SmartCentres Real Estate Investment Trust

Huw Thomas - President and CEO Peter E. Sweeney - CFO Peter Forde - COO Mauro Pambianchi - Chief Development Officer Rudy Gobin - EVP, Portfolio Management and Investments

Jenny Ma - Canaccord Genuity Sam Damiani - TD Securities Michael Smith - RBC Capital Markets Alex Avery - CIBC World Markets Pammi Bir - Scotia Capital

Thank you very much, Michelle, and good morning, everyone, and welcome to SmartREIT's Q3 2015 conference call. I'm Huw Thomas, President and CEO with SmartREIT and my pleasure to be leading this call.

Joining me on the call today are Peter Forde, our Chief Operating Officer; Mauro Pambianchi, our Chief Development Officer; Peter Sweeney, our Chief Financial Officer; and Rudy Gobin, our EVP, Portfolio Management. I'll make some opening remarks about the quarter overall and some comments on the business activities in the quarter, as well as some thoughts on the progress on our Q2 transaction with SmartCentres, and then Peter Sweeney 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 Web site. 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 somewhat challenging retail market conditions for certain segments. FFO increased 26.2% to 83.9 million and 10.2% to $0.54 on a per unit basis compared to Q3 of last year.

The increases in FFO reflect contributions from all of our growth initiatives, including the first full quarter of our recent large transformative acquisition and a very solid performance overall. Our same-property NOI in the quarter grew slightly over the prior quarter to 1.2%.

Turning now to our shopping centers, which are and will remain the core of our business. For the third quarter of this year, our market-leading occupancy level increased slightly to 98.7%.

Had we treated the two former Target anchored locations, which we’re now redeveloping as vacant, our occupancy would have been approximately 98.1. Market conditions continue to reflect the impact of a number of retail bankruptcies earlier this year, the departure of Target and still I think an uncertain economic climate.

However, relative to the market overall, I believe our performance is and continues to be a clear reflection of the attractiveness of our shopping centers to a variety of tenants. At the end of Q3, renewals completed for 2015 lease maturities were 75% despite ongoing rationalization by a select few of our tenants.

The weighted average rent per square foot, excluding anchors, is up to $21.69 per square foot at the end of the quarter versus $21.33 at the same time last year or 1.7% higher. So, overall, looking at all of that data, we've done well so far this year despite the tougher market conditions that all retail landlords have experienced.

As said previously that it's been a little harder in each quarter to maintain our exceptional occupancy level, which we see is mostly a reflection of the challenges faced by a few fashion retailers as well as slower growth in the Canadian economy, particularly in Western Canada. With increased retail competition, volatile employment levels and fluctuating consumer spending, there has been an increase in the number of retail bankruptcies this year, which is obviously well documented, which we still don't see as a major issue for us, but rather a shorter term situation and a natural outcome of fluctuations in the business cycle.

With respect to CIU, we continue to see good demand from retailers such as Winners, Marshalls, Sport Chek, Toys R Us, Michaels and good category growth in pharmacy, beer, liquor, fitness, banks and restaurants providing reasonable demand for space in most categories across the country. The Dollar store industry also remains strong and we're up to 66 stores now between Dollarama and Dollar Tree.

And as always, our core business proposition remains to provide value and convenience and to satisfy everyday shopping needs through our dominant retail centers anchored by major retailers and in particular Walmart, all of which drive significant traffic to our sites and which provides good opportunities for our other tenants to best serve their customer needs and simultaneously grow their businesses. Virtually, all of our 138 shopping centers contain both a food store and a pharmacy either in a Walmart store and/or as an independent retailer with many centers containing more than one of each and of course, these categories continue to be key drivers of daily shopping patterns.

Looking specifically at the impact of key announcements over the last few months, we've only two shopping centers where Target stores were located and both are anchored or shadow anchored by major grocery retailers. So traffic is still being attracted to the sites.

Both are in good growth markets with strong population characteristics and we have already received interest from national retailers for both sites. In terms of the financial consequences of the closure of Target, as we've noted before, both leases have corporate guarantees, which have been confirmed by the parent.

