Good morning, ladies and gentlemen and w elcome to Crombie REIT's Q2 2020 Earnings Call. At this time, note that all participants’ lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during the call you require immediate assistance, please press star, zero for the Operator. Note the call is being recorded on Thursday, August 6, 2020. I would like to turn the conference over to Ruth Martin. Please go ahead.
Thank you, Sylvie. Good day, everyone, and welcome to Crombie REIT's Q2 Conference Call and Webcast. Thank you for joining us. This call is being recorded in live audio and is available on our website at www.crombiereit.com. Slides to accompany today's call are available on the Investors section of our website under Presentations and Events. On the call today are Don Clow, President and Chief Executive Officer, Clinton Keay, Chief Financial Officer and Secretary, and Glenn Hynes, Executive Vice President and Chief Operating Officer. Today's discussions include forward-looking statements. As always, we want to caution you that such statements are based on management's assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see our public filings, including our annual information form, for a discussion of these risk factors.
I will now turn the call over to Don, who will begin our discussion with comments on Crombie's overall strategy and outlook. Glenn will follow with a development update and a review of Crombie's operating fundamentals and results. Clinton will discuss our financial results, capital allocation, and approach to funding, and Don will conclude with a few final remarks. Over to you, Don.
Thank you, Ruth, and good day everyone. The economic and social disruption experienced over the last few months has been truly unprecedented. When the global pandemic was declared in March, none of us knew the duration or kind of impact it would have on our country. We've said numerous times over the last 10 years, Crombie has not only grown and optimized the quality of our grocery-anchored real estate portfolio, but at the same time, we strengthened our financial condition and created an experienced and talented team such that we were ready for the proverbial black swan, in this case, the global pandemic. Our team mobilized quickly with office staff moving to work from home and operations staff preparing our properties to ensure the health, safety, and well-being for all visitors.
I want to personally thank our team, and especially our frontline team, for their resilience and extraordinary work ethic in the face of the elevated risk of COVID-19 to keep our customers safe and properties operating. Fortunately for Crombie, most of the space within our portfolio was occupied by tenants deemed essential services, and they remained open during the national shutdown. With the economy beginning to stabilize and most businesses reopening across the country, we are pleased that our July rent collection was 93%, an increase from the 90% achieved during the Q2. As restrictions lift, we are happy to say that 97% of our tenants are open for business. Significant strides have been made in recent weeks, as Canadians adapt to the new normal. While we are cautiously optimistic amidst the worldwide pandemic, we hope the current trend of stabilization continues.
Not all tenants have been able to weather the recession caused by the pandemic. Our leasing and operation teams have worked very closely with our tenants to maintain strong relationships and provide financial assistance through our Crombie Values small business program or the federal and provincial governments Canada Emergency Commercial Rent Assistance programs. Additionally, case-by-case evaluations have been ongoing with select tenants who do not qualify for either of the two programs to determine appropriate levels of support for their business. Our strategic partnership with Empire provides a sustainable competitive advantage for Crombie that enables us to expand and diversify our defensive grocery-anchored real estate portfolio with strong risk-adjusted returns, especially in the major urban markets in Canada, where we are able to unlock the significant underlying land value and do major mixed-use residential developments. Excuse me.
We are working closely to align Crombie's strategy with Empire's strategy, with an expectation that we collectively drive high quality yet defensive growth consistently and at scale. This alignment includes a three-year plan to invest in the modernization and expansion of grocery stores, a number of store conversions, including the FreshCo Discount format in Western Canada and Farm Boy in Ontario, accelerating Sobeys' build-out of Voilà, their online grocery home delivery service, land use intensifications, and the unlocking of major developments. I want to commend the Empire team for their resilience and dedication as they worked relentlessly to put food on the tables of Canadians and keep customers safe over the last six months.
The recent launch of their online grocery home delivery service, Voilà by Sobeys in the Greater Toronto Area, and their announcement of a new three-year growth strategy, Project Horizon, indicates Crombie is fortunate to have a strong partner that has not only emerged as a leader during the COVID-19 crisis, but will also be a leader of the grocery industry in Canada for years to come. Our first six major development projects play a key role in our long-term strategy to accelerate per unit NAV and AFFO growth. Despite being well managed by our teams and our JV partners, Westbank and Prince Developments, the impacts of COVID-19 on our major developments caused some minor increases in costs and slightly delayed expected completion dates. Though some work stoppages were experienced in Quebec, our development and entitlement work continued to forge ahead.
