finished one subsequent quarter end at 40, 000 square feet and took uptick in rent.

We are in negotiations with the other two right now for about a 120, 000 square feet, so we feel comfortable we are going to renew.

Okay. So that will be total of 160?

Yes. Those are the near-term in the next 12 months.

Further out, I mean we don’t have any indications. There is any issues with the tenant space that we are looking to consolidate there going anywhere else.

Okay. So, you feel pretty comfortable on the entire piece right now?

Yes.

Okay. And then just maybe really quickly, just on the suburban Toronto market, we spend some time talking about Winners but it is really small.

But I noticed that the recorded market rent for suburban Toronto went up about 0.5% quarter-over-quarter, is that reflecting maybe a bit more activity in the broader market or is that specific to your assets?

Yes.

I think what we’re seeing is there a little more activity in the north. The U.S.

dollar is kind of helping that area with leasing and certainly, we’re seeing good activity in our portfolio.

Okay. And then I guess, Jane, you mentioned that you would be a series of Board Meetings towards the end of the year and there is no kind of entertaining, removing the drip for now?

Is that something or the kind of results of those meetings? Is that something that we should see as part of the Q4 results or would that want a …

Yeah. I mean, it’s…

… separate press release at the start of the year?

What sort of normal course for us at the end of the year, that’s when we do our strategy sessions. We did a press release at the beginning of last year to kind of clarify folks how much leasing we’ve done.

I am not anticipating we are going to press release something coming out of the strategy session, I think, it would just be -- it will sort of inform our quarter remarks when we do our February call.

Okay. And lastly, I guess, you mentioned another $100 million in the disposition pipeline going forward, given your view that you are getting absolutely zero value for stuff, West of Ontario in the current unit price?

How possible is it to sell some assets on -- in Western Canada and actually show that they worth more than zero?

Yeah. I don’t think, we are going to be transacting in Alberta.

I think something there is really a bit there, I think we have been looking at assets that are non-core elsewhere and again at the beginning of the year, so we are aiming to try and do $300 million, so that $100 million kind of fills that number out. It will be probably other than is going to be difficult selling anything at a price we think is reasonable.

Okay. Great.

Thank you.

Thanks and good morning. Just getting back on to the topic of Toronto fair value increase and the strength that you are seeing there, I guess, just both an operating perspective and from a value perspective?

I am just wondering if you could give few other thoughts as to whether or not you have looked at selling a couple of the Downtown assets and perhaps realizing, just in recognition of certain transactions that have closed, realizing a value that might actually surprise everybody to the upside?

Well, I don’t think anybody will be surprised to the upside given our recent transactions in Toronto. Everybody knows this is a valuable portfolio we have got, we have big planned in Downtown, Toronto.

So nothing we will maybe surprised about the value. I think, as I said, it would be hard for us to sell that portfolio, because in our view, you couldn’t put it again.

But that said, we will -- we are doing everything we can think of right now in terms of considerations for bridging gap on valuations with -- valuation in our share price.

Okay. Jane, I think, in past calls you kind of mention that, interest from offshore investors in your -- in Canada certainly wasn’t a strong as it was in some of the assets in Dream Global platform, has that changed at all over the last several months?

Well, obviously, there was a one purchase in Downtown Toronto by an offshore buyer. I think so, but I haven’t seen transactions yet.

I think they are still pretty interested in the U.S.

Okay. And you maybe stated little bit more bluntly, are you guys working on perhaps doing some joint venture transactions with the Canada portfolio?

I think we will look at lots of different options that could be included this one of them.

So it could be included, but nothing on the eminent horizon?

Not yet.

Not yet. Okay.

No. That’s fair.

Okay. And just looking at the balance sheet in 2016, I guess, you have your per call redemption on your convert that could be occurring in March, plans for that as of yet we are just drawn your line or maybe give us some color on that particular maturity?

Yeah. Mike, I think, we will pay it down.

