Welcome to the Choice Properties Real Estate Investment Trust third quarter 2021 earnings conference call. Please be advised that today's conference is being recorded. I will now turn the conference over to your first speaker today, Doris Baughan, Senior Vice President, General Counsel and Secretary. Please go ahead.
Thank you. Good morning and welcome to Choice Properties Q3 2021 conference call. I'm joined here this morning by Rael Diamond, President and Chief Executive Officer, Mario Barrafato, Chief Financial Officer, and Ana Radic, Executive Vice President, Leasing and Operations. Before we begin today's call, I would like to remind you that by discussing our financial and operating performance and in responding to your questions, we may make forward-looking statements, including statements regarding Choice Properties objectives, strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, intentions, outlook, and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts. These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause actual facts to differ materially from the conclusions in these forward-looking statements.
Additional information on the material risks that can impact our financial statements and estimates and the assumptions that were made by applying and making these statements can be found in the recently filed Q3 2021 financial statements and management discussion and analysis, which are available on our website and on SEDAR. I will now turn the call over to Rael.
Thank you, Doris, and good morning, everyone. Thank you for taking the time to join our Q3 conference call. We're pleased with our strong financial and operating results. Our business model and our necessity-based portfolio has proven resilient over the course of the pandemic. In addition to our strong results, we're advancing our development program and executing on strategic transactions, both with a focus on improving the overall quality of our portfolio and driving meaningful net asset value appreciation. All of this is underpinned by an industry-leading balance sheet that affords us the financial flexibility to execute on these initiatives. Joining me on today's call is Ana Radic, who will first provide an update on our operational results, and then Mario Barrafato, who will provide an update on our financial results. I will then provide an update on our transaction activity and our development program. Ana, over to you.
Thank you, Rael, and good morning, everyone. As Rael mentioned, we are pleased with our operational results for the quarter. We continue to see positive signs of renewed activity across the portfolio as COVID-related restrictions are being lifted and our tenants get back to business. Our period end occupancy remains strong, increasing slightly to 97% compared to 96.9% last quarter. We had approximately 1 million sq ft of leases expiring in the quarter. We renewed 813,000 sq ft, resulting in a retention ratio of 81% and leasing spreads on renewals of 6%. We completed 204,000 sq ft of new leasing, resulting in overall positive absorption of 17,000 sq ft for the quarter. Our 45 million sq ft retail portfolio, consisting of open air centers with necessity-based tenants, continues to deliver stable, reliable results.
Retail occupancy was consistent with the prior quarter, with tenant retention of 89% and leasing spreads on renewals of 4.5% for the quarter, excluding two anchors with fixed rate options. Retailers have looked at foot traffic to drive leasing decisions, and our portfolio of neighborhood centers anchored by essential shops a few steps from shoppers' homes are seeing the strongest level of interest. New leasing activity has been strong. Across the portfolio, we are seeing interest from mid-box value and necessity-based retailers looking to increase their store network as well as relocate from enclosed shopping centers. Also driving demand is the entry of new QSR concepts and existing food operators expanding their footprints. The desire for tenants to locate at our grocery-anchored sites is evident by our high retention rates and consistently high occupancy.
We expect that as restrictions ease further, we will continue to benefit from the positive momentum we are seeing. Our industrial segment has been our strongest performing asset class over the past two years, with fundamentals continuing to strengthen. The national industrial availability rate dropped below 2%. The demand for distribution and logistics warehouses remains at an all-time high, and the supply-demand imbalance in most markets is driving rental rates to record highs. Leasing activity was strong across our entire national industrial portfolio, resulting in an occupancy increase of 40 basis points to 97.6% in Q3, with occupancy in our 6.6 million sq ft Ontario portfolio sitting at 100%. We also retained 80% of expiring tenants and grew rents by 16.6% over expiring rents in the quarter.
Offices faced the most headwinds over the past few quarters, with many tenants putting large space decisions on hold until they sort through their return to workplace strategy. Vacancy rates have ticked upward this quarter in most markets, but in downtown Toronto, where our largest assets are located, vacancy actually dropped 10 basis points to 9.9%, and sublease availability dropped even further. We are encouraged by this and by an increase in touring activity, especially on smaller units. New leasing activity for the quarter was slow as occupancy in our 3.6 million sq ft office portfolio declined from 90% to 88.7%. Of note is the fact that some of the space vacated consisted of retail tenancy as downtown and urban core retail continues to struggle compared to suburban grocery-anchored retail.
