Killam Apartment REIT

Philip Fraser - President and CEO Robert Richardson - Executive Vice President and CFO Dale Noseworthy - Vice President, Investor Relations and Corporate Planning Erin Cleveland - Vice President, Finance

Mark Rothschild - Canaccord Genuity Dawoon Chung - National Bank Financial Mario Saric - Scotia Bank Jonathan Kelcher - TD Securities Dean Wilkinson - CIBC

Thank you for joining Killam Apartment REIT’s Q4 2016 and year-end conference call. I'm here today with Robert Richardson, Killam’s Executive Vice President and CFO; Dale Noseworthy, Vice President of Investor Relations and Corporate Planning; and Erin Cleveland, Vice President of Finance.

Slides to accompany today’s call are available on the Investor Relations section of our website under Events and Presentations. I will now turn -- ask Dale to read our cautionary statement.

This presentation may contain forward-looking statements with respect to Killam Apartment REIT and its operations, strategy, financial performance, and conditions. The actual results and performance of Killam Apartment REIT discussed here could differ materially from those expressed or implied in such statements.

These statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Important factors that could cause actual results to differ materially from those expressed here, include among other things, general economic and market factors, competition, changes in government regulations, and factors described in the Risk Factors section of Killam Apartment -- Killam's annual information form and other securities and regulatory filings.

This cautionary statement qualifies all forward-looking statements attributable to Killam and the persons acting on its behalf. Unless otherwise stated, all forward-looking statements are as of the date of this presentation and the parties have no obligation to update such statements.

Thank you, Dale. In addition to releasing our Q4 and full year of 2016 results last night, we announced that the -- that -- at yesterday’s Board of Trustee Meeting, the Board approved a 3.3% increase in Killam’s distribution.

The annual distribution will be increased from $0.60 per unit to $0.62 per unit effective for the March 2017 distribution to be paid in April. This increase was made based on Killam’s -- strength of Killam’s result in 2016 and the Board's outlook for 2017.

Highlights of the Q4 results are shown on slide three. We generated FFO per unit of $0.21, a 5% increase from Q4 2015, same property net operating income growth of 1.8%, interest expense savings and contributions from acquisitions and developments were offset by a 14% increase in the weighted average units outstanding and we finished Q4 with the acquisition of 153 unit portfolio in London, Ontario on December of 22nd.

Highlights of Killam's 2016 results are included on slide four through six. As shown on slide four, we generated FFO per unit of $0.86, a 8.9% increase from $0.79 in 2015.

This follows the 9.7% growth in FFO per share in 2015. We are pleased with the performance we have achieved.

Our same property portfolio, which represents 97% of our total portfolio performed well again in 2016. Revenue growth of 1.8% was achieved through both occupancy gains at an average 1.6% increase in rental rates.

This topline growth combined with the 1.2% decrease in operating expenses contributed to a 4% NOI growth across the portfolio, a 13% increase in AFFO per unit and reduction of our AFFO payout ratio to 78% as reflected on slide five are also important achievements during the year. In addition to our earnings growth we are extremely pleased with the progress that we've made in strengthening Killam's balance sheet.

Slide six highlight the reduction in our debt levels and improvements in Killam's interest coverage ratio, both primarily due to the redemption of the $57.5 million of convertible debentures in July. Killam's debt as a percentage of total assets was 53.5% at December 31, 2016, a 290 basis point improvement from December 31, 2015.

We are more comfortable at this lower leverage and plan to further improve our debt ratios going forward, targeting a leverage ratio of 50% in the next few years. In addition, we also significantly expanded our credit facility in the year increasing it to $30 million up from $2 million.

Overall, we made very good progress advancing our strategic initiatives in 2016. Slide seven highlights our three strategic priorities for maximizing Killam’s value and long-term profitability.

Number one, increasing earnings from our existing portfolio; secondly, expanding the portfolio with the focus of geographical diversification and an emphasis on newer properties; and third, developing high-quality properties in our core markets. I will now turn the call over to Robert to provide color on the progress of each of these priorities.

