First Capital Real Estate Investment Trust

Thank you and good afternoon. In discussing our financial and operating performance and responding to your questions during today's call, we may make forward-looking statements.

These statements are based on our current estimates and assumptions, many of which are beyond our control and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these statements. A summary of these underlying assumptions, risks, and uncertainties is contained in our securities filings, including our MD&A for Q1 and for the year ended December 31, 2024, and our current AIFs, which are available on SEDAR+ and our website.

These forward-looking statements are made as of today's date and, except as required by law, we undertake no obligation to publicly update or revise any such statements. During today's call, we will also be referencing certain non-IFRS financial measures.

These do not have standardized meanings prescribed by IFRS and should not be considered as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Management provides these as a complement to IFRS measures to aid in assessing the REIT's performance.

These non-IFRS measures are further defined and discussed in our MD&A, which should be read in conjunction with this call. I'll now turn it over to Adam.

Thank you very much, Alison. Good afternoon, everyone, and thank you for joining us today for our Q1 2025 conference call.

We're really pleased with how the year has started. Our first quarter financial results were characterized by continued strength in our operating performance, which was driven by robust leasing activity and the execution of our capital allocation strategy.

These results demonstrate how our gross re-anchored retail properties provide insulation from today's macroeconomic uncertainty. Same property, cash NOI grew by a very strong 5.3% before factoring in lease termination fees and bad debt expense, which had a very small impact.

Its growth was primarily driven by higher rents. Q1 occupancy matched an all-time high of 96.9%, last set in Q4 of 2019.

However, rents in place are notably higher today than they were then. In Q1, we surpassed our previous all-time high, setting a new record with an average net rent in place of $24.23 per square foot.

During Q1, we renewed just over 500,000 square feet across 98 spaces. Renewal rental rates in year one of the renewal term averaged $24.91 per square foot, representing a year one renewal rent increase of 13.6%, which is once again above our long-term average.

It's included six fixed rate renewals, which, if excluded, increases our year one renewal rent to roughly 17%. We also extended our track record of securing meaningful contractual rent escalations to take effect during the renewal terms.

In Q1, 74% of our renewed leases included contractual rent escalations, resulting in a renewal rent of nearly 19% when comparing net rents in the last year of the expiring term to the average net rent during the renewal term. In addition to renewal leasing, we also completed approximately 90,000 square feet of new leasing across 42 spaces, tearing an average year one rent of approximately $32 per square foot.

In short, leasing activity continues to be very strong. We see a long runway for rent growth, given that economic rents remain well in excess of both market rents and in-place rents.

As most of you know, we are now almost halfway into a three-year strategic plan that we presented to our investors at the beginning of 2024. And it's hard.

The plan is focused on delivering our primary objectives. These primary objectives are quite simply delivering on a per-unit basis stability and consistent growth in FFO, growth in net asset value, and absolutely stable, reliable monthly cash distributions to our investors and growth in those distributions over time.

The three-year plan that we outlined for investors was designed to deliver on two key metrics. The first is delivering operating FFO per unit growth of at least 3% on average over the three-year timeframe.

The second key metric is achieving a net debt-to-adjusted EBITDA ratio that is in the low 8 times range by the end of 2026. I'm pleased to say that we remain on track to deliver both targets.

Beneath the surface, there are several things that contribute to the achievement of these two key metrics. Most of the assumptions are consistent with those provided in our investor data.

However, there are two assumptions that we have updated this quarter. First, over the three-year timeframe, development completions are now expected to be $300 million in total versus $200 million previously.

This is a result of us tracking ahead of what we initially expected. This change positively impacts achieving our key metrics and getting EBITDA specifically.

Second, dispositions are now expected to be in the range of $750 million in total over the three-year period versus $1 billion previously. Why did we make this change?

Given the increased macro uncertainty, a more appropriate assumption is that it may take a little bit longer to achieve the initial $1 billion of dispositions. So we reduced it to $750 million.

