Dream Office Real Estate Investment Trust

Michael Cooper - Chief Executive Officer Rajeev Viswanathan - Chief Financial Officer

Mark Rothschild - Canaccord Sam Damiani - TD Securities Matt Kornack - National Bank Financial Mario Saric - Scotiabank Mike Markidis - Desjardins

Thank you, operator. Good morning and welcome to Dream Office's year-end conference call.

Today I'm here with our CFO, Rajeev Viswanathan. Yesterday, we announced that Jane Gavan will focus on leading Dream Global and I will lead Dream Office.

Jane and I have been working very closely together for 20 years as of this April 30, and Global had a sensational year last year. It grew very profitably.

It was up about 35% and has garnered much interest in investors with Dream Global getting larger by assets, people and profitability and operating in four countries, Jane will devote all of her time to running Global. Dream Office has changed dramatically since we announced our plans exactly two years ago.

We continue to have some capital allocation decisions to make before we are on our steady-state, but we are shifting our focus to managing our three [ph] long-term assets to maximize their long-term value. Over the last two years Jane has managed our business plan while I have worked with the team on our strategic plan, with Jane pursuing Global's success I'm pleased to be able to oversee Dream Office.

Over the last few years we have undertaken a massive strategic plan intended to focus our business on our very best assets, reduce our overall capital including lowering our debt ratio, reducing its outstanding. We have trumped the company from 166 assets with an asset value of $7.2 billion to under 40 and just less than $3 billion at book value.

We still have a few remaining assets that we want to sell and expect to own about three assets for the long term. 19 of these assets or 60% are in downtown Toronto, and another two or 10% are in the center of Mississauga and North York.

I want to sincerely thank Jane for the contributions as CEO of Dream Office over the last four years. Now Toronto is undergoing major changes and continues to have population growth in excess of just about any large city in the developed world.

It's significance in Canada is growing and Canada's significance globally is also growing. The Toronto office market is performing better than just about any market in North America and rents are also increasing more quickly than in many years.

We believe that Toronto will continue to be an increasingly significant city and the best real estate will also become increasingly valuable. That is why we have concentrated much of our investments here.

Before I get ahead of myself, Rajeev please discuss the financial highlights, then I'll followup with a few comments and then we will be happy to answer any of your questions.

Thanks Michael and good morning everyone. Our NAV per unit increased by just over a dollar quarter-over-quarter to about $23.50 a unit driven by valuation uplift in Toronto partially offset by write-downs primarily in Saskatchewan and to a lesser extent Calgary.

As Michael mentioned, Toronto is perhaps the best office market in Canada and arguably North America. Accordingly our valuation uplift for Toronto in the quarter reflected compression to capitalization rates and an increase in our market rent estimates which are all supported by third-party appraisals for all of our Toronto assets at year-end.

For the quarter and on a year-over-year basis, our FFO per unit was down. However, this was the result of our conscious effort to build a higher-quality company focused on downtown Toronto with an industry-leading balance sheet.

We decided to repay low rate debt with proceeds from higher yielding asset sales which caused a drag on our FFO per unit partially offset through unit buybacks. We believe this trade maximizes unitholder value and it has recognized in our unit price performance which has returned 20% on our total return basis in each of the last two calendar years.

In respect to capital allocation we've been very active during and post quarter. Our disposition program continues with the properties identified as held for sale at year-end having now all closed and another $100 million dollars in the active disposition pipeline.

We also participated in the quarter in Dream Industrial REIT's equity offering back in November to retain our ownership interest and redeploy some of our cash. Lastly, we repurchased the remainder of the allowable units under our NCIB program purchasing 3.7 million units in the new-year.

Our balance sheet and liquidity position have never been stronger. It is almost $500 million of available liquidity and $300 million of unencumbered assets along with the reduction to our debt levels from over 50% back in 2016 to under 40% today.