Thank you, Philip, and good morning, everyone. The performance of Killam’s existing portfolio was essential to Killam’s FFO per unit growth.

We have an amazing team of over 550 employees who managed to maintain our 181 apartment properties and 35 manufactured home communities. We take great pride in providing high-quality housing for our tenants and this is reflected in Killam’s financial performance, as well as in our annual tenant survey results.

The results from our 2016 survey which was completed by over 2,000 tenants in November were very strong with a 9% tenant satisfaction rating. Our survey coordinator Corporate Research Associates tells Killam, our satisfaction rating is amongst the highest in the country.

As Philip mentioned, we achieved same property NOI growth of 4% in the year, slide eight and nice summarize key components of our revenue growth and expense management over the last three to five years. On the revenue side, we successfully improved occupancy and increased rental rates as slide eight highlights with a chart showing quarterly apartment occupancy for the last three years that exhibits a noticeably upward trend.

The second chart on this slide profile Killam’s average property revenue growth of 1.9% over the last five years. With the implementation of an expanded leasing team and the focus on tenant retentions, we improved occupancy and increased rents, while avoiding the seasonal spike in vacancy in the second quarter of the year.

As well we have been successful in maintaining a relatively flat rental incentive costs for the last two years, averaging just 77 basis points as percentage of potential rental revenue. Killam’s same property expenses were down 1.2% in the year, contributing to a very healthy 4% NOI growth.

We have implemented initiative to maximize both, water, energy and economies of scale savings to our portfolio and these programs are paying dividends. We also benefited from a mild winter in 2016.

Beside less energy consumption year-over-year natural gas rates were also lower. The total cost of natural per gigajoule was down approximately 12% in 2016 versus 2015.

We have experienced increased stability in the price of natural gas since the unexpected rates spike in 2013 and 2014. This is highlight in the graph shown the cost of natural gas in both Nova Scotia and New Brunswick from 2014 to 2016 on slide nine.

Slide 10 summarizes our revenue and NOI growth achieved in each of our core markets during the year. Halifax came in on top with 3.3% growth in revenue and 6.9% growth in net operating income.

Generating 36% of NOI, Halifax remains a very important market for Killam and we are pleased with how it consistently delivers impressive returns. The population of Halifax has been growing by 4,000 to 5,000 people per year or approximately 1% driven by a combination of natural growth, international immigration and urbanization.

Slide 11 includes historic statistics on the population drivers in the city for the last 10 years till 2015. International immigration accelerated in 2016, and although, annual numbers have not been finalized CMHC reports the arrival of 5,600 new Canadian in Halifax these last two years combined creating increase demand for rental units.

In addition to population growth, we are seeing strong demand from those outside in new apartment from home at the age. These changing demographics are expected to be an important driver for long-term rental demand in Halifax as a number of seniors those aged 65 to 79 is expected to continue to grow for the next 15 plus years.

Economic growth in Halifax is also contributing to the improved market fundamental and is drawing more people to the city. The Conference Board of Canada forecasts 2.5% GDP growth for Halifax in 2017.

Calgary stands out on the chart on page 10 was marked declines in both revenue and NOI in 2016. We are happy to report starting in Q4 2016 the Calgary market showed signs of improvement and so far in 2017 we have had a net lease up of 14 units and forecast 94% occupancy for March 2017.

Killam’s traditional markets do not experienced the occupancy swings we have witnessed in Calgary since the mid -- since mid-2014. So it is particularly nice to see the Calgary markets showing signs of stabilization.

Looking forward to 2017, we are targeting same property NOI growth of between 1% to 3%. We expect majority of our topline growth will come from increased rental rates.

Looking at operating costs, we expect to see lower natural gas rates in Nova Scotia in 2017. However, this may be partially offset by our consumption level to Q1 2017 be colder than last year.

So far in 2017 the weather has been relatively warm and natural gas rates in Nova Scotia have been as we budgeted and New Brunswick gas rates for January 2017 were lower than budget and generally in line with January 2016. Our energy initiatives and other operational efficiencies are also expected to moderate expense pressures.