It's expected that the bankruptcy process will take some time, but we see minimal financial risk over the long term and negotiations with Target and the monitor are ongoing. For the Future Shop banner, we had six sites, which were identified for closure with Best Buy concerning rent continuance until the end of their respective lease terms.

We already have four sites where other retailers have expressed interest and where we are in discussions to re-lease this space, and therefore we don't consider this to be a major issue for us either. For all other retailers, we have announced changes to their store networks over the last few months while individually none of these changes are material.

Collectively, as already noted, they have put and will put or will continue to put some pressure on occupancy given just the sheer volume of square footage that come into the market. We don't see this situation changing in the short to medium term and therefore, we'll be focusing on maintaining our very high occupancy levels while still looking for appropriate rental increases wherever possible.

So turning to future growth. For the balance of 2015 and beyond, assuming of course no major market downturn, we see growth in our FFO continuing to come from our same property rent increases, continued benefits from refinancing, ongoing efforts to capitalize on intensification on existing sites, our continued relationship with the Simon Property Group, our pipeline of developments and earn-outs, which now total about 4.7 million square feet, growing group of properties located in major markets with a potential to add mixed-use.

And of course with the addition of the SmartCentres platform, potential future development with Walmart and with other third parties. And then where possible selected accretive acquisitions over and above the completed transaction that we had earlier in the year.

I see this portfolio approach to growth opportunities as key to providing both a wide and flexible range of opportunity for us over the short, medium and long term while mitigating individual project risk. Overall, our strategy and tactics will continue to support the stability of our core shopping center operations, which we know are very important to ourselves and our investors.

But we also recognize that business conditions both generally and in retail are changing and therefore our business model and our focus has to adapt to if we were to remain amongst the most respected and attractive REITs for investors. The extremely successful performance of the Toronto Premium Outlet site on Highway 401 at Trafalgar Road continues with exceptional sales performance reflecting the mix of designer and other high-value labels.

The site is fully occupied. Key retailers are delivering exceptional sales performance.

And during the last quarter, we were very pleased with a decision to categorize this site as a tourist destination, which will now allow us to open every day of the year other than Christmas Day. Not surprisingly, we and our joint venture partner, Simon Property Group, are extremely pleased with the performance of the center and we've ramped up our discussions on how future expansion will work, the site changes that would be needed et cetera for what we believe will be an approximate 140,000 square foot expansion.

Our second premium outlet opened strongly in Montreal last October and we now only have three unleashed stores in the project. New tenants we have opened recently included the first Gucci outlet in Canada, Hugo Boss, Under Armour and Lacoste, and Forever 21 will open shortly.

Over time, we see this as another very successful value-driven outlet location with healthy returns and we've seen sales activity ramp up every month over the last few months to a very healthy level overall. We're also ramping up discussion with various retailers and other users about locating on the 75 acres we own in conjunction with Simon and Penguin properties next to the Montreal site, which will clearly benefit from a strong traffic already being generated.

And the first potential development on the site could be a significant hotel and conference center, which would be operated under a nationally known banner for which discussions are now ongoing. From an acquisition standpoint, SmartREIT quality, well-tenanted assets in strong markets continues to be in very short supply and I think that just continues to emphasize the significant benefits of the 1.1 billion portfolio that we closed back in May.

We were, however, able to acquire one 227,000 square foot shopping center that's soon to be anchored by a Walmart Supercentre in the middle of Maple Ridge, BC for 59.3 million during the quarter and that obviously adds to our portfolio in Western Canada. For the development of earn-out pipeline, 28,000 square feet came on stream in the third quarter with a yield of 8.2% and our committed pipeline for the balance of 2015 and 2016 is currently just over 335,000 square feet with an expected overall yield of 6.4%.

And I do expect this will grow in the coming quarters. And this together with a significant further pipeline of future development that was provided by the recent transaction with SmartCentres.

It means that SmartREIT can continue to deliver high-quality space with 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 on floors 9 to 14 is progressing very well.