Over the next two years we have very few mortgages coming due and about 290 million of unsecured which we are looking to repay. We continue to believe NAV per unit at this juncture is the most appropriate measure to evaluate the business as opposed to income [ph] metrics such as FFO or AFFO.

In our press release we have provided information regarding our existing and upcoming vacancies that will materially impact the numbers in 2018. We did also want to provide 2018 NOI guidance for each of our key markets understanding that 2019 is the year that the business will start to stabilize.

In Calgary and our two assets under GTA without factoring in some pruning of the assets we sold in Calgary, we expect NOI performance to be flat relative to 2017 for both markets. For Ottawa and Montréal we expect NOI to be down about $4 million relative to 2017 driven by the upcoming Bell Canada vacancy at 700 De la Gauchetière along with the impact from the roll down of rents back in may 2017 from the National Bank deal which we previously discussed.

We are however confident in our ability to release most of the remaining 100,000 square foot of exposure given the positive market dynamics in Montréal. And in Toronto our NOI performance will be slightly down impacted by the 438 University vacancy which has been addressed with a deal starting this December mostly offset by the achievement of higher rental rates and occupancy.

We are also targeting approximately $200 million of dispositions this year including the $100 million we are actively working on. Mostly dispositions will come from Saskatchewan with a few in Calgary as well.

And I will now turn it back over to Michael.

Thank you, Rajeev. We've been guiding our investors and analysts to focus on January 1, 2019 as that is when we believe we will have our business positioned to where we want it to be.

Although we're ahead of schedule on sales, we still have lots of work to do. The third quarter marked major progress aligning our portfolio.

We've identified about another $250 million of assets that we still wanted to sell as of year-end. Since then we've completed the sale of $50 million and we worked through the balance of the remainder of the year.

Although we are not yet done our asset sales, we will confident that we will complete them and the outcome of effective value of our business significantly one way or another. When we announced the strategic plan we had 113 million units outstanding and just under 50% debt.

We now have 75 million units outstanding and just under 40% debt. How people use office buildings is going to be vast changes and there is a big difference in value based on how suitable a building is for today's tenants needs.

Our assets are better now and that they are located in desirable locations. They have access to great transportation and tenants want to rent space in our buildings.

So at the end of Q3 while we continued to focus on capital allocation our major focus has shifted to how our management team will work together to provide more value to our tenants and our buildings. [Indiscernible] has been promoted to Senior Vice President, Commercial Properties and he is overseeing our downtown Toronto portfolio.

Andrew Reial, the Senior Vice President Portfolio Management is responsible for the value maximization of some of the most significant assets like 700 De la Gauchetière, Sussex Center, 5001 Yonge and our Edmonton and Burnhamthorpe property. Calgary and the assets that we continue to want to sell.

We also have a very motivated team that is pursuing ways to retain and attract tenants through increasing our tenant experience. While these changes are individually slow to implement and difficult to measure the value, we do believe they will prove out to be very valuable.

Our portfolio consists of assets that provide the full benefit of owning real estate. We are concentrating on high growth markets with exceptional assets that can be improved, intensified and redeveloped to continue to grow our cash flow and our value over the long term.

As we make more progress we will outline some of our operational initiatives. The Toronto market is very strong; we are seeing average increases of over 15% in rent on new leases and renewals.

We have much of our 2018 Toronto renewals spoken for and have already committed more space than we have expiring in 2018, so we will see increasing occupancy. While our NOIs are increasing as new leases kick in, we think the increase in the future yields will be more significant as the leases we are able to complete now commence.

As a result, we expect to see growth in the properties in Toronto that are meaningful. We also believe we're working on increasing occupancy in Sussex Centre and 700 DLG which will move the needle for us.

In Calgary we have some great assets, but it remains very difficult to lease space and if we're successful enough to lease space, the rent isn't much, so while we're not expecting any growth there. This year we expect to make an application for the redevelopment of our 16-acre site at Edmonton and Burnhamthorpe.

