Good morning. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Choice Properties Real Estate Investment Trust Q1 earnings announcement conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star and the number 1 on your telephone keypad. If you'd like to withdraw your question, press the pound key. Thank you. Mr. Adam Walsh, you may begin your conference.
Thank you, Julie. Good morning, everyone. Welcome to the Choice Properties REIT first quarter 2019 conference call. This call is also being webcast simultaneously on our website at choicereit.ca. Before we begin, we'd like to advise you that some of the statements made this morning may contain forward-looking information, including statements concerning 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 a number of risks and uncertainties that could arise and could cause actual results to differ. We refer you to the cautionary statements in our financial reports, including the MD&A for the quarter ended March 31st, 2019, and other disclosure documents for the full details.
These forward-looking statements are made as of today's date. Choice Properties assumes no obligation to update or revise them to reflect new events or circumstances except as required by law. On today's call, we have our Chief Executive Officer, Stephen Johnson, our Chief Operating Officer, Rael Diamond, and our Chief Financial Officer, Mario Barrafato. I'll now turn the call over to Stephen.
Thank you, Adam. Good morning, everyone. Thank you for taking the time to attend our Q1 2019 conference call. We're very pleased to report a positive start to 2019. We had in-line financial results for the first quarter and strong operational results. From an operational perspective, same asset net operating income on a cash basis increased by 2.4% compared to Q1 2018. Period-end portfolio occupancy remained very solid at 97.4%. Investment activity during the quarter included the transfer of approximately CAD 148 million of properties under development to income-producing status. This represented approximately 808,000 sq ft of new leasable area. Included in the PUD transfers was a 665,000 sq ft industrial property, which we developed in the GTA West market. It is 100% leased, and we own 85% of this asset. On acquisition activities, we acquired two high-quality, grocery-anchored retail properties in Ontario.
As well, we acquired a major residential development site in Toronto for a total investment in acquisitions of CAD 54.3 million during the quarter. The residential development site was acquired from Infrastructure Ontario. It is located near the intersection of Yonge and College in Toronto, and it will be developed in a joint venture with Greenwin. This is our second joint venture with Greenwin, and Greenwin is a well-established rental residential developer in the GTA. We initially anticipated the development on this site would include approximately 700 residential units, and we determined our purchase price accordingly. We now see the potential of receiving approval for a higher number of units. Notably, our agreement with Infrastructure Ontario includes a commitment to deliver 30% of the units as affordable rental housing for a period of 40 years.
Rael will provide you with more details on our development projects and new acquisitions in a few minutes. The combination of Choice Properties REIT and Canadian Real Estate Investment Trust, or CREIT, was completed just under a year ago. It will be one year next week. It is an appropriate time and an opportunity to provide you with a macro overview of our business today. Our business has grown substantially, but our primary goal remains the same, the ownership of a high-quality, income-producing real estate portfolio. One of our key objectives is to build our real estate business to deliver both stability and growth for our investors over a long-term investment horizon. The stability factor is in the context of both the preservation of your capital investment and the reliability of your monthly distribution.
The growth factor is in the context of distribution growth and net asset value growth, both over time. Our business, for the most part, has now evolved into two functional areas, our income-producing property, or IPP portfolio, and our development business. Both of these functional areas will contribute to stability and growth. For our income-producing property portfolios, one of the key focus areas is the long-term ownership and management of necessity-based retail real estate. The term necessity-based refers to retailers focused on the sale of everyday goods and services, such as food and personal care items. We believe that the ownership of this type of real estate is exceptionally well-suited and positioned to deliver our goals of stability and growth over a long term. As well, this asset class of real estate is less sensitive to both economic cycles and the ever-changing retail environment.