Construction remains on schedule for a handover to KPMG in early spring 2016 and we are actively moving forward to lease up the balance of the office and retail space available in the first phase. With a lead broker now supporting us on the office leasing, we're now responding with a number of RFPs with space and have told [ph] on the property now happening almost on a daily basis.

We're also in active discussion with two potential tenants and we are at the letter of intent/lease negotiation stage for an approximate 200,000 square feet second tower, which is expected to be built along with an integrated parking deck as part of phase II, which we expect would be fully leased before construction starts, so obviously a very positive situation. With respect to residential activity, we have begun work on the necessary approvals to move forward with the first potential tower on the site as well.

So, overall, we continue to be very excited about the long-term opportunities for VMC. As we continue to develop the master plan for the site, we're looking to preserve the largest range of options for the next components of the overall project including the best location for large-scale retail, the construction of the Vaughan regional bus terminal and optimizing access to this site from Highway 400 as part of the overall master plan.

For the StudioCentre site on Eastern Avenue in Toronto, we received final approval from the council earlier this week for the project, so we're obviously delighted to get that approval. And we will now be moving forward to begin work on this exciting new mixed use development where the existing revival film studios continue to be fully booked well into next spring.

In addition to very large sites such as VMC, the StudioCentre and Westside Mall that we've previously discussed and are actively working on, we have identified a number of other large sites with mixed use potential for new retail, office and residential space. These sites are generally in urban areas and we're now in the process of analyzing these sites that provide a short, medium and long-term view of the potential in terms of returns, capital demands, et cetera.

And this work has taken a little longer than we expected just to make sure that we're doing a very thorough job of the analysis, but we do expect to be able to share this with you and the rest of the investment community in the coming months. For Walmart Canada, in addition to working on two large urban sites in Toronto, one in Richmond BC for the former Walmart SmartCentres joint venture, we continue to support Walmart as they evolve their store growth strategy and expect to add new Walmart anchored shopping center developments to the SmartREIT portfolio in the coming months and years.

I talked a little earlier about our need to continue to innovate in our centers and we are very pleased to continue our participation in Penguin investment’s exciting new venture Penguin Pick-Up on a select number of sites. Five sites are now open, of which four are on SmartREIT locations with significantly more sites expected to follow at the pace of one to two per month.

Consumer response to this service has been very positive and the program continues to add new retailers weekly such that now over 1,000 unique retailers from both North America and also Europe have delivered their products through the Penguin Pick-Up locations, and package traffic grew 86% in Q3 versus Q2. I think perhaps one of the more important statistics also would be that our research has indicated that close to 50% of the shoppers who visit the Pick-Up location continue on to shop at the relevant center after completing their Pick-Up.

And we know for one of the locations, 80% of the customers who visited to pick up packages hadn't actually been to that location previously. So, obviously – potentially a very good growth driver and traffic driver for our properties.

Overall, a significant portfolio of growth opportunities we're developing is moving SmartREIT from a business that owned and operated a broad base of Walmart anchored shopping centers that provided a very stable operating platform through a business that still retains the stable base, but now adds a portfolio of short, medium and long-term growth initiatives, principally in major markets based on either existing locations or in exciting new developments. So I'll now turn things over to Peter Sweeney for a moment to comment on the financing aspects of the business.

Thank you, Huw. 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 remains at approximately $2.5 billion, our debt to aggregate assets ratio is at 45.3% and our interest coverage ratio has climbed to a very respectable 3.1 times. Each of these financial metrics underscores our unyielding commitment to our strong and conservative balance sheet.

As a result of our capital market activity, we've been able to reduce the weighted average interest rate on our total debt portfolio by 57 basis points to 4.21% and extend our weighted average mortgage term to 5.6 years, both of which we view as very positive for the long-term financial health of the REIT. Since the beginning of the year, we have continued to look for opportunities to refinance our various debt obligations to take advantage of the relatively very low interest rate environment.

We executed a number of transactions throughout the quarter, all of which increased SmartREIT's future financial flexibility and debt market conditions continue to be attractive versus long-term norms. For the duration of 2015, we have no remaining term mortgages left to finance and have already begun discussions to look at 2016 maturities.