The light rail trans [ph] will open in a couple years and this area will undergo a transformation. Each of choice REIT’s smart centers real can also sites beings rezoned and redeveloped basically adjacent to us.

The other application for rezoning we want to submit during 2018 is an application to redevelop 250 Dundas Street, West. We will provide more details on these two assets once the filings are made and become public.

We also are working on intensification upgrades at Adelaide Place, 357 Bay Street and 80 Richmond. Each of our 19 buildings in the Toronto core have the potential to be maximized and become the type of real estate that you see in the center of European cities and some major urban centers where they are impossible to acquire and when they rarely are sold their pricing is very high.

We were working on creating value on our assets individually and working together so that we have one of the greatest portfolios of office buildings in this city. The balance of our portfolio being 10% of the GTA and 30% primarily Montreal and Calgary, are excellent assets which provide some diversification.

We believe that we can see asset value and cash flow growth in Montreal and the GTA and it's still further away in Calgary. Two years ago we announced our strategic plan and stated we'll be focused and acting like a private equity firm with our primary metric asset value growth.

We have made much progress. 2018 continues to be a transitional year as we complete some asset recycling, fill some space that was known to go vacant when announced the plan, prepare for intensification of redevelopment and probably most importantly adapter approaching at the most at each asset and for our tenants and our owners.

All of our efforts over the last few years have been the best company we can have for 2019 and we think we're on schedule. We would be happy to answer any of your questions that you may have now.

Thanks. Good morning.

Good morning, Mark.

Maybe in regard to the IFRS NAV, you might be making comments about the strength in the Toronto office market, to what extent do you believe that the current values are reflective of the value that you see and that others will see in those assets or do you believe that the current [indiscernible] and it's no backward looking?

You know it's interesting you say that, we had the conversation with our Board yesterday. We didn't believe the IFRS value in Calgary a year and a half ago and with a lot of determination we've dealt with the auditors and we marked it down by half and it turned out that those values are what everybody’s values are today.

So you know what this whole process of IFRS value is what it is, clearly we have, we see more value over the long term than what’s the appraisers see.

But in the near term do you believe that this really reflects the current value?

Oh you know what, we got a whole team that deals with the appraisers and auditors and that's where they come up with, so I have my own private beliefs.

Okay, fine.

But Mark, we ought to be clear about it, we bought a lot of stock back, I think we bought quantum 113 down at 75 in the last 18 months and we’re buying as recently as last month at stock prices that are higher than here. We think our company gets better and better than what we concentrate on the core group of assets and reduce the shares outstanding and whether the NAV today is what the appraisers say, we think is a lot of value over the next number of years in this portfolio.

Mark, it's Rajeev. Let me just add.

Rajeev is going to defend this numbers now.

I just want to mention, we valued all our properties in Toronto using income methodology which is basically an office. Yes, we've alluded to looking at developments for some of our Toronto assets, so none of that's reflected in our values today.

Okay understood, and in regard to assets sales I think you said you would like to sell $200 million of properties this year. Can you just talk about it, are you selling some of that, I think you said you’re selling some assets in Calgary is that something new or is that all or are there still were remaining assets you wanted to sell and are all of the asset sales generally just will Saskatchewan, Alberta and you talk also about these proceeds?

Yes, Saskatchewan primarily into Saskatchewan, so we have that non-core markets bucket in our MD&A. That's really where we're looking to get out of and then I'd say a little bit of pruning in Calgary.

But those assets been identified before.

So this is not from the fixed assets in Calgary that you had intensified this quarter?

No.

No.

Okay and then and as far as the use of proceeds?

Same as before.

Buyback stock?

Most likely pay down debt, buyback stock and most importantly put it into the buildings.

Okay and then just lastly, you've increased your ownership in same industrial. You've definitely transitioned Dream Office to have a significant exposure downturn Toronto office, to what extent do you view this investment as a core long term holding or is it more just opportunistic now because you believe few industrial units are undervalued.