Currently, approximately 80% of our real estate portfolio is retail, which is primarily made up of grocery-anchored retail properties. Based on the current environment, we expect our retail portfolio to consistently deliver same asset net operating income growth and continue to be the foundation for generating reliable cash flow. Furthermore, given our relationship with Loblaw through our major shareholder, George Weston Limited, we expect to continue to find opportunities to acquire high-quality, necessity-based retail assets over the coming years. We have diversification in our existing IPP portfolio, diversification both in terms of asset class and geographic location. Approximately 20% of our portfolio is comprised of industrial assets, office properties, and our recently added rental residential asset class for apartment buildings. Canada is fragmented in terms of economic and real estate fundamentals, so this diversification contributes to income stability.
For example, we are presently benefiting from a strong economy in the G.T.A. We are seeing very strong financial performance in both our Toronto office and industrial assets. This strength is mitigating the pressures that the energy sector is placing on the Alberta economy and specifically on our Calgary office assets. This is diversification at work, providing stability. In addition to our income-producing property business, we have a significant development business. Our property development initiatives provide us with the best opportunity to add high-quality real estate to our portfolio at a reasonable cost. Our development business is divided into 5 categories, including retail intensification, redevelopment, greenfield, major mixed-use, and residential projects. In our currently active development program, we anticipate investing approximately CAD 1 billion, of which CAD 400 million is already invested. The most significant current focus is the development area is growing our rental residential portfolio.
Notably, we now have five major high-quality rental residential development projects underway in the Greater Toronto Area, each with a joint venture partner. Our investment in these projects specifically has been approximately CAD 73 million to date. The current budget is approximately CAD 372 million to complete, so the total planned investment is approximately CAD 445 million in these five projects. It's important to recognize that these five projects will be great additions to our portfolio. In addition to our current residential development program, one of the significant competitive advantage we have is the opportunity to add rental residential density to grocery-anchored retail properties, which we already own in major markets such as Toronto. It is too early, way too early, to credibly quantify the total extent of this opportunity. However, we expect it to be meaningful over time.
The important point is that we already own these sites for future development. For example, we now have three major sites for mixed-use development in the preliminary planning stages in the G.T.A. and one major site in Vancouver in the same category. Our development business is a very exciting part of our REIT that will add high-quality assets to our portfolio, and we anticipate will contribute to growth in our net asset value. To summarize, our first quarter results have built upon the positive momentum that we have had since the merger of CREIT and Choice Properties last May. Overall, the composition of the trust's income-producing property portfolio now provides a solid foundation for stability and growth. As well, we expect our development program will steadily add high-quality real estate assets consistent with our goals over the coming years. We are very well-positioned.
Mario will now provide you with some detail on our financial performance for the quarter. Rael will then provide some operational investment highlights. Mario?
Thank you, Stephen. Good morning, everyone. I'll begin with a brief overview of our financial results. Then I'll comment on our balance sheet activity. Overall, our 2019 first quarter results were in line with our expectations and reflect the stability and consistency that is inherent in our portfolio. Our reported funds from operations for the fourth quarter was CAD 169 million, or CAD 0.252 per unit diluted. There were no material unusual items in the quarter. FFO for the first quarter of 2019 reflects the full quarter impact of the sale of Sun Life Plaza, which was sold in December of 2018. After adjusting for the disposition plus Q4 2018 lease termination income, FFO for Q1 was fairly consistent with that of Q4 of 2018. On a year-over-year basis, FFO per unit was relatively flat compared to the first quarter of last year.
However, Q1 2018 does reflect a CAD 2.9 million non-recurring charge related to a call premium for early repayment of senior unsecured debt. Included in our Q1 performance was stable year-over-year growth in same asset cash NOI. For the quarter, same asset cash NOI increased by 2.4% over the prior year. This reflects the annual step rents embedded within the Loblaw portion of our portfolio, as well as incremental cash generated from leasing activity. On the leasing front, portfolio occupancy increased on 64,000 sq ft of positive absorption, primarily from leasing in our industrial portfolio. However, overall ending occupancy is down from Q4, primarily due to newly developed properties coming online at less than full occupancy. These properties do have lease commitments and will be fully leased during the year. Our overall quarter-end occupancy remains strong at 97.4%, with retail occupancy at 97.8%, industrial occupancy at 97.2%, and office at 92.2%.