The business continues to perform exceptionally well and we remain on track to achieve the operating FFO per unit growth and the debt-to-EBITDA metrics that are the core premise of our three-year plan. Through the first 15 months of the plan, our operating FFO per unit figure, excluding several positive but non-recurring items, is approximately 5%.

Our debt-to-EBITDA has improved to 8.9 times or the low nines adjusting for some of those same non-recurring items. Needless to say, we're very pleased with our results to date.

And with that, I will pass things over to Neil.

Thanks, Adam, and good afternoon to all of our call participants. Consistent with our usual practice, we have a slide deck available on our website at fcr.ca.

And in my remarks today, I will make reference to that presentation. So let's start with Slide 6.

FCR generated an operating FFO of $69 million in the first quarter. This was up slightly from $68 million in the fourth quarter of 2024 and down from $78 million in the first quarter of last year.

On a per-unit basis, Q1 OFFO was $0.321, up slightly from $0.316 cents in Q4, but down from $0.365 cents in Q1 2024. In providing context to the year-over-year decline, recall that our Q1 2024 results included a $9.5 million assignment fee in interest and other income.

While the accounting standards required us to include this amount in income, in substance, we viewed it as being more akin to property disposition proceeds. Excluding this fee from the Q1 results last year would equate to $0.321 cents in FFO per unit or a flat growth rate year-over-year.

First quarter results from last year also included an abnormally large $5.5 million lease termination fee. Now, lease termination income is a normal part of our business, but this amount was exceptional.

If you further adjust for the termination fee, OFFO per unit last year was 29.5 cents per unit, thus elevating this year's growth rate to 9%. Let's dig a bit further into the results.

At the core of FCR's performance in Q1 was same-property NOI growth, which excluding lease termination fees and bad debt expense was 5.3%, or approximately $5 million. This exceeded our internal business plan, with the key drivers being higher base rent and improvements in operating cost recoveries.

This strong Q1 print reinforces our confidence in FCR's ability to deliver same-property NOI growth of approximately 4% on a full-year basis. The year-over-year NOI impact from acquisitions, dispositions, and the non-same-property pool was essentially nil on a net base apiece.

Now, in terms of the NOI run rate, I will highlight several property transactions from the quarter. Firstly, on February 3rd, we acquired 1549 Avenue Road, Toronto for $22 million.

This was the final property to complete our large-scale Avenue and Lawrence Development Assembly. Secondly, we completed two Toronto property sales during the last week of March, including 895 Lawrence Avenue West and Sheridan Plaza.

Gross proceeds were $72 million, and the assets were sold free and clear. Both properties were fully leased when sold, and the NOI yield on the aggregate selling price was in the mid-to-high force.

Therefore, as we move into the second quarter, you should expect to see a small amount of NOI dilution related to the timing and the nature of the Q1 acquisition and disposition activity. Moving down the rest of the FFO statements, Q1 2025 interest and other income included about $0.5 million of non-recurring income.

If you adjust for this and the $9.5 million assigned with fee earned a year ago, then Q1 interest and other income was generally consistent on a year-over-year basis. Further down the page, interest expense, general and administrative expenses, and other expenses were also fairly consistent year-over-year.

Slides 7 and 8 cover key operating metrics, some of which Adam already touched upon. And in short, the theme really remains consistent again through the first quarter with continued and broad strengths across key occupancy, leasing velocity, leasing spreads, and rental rate metrics.

Slides 9 and 10 provide the distribution payout ratio metrics. Commencing with the month of January, FCR's distribution per unit was increased by 3% to an annualized rate of $0.89.

Results for the first quarter of 2025 show that FCR's payout ratio was 69% on an OFFO basis and in the mid-80% range when measured on either an AFFO or an ACFO basis. Advancing to Slide 11, the March 31st net asset value was $22.06 per unit.

This was consistent with $22.05 per unit at December 31st and little changed from $22.10 per unit one year ago. During Q1, fair value gains on investment properties were $2.5 million.