Our operating line provides us with an additional $350 million of financial flexibility. So, overall, we have ready access to funds for our growth agenda.

Turning now to distributions for a moment, our payout ratio continues to decline and is now at 76.9% versus 83.9% in Q3 of 2014, representing a very substantial decrease and well below the lower end of our current target range of 82% to 87%. We will continue to monitor this metric and we'll consider any adjustment to our target range in the coming months.

We've been very pleased with our unitholder response to the increase in distributions of 3.125% moving from $1.60 per unit to $1.65 per unit effective for the October 2015 record holders. As we look to the future, we expect SmartREIT to review the appropriateness of further modest distribution increases while retaining a certain amount of our cash flow to fund future growth initiatives.

The platform that we are building which we believe allow us to do both. And with that, I will turn the call back over to Huw.

Thank you, Peter. Let me close with two final comments.

Firstly, on the integration of the SmartCentres platform and real estate portfolio, we continue to work hard on the various issues that naturally arise on a transaction such as this to ensure a smooth integration, and overall have been very pleased with the process to date and very excited about the potential to be delivered. Secondly, as noted in our public documents recalling for another year of good growth in our FFO in 2015 in the overall range of 7% to 9% of the integrated business.

And all of the elements of the business have contributed to this level of growth, but I do need to acknowledge I think that we’ve an exceptional year with respect to refinancing benefits and this has contributed to the superior level of growth. And as we look forward, I've consistently said we are building a better SmartREIT for short, medium and long-term growth.

And based on our results to date, we're feeling we’re well on our way to doing that. So, overall, management remains very excited about SmartREIT's future and we look forward to spending time with you and our investors discussing SmartREIT's plans and future growth initiatives.

So, with that, operator, I will open it up for questions.

Thanks. Good morning, everyone.

Good morning, Jenny.

I want to ask a question about the leasing that's going on in phase 1 at VMC. Can you talk about the kind of tenants who are interested in that space?

How many there are and what kind of users they may be?

There is actually a wide range of tenants looking at the space, Jenny. So it's professional services both in the accounting and legal field.

It's commercial organizations, elements of government. So a broad spectrum of people have put out RFPs to space and we've been responding to those.

So I would say pretty much everybody that you would expect in terms of potential tenants have looked.

And do you have a sense in the timing of potential announcements of tenants or when you expect to sign them?

I mean for the second tower, we would expect either late this year or realistic perhaps early next year to be able to confirm the tenants in that tower, for the balance of space in the first tower, then discussions are ongoing. I think if you would have visit the site today, you would obviously see a very tangible building, which is substantially complete.

You would see site work progressing in terms of the surrounding square and additional parking. You would see work happening on the subway, et cetera.

So I think the more tangible the site becomes, and we've actually touring one of the banks' CEOs this morning around the site, the more people realize the potential of the location and we think momentum will simply build. As we announced this next tower, which will be a combination of commercial and community use, then we believe we'll be clearly demonstrating that the site over time is going to provide all of the facilities that anybody should naturally want in a new office environment.

But in a very, very high-quality building, which we believe would be amongst the best in the 905 area.

Okay. Now with regards to a comment that Peter just made on the distribution, just want to pick up on that.

You mentioned that you would consider moving the target range of the payout ratio in the coming months, which is at 82 to 87. Now, it looks a little high.

Is that really in response to the larger exposure to development or are you looking to – my guess is to reduce that to target range from more conservatism or what's sort of behind that thought process?

I would say generally just more conservatism, Jenny. I mean as you noted and as we noted, our payout ratio continues to go down.

And so as we continue to grow the business, we think it may be more conservative to lower our target ratio slightly. But we want to see obviously how the year ends, what our 2016 budget looks like before we make any firm commentary on that but we're obviously very pleased if you would look at the trend line then over the last three to four years, our payout ratio has consistently been coming down.

And as we move, yes, into a field where we do have more development than retaining some cash, obviously, it would be a good thing in terms of reinvesting that capital into the business.

