SmartCentres Real Estate Investment Trust

Huw Thomas - President and CEO Peter Sweeney - CFO

Heather Kirk - BMO Jenny Ma - Canaccord Genuity Michael Smith - RBC Capital Markets Sam Damiani - TD Securities

Thank you very much operator and good morning, everyone. I hope you had a chance to listen to that steering music before I come in.

Welcome to Calloway's Q1 2015 conference call. My pleasure to be in the call this morning and with me rest of our senior management team.

I'll make some opening remarks about the quarter overall, and some high level comments on the transaction. We announced on April 16th and then Peter will talk about the funding elements of the quarter and then we'll open it up for questions.

My comments will mostly refer to the first four pages of our supplemental information package posted on our website, and I refer you specifically to the cautionary language at the front of that material, which applies to any comments we make this morning. Overall we were pleased with the results for the quarter considering the general economic climate and the overall somewhat challenging retail market conditions for our certain segments.

Our FFO increased 7.2% to 71.1 million and 5.5% to 51.7 cents on a per unit basis compared to Q1 of last year. And the increase in FFO reflect contributions from all of our growth initiatives and a solid performance overall.

Same property NOI in the quarter 1.1% and for the first time in many years our market leading occupancy levels slipped slightly below 99%, essentially the various retail bankruptcies and restructurings over the last few months have driven a short term impact on vacancies. However relatively I believe our performance is a clear reflection of the quality of our assets and our strong tenant relationships.

Renewals completed for 2015 lease maturities are at 62% already with 890,000 square feet renewed despite ongoing rationalization by a select few of our tenants and the weighted average rent per square foot excluding is up to 2150 square foot at the end of the quarter versus 2098 at the same time last year. So overall looking at all of that data we've done well despite the tougher market conditions.

I've said previously it's been a little hard to reach quarter to maintain our exception occupancy level which is mostly a reflection of the challenges faced by a few fashion retailers as well as slower growth in the Canadian economy overall and particularly in Western Canada with increased competition volatile employment levels and fluctuating consumer spending. We have seen an increase in the number of retail bankruptcies which I don’t see as a major issue for us but rather a natural outcome of fluctuations in the business cycle.

With respect to CIU, we continue to see a good demand from retailers such as Winners, Sport Check, Toys R Us, Michaels and category growth in pharmacy, beer, liquor, fitness, banks and restaurants, and that’s all providing reasonable demand for space in most categories across the country. As before the Dollar Store industry continues to remain strong and our core business proposition remains to provide value and convenience through our dominant retail centers anchored by major retailers and of course in particular Wal-Mart, all of which drive significant traffic to our centers, and which provide good opportunities for our other tenants to best serve their customer's needs and simultaneously grow their business.

With respect to challenge retailers, Target, acceptance in Canada creates I believe a longer term opportunity for us as even pretense transition 75% of our shopping centers are Wal-Mart anchored or shadow anchored and Wal-Mart has now become the strongest big box value oriented retailer in Canada providing even greater strength and stability to our core portfolio. Looking specifically at the impact of announcements over the last few months, we only have two shopping centers where Target stores were located Opel and Kitchena [ph].

Both are good growth markets with strong population characteristics and both leases have corporate guarantees so there is a little financial risk for an extended period of time. And lastly, we are working our way through the options available for both sites, and have already received interest from national retailers for both sites.

For future shop ultimately we have five sites that are affected by the decision to close down this brand which we already have now three sites where other retailers have expressed interests and we are in discussions to release the space and Best Buy has confirmed that they will honor lease payments up to the lease maturity dates on all of the closed stores over the next five years. So overall clearly not a major issue for us.

Turning to other challenged retailers, with Jacob and Bombay, Bowring bankruptcies will have almost no effect on the portfolio, with only a small number of locations impacted. For Jones New York we have three sites, all in well located Wal-Mart anchored locations.

For SmartCentres we have 11 locations, which will transition overtime to other banners, with over 50% of these deals in the works already. And for NEXT, we have five locations, two of which are in premium outlets, centers which are all expected to be easily re-leased at the same or better rents.