This, of course, is a net number, so I'll provide a bit more color on the two largest components. Firstly, we recorded upward valuation marks of $39 million related mostly to higher NOI assumptions in the DCF models.

With strong leasing results over the past several years now, upward valuations related to cash flow modeling have been a recurring theme. Secondly, the biggest offsetting factor in the quarter was a $26 million fair value markdown related principally to Toronto development sites.

On this second point, I expect that some of our more avid readers will note that the carrying value of FDR's density and development land was $429 million at March 31st. This is an increase of $52 million from year-end 2024, and there's four major items that contribute to this net increase.

The first two I touched upon. They include the purchase of 1549 Avenue Road, which, of course, is an addition to the value, and then there's the fair value adjustments going the other way.

The third component relates to property categorization changes. During Q1, we added two properties to the density and development land category, while we also removed one property.

The first addition relates to the Avenue and Lawrence Assembly, which is a 3.7-acre site situated on a prominent corner in a North Toronto neighborhood with fantastic demographics. As mentioned, the assembly was completed during Q1.

This followed the approval of our official plan by the OLT in the fourth quarter of 2024, whereby we secured 660,000 square feet of total density. Currently, the assembly has approximately 61,000 square feet of existing built form across nine separate properties.

And these generate a run rate NOI yield of a little under 3% on total value. Previously, some of the properties were classified as income properties and several as development lands.

As of March 31st, all nine properties were uniformly categorized as a single development site in our disclosures. The second addition relates to a property located on the Island of Montreal.

During Q1, we were successful in removing certain lease encumbrances. And as such, the value of this site more appropriately reflects its intensification potential versus its income potential.

Hence, the property was re-categorized to density and development land from stable same property previously. Now, the third reclassification relates to a Greater Vancouver-area property where the change went the other way from density and development land to stable same property.

This is a good news story. For many years, this property has generated a steady rental yield, but our view has been that its intrinsic value principally related to its future residential intensification potential.

However, with significant growth in retail market rents over time, we recently signed a long-term lease with a national grocer for this property. And I might add, we did so at a rental rate and with escalators that we would not have envisioned a few years ago.

While the new grocer lease will not take effect for approximately two years, the timing of which is actually aligned with the current tenant lease expiry. It's now clear that the property's value is most appropriately reflected by the capitalized incomes, hence the reclassification.

Turning next to capital investments as outlined on Slide 12, during Q1, $72 million of capital was invested into the business. This includes the $22 million acquisition I mentioned a few minutes ago, along with $15 million into the operating portfolio and $35 million into development activities.

The most significant development spent during the quarter related to our Yonge & Roselawn development, the Humbertown Shopping Centre redevelopment for phases 2 and 3 are now underway, as well as advancing our small number of active condominium projects. Slide 13 summarizes key financing activities.

There were no significant financings in the quarter, but FCR did continue to carry sizable cash balances totaling $152 million. You should expect to see this cash drawn down over the next three months.

For instance, on April 14th, we used $75 million to repay a maturing term loan that had an interest rate of 3.35%. On June 2nd, we also expect to pay out a $56 million maturing mortgage that carries an interest rate of 3.26%.

And so with the yield curve once again upward sloping, we're unlikely to carry the same sort of substantial cash balances we did through much of the last two years. To wrap up, Slides 14, 15, and 16 summarize some of FCR's key credit metrics and the debt maturity profile.

FCR is in a strong financial position. The REIT and the Q1 with more than $800 million of liquidity in the form of cash and our undrawn revolvers.

FCR's unencumbered asset pool has a total value of $6.3 billion, representing nearly 70% of total assets. The REIT secured debt to total asset ratio remains at low at 16%.

Moreover, floating rate debt was only 3% of total, and the debt to EBITDA multiple continues to trend lower. And FCR has only one sizable refinancing to address through the balance of this year, when our $300 billion Series S Senior Unsecured Venture matures during the third quarter.