Okay, fantastic. I'll turn it back.

Thank you.

Thanks. Good morning.

Just on your guidance for base business, FFO and AFFO you increased by 2%. I'm just wondering what the key drivers for that increase were.

I'd say it's a combination of things, Sam, across the various elements that we have but certainly as I noted, we've had an exceptional year in terms of financing when we reflected with the Board yesterday. In total, I think Peter and his team have raised over $800 million of financing this year and certainly our secured mortgages were in the 5.7 range coming into the year, and we're going out where we have been refinancing in the 3 to 3.5 range.

So you've seen substantial benefits this year in terms of refinancing. So when you look at the flow through of all of those things, it's certainly been a significant contributor.

And realistically, we do acknowledge it won't be as large a contributor next year based on our maturing debt letter but I think we've done an excellent job of taking advantage of all of the opportunities that we've seen in the secured, unsecured, construction financing and equity markets this year. So if I think or look back, I don't think we could have done a much better job basically in terms of leveraging those benefits.

Thank you. And I guess the lease surrender fees in Q3 may have been a small contributor.

Are you expecting more of that in the fourth quarter?

Nothing of any substance that we know at this point, Sam. As you know, generally, retailers now with the Christmas season coming try to hang in.

If there are any retailers that might be in financial difficulties, this is the season where they make hay. And then typically in Q1 is where you see any outcomes of any challenged retailers.

Just going to turn to development and you certainly made comments, Huw, about the changing environment. On Page 9 of the MD&A, you have this future pipeline schedule with a category of sort of zero to three years, I guess.

And that square footage of anticipated development is now 1.5 million square feet, down about 300,000 square feet from the Q2 MD&A and that’s a fairly notable decline. I'm just wondering what drove that downward revision and anticipated sort of medium-term development?

I think we're just really looking at the market, Sam, and being a little more conservative. I mean if there is softer leasing demand for existing property, then that softer demand also flows through to development obviously.

So as we think about either existing earn-outs that exist on properties that we previously purchased or properties that we own that we're looking to develop, we're being conservative as to our expectations of how that will unfold. We'll obviously push as hard as we can and we think our occupancy reflects the quality of our sites and the fact that retailers still want to be on our locations.

And we are still adding new retailers and so on. But traditionally, we've always tried to be conservative in our view and that really reflects what we've done.

The other part of that too, Sam, is that we're making sure that we don't put at risk our company and quality of our portfolio. So we're not reducing our bar as it works for our tenants in our portfolio to diminish the overall covenant quality of the portfolio.

So if that means it takes a bit longer, so be it.

Okay. Just finally on the outlet center strategy, it's been at least a couple of years since the Montreal site was sort of initiated, kicked off or what have you.

What's the market for additional outlet centers in Canada? How likely is it that you and Simon will secure additional sites in the near term?

I've always said, Sam, that one of the challenges with Canada obviously is we're a small country with respect to population base and a small country in terms of core notes where you can build a true premium outlet center with a quality of tenants that we believe is appropriate. Having said that, there are two locations at least that we're actively looking at where we think there is a potential market.

So we're moving forward with those. But if we end up at four to five or five to six at an absolute limit, then I would be very, very happy with that.

And it may be less than that just depending on competitive activity and so on. But we're delighted to have the two that we have.

Toronto certainly will be a great site even when it's expanded. The Montreal site is growing, as I said, every month.

So, we're very pleased to have both of those and they're certainly contributing meaningfully to our results even though they're only two properties.

And just finally, you did mention that with stable – the Toronto property was stabilized in the double-digit size. I assume that's an unlevered yield measure and is that expected to be sort of stabilized in 2016?

Well, the existing property obviously you could argue was stable now. It's fully occupied.

We've begun the work on the expansion realistically by the time we have to build the parking deck that we would need to facilitate the expansion. The total site wouldn't be completed until the summer to fall of 2018 by the time we build everything out.

But the existing site, I think you can reasonably consider as stable now because we're fully occupied with the high-quality tenants.

With double digits on the existing site?