We were thrilled to see the Safeway store at Davie Street in Vancouver open in May, and look forward to the completion of this large mixed-use development, Crombie's first, later this year in 2020. Quality and diversification of our developments and the economic returns, including the significant NAV creation and solid AFFO growth, remain of utmost importance to our strategy as we complete CAD 600 million of major developments over the next 16 months. As we have said numerous times, based on current circumstances and valuation measures, we expect these first six developments to be worth a fair value of approximately CAD 750 million-CAD 900 million upon completion, thus creating approximately CAD 1-CAD 2 per unit of net asset value.
Importantly, we continue to work with Empire and Canada's major cities on the zoning and density entitlements of seven additional projects to unlock and realize the significant land value embedded in our major urban market grocery stores and generate opportunities to continue our development program into the future. Lastly, I want to encourage investors to use caution in using short-term KPIs to judge long-term real estate assets backed by a strong financial position and an expert management team. Short-term measures are important, but please recognize real estate portfolios and platforms like Crombie's are built for stability and growth over the long term, including their ability to withstand short-term shocks as we are seeing today. With that, I'll now turn the call over to Glenn, who'll provide an update on our developments and operational highlights.
Thank you, Don, and good day everyone. Crombie remains committed to the health, safety, and well-being of our employees, tenants, customers, and communities. With the reopening of all our properties, our enhanced cleaning activities and operational physical distancing protocols continue to be of critical importance as a protective measure against the spread of the COVID-19 virus. Understanding the value of open lines of communication, we have been sharing updates with our tenants on a weekly basis and will continue to do so. Many tenants are faced with substantial changes to the way they serve their customers, so we have assisted with implementing what is required tenant by tenant, property by property.
Our portfolio is well-positioned with respect to the defensiveness of our annual minimum rent, with 76% of minimum rent generated from grocery and pharmacy-anchored properties, 68% of rent from essential services tenants like grocery stores, and only 8% of rent from small business. Our largest tenants are investment-grade grocery stores, pharmacies, banks, and government offices. Over the last few years, we've improved the quality of our portfolio by acquiring assets in Canada's top markets, as well as recycling approximately CAD 800 million of properties, mostly in secondary and tertiary markets, to reinvest in Crombie's major urban developments. The portfolio we have today is strong and improves our positioning for future periods of uncertainty, such as what we're experiencing today with COVID-19. As Don mentioned, during the month of July, 93% of gross rent was collected, an improvement from the 90% collected for the Q2, which Clinton will detail shortly.
We received full rent collection from our retail-related industrial segment, 96% of our office rents, and 92% of our retail and commercial segment. We believe collections will continue to improve with approximately 97% of tenants already open, and we anticipate virtually all our tenants will be open and operational by the end of this quarter. Our tailored approach to rent relief further strengthened our relationships with tenants. To date, we have approximately 260 tenants at 70 properties in the application process for the CECRA program. Even with the additional support, inevitably, there are still tenants at risk. Since the onset of the pandemic, there have been numerous declarations of store closures, CCA applications, or bankruptcies in the broader market. Our defensive and internet resilient portfolio has minimal exposure to these announced closures, with only 17 leases potentially impacted, representing approximately 61,000 sq ft or approximately 0.7% of annual minimum rent.
To date, only two of these 17 leases have been disclaimed, representing approximately 6,000 sq ft or approximately zero annual minimum rent impact, which is an indication of the strength of our properties. Avalon Mall is feeling the impact of the pandemic the hardest. Avalon Mall was effectively closed from the end of March to early June due to provincial government restrictions. The reopening has been extremely positive, with 93% of tenants open for business and a significant improvement in rent collection at 60% for July, compared to 42% in the Q2. Strong fundamentals are critical in these unprecedented times. Crombie experienced a small decrease in committed occupancy to 95.6%, compared to our record high occupancy of 96.2% at Q1. New leases and expansions year-to-date increased our occupancy by 92,000 sq ft at an average first-year rate of CAD 18.95 per sq ft.