Now, on to our balance sheet. On the investment front, we closed on the acquisition of two retail properties from Loblaw, one in Mississauga and the other in Kingston, at a cost of CAD 36 million. In addition, we closed on a 50% interest in a development parcel near the intersection of Yonge and College in Toronto at a cost of CAD 18 million. Rael will provide more color on these investments. We continue to be active on the development front, with ongoing investments of CAD 33 million in the quarter. As well, CAD 148 million of development properties were transferred to income-producing status during the quarter, reflecting over 800,000 sq ft of new income-producing GLA. The most significant property transferred was the 85% interest in a 665,000 sq ft industrial building on Petty Road in Milton, Ontario.
As I referred to earlier, Petty was transferred at 77% occupancy, with the remainder committed to be occupied later in the year. In addition, our development initiatives resulted in the issuance of CAD 39 million of net new mezzanine loans. These are short-term in nature. We expect them to be repaid within a year. Our book net asset value increased by CAD 45 million quarter-over-quarter, or CAD 0.05 per unit, arising from net earnings and a positive adjustment to the fair value of our investment properties, partially offset by cash distributions. For the quarter, we had a fair value gain of CAD 6 million on a proportionate share basis, primarily due to the increase in valuations for GTA industrial, office, and residential properties, offset by declines in select retail properties with fashion or discretionary retail tenancies. It was a quiet quarter from a financing perspective.
Amounts drawn on our facility increased by CAD 160 million, primarily due to ongoing investment in the development pipeline, as well as funding acquisitions and our mezzanine loan advances. Overall, our financial metrics remain solid. Using amounts from our proportionate balance sheet, our debt-to-gross book value is approximately 47.6%, and normalized leverage and coverage ratios are 8.1 times and 3.4 times respectively. These metrics are further backed by CAD 1 billion of liquidity on our credit facility and a CAD 12 billion pool of unencumbered assets. Overall, very solid operating results and another strong quarter for Choice. I'll now turn the call over to Rael.
Thank you, Mario, and good morning, everyone. As Stephen mentioned, I'll provide a brief overview of our income-producing portfolio and further details on our transaction activities. Our consolidated portfolio of income-producing assets includes 735 properties comprising 68 million sq ft of GLA. This high-quality portfolio includes retail, industrial, office, and residential properties and is located across Canada with a concentration in Canada's largest markets. Our retail portfolio is primarily focused on necessity-based retail tenants and is anchored by long-term leases with Loblaw, Canada's largest retailer. We continue to successfully add to our retail portfolio through development, including a mix of greenfield developments and intensifications. In Q1, we completed and transferred a total of 130,000 sq ft of retail development at a total cost of CAD 52 million. Our development initiatives are a key component of our business model, providing the opportunity to add high-quality real estate to the portfolio.
As Mario mentioned, during the quarter, we also closed on the acquisition of two grocery-anchored income-producing retail properties from Loblaw for a total cost of CAD 36 million. This includes a 115,000 sq ft grocery store in Mississauga. On its face, this is an attractive asset to add to our portfolio. A grocery site on a long-term lease with Loblaw in a great location near the intersection of Eglinton and Winston Churchill Boulevard. This was not the only strategic merit to the acquisition. The site includes both near-term retail intensification potential of approximately 20,000 sq ft and nearly four acres of excess land. Most critically, the site is directly adjacent to Winston Churchill Power Center, an existing Choice asset. When combined, these assets represent a 40-acre assembly with current cash flow and long-term residential intensification potential.