I mentioned before that our tax base is really low because the industrial REIT was spun out of Dream Office. We talked about this as well on the Board and there's quite a good conversations to whether in the future we show more or less but at this point it's a 7.6 yield with a low payout ratio in an asset class that we think is very exciting.

So I mean, we have no investment decisions to make now, but I think that we just like it for what it is.

Okay, great, thank you very much.

Thank you.

Thank you. Good morning everyone.

Good morning.

Michael, just on your comments about the two applications you’re going to be making for redevelopment, maybe I misheard, but did you say Mississauga or was that the former of…?

No, no, no. There is the Burnhamthorpe and Edmonton which is the 16 acres site that Aviva was a tenant of and we're getting more advanced on our plans there and that's a pretty exciting site as that whole area is changing.

The one where we're doing in downtown Toronto that we're totally focused on is 250 Dundas Street, West which is at Dundas and University.

All right, so that's the former Aviva on Eglinton in fact, I probably misheard, so both of these assets really don't have long term leases obviously the one has none that would prevent any near term project, right?

I’m sure, I don’t understand the question. It’s a little complicated.

Aviva, we’re continue to have some commercial space there. We are working on leases there that only had to do with existing space.

Okay.

Okay, so with 250 Dundas, West we're really looking at what's happening in the city and what we might be able to develop there. We think that is a great site for residential and we went and so we're looking at as much residential that we can put there.

Sorry just going to say 250 Dundas, we have the ability to ask our tenants to leave with a year's notice as well.

Okay.

Are you asking whether we have a new tenant?

No, no, so that’s helpful, I'm very much looking forward to learning more about those. So a lot of my questions have actually been asked.

Thank you, Mark. But just on the reinvestment of proceeds and you talked about pay down debt, buyback some more stock, reinvesting in buildings, nowhere it was mentioned, new acquisitions.

I'm just wondering, how you look at the market for new acquisitions. Today both in Toronto which is obviously the key focus of the REIT right now, but I wonder if you see any potentially markets that are undergoing distress right now that might be a good time to step in.

No, I don't see anything in distress that has good intrinsic value. I think it's a pretty good market that way, so we're definitely not looking at that.

We might look at acquiring buildings that are significant to our existing holdings that are strategic for us. I think the likelihood is any asset purchase we do.

we're not looking anything right now, but if I guess I would say there's a high degree of likelihood any assets we buy the property will be touching an existing property.

Right. Okay and maybe just looking at 700 DLG I just wonder if you could provide any more color on the prospects for back filling that with a vacancy that's coming back this quarter?

No, Andrew Reial just told me yesterday that he's had some recent success, so I think that we're feeling pretty good about it. I would say that Montreal is performing better as a city and an office market than it has in a long, long time and I think it's quite investible now.

So we think this is good upside on that building.

Okay, thank you. I’ll turn it back.

Thank you.

Good Morning guys. Just quickly turning back to 250 Dundas West I assume that you wouldn't want to keep the legacy building there, it would be demolished and built up and would it be a mixed use project at the end of the day with some office exposure?

I would say that I wish I could say more than we're saying, there is a proposal. There's a lot of things happening and how developments changing in Toronto and a lot of it hasn't resolved yet.

Right now the policy is that you have to maintain the commercial space that you have and in that case this is 130,000 square foot building there, so that would have to be integrated into a new building. We'd have to have at least 130,000 square feet of commercial and the balance could be residential.

And I guess you're probably alluding to the OMB changing over I guess, we haven't seen what the outcome is going to be of that, but has it changed your approach to what you're looking at from a development standpoint within Dream Office?

Well throughout the Dream family we have a lot of development activity in the city of Toronto and we're quite active. What I would say is, there's a fair amount of land that is already zoned.

The price of that is unbelievable like it is going straight up since the spring. So what I'm getting at is Zone land is probably more valuable than it has ever been before.