While we experienced 124,000 sq ft of year-to-date net lease expiries, vacancies, terminations, and space adjustments. We ended the quarter with 88,000 sq ft of committed space at an average first-year rent of CAD 21.18 per square foot, which will boost future NOI growth. During the quarter, 230,000 sq ft of renewals were completed at a 3.6% increase over expiring rental rates. Year-to-date, our renewal program is on schedule as we have renewed 386,000 sq ft at an increase of 4% over expiring rent. During the first six months, our retail renewals were solid, with 302,000 sq ft of retail renewed at rental increases of 4.9%. As we continue to maneuver our necessity-based portfolio through these uncertain times, our team is dedicated to ensuring our underlying business fundamentals and core portfolio remain resilient and strong.
The impact of COVID-19 on our major development program, as Don noted, caused some minor cost increases and slight adjustments to completion dates. These changes are discussed in the MD&A, and I will note them here. We are pleased to report that construction at our Montreal Le Duke mixed-use development and our Montreal Voilà par IGA customer fulfillment center, or CFC, resumed in May after the six-week government-required shutdown. Construction in Vancouver, the GTA, Victoria, and St. John's, the homes of our other four major projects, were deemed essential, and work continued, albeit at a slower pace, through the quarter, with new protocols to ensure the safety of all individuals on site. We continue to expect to reach substantial completion in 2020 of our first three major developments, including Davie Street in Vancouver, Belmont Market on Vancouver Island, and Avalon Mall in Newfoundland and Labrador with slightly delayed schedules.
Investment continues in Bronte in Oakville, Le Duke in Montreal, and the Voilà par IGA CFC in Montreal, with substantial completion expected in 2021. We have another seven projects in pre-planning where we continue our work to improve and deliver value-enhancing entitlements for each development. In Davie Street, Vancouver, the new Safeway store opened on May 21st, with Scotiabank and a government liquor store scheduled to open in Q4 of this year. Total project cost for the retail component increased by CAD 600,000, reducing our expected yield range slightly to 6.2%-6.5%. The residential portion is well advanced, with construction complete and interior finishing well underway for both towers.
Despite construction continuing throughout the pandemic, the estimated substantial completion date of the 330 residential rental units has been extended slightly but will still be completed in Q4 2020, as previously communicated, with an estimated increase in total project cost of CAD 1.8 million, reducing our expected yield on cost range slightly to 5%-5.5%, which is still a very strong risk-adjusted return on a high-quality residential development in Vancouver. Belmont Market on Vancouver Island will reach substantial completion in 2020, with the final phase of the development consisting of three small buildings totaling 23,000 sq ft, which will come online in 2021. Construction commenced on the first of these three buildings during the Q2, with the remaining two buildings slated for 2021 construction.
Avalon Mall is the only regional mall in all of Newfoundland and Labrador. We are cautiously optimistic that as the economy continues to reopen, it will reemerge and continue its dominance, as evidenced by sales of approximately CAD 700 per sq ft pre-pandemic. Construction of our expansion area will be substantially complete in Q3, with the grand opening delayed until spring of 2021 due to COVID-19. 92.6% of Avalon Mall, excluding the expansion area, is leased. Due to an expected near-term slowdown of leasing activity, we have adjusted our NOI yield on cost range projections from 10.3%-11% downward in Q1 to an updated 9.2%-10.1% range in Q2. In Montreal at our Le Duke project, we've experienced some pandemic-related completion delay but still anticipate substantial completion in Q3 of 2021 as previously communicated.
This 25-story mixed-use tower with 26,000 sq ft of IGA-anchored commercial grocery and 390 residential rental units has the structure complete to the 25th floor, and the project is 89% tendered. Crombie maintains its 2021 substantial completion date for the Montreal CFC. The Empire launch of Voilà par IGA, the online grocery home delivery service to be made available in Quebec and the Ottawa area, is now expected in early 2022, delayed slightly due to the temporary shutdown of non-essential construction in Quebec during the pandemic. Construction commenced in May, foundations are in place, and steel superstructure is now underway. The Bronte Village construction site in GTA remains open and has been only marginally delayed due to the impact of a reduced workforce arising from COVID.