An example of an efficiency initiative we taken on this year is internalizing the property management for Killam’s Newfoundland portfolio. Newfoundland delivered 8% of Killam’s NOI and it managed by the third-party as we grew the portfolio.

Newfoundland was the only portfolio where we used the third-party property manager for operations. Effective March 1, 2017, we will take over full management, the internalization of management to generate net cost savings of approximately $200,000 per year.

Fortunately, we have been able to hire a number of key operational staff that works for our previous property management companies, so this transition to be seamless. The second component of Killam’s growth strategy courageous to be the expansion of our portfolio and increased geographic diversification through accretive acquisitions.

With an emphasis on newer properties, during 2016 we completed $72 million in acquisitions, 62% of which were in Ontario. We discussed our Garden Park property in Halifax and our Kanata III in Ottawa acquisitions during our Q2 earnings call earlier this year.

In addition to these two purchases, we also acquired a five building portfolio in London, Ontario in December 2016. The purchase price of these 153 units was $13.6 million, representing an attractive value at $87,500 per door.

Highlights of the acquisition are included on slide 12. The average monthly rent is a very affordable $731 per month, well below the $858 average rent CMHC reports for similar units that built in the same period.

We expect to achieve above average NOI growth with this property by moving rents to market and accessing increase economies of scale with our existing assets in London. Finally, we continue to grow by developing assets in our core markets.

As we reported last quarter, our Southport development lease-up very quickly and it’s now fully leased. The Alexander development is taking shape.

As it is now 14 storey above grades and already has an impressive profile on Halifax’s skyline. The Alexander at its full 21 storey should be marquee address given its excellent locations, surrounding amenities and commanding views of Halifax harbor.

Slide 13 includes key details on this property and slides 14 to 16 show development progress and additional [ph] renderence (13:28). We received many leasing inquiries and anticipate the 55 podium level units will be available for occupancy in Q3 2017 and the completed tower available by Q1 2018.

Part of what makes the Alexander development so unique is the fact that about Halifax’s historic Brewery Market, Killam acquired the Brewery Market commercial property in 2015. The Alexander and Brewery Market will be fully integrated internally and also share common outdoor amenities.

We are very excited about our redevelopment plans with the Brewery Market in conjunction with the Alexander as this will increase its retail appeal to tenant and the community overall. Killam’s advanced new Saginaw Park development in Cambridge, Ontario in early October 2016 and recently pour the concrete floor -- concrete for the main floor.

Saginaw Park is a sister building to Killam’s successful 120 feet unit Saginaw Gardens completed in 2015. Saginaw Park will be 93 units and it’s expected to be delivered by early Q2 2018.

Our rendering of Saginaw Park is shown on slide 17. Development photos are shown on slide 18, where you can see new building proximity to Saginaw Gardens.

I will now hand you back to Philip.

Thank you, Robert. 2017 is off to a good start with the announcement of $62 million of acquisition.

In January we acquired Spruce Grove Lane Apartments, a 66 unit apartment complex located in Calgary operator, a $12.8 million, $195,000 a unit. Slide 19 provides an overview of this acquisition.

While the acquisition opportunities we reviewed last year in Alberta. Spruce Grove acquisitions stood out for number of reasons.

First, the location is great, 3-acre site in a sought-after neighborhood of Pump Hill close to Glenmore Landing Shopping Center and a very high and single family neighborhood. Below market rents, our current average rent for two bedroom unit is $1,110, 13% lower than what CMHC reported as the average two bedroom rent of $1,270 in neighborhood.

We believe we can move rents to market with minimal capital spend. And finally, the potential to increase the yield [inaudible] (15:47) capital upgrades.

The units are spacious but have the same looking and features from when they were built 40 years ago. We believe we can increase rents 30% to 35% by repositioning the units.

We are in the planning phase of the renovation designs now. We will make the investment as unit turn with the full program taking approximately three to four years.

With the release of our results yesterday we also announced the scheduled closing of the last two building, five building Kanata Lakes development in Ottawa known as William's Court. Killam has a 50% ownership in the first three building and we are pleased to acquire with our JV partners the remaining two buildings.