This concludes my remarks, and I'm now pleased to turn the session over to Jordie for his comments.

Thank you, Neil, and good afternoon. Today I'm going to provide you with a brief update on our investment, development, and entitlement activities.

In his remarks, Neil mentioned our sale of two Toronto properties, including 895 Lawrence Avenue West, a 30,000-square-foot unanchored income-producing retail center, and Sheridan Plaza, a 170,000-square-foot center located at Jane and Wilson. I will add to his comments by noting that the aggregate selling price of these assets equates to more than a 20% premium for IFRS carrying values.

With respect to new transactions, subsequent to the quarter, we entered into a binding agreement to sell a property located on the Island of Montreal for approximately $33 million. While pursuant to our agreement, certain details about this residential development site are still subject to confidentiality.

We can say that the sale price equates to a mid-2% yield based on the current income in place, and it represents more than a 25% premium to our Q1 2025 IFRS value. The deal is now firm and slated for a June 2025 close.

I should also note that we're actively working on several other transactions that are similarly consistent with our strategy. I look forward to updating you on this activity in future boards.

We're busy advancing our two active mixed-use developments as well. At Yonge & Roselawn, we remain on schedule and on budget.

At the end of Q1, the project decking had been installed in preparation for the first floor slab pool. We own 50% of this 636-unit residential rental building with 65,000 square feet of retail space and serve as the development manager.

75% of the project costs are awarded, with a further 12% being tendered or under negotiation. This past quarter, City Planning issued the revised Notice of Approval conditions permitting an additional four stories at our 24- and 30-story tower plans now contemplated.

While still several years from occupancy, we have very strong demand for the 65,000 square feet of large and smaller format retail space. Construction of our 1071 King Street West development project in Liberty Village is also on schedule and on budget.

You'll recall we own 25% of this 298-unit, 225,000-square-foot purpose-built residential rental project, which includes 6,000 square feet of at-grade retail space. Today, 81% of the project costs have been awarded, and the structure has now reached grid.

Moving to retail redevelopment. Last quarter, I touched on the large gap between economic rents and market rents for new-build commercial retail space.

Specifically, the required rent to rationalize the construction of ground-up retail space is significantly higher than current market rent. This continues to limit supply of new retail space.

At the same time, however, it's created an opportunity for FCR to invest capital into the redevelopment of our existing retail properties and achieve very attractive returns. These redevelopments take many forms.

The ongoing redevelopment of Humbertown Shopping Centre in Toronto is a tremendous example of this type of investment opportunity. In the fourth quarter of 2020, after completing the project's first phase, we entered into a new long-term market rent fully net lease with Loblaws.

They will remain on-site in an enlarged premises that we have created by consolidating their former space with 13,000 square feet of contiguous CRU space. This expanded Loblaws store sits in the second phase of our redevelopment, which commenced this past quarter.

Phase 3 is the final phase of the retail. This phase, which includes a newly created 20,000-square-foot shopper's front yard, a TD Bank, and a Scotiabank, amongst other tenants, also commenced this quarter.

On completion of the redevelopment, expected in 2026, we will have removed or converted to leaseable all of the enclosed common areas of the center. In so doing, we will have grown the gross leaseable area of Humbertown Shopping Centre by 17,000 square feet and much of the existing leaseable area will become much more valuable as a result of our improvements.

In total, we will invest $47 million in the redevelopment of Humbertown and will benefit from unlevered returns exceeding 7% on this invested capital. Another smaller but impactful example of our execution of this growing opportunity set is Cliffcrest Plaza.

Cliffcrest is an 80,000-square-foot center located at Kingston Road in McAllen in Toronto. The center is a Shoppers Drug Mart, LCBO, and a Dollarama, along with select other smaller national and local tenants.

A notable absence in terms of merchandising for the center was a grocery store, and that changed last quarter. We entered into a long-term lease with Loblaws for an urban dough grill store.