Okay. And when you look at the maturity profile, it’s pretty active in terms of amount of debt is coming due, are there any large chunky mortgages in the 2016 profile that need to be address or there might be substantial vacancy in the property?

That’s a good question. There are two properties that I think we are actively working on.

The two that come to mind are First Tower in Calgary and Enbridge Place in Edmonton. Those are things that we have, First Tower being something that we own with H&R and Enbridge Place that we own with right.

So those are two assets that we are looking at, but we have plenty of liquidity from our lines in our unencumbered asset pool and we are fairly confident that there won’t be any issues in terms of refis or drawing down on our cash. We had a lot of financial flexibility.

Clearly, but could you just give us sense of what the bullet payment with each of those mortgages are at your interest?

Sure. On Telus, I’d say roughly -- sorry on First Tower, I’d say roughly $60 million and on Enbridge place roughly $50 million.

Okay. Doesn’t sound that bad.

Okay. And then just lastly, as you go forward, I mean you’ve talked about not looking at drip participation.

And when you guys think about the sale program and potentially downsizing the asset base buying back shares, not sure if the leverage will stay at its existing level or tick down. But do you envision a scenario over the next two year or just by virtue of asset sale activity, the earnings profile of the REIT may actually decline and that might necessitate a reduction in distribution?

I mean, it’s not something what we foresee right now.

Okay. That’s fair.

That’s it from me. Thank you.

Thank you.

Good morning

Good morning.

Will you share with us please your plans on Enbridge Tower at Edmonton on how you’re going to re-lease it or may be re-propose it to a different…

Good morning Tony. It’s Paul -- Paul Skeans.

We were looking at -- we've got a little bit of time there and we’re looking at the whole suite of auctions. We are looking at conversion options but I think our focus right now is it’s a solid asset in a solid location.

The proximity to all this happening in the arena district is positive, strong floor place and what I can tell you is there are large tenant in that market. It’s looking at their options and we’re actively participating in that process and have been chasing other opportunities.

It’s early days there but that’s a focus right now.

Can it be turn into condos?

We believe it could. That’s not something we’re actively doing right now but we have had done some preliminary due diligence and I think floor plate does work at options.

So that serve a backup at this point.

Can you also share with us please two-thirds of your Calgary space is got to be coming up as I understand its value at 2019, 2020. What’s you game plan there on re-leasing that space when there is just no -- there is no bit?

Yeah. I think you’re referring to the article that was in the paper last week, Tony and 66% of our portfolio -- what it said is 66% of our portfolio rolls over a period of four years.

And when you break that down, that’s 15%, 16% per year which is actually in line with the industry and it’s quite typical of a portfolio like ours with average smaller tenant size. So there is nothing in that, that scares us.

I think you can see from our stats that our biggest challenge in Calgary is separating and eliminating the emotion. Headline articles create a lot of emotion there.

I think if you look at day-to-day, we’re actually accomplishing a lot of leasing and I continue to be optimistic about 2016. So again our average tenant size is -- when you back out Telus, our average tenant size is approximately 7,500 square feet.

I think there is a lot of tenants. Our exposure to any single tenant is minimized and so we’re making a lot of small decisions.

We’re 44% complete of our Alberta portfolio for 2016. If you back out the Telus, non-vacate that increases to 52%, 2016 is dealt with as I alluded to earlier.

We’re looking forward to the next quarter to be able to report some progress on 444. Again we’re sleeves rolled out and if you look at our stats, despite the headlines there is actually leasing activity happening.

I’ll ask you a final question, I guess, it’s on everybody’s mind. Worst case scenario, what would it take for [indiscernible]?

You have to look at this over the long run. I think right now it’s a tough leasing market in Alberta.

As I started out my comment, Toronto’s virtually full. So, I think we are going to go through a period where we are spending more key people in space.

We are spending more money on our buildings and normalized over the long run, I think it will settle out. So, we are not considering that option right now.

Okay. Thank you.

Thank you.