Killam's acquisition cost of the 50% interest in the building is $49.3 million, details of the Kanata development and the acquisition highlights are included on slides 20 and 21. We have been acquiring ownership interest in the 739 unit development since the first building completed in 2012.

This has been a positive five-year relationship with the developer of William’s Lake repeating developments. With the closing of these two last buildings, Killam will take on management of 1203 Maritime Way and 985 Great Lakes Avenue, and leasing for the entire complex on March the 1st.

We have just completed two very strong years of financial performance and remain optimistic about the future. We are well-positioned for additional growth.

We have a high quality portfolio of properties and a committed team providing customer focus service and expect a benefit from strong demand for apartments. We are experienced developers and have the ability to grow the value of our portfolio with the deep pipeline of development projects.

Also with selective acquisitions we expect to increasingly grow our existing base of assets and expand Killam’s geographical diversification. This concludes our formal part of the presentation and we will now open up the call for questions.

Thank, and good morning, guys.

Good morning, Mark.

You gave some guidance for the first target range for same property NOI growth for the year. I was wondering if we could go down the Halifax where there is a decent amount of supply coming in line although the market seems quite healthy.

What is your expectation there? Do you expect to be able to improve the occupancy, there is the forecast that overall market for vacancy to increase and how much of that would come -- how much of the growth would come from the expense side where you are expecting some improvement on the natural gas side?

We see some improvements Mark on the natural gas side for sure. From a revenue growth standpoint, we think we can see about a 1%, not revenue growth, NOI growth 1% or so, is what we expecting the market.

And you are right the highlight there is outside competition but one thing talking it’s an incredibly resilient market and it continues to absorb the new product as it comes on and so we think that occupancy will maintain relative stability for us.

And when you say 1% NOI growth, is that really from the expense side or do you expect to get remaining cost as well?

I would say that expenses for the most side, it’s fairly flat with a bit of growth on the rent.

Okay. And with regards to Calgary, you made the positive comments, and obviously, you've done better in the asset you already.

Are you talking broadly about the market improvement and when you -- the acquisition that you have been successful on, is that a function of defining one deal that work for you or is there just a limited amount of product available and I am asking the context that give more positive comment regarding the Alberta market?

Well, again, before example one, we were right there relative to where the market was going. So, yes, you could argue that, the only example one, are we good indicator that the market is start to stabilizing turnaround.

But what we know is that -- from the ownership of that property over the last two and half years and the amount of turnover that we were experiencing that is finally started to slow down all through the first two months of this year and with a little bit of color looking at it in March and April. So, with that, that’s really the reason why we sort to see the stability coming and then just our leasing activity.

So in some regards we are talking both our owned asset. We have good leasing activity on the asset we just bought but we have work to do on that.

So, Mark, I guess, to be absolutely frank, our assets that we own in that province are looking better, whether that asset, you can use that as an indicator for the rest of market. I think time will tell once everybody reports.

We were -- we are -- we thought about the wording on that, we use the word stabilization. We didn’t use the word recovery.

It’s too early to tell. But would be this fields in about four months kind of in that the happening.

We do also know that our April numbers there are three move outs and seven new leases signed. So it seems that be it a little better than it’s been.

So we are optimistic.

Great. Thank you very much.

Thank you.

Good morning, guys.

Good morning.

Just with regards the Calgary property and correct me if I'm wrong, but there were some fair value adjustments for the apartment for fully about $9 million is that related to Calgary property?

Yeah. $5 million was related to the Calgary market.

Okay. Great.

And follow-up on Mark’s question with regards to general market commentary, how fast perform very well during the quarter, but weakness also came from St. John in New Brunswick and St.

Johns in Newfoundland, and also certain pockets of Atlantic Canada. So could you perhaps provide some general outlook on these regions as well?

Looking at New Brunswick, yeah, St. John has been some occupancy issues.

However, it did generate for the year, I guess, 3.6% growth in NOI, so we are able to kind of control the cost in earlier in the year. So that was good.

But I think that St. John in particularly need to see a bit of economic activity and the growth is today, I think, Frank McKenna was commenting that, he thought that they should do a new plan they are going to provide.