I should also note that we have reopened the currently closed Rona store in Aurora, as that business continues its rebuilding. While, individually none of these changes are material, collectively, as I've already noted, they have put some modest pressure on occupancy given the sheer volume of square footage which I note is also affecting other landlords and has caused them certainly to be more aggressive in terms of rents being offered to try to attack tenants to what I see as generally weaker sites.

Turning to future growth, and my comments may appear repetitive but this is because our philosophy on growth is unwavering. For 2015 and beyond assuming of course no major market downturn.

I see growth in our FFO continue to come from our same property rent increases, ongoing efforts to capitalize on intensification opportunities on existing sites. Our relationship with the Simon Property Group continued refinancing benefits.

Our pipeline of developments and earn outs which currently total approximately 2.7 million square feet but that's excluding the proposed transactions 1.9 million additional square feet. A growing group of properties located in major markets with a potential to convert to mixed use and finally, select accretive acquisitions over and above the proposed major transaction.

Now with the addition of the SmartCentres platform we will add potential future development with Wal-Mart and with third parties to the suite of initiatives, and of course, most of the development that will be executed from now on will be for our own account. I am very conscious in both my actions and comments that investors have come to expect Calloway to deliver a very stable performance and obviously we've continued to do that.

Our strategy and tactics will continue to respect that stability, but will also recognize that business conditions both generally and in particular retail are changing. And, therefore, our business model and focus has to adapt too, if it were to remain amongst the most respective and attracted REITs for investors.

The transaction we announced in April 16th clearly reflects this and it provides both significant additions to our stable core business but also adds significant capabilities to drive growth. The extremely successful performance of the Toronto Premium Outlets site on Highway 401 at Trafalgar continues with exceptional sales performance reflecting the mix of designer and other high value labels.

We currently have at least five retailers on this site who are driving sales in excess of $2,000 square foot clearly an amazing performance for a site at this stage of evolution. And based on updated sales number, the stabilized yield on the Toronto site is now into double-digits.

Not surprisingly we and our joint venture partner Simon Property Group we're extremely pleased with the performance to-date, and we have ramped up our discussion in how future expansion will work and such changes that would be needed et cetera for an approximate 120,000 to 160,000 square foot expansion. And we're also looking at areas where we can improve parking as well even to the existing site.

Our next venture in Montreal opened strongly in October last year and approximately 90% of the project is expected to be leased by the end of the summer with new tenants committed including HUGO BOSS, Under Armor, LACOSTE and Forever 21. And overtime we see this as another very successfully value driven outlook location with healthy returns.

We're also ramping up discussing with various retailers about locating on the 75 acre retail lands we own with Simon and SmartCentres, next to the Montreal site which will clearly, benefit from a strong traffic already being generated. And finally, as a result of the completion of the proposed transaction we were on the Wal-Mart anchored Gainesville [ph] shopping Centre just over the bridge thus completing an excellent new retail note very well located on a major highway in the northern section of Montreal.

For regular acquisitions, Calloway’s quality assets have been hard to find which really emphasizes to me the significant benefits of the 1.1 billion portfolio that we will be acquiring shortly. We did however manage to acquire 100,000 square foot anchored site in Barry [ph] for just over 25 million in the quarter and that adds to the considerable presence we have in that growing market.

For our development and earn out pipeline, the modest 39,000 square feet came on stream in the first quarter lower than the recent past and that I think reflects current market conditions, but with a reasonable yield of 6.8%. And our committed pipeline for the next couple of years is much stronger with just over 350,000 square feet, with an expected yield of 7.1%, reflecting somewhat of a rebound.

And that's before we obviously maximize the benefits of the SmartCentres platform. And that so this together with a significant further pipeline of future development which the transaction will add means Calloway can continue to deliver high-quality space and healthy yields for a number of years.

The Vaughan Metropolitan Centre development continues to move forward and construction of the 360,000 square foot office complex with KPMG as the lead tenant is progressing very well. Site conditions for the development remain good and we have now completed up to the 10 storey of the main tower.