Yes.

Perfect. Thank you.

Yes.

Thank you. I wonder if you could give us a little bit more color on your development plans for the two former Target properties.

You said in your opening remarks, you're talking to a number of national retailers, but I'm wondering if you could just give us some more color on where you are and what you think is going to end up being the final product, if you will?

There is a site, first of all, in Oakville, Michael, that we believe either we'll move forward with one tenant on the site and we still need to have some discussions with some of the other tenants on site whether we can make that happen or not. If that doesn't happen, then we will break up the Target box and we have interest in effect in a broken up box from a number of potential tenants.

The [indiscernible] site is more likely to be a break-up below, we're stepping back. That one does have the potential to actually redevelop with even some residential on it based on the surrounding properties.

So that one may be a longer-term development with a more complex approach. But again, there are some tenants that are already interested in the site and it's – the issue is only us working through as to which is the optimum strategy to either simply re-tenant it with common retailers or step back and do a more complex redevelopment adding elements of mixed use into it.

Okay. And to the Oakville site, what – any sense of timing when you'll come to a conclusion whether the other tenants will cooperate or not?

We continue to have discussions. So unfortunately, as you know with real estate, these things always take longer than you expect.

I would hope in the next, certainly, three to six months, we get this resolved and can move forward. And that's the best I know at this point.

And obviously as soon as we have an indication that we have an outcome that we're comfortable with, then we'll let everybody know.

Okay. Sure.

And the small piece of land that you bought at 60% interest in Orleans, what's the plan for that?

That's a property that's adjacent to an existing property and we've in a number of locations done that in terms of enhancing the existing value of our property, because the existing one is fully built out. So these centers have simply build it out as a shopping centre.

And to the extent we can add several uses that enhances the existing shopping centre, we would do so.

Just an add-on to your existing property.

Michael, yes.

Okay. And could you give us a little bit more color, you mentioned in your opening remarks about you're looking at a residential tower on the VMC site, what do you – what's your initial thoughts on that?

Again, I think you've been up here, Michael, or perhaps if you haven't been recently and if anybody else who hasn't been to the VMC site, if you would look to the east at Jane [ph] and Highway 7, then you have two residential towers that are complete. And if you would look to the west at Weston Road and [indiscernible] site, you have liberty moving forward with a multi-tower mixed use development.

So clearly residential is already established in the neighborhood. And both of those sites are well away from – to use the sports analogy, center right.

I think anybody who does come here clearly acknowledges that if you look at the long-term plans that Vaughan has or additional people who will live in this community, then our site presents an amazing opportunity for residential development. So we're simply beginning the process to look at what the options are going through the necessary approvals and so on to give us the flexibility.

And we've had some preliminary discussions with developers about the potential for the site, no commitments at this point. So we're naturally doing all of the exploration we need to get a clear view as to how we would move forward, what was the most effective way, whether it would be condominium-type developments, rental developments; so keeping all of our options open at this point, but very comfortable that this site is going to have a lot of long-term potential.

And one point you are thinking about a partner for your residential and operating partners, is that still the case?

Yes, I think it's likely initially, as everybody would know, we have very significant retail expertise in terms of development, a very strong capability in office that emerged as we've worked on the beginnings of VMC, but we're not a residential developer. So we would certainly reach out to that sector and get perspectives and potentially partnerships to help us move forward in the most effective way.

Okay. Thank you.

And just last question, what type of community use would that tenant be for the second tower of VMC?

It could be sports centre type development, it could be libraries, it could be office-type community development, but most likely in the sporting, library, other uses such as that.

Okay. Thank you.

Thank you. Just on the development platform that you acquired with your SmartCentres acquisition.

Have you put some more thoughts or come to any further conclusions about what the opportunities that you might explore with that platform might be?

Well, the obvious opportunities, Alex, are we are in active discussion with Walmart with respect to their store strategy in Canada. If you look at their existing store mix, then they are still underrepresented across the country and have opportunities that they would like to have in certain markets, and we are well aware of what those opportunities are.