So maybe that will happen. The forestry market seems to be okay but with the changes in U.S.

I don’t know how that’s going to work long-term. So we continue to watch it closely.

We do notice again that market and we always do better than the market and so we get more than our share so we are going to continue to maintain our assets and see what we can do. Other than that when you take a look at New Brunswick for the most part it’s fairly steady and month end in particularly has larger traction to the balance of the property when you think about organization it’s the one that benefit the most, so it seems to be doing well.

In fact in terms of provincial capital so it seems to have good legs too. So we are okay with that.

The commentary here in Halifax is for the most part it’s doing very well. We like the fact that there is increase immigration.

There is potential migration also we are benefiting people coming home, so we are seeing numbers there. But across the Board the market has been strong for last number of years and we don’t see that’s going to -- we don’t see that changing any time soon.

Okay. Great.

And switching gears here a little bit to your 2020 target of reaching $2.5 billion of assets. I understand there is a healthy amount of development activities going on.

But would it be fair to assume about $100 million to $150 million of acquisitions per year and most of that will come from Ontario and Alberta.

I don’t think we sort of highlighted that level, but so far this year we have done about 60. So roughly if we can do more than 50 year plus, that’s a good chunk of it and in it’s a development, but the majority of that will be in Ontario.

We are still looking at Alberta and then again to sort of just to maintain our presence in Atlantic Canada that will do the odd acquisition and plus we get a two more developments in Halifax over the next few years.

Okay. Great.

Thanks for the color. I will turn it back.

Thank you.

Thank you.

Hi. Good afternoon or good morning.

Hi.

Just maybe on the distribution increase, it was nice to see a pretty healthy uptick there. I also noted that you included the payout ratio is a key performance you make here this quarter kind of setting an expectation of continued growth and sustainability in the distribution.

I am wondering if you at this point can provide any additional color in terms of the target payout ratio or perhaps kind of longer term distribution per unit growth target?

What again from the discussions with the Board, it’s been over three years since we have actually had a increase in our distribution and that again from a discussion at the Board discussed and they are still not prepared to sort of give vote where we would be in terms of the payout ratio, but they want like -- they want to assess it basically almost every Board meeting.

Okay. So that’s something perhaps over time…

Yeah.

… get more color. Okay.

Great. And then, secondly, just on the CapEx, I thought the disclosure on page 33 of your MD&A, it was pretty good and interesting, you were then talk about taking annual expense savings over time, that was 7% of your total 2016 NOI.

So, a fairly meaningful. I was just wondering if you can provide bit more color in terms of the delta between the disclosed potential $7 million of annual savings than the $4.3 million of savings coming from the energy and hopefully going from about four years worth of about $10 million.

Yeah. Kind of I have to take a look at that, I think, what it is, it’s a compound effect of the follow on when you do the energy investment in efficiencies, you benefit by in subsequent year, so it’s compound and that’s how the number goes from $4 million investment to $7 million.

Are you looking for color about exactly what projects we are going to be doing this year versus what we have done and what we are doing in the year after.

Sure. Yeah.

That will be the longest kind of the evolution of it and how quickly you can approve savings from flowing?

Yeah. So we have done a lot of installations for water savings, so that’s a big thing for us, it’s a big for us and we are doing virtually all of our building when we complete here in the next couple of years, so that will be good.

We are doing complete light switching over, we are doing LED lighting for our common areas and so we are seeing big savings there as well. And then we are doing additional work on our various boilers, working to make those more efficient by time to tech mark controllers that look to the extra air and adjust the heat of the burners.

New systems going on, traffic with everyone is support there in a big way. We are looking at more solar power in terms of generating hot water for our domestic hot water systems.

So those are the big initiatives that we are working on right now.

Okay. And then in terms of kind of timing of like of the $4.3 million expect savings, how do you see that evolving over time in terms of realization?

I don't have off the top of my head how that will roll out, but I would say that, over the next three or four years.

Okay.

Yeah. That’s cumulative, I think, that $4.3 million kind of looking at the investment over the next five years.