We were able to accomplish this by first securing control on 10,000 square feet of contiguous CRU space in the center. The dough grill store opened in Q1 of this year.

The gross rental rate they pay is at market, which is 70% higher than the former in-place rent. Also, unlike the former tenants that the dough grills has replaced, the new Loblaws lease is fully met and includes annual escalators.

Moving west at Staples Lougheed, and Burnaby within the greater Vancouver area, Staples occupied 27,000 of the 30,000-square-foot center. Their lease expires in 2027 with no options to extend the term.

Given the population growth, increase in density on the surrounding property, and its proximity to the SkyTrain, we believe high-density residential was the highest and best use. So a number of years ago, we submitted a rezoning application to permit 470,000 square feet of residential density.

While this form of density remains valuable in Burnaby, over the last several years, there's been a significant growth in market rents for retail space in the north. Today, based upon the rent that we can secure, the site is more valuable as a retail development site.

Accordingly, and as Neil had mentioned in his formal remarks, this quarter we entered into a long-term, unconditional lease with Loblaws for the entire property. Coinciding with Staples' expiry, the new lease will not take effect until 2027.

However, this recently categorized Staples safe property asset will see meaningful income growth over the contractual rental period of the new Loblaws lease. What's more, the discounted value of this new Loblaws income stream is greater than the value of the site as high-density residential.

Another example of a retail redevelopment that we've undertaken is a property located in a very attractive neighborhood called Bridgeland, very close to downtown Calgary. We knew this half-acre site had medium-term redevelopment potential and purchased it with that view in 2018.

At the time of purchase, it was tenanted by a Molson-owned brew pub. With Molson vacating the site on the expiration of its lease, we were able to enter into a long-term lease with Shoppers Drug Mart to construct a new 18,000-square-foot store.

Demolition of the former building commenced in the first quarter, and we expect to provide Shoppers possession of its new premises in the next 12 months. With respect to entitlement, in 2024, we secured approvals for 2 million square feet of incremental density on our property.

In 2025, we anticipate we will receive approvals for an additional 1.8 million square feet of incremental density. During this year, we also expect to submit rezoning applications for a further 1 million square feet of incremental density.

To date, netting up the density we've already sold, we have submitted for entitlements on approximately 18 million square feet of incremental density. This represents 77% of our 23 million square foot pipeline.

Once zoning permissions are secured, they provide FCR with great optionality. As I think it's clear, we remain focused on the successful execution of our objectives.

Thank you all for your time today and your continued support of FCR. And with that, Operator, we can now open it up to questions.

Thank you, and good afternoon. Just quickly on the disposition target, obviously, I think it's pretty understandable it's getting revised down.

The market for land has not exactly been hot. Based on what you guys are seeing and what you know, do you think there's any risk of it getting revised down further by a material amount, or you're fairly confident that this 750 by 2026 is achievable?

Hey, Lorne. So we're fresh hot off the presses with the 750, so we're going to stick with that for now.

But there are several points that I think are worth making with respect to the change in our disposition assumption. I know you've made a keen interest in it, so I will make a couple of points.

First, the world has changed over the last year and a half when we made our initial assumptions, but particularly over the last quarter. Macro uncertainty and volatility are clearly up.

We recognize the macro environment is something that has an impact on our disposition program and also happens to be out of our control. All we really wanted to do is be realistic and that it may take a little longer to achieve the billion dollars of dispositions.

Second, the impact is strictly timing. I really want to stress that.

We're very confident in our ability to monetize properties over time and at premium pricing levels, and we've established a pretty solid track record in doing so. We just think it may take a bit longer given the macro environment.

And third, and this is the most relevant point, is that the impact of this change in assumptions on the two key metrics. And to your point, this is something to keep in mind if the assumptions change down the road, which at this stage we're saying it's 750 to 750, but if they do change.