And we've also finalized the project financing with the consortium of lenders for the initial tower and the associated infrastructure and Peter will cover that in a minute. We're actively moving forward to lease up the balance of the office and retail space available in the first phase and we have a lead broker now supporting us on the office leasing.

And we are now responding to a number of RFP space with a lot more activity from potential tenants happening even in the last few weeks and I think somewhat ironically the delay the sub-lease completion has actually raised awareness of the subway extensions have gone significantly which obviously I see as a good thing for the project. KPMG have also confirmed they will open its plan next fall despite the subway delay reflecting their confidence in the site.

And we're also in active discussion with two potential tenants for a second office tower which is expected to be built along with an integrated parking debt as part of Phase II. So overall we continue to be very excited about the long-term opportunities at this site and as we continue to develop the master plan for this site we are looking to preserve the largest range of options for location of the next components of the project and addition to the second time noted we are working on the best locations for large scale retail.

The construction of the Vaughan Bus Terminus and optimizing access to the site from Highway 400 is part of the overall master plan. Consistent with the focus and creating a number of growth opportunities the team will support on SmartCentres as actively identified several opportunities within the portfolio to intensify existing sites with further retail space and also significantly increasing the potential value of certain sites through mixed use development.

One of the most significant redevelopments is the Platgoraso [ph] in North Montreal. We are now well advanced with activities to repurpose the former anchor space and Canadian Tar had an exceptional strong store opening during April which has already helped to increase traffic to the overall site significantly.

We are also adding an additional 32,000 square feet of CIU space within the mall and have the potential for a further 35,000 square feet of space on pads on the site and received good interest from a number of tenants already. The outside of the mall has been fully upgraded and we are simultaneously aligning the site with our existing adjacent Montreal North property and that will create a dominant Centre with over 600,000 square feet of retail space including a Wal-Mart now a Canadian Tar Supersea Winners and IGA as well as the full range of supporting retail.

Going back to mixed used in addition to the MC where we have identified a handful of initial sites, where the potential of totaling 3 to 4 million square feet of new retail office and residential space and tied to in the early stages of zoning and with new councils in places the work will now speed up. We previously identified that currently the largest of these sites is the Westside Mall along Eglinton and Toronto.

And then we have two other opportunities that we have identified in Toronto and Ottawa, to provide an excess of 2 million square feet of additional mixed use density. And again, these sites are in the early stages of approval, but are receiving good support from the relevant levels of government.

In total the combined opportunities already identified provide the potential for over 7 million square feet of future developments for Calloway over the longer term. And once the SmartCentres platform is integrated we will undoubtedly identify other opportunities across the portfolio.

I've talked earlier about our need to continue to innovate in our centers and we are very pleased to continue our participation in SmartCentres exciting new venture Penguin Pick-Up on a select number of sites. Three sites are now open and two further sites are expected shortly with a lot more to follow.

And consumer response has been very positive and we continue to add new retailers to the program. Ultimately overall this portfolio of opportunities will help move Calloway from a business that simply owned and operated Wal-Mart anchored shopping centers to a business with a broad set of short, medium and long-term growth initiatives, principally in major markets, based on either existing locations or in exciting new developments.

In Q4, we did complete the transaction to sell seven smaller properties in secondary markets and that was for proceeds of around $100 million, and we have now identified a small portfolio of four properties of similar values that we'll be looking at marketing in the coming month. So we will just continue our efforts to recycle capital and to upgrade the portfolio.

So I'll now turn things over to Peter to comment on the financing aspects of the business.

Thank you, Hew. With respect to our balance sheet we are very well positioned to take advantage of growth opportunities as they arise.

Our unencumbered pool of assets is in excess of $2.4 billion. Our debt to total aggregate assets ratio is 43.1% and our interest coverage ratio has climbed to 2.8 times.

Each of these financial metrics underscore our commitment to our strong and conservative balance sheet. As a result of our capital market activity over the last three months we have been able to reduce the weighted average interest rate on our total debt portfolio by 19 basis points to 4.48% and extend our weighted average secured term to 5.7 years both of which we view as very positive.