That said, we did see a lift in renewal spreads of approximately 3% on the deals that were completed. We have used this time with fewer people in our buildings to its full advantage. We have completed improvements that reduce the energy and water consumed in our buildings to make them more efficient and cost-effective. We have upgraded common areas and created new tenant amenities as well as in-built improved move-in ready office suites, so we are able to lease space more quickly. Overall, we are pleased with the operational performance of our portfolio and we expect to continue to deliver strong results looking ahead. I'll now pass the call over to Mario to discuss our financial performance.
Thank you, Ana, and good morning, everyone. This was a strong quarter operationally with solid third quarter financial performance. The strength and stability of our necessity-based portfolio has proven resilient over the last 18 months, and that is reflected in our AR collection rates, which increased to 99% in the quarter. We also reported bad debt expense of CAD 1 million, our lowest provision during COVID. As COVID restrictions continue to lift across the country and the Canadian economy looks to fully reopen, we are well positioned to benefit from momentum. Our reported funds from operations for the third quarter was CAD 172.7 million. This was a relatively clean quarter, apart from the CAD 1 million bad debt expense I referred to earlier.
When compared to the third quarter of 2020, FFO increased by CAD 3.5 million, due primarily to a decline in bad debt expense of CAD 3.8 million and contributions from development transfers and acquisitions of CAD 1.7 million. This was partially offset by a decline in straight-line rent. On a per unit diluted basis, our Q3 FFO was CAD 0.239 per unit, consistent to the CAD 0.238 reported in the third quarter of 2020. Total same asset cash NOI increased by 2% compared to the third quarter of 2020. By asset class, retail same asset cash NOI increased by 2.5%, while industrial increased by 3.5%. This reflects a combination of declining bad debt expense, contractual rent steps, and higher renewal rates and occupancy gains in industrial.
Office same asset cash NOI decreased 6.4%, primarily due to reduction in occupancy and lower parking revenues. When excluding bad debts, total same asset cash NOI was relatively flat, increasing by 0.3%. Overall, we're pleased we've been able to maintain stable occupancy and consistent same asset performance over the last four quarters. Turning to the balance sheet. For the 5th consecutive quarter, we reported an increase to our net asset value. This quarter reflects a total increase to NAV of CAD 89 million or 1%, including an increase to the fair value of our investment properties of CAD 51 million. The increases were primarily related to the advancement of our residential development projects and gains from capital recycling of retail assets in secondary and tertiary markets.
Market demand for grocery-anchored retail in these markets is robust, with significant liquidity and demand from all types of investors. We had very little new financing activity in the quarter. However, we continue to maintain a strong balance sheet in terms of leverage and liquidity. Our leverage ratio was consistent with prior quarter, with our net debt to EBITDA remaining low at 7.4 times. From a liquidity perspective, we have approximately CAD 50 million in cash and cash equivalents, CAD 1.3 billion of available credit on our line and CAD 12.8 billion pool of unencumbered properties. Overall, we're pleased with our third quarter performance, delivering strong operating results and driving net asset value through development and capital recycling while maintaining a conservative and flexible balance sheet. I'll now turn the call over to Rael to address our development and investment activities.
Thank you, Mario. With another active quarter making progress on both our development program and our transaction activities. In terms of transactions for the quarter, we acquired a retail property at 325 Moore Avenue, Toronto for CAD 31.6 million. The property includes a Rexall drugstore and a TD Bank, and is directly adjacent to one of our existing Loblaw anchor sites. The acquisition is strategic because the existing tenants are necessity-based, and this allows us to control the entire site, providing flexibility in terms of any re-leasing efforts or longer-term redevelopment opportunities. Taken together, the site forms a 2.5-acre parcel that is exceptionally well located. During the quarter, we also advanced a CAD 41.6 million mezzanine loan to our development partner, Rise Commercial Group.
The loan is well secured by 154 acres of future industrial development land in East Gwillimbury, Ontario, just north of Newmarket. The land is currently zoned agriculture. However, it has been designated as employment use in the secondary plan and is undergoing a rezoning process. In advancing the mezzanine loan, we obtained an equity conversion right into 75% of the land. This option provides the flexibility to acquire an industrial site in the GTA at a very attractive cost basis of CAD 370,000 an acre. We're excited about this mezzanine loan and the possibility of adding to our significant pipeline of industrial development opportunities. On the development front, we continue to deliver exceptional assets to our portfolio and are making steady progress on the rezoning of our longer-term pipeline.