It's really important to keep in mind that the change we just made on the two key metrics from our disposition program and along with other activities, all of these are designed to achieve two things. Operating FFO objectives that we laid out, and on that front, very little impact from the change that we've made, all of which is entirely offset by strong operating results.

And the second is our debt to EBITDA. And the change in dispositions has a more pronounced impact on debt to EBITDA, but we left that unchanged too, and that's because the change to dispositions has been largely offset by both strong operating results and our expectations around the acceleration of development completions.

And so the bottom line, Lorne, is that we're very pleased with our disposition progress to date. Most importantly -- and this is where I think those who view this change to our dispositions assumptions negatively have missed the mark, is that we believe that we will achieve the two key objectives of our plan, being operating FFO for unit growth and debt to EBITDA with less dispositions in the three-year timeframe.

And we think that's a good thing.

Okay, that's fair enough, and kind of tucked in briefly there. Maybe I'll switch over to the operating side of things.

Obviously, you guys are constantly talking to tenants. Have you noticed any changes in behaviors or leasing timelines as a result of the broader macro uncertainty?

Yeah, that's a very good question, and something, as a management group, we have a heightened sensitivity to. And so what that means is we've been speaking to our frontline leasing staff more frequently.

And the good news is we can tell you from their perspective, they see absolutely no change to the depth of demand, the way lease negotiations are progressing, the type of interest. We have no change from 3 months ago, 6 months ago, 12 months ago, and as you know, that's a good thing because demand has been very robust.

So certainly something we're paying close attention to, and fortunately, what we can tell you certainly as of today is that we've seen absolutely no indication of any change on that front as a result of the increased macro uncertainty.

Okay, that's great to hear. Thank you very much.

Thank you very much, Lorne.

Thank you, and good afternoon, everyone. Just in terms of the markets that you're in, are you somehow seeing any cracks among the retail tenants currently just given the broader macroeconomic uncertainty?

Thanks very much for the question. So firstly, no, we're not seeing any cracks from the macro uncertainty.

And two, we're seeing remarkable consistency across geographic markets and neighborhoods that we're in. There's no discernible difference to how our properties are performing from whether it's in Vancouver or Edmonton or Calgary or Montreal or Toronto or Ottawa or actually remarkable consistency.

And it's actually been that way for many, many years, but to your point, we're not in a normal environment now, but we can tell you that from that perspective, we have seen that consistency remain in place.

Okay, and then I guess if you're looking at weighted average lease terms on renewals. I believe in the past that you alluded -- you mentioned the fact that those lease terms are increasing as you're signing on tenants given the demand.

Is that something that's expected to happen over the rest of the year as well?

Yeah, that's a good question, but the short answer is we're not sure. So our long-term average was somewhere in the range of five years in terms of your typical renewal term.

The last two quarters, and I wouldn't necessarily say two quarters makes a trend, but it's been two quarters now where that's been closer to six years or about a year longer. We're okay with that because we're comfortable with the rents in place.

And as you've seen from one of the two renewal lift metrics we disclosed, we're getting above average contractual rent growth. So from our perspective, we see the same things as our tenants.

Great fundamentals. Our real estate is expected to become more and more valuable over time.

Market rents are expected to grow. And so obviously the longer you walk in in these terms, the longer it will take you to reset your rents to market.

So that's something we're certainly cognizant of. But if we have the right tenant in place with the right starting rent and an escalator throughout the renewal term, we're happy with it.

We've been happy to move from a five-year typical term to something that's six or six and a half years. But in terms of how the balance of negotiations go, I would say it's something that we typically don't die to.

And to be frank, we remain flexible on because it's very case-specific.

Okay, great. Well, thank you for that.

I'll turn it back to the operator.

Thank you for your question.

Thanks. Good afternoon.

Just wondering what your thoughts are about sort of pending economic slowdown if it happens and how it might impact the tenant base this time around compared to past slowdowns or recessions. Just wondering if you see a different mix of the impact between larger national retailers versus smaller local ones.