So we are prioritizing roughly higher payback first, is that our considerations to, so I don’t think, it’s going to be an even we spend over the five years, I think, both the higher savings in the next couple of years, because we are going get those higher return one first, but kind of looking over that five-year spend.

Got it. And with the upside from these initiatives would that be included in your stated long-term target and probably growth about 2% or would that be addictive to that over time?

Be factored into next year for sure.

It was factored into our 2017 and it will be factor as we go forward.

Okay. And then just last question, just coming back to the balance sheet kind of long-term target of debt to asset value we said 50% by 2020.

Does that reflect any calling we have with respect to cap rates move to 2020 or is that assuming kind of existing asset valuations?

I think, it’s really focused on the reduction debt.

Steady state cap rates.

Okay. Great.

Thank you.

Thank you.

Good morning.

Hello, Jonathan.

Just going back to same property NOI, in Q4 your same property NOI, sorry, same property operating costs were up 5.4%, which was a pretty good jump over the first three quarters of the year. Can you maybe give us a little color on that and do you expect that to carry through to Q1, Q2?

So part of that was insurance -- increase insurance costs that we dealt for most of 2016, so that was part of it. A bit of operational, some work being done at the properties on insurance.

No. It should come overall cost…

Overall cost.

… year-over-year there is more snow in December compared to the prior year, so there was an increase in that.

Okay. So nothing had really stood out as a one-time item?

I think nothing there.

And so would you expect the operating costs to be sort of inflation plus next year?

Yeah. I mean, for the year our operating costs were down 1.2% by our expenses.

So it was just a bit of bluff in fourth quarter. So yes we will see them steady state in 2017.

Okay. And then just you gave pretty good color during your prepared remarks on utility costs for Q1, but if I were to sum it up, it sounds like Q1 utility costs are trending to be roughly the same as they were in Q1 ’16, that would be fair?

I would say the commodity costs on its own trending, I would say, down overall, because Nova Scotia is down, but if that commodity if the consumption increase that’s the question. So in January we were with actually mile there in January of ’17 versus ’16, the January look good, February not so good, now we have got snow clearing…

Yes.

But, really, Jonathan, in the last six weeks of this quarter, depending on what the weather like, weather is going to be dry sort of average out to be normal winter or slightly little bit higher, but I mean, other than this winter storm from a temperature point of view the next couple weeks are sort of forecast to be relatively mild.

But I think when we were heading into the winter we were anticipating based on feedback from some experts in the field we use that that New Brunswick pricing could be fair but higher than we have actually at least saw in January, just based on demand -- slight main drivers in New England and we didn’t see a lot of sites in January and looking long-term in the forecast. I mean, it looks pretty good.

Yeah.

So New Brunswick I think it’s going to come in this last when we expected, but the…

Okay. So it actually sound like it maybe down year-over-year there depending on, obviously, depending on weather in March.

Same with Nova Scotia, yes, and that’s going to create run way.

Okay. And then just lastly, you expect to break ground on new development projects in 2017?

That would be the intent, I mean, the ones that we have fairly close to with an expectation we want to get into the ground would be our development, our JV development in Mississauga, but that’s still is permit waiting for the final approvals. And as time goes by, it whether we can actually commence it and get into the ground this is, but it’s going to be close.

Okay. And that would be the only one?

Well, right now, there is a two other thing we are working on, but I mean, that’s the one…

That’s closest.

The closest in which we would be very happy to be able to say that we can start.

Okay. Thanks.

I will turn it back.

Thank you.

Thanks.

Thanks. Good morning, everyone.

Good morning, Dean.

On the developments, what's the cost left on completion of both the Alexander and the Saginaw?

Are you talking costs or equity components?

Just cost?

Well…

Okay. Then equity component?

On the Alexander we are already into our construction line, so therefore we are talking basically although equities into the…

All the equities in, okay.

Yeah. Up in Cambridge what are we looking the last couple million dollars.

$1 million.

$1 million and that’s it.

$1 million in the year and the rest on…

Well, $1 million to $2 million depending on…

$1 million or $2 million, okay.

Yeah.

And that just traditional construction financing that’s in there that will get taken out on the backend?

On completion we just put it over to a fixed rate term mortgage.