While it's too soon to quantify what it may look like, we believe there's significant long-term upside in the asset. This transaction highlights the competitive advantage of our strategic relationship with Loblaw. We expect that this relationship will continue to be an excellent source of opportunities in the future. Our industrial portfolio includes 115 properties and approximately 17.1 million sq ft of GLA. The portfolio is concentrated in Canada's largest distribution markets, where demand for industrial space by both investors and tenants remains strong. Our industrial assets operate under healthy fundamentals with low vacancy rates and increasing rent. Development is a great means to add high-quality assets to our portfolio. In Q1, we completed and transferred a total of 626,000 sq ft of industrial development at our ownership at a total cost of CAD 78 million.
This includes Building E at our Great Plains Business Park in Calgary, Alberta. This is the fifth completed building at Great Plains, and it comprises 120,000 sq ft or 60,000 sq ft at our ownership. We also transferred 2,994 Petty Road, a large bay modern distribution facility in Milton, for 666,000 sq ft or 565,000 sq ft of ownership share. We have finalized a long-term lease for approximately 550,000 sq ft with Kimberly-Clark, a multinational consumer products company. The remaining 150,000 sq ft was leased to Loxcreen, a distributor of flooring products, on a long-term lease. The rents achieved exceeded our original pro forma by more than 15%. This asset is a great addition to our industrial portfolio as it is in the GTA West sub-market of Milton, one of the strongest industrial markets in the country.
Our office portfolio is focused on large, well-located buildings in the downtown core of Canada's largest cities. Fundamentals in most large office markets in Canada, including Toronto, Vancouver, and Montreal, are healthy due to strong economy and robust job growth. Office property fundamentals in Calgary continue to be challenging. That said, in Q4, we significantly reduced our exposure to this market with the sale of our 50% interest in Sun Life Plaza. Finally, our residential platform provides an opportunity to further diversify our portfolio. Our focus has been on developing new rental residential assets, primarily in the GTA. The rental market in the GTA is strong, as limited supply and demand have driven up rents. Our current platform includes four residential rental assets that are income producing and another seven rental residential assets that are in various stages of development.
In total, when complete, these residential projects will represent approximately 1,500 units at Choice's share. This includes over 1,000 units located in the GTA, all of which are in close proximity to major transit. We're excited about the prospects of our residential initiative. That concludes my comments. I would now like to pass it back to the operator for questions. Thank you.
At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Sumit Arora from CIBC. Your line is now open.
Thanks. Morning, guys.
Morning.
Just firstly, can you give us a bit more background and just your vision for the Woodbine development and just in terms of density and timing, what we should be expecting there?
Hey, Sumit. Rael speaking. Just a bit of color on the site. It's a 1.7 acre site. It's adjacent to Woodbine TTC subway station. We've submitted our rezoning application to the City of Toronto, and we are in preliminary discussions with the city. Plans include retail, mostly grocery at grade, with mid-rise residential buildings above. We believe it's a phenomenal site and opportunity. We're really early in the process, so exact densities are still to be determined. As I mentioned, it would be a mid-rise project. We expect to have further discussions with the TTC to determine how we can integrate the two sites together, and we'll provide further details as available.
Okay, thanks. It's a minor point, but just noticing some fair value changes in the quarter. Can you remind us what exactly is your power center footprint and what drove the fair value decline? If it was just NOI expectations changing or just lining up cap rates to what's happening in the market?
Hey, Rael again. I don't have the exact power center footprint. We can get back to you on that. It was really a tweak in assumptions primarily related to Payless ShoeSource, given the bankruptcy, and then Home Outfitters has given their announcement that they're closing stores. It's really just a tweak in our modeling assumptions. It wasn't significant.
I think the same thing. Overall, the CAD 6 million was probably net CAD 40 upside, CAD 34 downside. All really select assets. We had about CAD 800 million appraised in the quarter with no real change in any trends or global assumptions.
Okay, thanks. That's it from me. I'll turn it back.
Your next question comes from the line of Michael Markidis from Desjardins. Your line is now open.
Good morning, everyone.