Hi, guys. Just quickly to follow-up on the small tenancies, has there been any update in terms of -- are you seeing receivables creep up or they still pretty financially sound in the Calgary market?

Good morning, Matt. We’ve been very fortunate.

Historically, we virtually had nothing. We have had a couple of small tenants that we’ve had four small tenants that are like sub-2000 square feet and aside from that we are working with a couple of very small tenants in terms of rent lease and that’s really about it.

Okay. And the market seems to be taking a worst case view on the stock.

So from an occupancy standpoint, if you -- and I don’t know if you can answer those. But looking out through 2017, what do you think the worst cases from an occupancy standpoint where you would be sitting at the end of the year?

[Multiple Speakers] I don’t briefly look -- why there we would be sitting? Yeah.

But generally speaking, you are seeing your 65% or 60% retention ratios. Retention ratios has held in there.

And do you see that going forward -- I mean, you are not going to lose every tenant that’s coming due going forward, correct?

Exactly. And that’s what everything we’ve been trying to talk about with our leasing program, our retention.

Our 2016 number is really good. We were stating in terms of a percentage but that’s almost as much leasing is we’ve done for the whole of 2015.

So, I think we feel pretty good that we are going to keep our tenants and we are going to reaching out to our 2017. We are focused on keeping our tenants in our buildings and we think we are going to do that.

Okay. Great.

Thanks, guys.

Hi. Good morning.

Just firstly to circle back to the debt coming due on First Tower, can you confirm that you are in a position to act completely independently of your partner in terms of your financing decision there?

No. I’d say we do it together.

Are you obligated to do it together?

I believe so.

Okay. One number I may have missed with respect to the two plus million square feet of leasing that’s been accomplished for next year.

Did you make a comment as to whether the contractual net rents on that 2.1 million square feet is above, below or equal to the current in-place rents?

Neil, I’d have to look at some of that. But let me give you a little bit of color on that so.

Out of the 2.1 or the 53% that we talk about for 2016, the blended rate on the new rent renewals is roughly 18 bucks for a leasing cost of about 14 bucks a foot, which is line-over working commissions. And I commented about 86% of that 2.1, as Jane earlier alluded to is renewals.

Okay. So, I guess at the end of the day, you don’t have the information handy as to whether the net rents on the renewals are at or above in-place rents?

Yeah. Neal, I’m happy to give you a call after this particular call.

Okay. No trouble.

Just to finish up, when you look to that 2016 leasing expectations along with your plans for building improvements including improvements to the office space common areas, et cetera, as well as your plan to keep creating higher better used retail space, what do you think we should think about again, high level order of magnitude for capital reinvestment into TIs and leasing costs and then building CapEx?

Neal, as Jane alluded to, we are going through our business strategy session and I think a lot of that we will give it on our year call.

Okay. Thank you.

Thanks. Just a couple quick ones, on the leasing for 2016, you’re halfway through roughly.

I mean, how is that compared to previous years? Is that basically in line with rates at this point in the year?

No. We’re much further ahead than we were last year.

And how about if you go back sort of three, four, five years, would that still be a relatively sort of above average performance or?

Well, I think in terms of numbers, yes.

Percentage wise.

I don’t -- I’m looking Kevin, I don’t know what the number would be but my sense is yes.

Okay. Okay.

And just on the bad debt that you expensed in Q3, could you give a little color as of that? I think there was sort of a net negative $400,000 number bad debts or termination fee income, can you provide a little more color on each of those numbers?

Yeah. Sam, Paul Skeans alluded to it.

So we had -- I call it a few small tenants in -- are left.

But what was the gross number for each of those termination fee income versus bad debt?

I don’t have that handy. I’m happy to -- why don’t you -- if you have a few more questions, I’ll try to address that, I can get that off or I can answer it offline for you.

Either way. I appreciate it.

Thank you.

Okay. Thanks.

Thank you everyone for your attention today. And we look forward to reporting back next quarter.