We see these financing metrics being further enhanced as the year progresses and we are able to refinance additional secured debt at materially lower interest rates upon the refinancing and maturing existing secured debt. Essentially since the beginning of the year we have continued to look for opportunities to refinance our existing debt obligations to take advantage of the very low interest rate environment.

We executed a number of transactions throughout the first quarter all of which increased Calloway’s future financial flexibility and debt market conditions continued to be attractive. We started the year with approximately $169 million of mortgage maturities at an average interest rate of 5.68%.

As at March 31st, we have completed new financings for a total commitment of $173.5 million at a weighted average interest rate of 3.13% substantially all of which are represented by 10 year terms. For the duration of 2015 we have only 88.4 million of remaining term mortgages to finance which we anticipate will occur later in the year still at significantly lower rates.

Our very successful $160 million ten year debenture offer at 3.556% which was completed during the first quarter, also reflects strong market confidence in Calloway's long-term future. And in addition on April the 24th we were able to complete permanent financing for the Toronto Premium Outlets for a term of seven years, interest only with limited recourse at a very attractive interest rate of 3.13%.

On the construction financing side of things we were also pleased to confirm that during the first quarter we completed a $165 million four year construction financing facility with two of Canada’s major financial institutions for the VMC. Prior to the quarter’s end we were successful in replacing this four year floating rate facility with a five year 2.88% fixed interest rate facility.

This facility will provide security from interest rate escalation and we’ll substantively improve the project expected return levels as compared to original budget. Turning to distributions for a moment, our payout ratio continues to decline and is now at 82.6% versus 84.1% in Q1 of 2014.

This represent the substantial decrease and well within our updated targeted range of 82% to 87%. And we expect that this trend will continue.

Our current preference is to continue to look to maintain our payout ratio in this range and over time we expect that Calloway will provide a balance of regular distribution increases while still retaining a certain amount of our cash flow to fund future growth initiatives. The platform we are building, well we believe allow us to do both.

And with that I’ll turn it back over to Huw.

Thank you Peter. So turning to the proposed transaction for a moment.

We are obviously very pleased that the market reaction to date, unit price was up over a 7% from the subscription receipt issue price but it’s pulled back recently obviously along with the rest of the REIT sector. Our discussions with investors have been universally positive.

And analyst commentary has also been very supportive. In the background both ourselves and the SmartCentres team are working very hard on all of the documentation needed for the closing and the transaction is of course subject to the normal approvals for a transaction of this magnitude including unitholder approval but at this point we are not expecting any issues.

We are also working hard on a multitude of issues that come up to ensure us move integration but we do expect to hit the street running after approvals are obtained. So in summary at this point recording for another year of good growth in our asset bolt in the 4% to 5% range for the base business as I recall it.

And given the level of recent uncertainty in the retail world, we’re taking a relatively conservative view but as the year progresses and we get a better view of tenant’s activity on the overall economy. I would hope to be more positive on our expectations for the base business.

In addition to that we see the potential for a 1% to 3% growth due to the proposed transaction. So overall a very good performance expected for the business.

I've consistently said we are building a better Calloway for short, medium and long-term growth. And I do believe we are very well on our way to doing that.

And overall I remain very excited about our future as to all of our staff and look forward to spending time with you and our investors continuing to discuss Calloway and its future growth. So with that I would be pleased to open it up for questions, operator?

Given your comments on sort of the friction and pressures in the market right now. How low do you see occupancy potentially going in 2015?

Based on everything we see at the moment I don’t see it going really below where we are right now. Obviously the transaction you got 3.6 million square feet that is basically a 10% or 99.7% occupied so when you that add in after May 26 or May 28 that we close that obviously help our overall occupancy slightly but based on what we see at the moment in terms of the discussions that we are having with the tenants et cetera then the level that we add or above that is where we see things at the moment and I think that is just an ongoing reflection of the quality of the sites and the quality of the relationship we have with our broad tenant base and what I believe is the attractive that Wal-Mart anchored sites will provide because tenants are looking locations where traffic is clearly going to be strong.

And sir would you say so your expectation is putting inside of the acquisition just for the core portfolio right now that you are kind of at the bottom where you -

I certainly hope so as we see things today, I mean always things can happen clearly. I mean the retail world is still not robust.