Morning
would you happen to have the You guys had a pretty significant uptick in the development deliveries this quarter. Would you happen to have the IFRS NOI contribution from the developments for Q1?
I don't have them globally, Mike, but the biggest one would've been like Petty Road would've probably had about a CAD 15 million change. That would be the biggest one, and then probably the second largest one would've been VIA 123, which just got stabilized.
Okay.
Yeah. Some of the development fair value bump would've been realized earlier in the process as well.
Oh, sorry, I was more getting to the, not the fair value change, Mario, the actual account, the NOI contribution.
Oh, the NOI contribution.
Yes.
Oh, in the quarter.
Yeah, sorry.
Total contribution.
On an annualized basis, it's just over CAD 9 million.
Yeah. Just on an annualized basis.
That was the actual contribution.
No, that would be the annualized. During the quarter, Petty would've come in halfway through. It wouldn't have been a significant contribution in the quarter.
Okay. There's a significant amount to be realized in the next several quarters then. Would be fair.
When we say annualized, remember Petty, only a portion of it is in occupancy. It's going to take time to get all of that in.
To get stabilized.
Yes. Okay. All right. Just on the development side, your disclosures are great, so thank you for that. Looks like a slight downtick this year, CAD 200 million-CAD 225 million is the expected investment over 2020 and 2021. Just longer term, maybe three to five years out, as you guys see all the moving parts, would it be reasonable to expect, like what would be the expected amount of annual investment sort of medium term, three to five years out? Would it be reasonable to think that it would double, stay around the same level? Just trying to get a sense of the magnitude.
Hey, Mark. It's Rael again. The projects that are going to come online in the future to commence development are going to be primarily residential. The timing, we haven't yet exactly determined the timing.
Yep.
The capital obviously is significant. We can obviously phase the timing a little bit, but we don't have a great answer for you on the exact magnitude, call it three to five years out.
Certainly not by year. I'm going to give you a sense as we did earlier of the aggregate dollars. Breaking it down by year is dependent upon a lot of things.
Sure. That's fair. Okay, last one for me before I turn it back. Mario, you mentioned that there was no material unusual occurrences. We did just notice that the G&A had a pretty significant uptick sequentially from Q4. You guys used to have an offset to your reported G&A that was a reallocation of G&A to property management, I guess, so OpEx and NOI, and that disclosure is gone this quarter. Was there an accounting change or an allocation change that drove the sequential increase in G&A or was it just a normal ebb and flow?
Mike, I think the disclosure's still there of the gross G&A, which there's two parts. One gets capitalized, relates to development spending, and one is the operating stuff that gets allocated. The G&A is just a little higher. There's a few areas that we still have to expand upon in our company, so we're trying to expand our IT platform. Some of the administrative stuff that as we now live this for a year and a bit, that's really the nature of it. The operational-wise, though, it's been pretty stable.
Okay. I apologize for missing that disclosure. We'll have a second look. Thanks very much.
Your next question comes from the line of Pammi Bir from Scotia Capital. Your line is now open.
Thanks, good morning, Stephen.
Good morning.
Just thanks for the macro update. As you mentioned, it's been a year since the CREIT acquisition and the integration seems to be done. If you think about the next 12 months, what are the near-term strategic priorities from here?
Good morning, Pammi. Certainly, as I mentioned earlier, our focus, we break it down between our IPP portfolio and our development business. On the development business, just moving the projects that we're committed to, the five largest, basically the ones in the GTA, with the total budget of about CAD 445 million. Just keeping those on track. Moving the other potential development projects basically along from a planning. As I mentioned, there's four major mixed-use sites that are in the planning stages. We want to move those along. As Mario mentioned, we're improving internally, basically IT. We've moved over to a new system, or we moved Choice over to basically a new system that was on the system that CREIT was on before. That integration is done, but we continue the modernization there. Those are the main things.