As far as the OMB we don't know how that's going to turn out because that would have to be a new application that it doesn't apply to. So we'll see, I think that 250 Dundas West is that a pretty good place.

Generally the issue is there's some new policies that are going through committees as to how core buildings in the core can be developed and we need to see how those turned out. It is a very difficult time to predict what the outcome will be.

And more generally I guess, do you have zoning in place for any of your other existing buildings to intensify them or is that sort of new in the process and you'll deal with it as the market changes and the new and see that the proof of these type of projects comes in?

Yes, we’ve got the two building that we're trying to get the first applications in this year. Just by the way throughout the other provinces there's nothing like in OMB.

And there never had been, so you generally have to deal with the cities to find something that is attractive to them and attractive as a developer. We're used to doing that, so we'll see what happens here and there might be a bit of a rocky transition, but ultimately there's a lot of people coming to Toronto.

They need homes, they need office space and I don't see it as big as the hurdle as other people do. I just think we've got to focus on what we want to do and make sure something that city values.

Fair enough. Quick question it's not overly material to you guys, but on 425 Bloor East does the fact that it's ground lease on that site would that impede you from sort of redeveloping that, there's been a lot of high rise residential in that area as well?

There has been a lot of high rise residential and it's been incredibly valuable as we have recently bid on some and lost in other businesses, but I would say that the lease is at this stage is a complete impediment of development.

Okay, fair enough. Just maybe Rajeev on 2019 or at least 2018 sort of blending into 2019 it sounds like that is going to be a good year for organic growth as some of these vacancies that are transitory are leased, but can you give me a sense as to how that sort of transitions?

I assume you get some straight line rents, it won't impact cash NOI, but FFO would be impacted positively I would think at some point during 2018 on that front and then positively on the cash basis into 2019?

Yes, I think that a fair assumption. I think you'll see with some asset sales depending on what we do with the proceeds, yes 2018 will be sort of let’s call it quarter-over-quarter flattish, although next quarter, oh sorry for Q1 we got a $5 million termination fee coming in, so if you want to model that that's fine, but yes, 2019 is really when you're going to - I’ll call it that inflection point starts to come through.

Okay, makes sense. And then one last question on strategy, if you’ve and when you've dealt with the leasing at the property on [indiscernible].

You only have one asset in Montreal is that something that you potentially sell Montreal cap rates have also come down fairly significantly. So wondering it's that, I mean it's one of your core assets, but would it be potentially a sale property at some point in the future?

That's a really good question. I mean Montreal, well again we've discussed this early yesterday where it's like if Montreal is doing so well now, do we think it's going to continue doing well in which case we should definitely keep it for the long term or do we think it's sort of its good now but it may not be soon and we're still doing work on it, but Montreal doing very, very well.

We only have one asset, it's a million square feet, so it's a significant asset that can fund itself on the G&A and stuff like that, so we don't think there's an issue about scale.

I guess a tag on question and you brought National Bank in for 10 years that's good, but they've announced they're building a new headquarters not far from that site which I think is good for Montreal generally, but how do you view the building that's attached to you in that context?

Thanks Matt. Where do you work?

Non-disclosure.

Look, that was a surprise to us and the way 600 DLG and 700 DLG work is, we actually share the below grade. There's a lot of the operational things between the two buildings.

I think the area of town is good. I think those buildings are exceptional.

That's been a bit of a shock and we're not really, we don't know yet if that's positive or negative or whatever, but we're going to be looking at it. So you're talking about pretty recent events and there's still not a lot of clarity, so we'll be watching that closely.

Fair enough.

But I don't know, I don't think we have a view as to whether that makes our building more or less valuable in the short and long term.

And will be there presumably until construction finishes and construction takes a while so it's not a near term issue.

Yes, National Bank’s building is actually quite full, so it's really not like our lease is 10 years, but put that aside. National Bank has got a fully leased building that's not in competition with us and they've got I mean pick a number five years, I mean before they move out.