I would suggest to seeing some decent numbers come of certain sectors the double store industries remain strong the results from Loblaw [ph] yesterday were very positive both for them and for shoppers. Canadian time report next week so I think the more news that you get from retail is that would be a good thing but we will see tomorrow what an employment et cetera so I wouldn’t say the Canadian economy generally robust at the moment and that can have an impact clearly on retailers and how we feel about their future needs et cetera but we are seeing demand from what I call a core tenants on an ongoing basis so gives us certainly some believe that things will stay in reasonable shape and we highlighted we are already up to a decent level of renewable by next year.

In terms of the development pipeline, how is this closer relationship is sort of direct line into Wal-Mart change what your expectations are for 2015 and 2015 in terms of development starts and development delivery?

We will have to wait in effect until the acquisition close this for us to truly have that what I will call inside the tenth discussion because the strategic relationships still set with SmartCentre and obviously until the deal closes we don’t really have access. But if we do know that SmartCentres are looking at a variety of options in terms of new stores for Wal-Mart obviously I suspect Wal-Mart is bidding on target locations and that news the news will come out some point.

But Wal-Mart are obviously committed to grow in Canada it has been 100 most successful international ventures and the nature of the large public company is you have to keep on growing. So I would anticipate that Wal-Mart will continue to look for locations and I would certainly hope and expect that we would continue to have the opportunity to work them and deliver over the year the next while further sites for them between much like SmartCentre nothing it was guarantee but Mitch obviously on the group generated a very strong relation that delivered over a 170 shopping centers for them so there is clearly a lot of history and a lot of success from delivery and I would hope that we step into those shoes.

So have you got a target for 2015 in terms of square footage or quantum of the deliveries?

To be honest, we are just really our away through that right now understanding exactly as we look at what their potential plans might be based on what we know that SmartCentres has et cetera I would say by the second quarter we will clearly have a much clearer idea how things look there I will not rather idea what may have happened with target locations and we do know that they are in the background looking at their overall store strategy and what is the optimum size of store that they would bring to the market in the future and while that we will take a while then at least we may once we are inside them as a better idea what the impact of that might be.

The other thing we should add and remember too is that the platform has got significant capabilities and bringing on other developments including mixed use, including other anchors and so on so while there is a line of sight right now for a certain segment of that development we are simultaneously developing other areas of growth in terms of development and redevelopment that we are putting together now and as you mentioned we will have better line site on that by Q2.

Thank you.

Thanks, Heather.

Thanks, good morning everyone.

Good morning, Jenny.

Good morning, Jenny.

This question is probably more for Peter but looks like there is a good amount of floating rate debt that you guys have taken on as part of the proposed transactions so looks like it will probably go up to the mid-teens as far as percentage of the total debt. The question is, are you comfortable with that and if not, you know, do you plan on fixing some of that into long term fixed rates over the short term?

Great question, Jenny and thank you for asking it. I think there is probably two parts to the answer.

So with respect to the gap that we are assuming that is floating rate as part of the 2020 transactions, I think it is fair to say that we are very comfortable with that floating rate debt staying in place over the course of the next several years as those projects are completed it will be replaced with fixed term debt on a variable and rational basis, it will take up to six years to do that. The one component of our variable rate portfolio that we are looking at and have not yet landed on a firm decision on which way to go will be the upper hand notes that will come due on October this year that aggregate to about $100 million.

So we do have an option of replacing them with more variable rate debt or alternatively we have an option of replacing them with fixed rate debt. So at least for now we haven’t landed, Janine, on decision either way.

We are, I think it is fair to say we are comfortable at the 16% floating rate debt level on an all invasive which is what is the transaction provides us with where we certainly are conscious that there may be an opportunity and maybe we should use this opportunity in October to bring that down by at least a few percentage points by locking in on the upper hands when they come due.

Okay, great that’s helpful. And within the MD&A you are talking about the NOI run rate and your forecasting same property NOI growth for 1.2%.