For the quarter, we completed and transferred two development projects for total development cost of CAD 52 million. The assets transferred this quarter include a new Shoppers Drug Mart pad for 17,000 sq ft at a retail site in Guelph, Ontario, and the second of three buildings at our rental residential development, The Brixton, located in the Queen West neighborhood of Toronto. The second building includes 93 units at our ownership share. The leasing program at The Brixton is well underway, and activity has picked up considerably in the last few months as COVID restrictions have continued to lift. Of the 665 units that have been transferred to date, 55% are leased. We expect to transfer the last building later this year. Construction is also wrapping up at Liberty House in Liberty Village, with an expected completion in the fourth quarter.
We had originally anticipated first occupancy early next year, but based on the leasing activity and the status of construction, the first tenants began taking occupancy earlier this week. We will transfer this asset to income producing in Q4. In addition to our active residential projects, we continue to find opportunities to intensify our existing retail properties. We commenced development on eight new retail intensification projects across the country. On completion, these projects will add an additional 55,000 sq ft of necessity-based GLA, including three new Shoppers Drug Mart locations and two new bank pads. Looking forward, we're making considerable progress on advancing our longer-term planning projects for our mixed-use developments. In the quarter, we submitted applications on two residential and mixed-use projects here in Toronto.
The first application is for a mixed-use development on a three-acre parcel of land located at the southwest corner of Danforth Avenue and Broadview Avenue in Toronto. The second application is for the residential development at our existing residential property Via 123, located at Don Mills Road and Sheppard Avenue in Toronto. Both sites are exceptionally well located within close proximity to a TTC subway station. Taken collectively with our ongoing planning projects, we have over 10 million sq ft of GLA, either zoning approved or with zoning applications underway. With more projects ongoing and more submissions expected, we believe we have one of the best development pipelines in the REIT space, and that will drive significant long-term net asset value appreciation. With that, I would like to now turn the call back to the operator for questions.
As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Your first question comes from Sam Damiani with TD Securities.
Thanks, and good morning, everyone. Rael, maybe just the first question is on the East Gwillimbury land. I wonder if there's a little bit more color you can provide on, I guess, the visibility on the rezoning of that parcel. Is the primary plan to do, you know, co-develop it with Rise or what is like what is the sort of plan, I guess, over the medium term exactly?
Yeah, Sam, thanks for the question. You know, our development partner had their pre-construction meeting with the town in September this year. You know, they've assembled a consulting team to prepare all the material to submit a zoning bylaw amendment. You know, they're targeting the first submission in January of 2022. It would be our intention to convert. We just want to see some progress on the zoning side. But I'd say overall, we're very bullish on the site. You know, just to put it in perspective, you know, it's not a traditional industrial zone or node. There have been tenants moving to the area. You know, the drive is about 25 minutes to the 401. If you just compare that to other sites east or west, it's exceptionally well located.
Yeah. No, that seems like an opportunity in terms of location for expansion for the market, for sure. Maybe just flipping over to same property NOI growth. It certainly is evident that the office sector is holding the rest of the portfolio back. Any sense on, I guess, a turning point with occupancy in the near term? I'm also just wondering if there was much NOI contribution in this quarter from the space that was most recently vacated that brought occupancy down to 88% and change.
Hi, Sam. I guess I'll answer your first question. You might have to explain the second question to me. I'm sorry. You know, as to a turnaround, we're starting to see a little bit more activity, particularly, and this is deal activity, particularly with smaller tenants. Subsequent to the quarter end, we completed, you know, 14 new deals. They totaled about 40,000 sq ft in the office portfolio, and that was in sites across the country from Calgary, Montreal, Vancouver. Those tenants are out looking, so that will help. You know, the larger ones, you know, those that I think is gonna take a little bit longer. What was your second question, if you don't mind repeating it?
Sure. I mean, the NOI, the same property NOI year-over-year was down 6% and change in the office sector, but sequentially it was pretty stable. I'm just wondering, you know, with the occupancy down at quarter end, should we expect another sort of step down in NOI in Q4 versus Q3?