So I'm not sure in the short term it has a big effect, but we'll be watching closely and I think there's opportunities there to.

Great, sounds good. Thanks guys.

Thank you

Hi, good morning. And just may be one detailed question and then a couple of higher level questions.

So, just on the detailing kind of focusing on 2019 kind of in accordance with your discussion on the call, in terms of the lease expires that have been renewed, so the one-third of the expires that have been done, what's been the mark-to-market on those leases to-date?

Hey Mario. It’s Rajeev here.

I don't have it handy, but let me give you sort of color. Okay?

Most of it has been done in Toronto and as Michael said we're seeing 15, 18% in some cases, so I guess we're seeing material up less in our rental rates relative to expiring.

Okay and I guess there's some that's also been done in Calgary, so would it be, would it be fair to say that that offset Toronto?

Correct.

Okay and then on the - that are expiring in Calgary in 2019, how much of that would be related to assets that you plan on selling in ’18?

I’m just looking at the sheet here for a minute. Not a ton, yes but most of that's probably I think in, I don't have it handy but that's probably in IBM which is an asset that we want to keep.

Got it. Yes, understood.

So then just maybe shifting to higher level and coming back to Toronto, Michael to your point I think there's been some surveys out there that have noted Toronto was a top five global market, never mind North America in terms of vacancy rates over the next three to four years valuations are high, you are 61% concentrated in Toronto. How do you think clearly you are positive on that concentration, how do you think about what may go wrong in the city, so when you're looking at the outlook which is positive what are the things that you're worried about whether it's valuation or projected cash flow growth?

So your question is, how good is our imagination about dealing with risk to Toronto and I would say incredibly good. How do I put this, it's been incredibly sad over the last week watching the U.S.

news with these kids and what happened in the Florida school and I think that the probably the best thing in Toronto is there is a sense of safety and there's some basic things that are incredibly valuable that aren't available in a lot of parts of the world. So I think that's actually the greatest thing we have going for ourselves.

I would say the worst thing is I don't give a shit. Our politicians are terrible and there is no doubt in my mind that over the biggest threat to Toronto is that everybody is totally gouging at the trough and trying to eat up Toronto for government.

You'll see in our suitability letter for Dream Unlimited, I think we're paying well and in excess of 20% of our revenue in various levels of tax and levies across that whole company. And if anything goes wrong, I don't know how much money is left to absorb it, so I think we have real political risk here in terms of the number of people who are paying taxes are too small.

So I think there's a huge risk there. I think there's a lot of global risk that could affect Canada and Toronto would suffer from it.

Anything that would mean the capital disappears is a real risk. I think there is risks around, is the premium cost of being in Toronto worth that compared to a Nashville or other things, so I think there are all those kind of risk, but having said all of that I think it is way more likely that Canada represents an incredibly safe and valuable place to put money in good quality assets and that will rule today that’s my personnel opinion, but what do you think?

Well, I've seen a lot of statistics that support your opinion. So I appreciate the color.

On the capital disappearing if anything we've seen the opposite, when it comes to Toronto in a long - for a while, can you talk about whether you've seen any incremental shift in terms of foreign institutional appetite for Toronto office assets?

You know, that's a great question. And what I would say is, it is accelerating at a rate I've never seen and it's coming from everywhere.

And last week Choice REIT made an announcement and that’s basically the western family say they want more real estate. I think you're seeing huge interest in high net worth in Canada and elsewhere.

There's been a tremendous amount of money made in a bunch of business and people recycling that into real estate. People from all over the world are doing that and they're interested in Canada.

Our pension funds are huge, other pension funds are interested. There is not enough real estate for the amount of capital that's looking for.

Okay and then just maybe now that you mention kind of Choice and just dovetailing on from the previous discussion with respect to your investments in Dream Industrial. A couple years back you made the decision to more the specialization route in terms of the various platforms that Dream operates.