Okay. Good.

And then just looking at the Spruce Grove, so you got three year to four year sort of horizon on turning those which would 12 to 15 a year I suppose. What are you thinking is the cost of that’s going to come in at?

Our current budgeting and we are just getting it now and what we are trying to do is that, again, you can imagine, these are roughly the 1,100 square feet and either two storey or one storey with two bathrooms, two bedrooms all the units. And so what we are looking to do is we placed all the existing flooring which is happens to be crafted into hard surface, complete upgrade on the bathrooms, the two bathrooms and the kitchen with new appliances and actually putting a new front door and then there is fire places in every single land that we are going to replace the fire place plus do hardware on door openings.

So we are looking at right now it could be up to about $30,000 a unit.

Okay.

And we think, we would test the market around $1,600 to $1,800.

$1,600 to $1,800 that’s your 30% to 35%, so that looks like it’s a something in the mid-teens in terms of a return.

No. It’s the full higher management, 11 on 18, well, the 7 on 18 is 38% increase.

38% -- that’s a 38% bump in the rents.

Yeah.

And then that looks like it’s off of…

Sorry, you are talking return on our equity?

Yeah. On the equity put into it $1 million, so you are $1.7 million, $1.8 million-ish, okay.

I can back into that. That’s good.

And then just the last for me is just a housekeeping for Rob. Was there a prior period cash adjustment on the 2015 ending cash balance?

Yes. We actually reclassified some restricted cash that was sitting in other current assets to cash during the period.

So we had that comparative figures noted in the financial statements. So it’s just some of the balance that isn’t required to be held in trough, we restricted that or reclassify that.

Reclassify that, okay.

Yeah.

All right. That’s good.

And we did for both period, the comparative period as well.

Right. Got it.

Make sense now. Okay.

That’s it for me. Thanks everyone.

Thanks.

Thank you.

Hi. Good morning.

Good morning, Vishal.

In the 2016 report I see here you guys have noted $45 million of capital available from credit facilities and cash on hand. Can you please provide is that take into account the Calgary and Ottawa acquisitions, and also you take into account cash or facilities you guys are required for improvement?

I didn’t get that last part, Vishal, we required for what?

For the development projects you guys have?

Really looking at the cash on the balance sheet and the acquisitions at year-end.

At year-end, so that doesn’t include any line of cash you guys required for the announced acquisitions?

No.

So pro forma that you have an idea of what the current liquidity is?

Sorry, your question is, what you are asking?

You’ve noted that of this $45 million of capital available for acquisitions.

Yeah.

I am wondering taking into account…

[Inaudible] (39:35)

… the announced acquisitions both year?

About $18,000 -- $18 million to close Kanata.

Okay. Perfect.

Thank you very much.

Good morning, guys. Just a quick one for me, now that you guys have raised a distribution a little bit and I know this was touched upon a little bit before, but it’s a pretty good signal for investors like ourselves and it’s good to see you going forward growing it a little bit doesn’t have to be 2% but somewhat.

So my question really is, how do you think about prioritizing distribution increase versus getting down to your 50% LTV at this point?

Well, it’s a balance, right. I mean, because again, if you are going to reduce your leverage you are going to beat, it’s going to be equity that goes to pay it down, which I suppose to equity that could go into growing the business by acquisitions or developments.

So I think that primarily lot of the focus is on the existing portfolio. So if we can grow earnings from that then some of that can actually go back in the form of an increase in distributions.

Now I don't know if or in a situation where we can increase the dividend every single year, but it's been three years since the last one. But based on the last two years of results in the improvement in our earnings the Board felt that it was appropriate at this time to show an increase.

Yeah. We have been successful in decreasing our leverage and increasing our dividends over the years or distribution increase.

So we tend to look at them together. In terms of prioritizing, I don't, yeah, we don't have a firm priority one way or the other.

Okay. That’s very clear.

Thanks guys. And see you in London or Amsterdam.

Yeah. Thank you.

Thanks.

At this time, I would like to thank everybody that listened in and participating in today’s conference call and we look forward to our next call in May. Thank you very much.