That's helpful. I guess if we maybe just look at the balance sheet for a minute. Is there a near-term objective to get leverage, maybe not close to where CREIT levels were. If we think about the next year, get leverage down a bit further, whether it's through dispositions or other means. Just curious if that's part of the agenda.
I guess I'll go first, Pammi. I think right now, given the nature of our portfolio and the tenant profile, the balance sheet's fine. I think there's no immediate urgency to do anything. Obviously, if the opportunity comes up and we have a chance to reduce leverage, we would do that. Right now, there's no sense of any really immediate urgency to get it down. I think where we are right now, we're pretty comfortable.
Okay. Just on the CAD 300 million of debentures coming up for maturity this year, what are the plans there in terms of refinancing? Is it sticking with the unsecured or moving to secured? Maybe just some color on duration.
Sure. The beauty with our company right now is we have access, I think, to multiple sources of capital. Obviously, unsecured debt is probably the most meaningful part of our balance sheet and one we'd like to continue. The market's open, it's available. It's an option, but the beauty is, again, if it does freeze up or the pricing gets out of the way, we have a big presence in the secured mortgage market, and also in the corporate banking market as well. Unsecured would be our first choice if the market's open.
Okay. I guess in terms of term, are you thinking 5 to 10 or something shorter?
Really, it's the latter. It's filling in the latter.
Okay.
7 to 10 is probably a spot that would be good, but we have a lot of flexibility.
Okay. Just last one. On the Yonge and College project there, the new one, what's the overall timeline here? Then just, given the affordable housing component to it, how does that impact the economics in terms of the funding or the expected yield?
As far as timing, Pammi, we going through the zoning process. We do expect strong support both from the province and the city, just given the nature of the project. We don't have an exact timeline on when we would start construction. The second part to your question, the affordable component, we bought or purchased the land at a discounted value from the province. We also don't pay DCs on the affordable unit component, and we don't pay property taxes when the building is operational. The yield is slightly lower than you would see on call it a full market rental residential project. Mitigating that is you would have a cheaper source of financing just given CMHC insurance. There's also programs with CMHC where you can get higher LTV, so your equity requirements are a lot lower.
As Stephen mentioned, that we do expect some potential up zoning in the size that would enhance our yield a little bit.
Okay. That's very helpful. I guess on the 700 units initial expectation is the thought that could be, is it maybe 100 units or 200 units more or something in that range?
Yeah, it's Stephen. We just don't know at this stage. We're in the middle of the process of going through. We believe we will have an opportunity to increase it.
Okay. Thanks very much.
Your next question comes from the line of Tal Woolley from National Bank Financial. Your line is open.
Hi, good morning.
Morning.
I just wanted to start by asking about the acquisition of the third-party Loblaw sites you made this quarter. Were these opportunistic, or is there maybe a bit of a broader strategy to try and buy in some of the best of the Loblaw leased sites that are out there or some of the best third-party leased sites in the Loblaw footprint and bring those in-house to Choice?
The assets were purchased from Loblaw. Choice had a strategy of acquiring vended assets historically. The management team has historically disclosed that the bulk of the acquisitions were previously actually completed. They are solid assets and we'll evaluate each potential opportunity on a go-forward basis based on its merits. The one is strategic. It's adjacent to the site we own, and we expanded the other one. It's a very good performing store. We acquired it well below replacement cost, and we think a great real estate investment long term.
Okay, that's great. Thank you very much.
Your next question comes from the line of Johann Rodrigues from Raymond James. Your line is now open.
Hey, guys. A year into the merger of the two companies, I was wondering if you had a sense as to what on a stabilized basis here, you'd expect for cash, same property NOI growth. Maybe excluding development, just on the core portfolio here.
Sure. I think right now when we deal with the same property, it's primarily the legacy Choice portfolio.
Right.
They've got steps about 1.5%, and then you've got some recovery of capital income coming in. Between 1.5%-2% is probably a good run rate for that portfolio. The CREIT side had probably, as it becomes same asset, it probably has a growth profile that's just maybe slightly below that. Again, 1.5%-2% would probably be a good run rate on same asset cash NOI.