So we're actively going through their wish list as it were and looking for a number of locations across the country. In addition to that, the team has gone through the entire portfolio of properties that we have.

And other than the obvious large opportunities, VMC, StudioCentres, Westside Mall and so on, there are a number of other properties that we believe lend themselves to mixed use development. We've talked about 407, the other side of the highway, which is currently a retail development but would be adjacent to the Liberty [ph] development and would be a natural over time mixed use development, but there are a number of others as well.

So the team are putting that work together. I think we're a few weeks away from having the output of all of that.

And then we continue to think about whether there may even be greenfield locations that we would acquire either ourselves or with a partner to look at mixed use development. So I think the good news is, there are multiple facets to what we'd be able to do with the platform.

And activity levels are high and I think everybody is very focused on moving forward on all of those fronts.

Okay. And then just on the initial potential residential tower at VMC, whether it's a condo or a rental?

Is it not also sort of I guess a third option there where presumably even if you were to build it as purpose-built rental, you might put condo title on it and have the option to build it rented out and then as the node really develop some units, basically a node that's coming from zero, have you looked at the option of building it as rental and then monetizing it at some point in the future?

I mean I would say at this point, Alex, we're early stages. We will clearly discuss with, I'll call them, experts in the field as to what our various options are to try to provide, as we said, the most flexibility, which is how we're approaching the site and then come forward with what we are planning.

But the great thing is, is because we are controlling the master plan for both our property and then the land that Mitch [ph] owns with private partners, then you've got the entire 100-acre site that we are planning on a overall basis, which I think puts us in a unique position virtually anywhere with respect to the ability to design and manage that entire area. And so that's what gives us I think the highest level of sort of excitement about all of this.

Okay, that's great. Thank you.

Thanks.

Thanks. Huw, in your closing remarks, just before the questions, I apologize, but I missed what you said about something about 7% to 9% growth.

Could you just clarify that please?

Yes, what I was doing, Sam, was emphasizing that for this year overall, so I'm combining the existing business and the new platform that we see FFO growth being in the 7% to 9%. So overall, that's up from where we thought at the end of Q2 and that's just reflecting obviously a strong Q3 and how we see Q4 unfolding.

Thank you very much.

I'm not providing any guidance for next year at this point. We haven't finalized our planning for this year.

We will do that in the next few weeks. Obviously, there are a number of positives that have occurred with the business with the full year of the platform and full year of refinancing benefits from this year, other select acquisitions, same property, et cetera, et cetera.

But we need to work through the entire detail before we're comfortable obviously giving any guidance for next year, but certainly optimistic that it will be a positive story.

Great. Thank you.

Thanks. Good morning.

Just looking at the G&A, really just one question. With the full quarter of just launching [ph] this transaction now in the books, is this sort of a reasonable run rate to think about?

Sites may perhaps move into unit price that could I guess sway the equity component of the compensation. But is this a fair number to work with?

Pam, it's Peter. Good morning.

I think what we've done in Q3 is we've taken a very conservative approach to our G&A costs resulting from the add-on of the 2020 transaction. I think the question is what's an appropriate run rate moving forward?

The simple answer is that as we engage in more developments moving forward, one should expect the amount of G&A to reduce because there will be a larger amount that will be capitalized to some of that new development moving forward. So for Q3, the amount that you're seeing represent what we believe to be a very conservative approach.

Okay. And then just I guess along the same lines, the capitalized interest component, also again a bit of a larger pickup I guess quarter-over-quarter, again, maybe partly due to the full quarter impact of the transaction.

But is that figure there for capitalized interest, should we expect that to also continue rising as a development pipeline expense?

Yes, I think the same is true. I think for the capitalized interest component that you see in Q3, that's at least until we embarked upon a larger development initiative that the amount we see in Q3 would be appropriate to use in your model.

Okay, great. Thank you.

Thanks, Pammi.

Thank you very much, operator, and thank you to everybody who joined us this morning. We very much appreciate your attention and interest, and look forward to obviously following up with any questions you might have and to meeting and speaking with you in the coming weeks.

Thank you very much. Have a great morning.