If so, it would be very modest. There is, you know, a few smaller tenants we know are not renewing, but we have minimal lease rollover exposure. Yeah, the variance that you saw or the drop relative to Q2 was primarily a result of the larger vacancies that we spoke about, you know, earlier at 175 Bloor being the largest one.
Sam, I think the one thing with office right now is, there's not a lot of visibility. You know, people still, there's no real big trend back yet. We're seeing people trickle in, so there's been some good news. I think right now there's not a lot of longer-term visibility.
Okay, last one for me. On the retail side, occupancy is steady. You know, the momentum is there, the activity's picking up. You know, we're still not back to 98% occupancy pre-pandemic. What's your expectation, I guess, for 2022 to get there? I guess what categories might still cause some headaches in terms of headwinds for occupancy going forward?
Maybe, Sam, I'll just talk about maybe the forecast, and Anna can get into the detail. I think by the end of next year we'll be stronger. I think in the interim, like on an average basis, there's gonna be some turnover of tenancies, and with that'll come some downtime. You'll see, you know, we're kind of still projecting that 1% to 2% NOI growth. Depending on the timing, you know, it could be closer to the 1%. We still have some things to work on. But as far as retail, I don't think, like I think at year end we might be closer to that 98%, but during the year we'll be lighter than that.
As far as retail goes, I think Ana talked about there is some traction to the retail with the open air centers. I think as the economy opens, we'll see a bit of activity. We are very bullish, but just on timing, we may see it towards the end of the year, not the early part.
That's great. I'll turn it back. Thank you.
Your next question comes from the line of Mark Rothschild with Canaccord. Your line is open.
Thanks. Good morning, everyone. Rael, you gave an update on the development pipeline, and it's quite extensive now. Should I infer from that or read into that you're being a little more aggressive in picking up the pace or trying to take on more projects now? Or is this all just generally what's been in the plan?
Hey, Mark, thanks for the question. I would say we were slightly behind others on advancing our zoning, and we've made significant strides in advancing the zoning. Well, we wanna be in a position where we can get, you know, more sites zoned and then in a position to commence construction. Then we'll obviously commence construction when, you know, the market dynamics are right. You know, if we just look forward over the next 12 months as an example, we have two buildings, you know, transferring to income producing property this year, and we would expect to commence construction on two more projects in 2022. Then maybe again in 2023, we'll commence construction. It's really trying to position ourselves that we have this pipeline of wonderful opportunities on the residential side.
I think the other thing to note on the industrial side, like it will come quicker just given the lead time for development is quicker. I think if you look overall at our pipeline, you know, with the land acquired earlier this year and with the auction with East Gwillimbury, you know, we probably have 450 acres of potential development land which, you know, could add about 6-7 million sq ft of best in class industrial, which, you know, it's all in the GTA, which will probably grow our industrial portfolio by about 40%. It's very, very meaningful. Once that land gets zoned, we'll come on quicker.
Would the idea be for an industrial to do that on your?
Sorry, I didn't mean to interrupt you, Mark.
No.
I think overall the way we view it is we have a great mix of residential opportunities, industrial opportunities, and then we spoke about the pickup in retail activity. Overall, we're very, very bullish with our development activities.
I know with some of the mixed-use and the residential in particular, you're looking to do with partners. For the industrial, would you look to do that all yourself?
Well, the two big industrial opportunities, we have a partner, Rise Commercial Group, very good partner. One of them we would own 85%, one of them we would own 75%. They are primarily responsible for the development. Our team works closely with them, but then we would take over leasing and property management on completion.
Okay, thanks. Maybe just one more, maybe for Mario. Over the past year, you have issued stock to the vendors, which obviously is a related party for buying properties. Is it somewhat dilutive or it takes away some of the accretion because you are using more equity. Are you comfortable where the balance sheet is now, and is that something that you will look to do more of in the future?
Hi, Mark. Thanks. The first question, yeah. I mean, we're very comfortable with the balance sheet. You know, there's two elements that we've been focusing on. One is, you know, getting our leverage down and pushing out our debt maturities and maintaining liquidity. I think we've come out of COVID, you know, very strong. We've been improving our asset quality, which again, de-risks the portfolio, which means less pressure on the balance sheet. I think as far as equity goes, I think we would use it if it's very strategic. In some cases, you know, there's some tax benefits to the, to the vendor, which gives us, you know, an advantage. If we can get access to good properties, or use it strategically, we would do that again.