Just wondering if that’s based on the current occupancy rate or if you're factoring any sort of increases in occupancy on a core portfolio or that’s really driven by rental rates.

The combination, Jenny is I think of all of those, we are certainly not expecting changes in occupancy rates as they are now. And again with the absorption of vacant space in the market we will work our way through that in a short term.

In the longer term, sorry the medium term for this year we expect that to hold true for the rest of this year as we continue to negotiate we are well over 50% in our renewals. And given that we are just a bit over 7%, and we certainly expect that to hold.

And this takes into account all the retailers that have had issues that we know right now.

Yeah.

Okay, great. Thanks.

I'll turn it back.

Thanks.

Thank you.

Thank you. You comment that with NEXT which I know that a couple of properties stores are at the Montreal and Toronto Premium Outlet that you expect to get same or better rent.

Just wondering if that's the same, if that's the case for future shop SmartCentres in Bombay.

I would say so generally, Michael, yes. We had a very good, call it strategic discussion with Best Buy and went through all of the various permutations with respect to their needs both in the Best Buy locations as well as the future shop sites that obviously we are talking more about and that’s the benefit of being able to talk, what I would call strategically as opposed to tactically with tenants like that and feel good overall about our ability given the locations.

You come back to that if they're in Wal-Mart anchored locations and generally speaking I view that as a positive, particularly going forward, the demise of Target. I think it will create a about $2 billion worth of sales that will come back into the market and clearly that will be spread among multiple retailers but it's not unreasonable to expect that Wal-Mart will benefit from a reasonable percentage of that, which I think will only drive traffic to our sites et cetera.

So we see as they say that as a positive benefit of everything that's happening and it will help us as we're look at re-leasing..

Michael the other part of that is that I think we mentioned once previously we got a lot of calls from seasonal calls from retailers immediately after the Future Shop announce Future Shop hats all to the market and told the market that this was happening so a lot of retailers already knew it was coming and Future Shop have told those other retails to hold a little bit until they made their announce and after they made their announcements these retailers then hold up and said they were very interested in you know at least the very lease stepping into the Future Shop shoes maybe asking for a little bit more terms if they could be there longer and all of them were at the same or better rents.

And would you expect this to play out over six months or the balance of the year?

It maybe even longer as gun uses you know from that prospective they are happy to continue operating a lot of their stores and they are monitoring their strategy to see how it unfolds in different markets they don’t know how it unfolds in every market because it is very different. The Future Shop brand was generally well received in some markets and not in others the Best Buys - so right now with a major decision that they made to close the Future Shop brand they have to figure out to how the reposition the Best Buys brands to be suitable for Future Shop high tenants and they are trying do that so it's going to work its way through.

We think over I think I'll make decisions quickly on the near front of the decisions they have made and then they will monitor it for the rest of the years what they are telling all the landlords across the country. But again as you mentioned because you know 75% of our sites are Wal-Mart anchored and we are in good sweet spot for the size of the GLA which is in the 20,000-25,000 square feet where a lot of other tenant sit it bodes well for our projects.

Thank you. And just you yesterday you announced the first three locations in Canada and none of them were Montreal Premium Outlet, Toronto Premium Outlets.

I was wondering if you can give us some comments on that.

The discussions that we have had to this point say that they may come into the expansions that we will have overtime so to the extent of GPL that run away full there is an opportunity for them to come in at the moment. The bay obviously could consider swapping out the Bay location and putting conserving [indiscernible] support that and then obviously we would support that and similarly if they want to do that in Montreal so because of the Simon relationship they enjoy the best possible relationships with retail as a bad nature globally and that is the benefit of we are leveraging through Simon is the relations with they have not just obviously with traditional North America retailers but also European retailers too so overtime we will continue to look to be adding Europe brands and we have announcement we can quite make about Montreal that we are excited about in terms of the new European retailer.

Right, thank you. And just switching gears to on metropolitan center.

Any change in your net effective rental rate assumptions budget for the existing tower and proposed tower?