Okay. Great. Maybe also, what would be the expectation for 2019, maybe even over the next two years for divestitures, if any?
Yeah, it's Stephen. We don't have a set number for divestitures at this stage.
Okay. Just one or two questions on the development side. In the MD&A part 4.6, at the top of the page, you mentioned the 2019 greenfield development projects, 1.3 million sq ft. A planned investment to invest CAD 31 million in the next three to five years. I was just wondering, what does that refer to?
Sorry, Johann. We just want to pull up the table. Give us a second.
Page 16.
We've got page 16.
Yeah. Part 4.6, Greenfield development.
What part 4.6 refers to, that is of the Greenfield developments, those are the developments that are under vertical construction. There are others that we haven't yet commenced vertical construction on.
Yeah. Johann, the opening of that section 31 is really our planned investments. To clean the MD&A up, the table below only focus on the one that are actually under vertical construction. That's the difference. The 31 is really our planned spending on these projects.
Right. Johann, if you look at page 15, the 31 is broken up into CAD 26 million would relate to retail under vertical construction and CAD 6 million relating to industrial under vertical construction. That's just the incremental capital. Then obviously we've already incurred or obviously already spent a large portion of that or incurred a large portion of that.
Okay. Anything residential would be on top of that number?
Anything residential would be included in the residential, and there's a further table that breaks that out, which is on page 17. All the residential under construction is on page 17. Under construction developments.
Okay. That's helpful. Just one last before I turn it back. Do you have a sense, maybe you said this, maybe you haven't, as to what the proportion would be between rental, residential, and possible condo?
Of the projects that Stephen spoke about, for example, the five in the GTA that are under construction or various stages of development, those would all be rental residential. One of them has a very small condo component, and that one is Bovaird West in Brampton. I believe there's 207 units of rental, and I think there were 80 units or so of condo, in mid-rise condo building. Other than that, it's all rental residential. As far as the mixed use, we haven't yet determined the mix.
Okay.
Our focus is really the rental residential side of it.
Right. Okay, thanks. I'll turn it back.
Thank you.
Again, if you'd like to ask a question, press star then the number one on your telephone keypad. Your next question comes on the line of Sam Damiani from TD Securities. Your line is now open.
Thank you. Good morning. Just wanted to touch base on Woodbine again. Is the Loblaw store there going to be retained? If so, have you worked out a way to keep the store operating at the location during construction?
It will be retained long term, and we'll work with Loblaw on how to get it accomplished.
That's certainly key in many of these locations is having the relationship with the tenant to be able to do that. Over in the west block, what's the status on the leasing there in terms of the remaining square footage that needs to be leased before it opens up, I think, next year?
Yeah. The portion that's opening up next year is all leased. There is other retail that's under the Gardiner. We've done a lease with. We've done one lease with a complementary user to Loblaw and the rest we've really been holding back on the leasing because we think we would get higher rents once tenants can visualize the space. That would only come online, I think 2021 or 2022, Sam. I don't know the exact timing.
That's helpful. Just finally, on the balance sheet, Mario Barrafato, is there a plan to fix rate some of the variable rate debt that you have today?
That's a good question, Sam Damiani. Right now, we like the variable rate debt. It gives us a lot of flexibility. Specifically, we can term it out when we want and how we want, that's pretty valuable. Also, it gives us immediate use of proceeds. The reason I say it's a good question, about three months ago when interest rates were spiking up, it was a concern, I think rates are flattening out. Right now, the variable rate debt has term, it's got a reasonable cost, so I think we like the optionality of keeping it the way it is right now.
Great. Thank you.
Thanks, Sam Damiani.
There are no further questions at this time. I will turn the call back over to the presenters.
Thank you everyone for taking the time to attend our conference call, and have a great weekend.
This concludes today's conference call. You may now disconnect.