And are you seeing any categories of your tenant base starting to feel the pressure of less confidence or less consumer spending?

Yeah, again, very good question, Sam. It's something that we've talked a lot about as a management group.

Because we do think there's clearly a heightened risk of an economic slowdown. The short answer is today we're seeing no impact at the property level, whether it's large national or local tenants.

And we take some comfort in the fact that previous downturns have demonstrated FCR resiliency. There's very little correlation with previous recessions in our key operating metrics.

For example, the last recession we had in Canada was in the 2008-2009 period. 2009, same property in Hawaii.

Growth for FCR was no more than 5%. Renewal lists were well into the double digits and occupancy held in around 96%.

So that being said, every downturn is different. And this one certainly has its unique characteristics.

Something else that has become pretty evident to the management group is that the local tenant base across our portfolio today is the strongest local tenant base we've ever had. We went through a bit of a quick cleansing in the second quarter of 2020.

COVID really flushed through any of the marginal local operators. In many cases, we replaced them with local operators for merchandising purposes, but the ones that were leasing space at that time were very, very strong, established businesses, well-capitalized, really well-run operations.

And so we're feeling pretty good about the tenant base today, notwithstanding we do think there's obviously the risk for an economic downturn of materialized. That usually hits discretionary retail the most.

And as you know, that's a segment of retail that is not abundant in our business by any stretch. We are focused on the necessity end of the spectrum.

And in Canada, getting that type of space has been very tough. Our tenants are planning years and decades in advance, and so we're quite optimistic that even if a downturn materializes, that our operating metrics will continue to hold in very strongly.

That's helpful. Thank you.

And last one for me, just on the Yorkville node, just wondering if there's any updates to share on leasing activity or investment plans in that cluster of properties in the near term.

Yeah, leasing's been pretty good. And so we've had a little bit of churn.

We were able to have one of our tenants, which was Versace, terminate their lease early with a payment to First Capital while we simultaneously leased that space to the adjacent retailer on a new blend and extend that created a lot of value for the property. We're dealing with a number of other new tenants in the node, but Yorkville is in a very good spot as a node from a demand perspective relative to the last few years.

So not much more to report there, but in terms of investment activity that you touched on, we think there's a likelihood that some of the properties we own in Yorkville over, let's say, the course of our three-year plan will be ready for sale. And so you shouldn't be surprised if we monetize some of them.

Great real estate, we need a big price, and if we can get that, then we think it's in our investors' best interest to do that and reallocate the capital.

Great, thank you, and I'll turn it back.

Thank you, Sam.

Hey there. You touched on it already, but I'm just curious to get some more thoughts on it.

As you've talked about, you're running ahead of plan on the three-year objectives, and you've made a change to your disposition program. I guess the question is, you know, what kind of cushion do you think you still have to hit your sort of FFO per unit growth objectives in your debt to EBITDA if, in fact, you think it's prudent or necessary to further reduce the disposition cadence or, let's say, leasing fundamentals moderate a bit from here?

Yeah, look, I mean, you're referencing a cushion. We're telling you what we think the realistic outcome is based on our forecast today.

So I wouldn't read into that that there's a cushion. That's what we expect to happen.

A lot of moving parts. If our expectations change in the future, we will certainly let you know, but this is our best guess today.

And overall, the business is performing very well. And we're a lot less fussed about disposition volume.

We're really focused on driving operating FFO per unit growth that exceeds 3%. And we are very focused on continuing to improve our debt to EBITDA now for the low-end time.

That's what will determine success for us, not disposition volume, not development completion, not several of the other supporting metrics. But we do think it's important to articulate our current expectations, and a couple of them have changed this quarter.

And so if that happens in the future, we will certainly let you know.

I appreciate that. And just, I guess, thinking about the current environment for asset sales, just what you're seeing in the private market in terms of the depth of the buyer pool, the composition.

Has that potentially changed, I guess, in the last month or so since Liberation Day?

Yeah, it's become a bit tougher. That's what resulted in us taking our expectation down.