No, the only one of the only the important good news would Peter committed on the funding and obviously that is a benefit in terms of coming at least 5 million lower than we expected in the plan and construction has gone extremely well and our construction cost and coming in below plan as well in the 5% to 7% range. So delighted in terms of both of those so overall no the news we are getting at the moment would be positive not negative in terms of that in this hotel.

And different terms of like rental rate expectations any change there?

No, the conversations that we have had with the tenants for the potential second-half have been right where we would expected it is always little a give and take in term of things like parking and so on but they are consistent with the performance that we would have had so pleased in terms of that and remember this first tower the KPMG tower will be the first great office building in the entire area so, that obviously gives us some benefit in terms of tenants that are looking for that quality of space.

The other good point to note on that is KPMG have called us recently and asked for a little bit more space in the collar. And the other tenants that we’re talking to are asking for more space than we had anticipated initially in the initial rounds of discussion so we view that as looking at the rental rates as being solid market repo rates for now.

Okay and just lastly the four small market properties that you’re thinking about selling, what’s the rough value on those?

It’s a little bit more than last time Michael about a 120 million something like that. So not a huge amount given the overall portfolio would be up over 8 billion.

But still consistent with a logic of looking to optimize the quality of the portfolio looking at sort of individual decisions in certain markets where we don’t see reasonable long-term growth etcetera.

Thank you.

Thanks and good morning. I just wanted to talk about the pro forma leverage after the SmartCentre’s acquisition, look for plan is to build a leverage back down to where it is today.

We are starting initially Sam and comfortable where we are at 46%. The reality is I think our leverage really didn’t go up as much as some our peers because we weren’t as aggressive as some people may have been over the last well [ph] on the acquisition front.

So I think we would be very consistent with our peer group at the level of leverage we will end up at. Having said that if the market is focused on what people have been crawling the American model with lower pay-out ratios and lower leverage.

And the messaging what we get is the market is uncomfortable at that level. Then we’ll at least consider whether other equity offerings might be relevant or use the proceeds of properties that we disposed of, could get slowed into obviously lowering leverage as well but one thing I always come back to is obviously cash flow and cash flow and I think the quality and the stability of our cash flow I would put up against anybody.

So in terms of the ability to support a slightly higher leverage level compared to potentially appear that maybe have more volatility than us, means I’m quite comfortable as I think Peter is. And I know in our discussions with VBRS we had in slighter tense [ph] discussion with them before the transaction occurred under confidentiality and they were more than comfortable with where we were.

And obviously confirmed us when the transaction was announced and so on. And we’ve had a few conversations with the debt side of the world subsequent to the announcement.

And nobody expressing any concern at this point in fact lots of interest if we wanted to come to market with the term debt, the opportunity is clearly there but at this point to 46 we’re okay but we’ll continue to monitor.

One of the other components I think Sam that we should be reminded of is that we’re currently continuing to enjoy reduction in our weighted average interest rate, so that will continue I think as I mentioned for the balance of this year. And again assuming that the markets don’t do erratic, we’re assuming that into 2016 perhaps even ‘17 as our secured mortgages come due and we still do have quite a number of them that will be coming due next year and year thereafter, that we will enjoy some large material level reductions in rate pursuant to refinancing.

So as Huw said the quality of the portfolio and the financing metrics associated with the portfolio and its ability to generate cash. In our case I believed should, should be able to sustaining a higher leverage level if we, if we want to keep it at the 46% level.

We may plan to these levels at this point?

No I would say not Sam, not immediately no.

Just lastly you made an acquisition in - I wonder if you talk a little bit about the plans for that asset and those ID exact location.

Small asset vary on the food anchored Sam not large. The expectation is to leverage our knowledge at the marketplace, our knowledge of our tenant relationships there to enhance the tenant profile and do a tiny bit of, it has a little bit of intensification ability on it with retail.

So again not a loss there but upside in terms of NOI potential and we wanted to capture the market even more than we had now and this presented a great opportunity with the food anchored site.

Thank you.

You're welcome.

Thanks Sam.

Thank you very much operator and obviously thank you to everybody for joining us. We know how busy you are.

Obviously any follow-up questions, Peter, myself really would be delighted to take those otherwise have a great day. Thanks again.

Thank you.