Since then we've seen more recently stuff of your peers, but primarily the retailer REIT where arguably specialization at low returning into diversification in order to maximize underlying planned value. So from a Dream perspective, how do you think about the shift towards diversification and a bit away from specialization when it comes to Dream Office?

I think I got it wrong. I thought people wanted specialized businesses that really started when we decided we wanted to invest in Germany and we felt it wasn’t right to sort of force that on investors and never made that decision.

But it clearly hasn't been something that people care about very much although I think in most of the world people really do like specialized vehicles. But my take on what's happening is, since the global financial crisis, real estate in Canada has become much more innovative than it literally ever was before.

And what you're seeing is, anybody who owns real estate starts from the real estate and says what's the best use of that real estate and how do I make the most money and provide the most value and they pursue that, which means that a retail REIT that hasn’t a parking lot can put up a senior's home and it has nothing to do with retail, but that's how you take care of the best real estate. So I think what we’re really seeing is, the real estate’s driving the use not somebody’s philosophy.

Yes, okay that makes sense. Thank you.

That’s my two cents.

Okay, I apologize to everybody that not one name has been said consistent with how you like to pronounce it.

I've been called a lot worse Michael, so it's okay. Quick question from me just on Aviva I think you guys are, sorry, I don't want to call Aviva anymore.

We’re changing that to we'll call it Edmonton and Burnhamthorpe.

Yes, $41 million is your carrying value, so I think that’s around 2.5 million in acre, could you give us a sense of what type of incremental density you think is achievable that's…?

It’s massive, so that's why it has from a 322,000 square feet of commercial space on it. It’s probably would be in the range between 2 million and 3 million square feet of potential density.

We've got to retain some of the commercial I'm happy to retain some of the commercial, so the real issue is how do we put together a development there that’s appealing to the city that through public space and uses that it is desirable for us to build?

Okay, and Rajeev just a technical question on how you valuate that asset then, so your fire application let’s say a period of time goes by and you're successful and you get a zone for 2 million to 3 million square feet, how does that translate through entire that asset is marked from a high price perspective?

Yes, so you're right about how it's valued today about $2.5 million an acre that's about right. Let me talk about like for example the 250 Dundas.

Okay? So if we were to get the approvals for density, density trades at X dollars per billable foot, so at that point in time we will change the valuation according to that.

So each of these are going to be sort of case by case, but the rules require you to look at highest and best use. And again, we haven't reflected some of that in some of our values because we haven't been able to figure out yet exactly what the highest and best use is although we suspect we know what it's going to be.

Going to Aviva specifically, or as we like to call it, Burnhamthorpe and Edmonton, the $41 million is consistent with what we think the market value would be on sale and through a development process it would be more valuable and I think at that point we would value it for what it’s zoning would be then.

Okay, now that's helpful. Thanks.

And then last question from me, just here with the $200 million of sales that you are targeting this year and the NCIV [ph] expired is the SIB something that might be on the table again this year or is that something you wouldn’t want to go down that path?

It’s a nice path.

It's a nice path? Okay.

It’s a nice path. Yes, we'd do anything.

I mean, look I don't think there, whether we do it or not I'm not sure at this time would depend on the situation. But I think we would look at our balance sheet what level of debt we're comfortable with what the opportunity is and if that's paying down debt or put into buildings or as I think Mark was asking buying another property or buying back stock, we'd look at it all.

That's right, we have to.

That's great. Thanks very much.

Thanks. Just a quick follow up on the balance sheet.

Sorry Damiani.

Yes, that’s very well done. Thank you.

The unsecured total around $290 million maturing over the next couple years or so, do you fully provision that between you've got unencumbered assets, the [indiscernible] facility and the assets securing that, I mean you don't need to do anything more to put the REIT in a position to repay those debentures is that correct?

Correct.

Okay. Thank you.

I'd like to thank everybody for their continued interest in the company. We appreciate it and we look forward to sharing our first quarter numbers with you.

Thank you.