But we didn't take it down to zero. So hopefully, Jordie gave you the sense that we are still active because we are still active.

And post-quarter end, we got a great deal over the line, which is that Montreal development site. There are others that Jordie’s got good traction on and his team has good traction on.

We hope they materialize. But, look, this has been a tough environment since we started.

And we've had a lot of success, and we've sold assets that fit the criteria where we said we would sell in a big crisis. So we're just concerned with the state of the world today that it just may take a little bit longer.

But the market's not dead. It's just not as good as it was.

I appreciate that for the comments. I'll turn it back.

Thank you.

Thanks. Hi, everyone.

Just on the $300 million of development completions, can you remind us, what range of yield do you expect and how does that yield sort of the spread to acquisitions? How would that compare?

Hi, Pammi. It's Neil.

It's a good question, and maybe I should have addressed a bit of this up front. So two things.

I guess, firstly, the change in the assumption, the expectation rather. At our February 2024 Investor Day and subsequently, the $200 million of expected development completions included approximately $100 million of income property development and redevelopment coming online.

And in 2026 specifically, it included the delivery of Edenbridge Condos at Humbertown. And so at FDR's 50% share, the estimated growth proceeds from the Edenbridge closings should be just over $100 million.

Now, as many of you know, we also have a 35% interest in the 400 King Street Condos in Toronto. And for purposes of the three-year plan, we had been assuming that those condo closings would occur in early 2027.

Now, the project is continuing to advance quite nicely on time and on budget. And so we've now assumed that FCR will receive approximately 60% of the total proceeds from those closings in late 2026 with the balance still falling into 2027.

So that's the lion's share. Actually, by a very wide margin of the increase in development deliveries to $300 million from $200 million previously.

Now, more specifically, your question related to the yield on IPP developments and redevelopments. In round numbers, that's about a 7% yield.

Okay. So the 7% yield I think, was what you had expected at the beginning of last year at the investor day.

So the change really just is on the condos at 400 King. So on 400 King and Edenbridge, how much of the -- what sort of gains or residential gains do you expect for that to contribute to EBITDA?

Yeah. So as you know, Pammi, we talked about this at our investor day as well.

We specifically excluded those from our baseline OFFO per unit objective of growing by at least 3% on average over the three-year timeframe. We've actually not quantified specifically what the future profits from those deliveries are at this point.

But they are included in your debt to EBITDA metric, though. You will be including the profits in EBITDA.

Yes, they are included in EBITDA, but I would say relative to our, call it $430 million run rate, they're not that sizable.

Got it. That's it for me.

Thanks very much.

Thank you, Pammi.

Good afternoon, guys. Just wondering if the uncertainty in the market, do you think that will flush out any potential opportunities for you guys that you wouldn't have otherwise thought you'd be able to get access to, or are these assets pretty precious to the current holders of them?

Yeah, look, if we're talking gross rate for retail, that's certainly an asset type that certainly on a relative basis has become more attractive to investors. And when you look at the owners of the majority of the types of assets we own.

There hasn't been much that's traded, especially since interest rates started rising in 2022. So the fundamentals are really strong.

And all of us that own these types of assets understand that. So hard to imagine, but we'll see.

We'll see what unfolds.

Fair enough. And then just on occupancy, you mentioned it's an all-time high.

Is there any more room to move that, or is there some structural aspect to it or strategic aspect to the vacancy?

Yeah, I think more strategic. So we've always been at the more proactive end of changing our tenant mix, maximizing the merchandising mix, making sure we've got the best operators within a desired use category.

So we've said this is not a portfolio that one should expect 99% occupancy. If we do that, we're missing on rent growth opportunities.

So we're pretty full today, but the environment's really strong. And we'll see.

Hopefully, maybe we can push through the current 96.9% all-time high.

Fair enough. Thanks.

Thanks, everyone, for attending the meeting. We appreciate your support.

Good afternoon.