Okay, great. Thanks.
Your next question comes from the line of Himanshu Gupta with Scotiabank. Your line is open.
Thank you and good morning. Just on 2022 lease expiries, a fair bit of industrial is coming due. I think around 1.6 million sq ft. What kind of rental spreads are you expecting given you know how strong the market is? Is it Ontario or is it Alberta? Like, what's the mix of the expiry coming due?
Just to answer your question, on the expiries. We have a few large expiries that are coming due in Q3 2022. It's kind of spread out across the country. It's not heavily weighted in Alberta. We have a large Loblaws distribution facility in Montreal on Francis-Hughes that is rolling, as well as a large facility in Ontario and then another one in Alberta. Then another 500,000 sq ft that's spread out as well across all those markets and Halifax as well.
In terms of, you know, what we're projecting for, industrial, I mean, we expect to see, you know, on a long-term basis, real growth, rental rate growth and, net asset value appreciation in those assets. In the short term, we do have some temporary vacancies that will be evident in our results next year. It's the three that I spoke of in Montreal, Ontario, and Alberta. We have re-leased the largest one in Montreal, which is 500,000 sq ft that has been re-leased to Amazon. It'll be a large distribution facility, actually their largest, in the province. We're really excited about that, and we'll see a huge lift in rents relative to the current, in-place rent.
There will be a period of downtime while they invest in the facility and get it up and running. You know, that will have an impact in 2022. Similarly, in Ontario and Alberta, we have tenants that are also relocating to larger facilities, but we have significant interest in both of those sites. We anticipate re-leasing them, you know, very, very quickly and again, at rents in excess of expiring. Sorry, again.
Got it. No, that's very helpful. Maybe along the same lines, on the retail side, and I know you already mentioned about the occupancy trends and leasing environment improving. My question is how is the market rents trending for, you know, grocery-anchored open-air retail properties? Like, we keep hearing about the cap rates compressing or more investor interest, but is anything happening on the market rent side?
Yeah, we are seeing lift in rents. Like in our grocery-anchored centers this quarter, you know, we saw a lift of about 6% as I mentioned in my call. You know, we expect that to continue as we have ample demand.
Got it. That's it. Thanks.
I think, Himanshu. It's not just the rents, but I think you talked about the cap rate compression. Where there's lease term, especially with a lot of vacancy, it's a really valuable commodity.
Absolutely. Yeah. No, thank you. Thank you, Mario. Maybe my next question is on the mixed-use developments. I know you know more zoning application was filed this quarter. There you mentioned like more submissions expected. How long the list can get in terms of zoning application files?
Yeah, I don't have the exact list on what's in the pipeline handy, but if you actually look in our investor material, we have maps of the major cities. We pretty much have more dots on the map than most. We're just bullish on the long-term pipeline. We're working collaboratively, you know, with our major tenants and saying where it makes sense to file those applications.
Got it. Maybe, you know, will you look, you know, in the near future to probably quantify, you know, what the medium-term or long-term development pipelines could look like? I know it's just pretty massive looking at the chart, and I'm looking at the chart right now. Yeah.
Yeah. Look, we've quantified the CAD 10 million in planning applications. You know, as we get more clarity on timing, we'll look to quantify more.
Himanshu Gupta
Sure.
We try to be very transparent in our disclosures. I think a lot of investors have told us the long term really is not as valuable. We're trying to show the potential, but the quantification right now is not as relevant as maybe the near to mid-term. We're trying to be very transparent on what is active and what is in the pipeline. You'll get those disclosures from us on a regular basis now.
Sure. Thanks, Tyler. I totally agree with your comment, by the way. Thank you.
Thank you.
Your next question comes from the line of Sumayya Syed with CIBC. Your line is open.
Thanks. Good morning. Just wanted to confirm that, on The Brixton and transferring it to income producing, did show up in the fair value gains this quarter.
A little bit. It's been showing up in the last few quarters, so yes. Also, as East Liberty advances and we're getting closer to cost complete, we're getting certainty on the remaining costs, and we're having a better view of rent, that all impacts the fair value as well. They're both there. It's not one big hit. It's been coming in as the project advances over time.
Okay. I guess on East Liberty, just curious what rents you're seeing there, and when do you expect it to be stabilized?
You know, we're seeing rents around CAD 3.90 a spot, and we expect it to be stabilized in about 12 months from now.
I'll just get your thoughts on what you're seeing in the market in terms of buyer demand for more secondary, tertiary market retail, and if you can comment on any spreads you're seeing in cap rate compression versus more, I guess, core-located product?
Yeah. Look, we've spoken about the last few quarters. We continue to see lots of liquidity for the right type of retail, and the right type of retail is, you know, necessity-based retail. There are lots of different investor types looking for that product. You know, we haven't. I wouldn't say we've seen a, you know, meaningful compression in cap rate because it's deal specific. You know, obviously, we've been very active on the capital recycling program, you know, selling assets that we feel are non-strategic and may have lower growth.
Okay. Thank you. I'll turn it back.
Again, that is star one two, ask a question. Your next question comes from the line of Tal Woolley with National Bank Financial. Your line is open.
Hi. Good morning, everybody.
Hey, Tal.
Just to start with on the, you know, you made earlier comments that, you know, you've spent a lot of time and capital this year, sort of building up this future industrial, this bank of industrial land. When we're thinking about it from our side, should we be thinking, is this all third party, or does Loblaw figure into occupying some of this as well?
Yeah. We purchased the land for third parties, but obviously, given the relationship with Loblaw, we will always show it to them first. We would be thrilled if they would consider leasing there. It's generally going to be third parties. You know, our current focus is really on the rezoning right now.
The push to acquire these lands is not. It's not, like, a sort of Loblaw imperative for their strategy. It's not them driving these decisions. Those are yours. You guys are making the choice to make these acquisitions.
Yeah. It came through our development partner, Rise Commercial. We have a strong relationship with them, and they've shown it to us, you know, first and, you know, very fortunate we've fostered these long-term relationships.
Okay. I guess, like, maybe just a bit bigger picture. You know, like, we're a few years out from the CREIT deal and you guys taking over as the management team done a lot of work cleaning up the portfolio. You know, from my ears, it certainly sounds like you're talking a little bit more about playing a bit more offense now, you know, talking up near-term development, things like that. You know, are you like, how do you wanna position Choice? Like for the future, in terms of like where you want the split between the asset classes going forward.
Look, you hit on it. You know, I'd say over the last three years, you know, our focus really was first on integration and getting the right people in place. Second was, you know, fixing the balance sheet. Putting the balance sheet in a better place so it never, ever gets in the way of you know, running the business or in the way of, you know, taking advantage of acquisition opportunities. The way we think about the entity today is we have this wonderful portfolio of stable growing cash flow from, you know, necessity, basically, retail, industrial office and now residential. We have truly, we believe, the best development pipeline in the REIT space. We have a balance sheet that allows us to take advantage of those opportunities, and we have, you know, phenomenal people.
We actually think we are exceptionally well positioned. As far as specific mixes on assets, we're more focused on asset quality. Like, if you even think about our capital recycling initiatives, we focus on selling assets that we think have preservation risk or may have lower growth. We're not selling our best assets. In fact, we'd rather buy more of our best assets. We're less focused on, you know, specific mixes. We're more focused on quality.
Okay, that's helpful. Just lastly, you know, like, again, now that, you know, you're sort of at this new kind of phase for the company, you know, prior to the CREIT deal, you had sort of seen annual distribution hikes every year. Is there any thought to sort of maybe restarting that going forward?
Hey, Rael Diamond. You know, we haven't talked about it recently, but I think just the way to look at it is, you know, we've had growth and we've had to make some trade-offs. So as Rael Diamond said, we took some of our growth and, you know, put it towards the deleveraging, and that kind of took a few cents. Then the asset quality, you get a bit of inherent dilution when you trade kind of higher cap rate assets for lower cap rate assets. Again, we're generating value and then investing some of the proceeds into this development pipeline. I think there will be a time which we haven't talked to the board yet about it, but at some point, some of our growth will be diverted back to unitholders.
I think it has to be a time when we're ready that we can consider it long term.
Okay. That's great. Thanks, gentlemen.
I'm showing no further questions at this time. I will now turn the call over to Rael Diamond.
Thank you, Judy. We wanna thank everyone for joining us on today's call. Please continue to do all you can to stay healthy and safe. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.