We still anticipate the 54,000 sq ft of commercial and 480 residential rental units will be substantially completed in Q4 of 2021, as previously communicated. Bronte is 96% tendered. Upon completion, we expect these properties to create significant AFFO growth per unit. Based on current circumstances and valuation measures, as Don noted, aggregate NAV creation of approximately CAD 1-CAD 2 per Crombie unit and increase our presence in the country's top urban markets while diversifying and improving our overall portfolio quality and income stream. Lastly, and most importantly, we're not aware of a single COVID-19 infection to date on these six project construction sites. We are proud of the work that our partners, our contractors, and our team have done in focusing on health and safety.
With that, I will now turn the call over to Clinton, who will highlight our Q2 financial results and discuss our capital and development program funding approach. Clinton?
Thank you, Glenn, and good afternoon, everyone. During these challenging times, Crombie remains in good financial health with a strong and flexible balance sheet, ample liquidity, and an ability to prudently allocate and creatively source capital. While we are pleased with our 90% collection rate in Q2, which improved to 93% in July and 97% tenant opening statistics, like everyone else, we are unable to predict the future duration and financial impacts of the pandemic with complete certainty. The pandemic created increased risk, particularly around the collection of tenant receivables. Our bad debt expense for the quarter was CAD 8.7 million. This includes CAD 1.1 million expense for the 25% rent abatement for tenants under the CECRA program, CAD 2.6 million expense for other rental abatements, and CAD 5.1 million in a general provision for bad debts.
Bad debt expense for the quarter is 8% of quarterly gross rent, consisting of 1% for CECRA, 2% for other abatements, and 5% general provision against the 7% of deferred and unpaid rents. Judgment is required in estimating bad debt expense at closure. Where doubt on collection existed, we included those amounts in our Q2 provision, negatively impacting short-term NOI by increasing bad debt expense. On a cash basis, same asset NOI decreased by 4.6% compared to the Q2 of 2019. Excluding COVID-19 related adjustments such as bad debt expense and a decline in parking revenue, same asset NOI increased by 3.6% quarter-over-quarter. AFFO per unit was CAD 0.18, decreasing from CAD 0.25 for the same quarter last year. Our AFFO payout ratio was 125.2% versus the same quarter last year at 89.9%.
FFO for the quarter decreased to CAD 0.22 per unit from CAD 0.29 for Q2 2019, and our FFO payout ratio was 101.8% versus 75.7% in the same quarter last year. The decline in AFFO and FFO is primarily due to the significant increase in bad debt expense and parking revenue impact as previously noted. Adjusting for the impact of COVID-19 on Crombie's operating performance, AFFO per unit would be CAD 0.26 and FFO per unit would be CAD 0.30. Additionally, we are feeling the effects of approximately CAD 500 million in dispositions executed in 2019 with the primary reinvestment of proceeds to major developments with no initial return while we await the completion of major developments over the next 16 months. G&A as a percentage of property revenue for Q2 was 7.2% or CAD 7 million, up from Q2 2019 of CAD 6 million.
During the quarter, in the face of the uncertainty of COVID-19, we chose to reduce operating expenses with an organizational realignment, resulting in elimination of certain positions, including two at the vice president level. Severance costs of CAD 1.5 million were incurred, resulting in the increase of G&A expense, partially offset by lower travel and office expenses. Excluding severance costs, G&A in the quarter would have been CAD 5.5 million versus CAD 6 million last year. In the first six months of 2020, when fair valuing our investment properties, we made assumptions as to the potential short and long-term impacts caused by COVID-19. Net property income has been lowered and capitalization rates increased in certain cases. In the Q1 of 2020, Crombie reduced its fair value of enclosed malls by approximately 15%, which was the primary driver behind a Q1 fair value reduction of investment properties of CAD 86 million.
In the Q2, expectations were again updated as to the impact of COVID-19, and values were in line with our Q1 estimates. Additionally, fair value was positively impacted in Q2 by non-COVID-related adjustments for capital investments in Sobeys properties, causing increased NOI and appraiser-provided reductions in capitalization rates for some of our properties in British Columbia, resulting in an increase in fair value over Q1 of CAD 85 million. Crombie remains committed to increasing weighted average term to maturity of our debt, reducing leverage over the medium term, and increasing our unencumbered asset pool. In the Q2, a 3.88%, 16-year mortgage loan for CAD 118 million on our Vaughan, Ontario, distribution center was secured and funded. We repaid approximately CAD 10 million of mortgages, leaving CAD 48 million of mortgages maturing primarily in Q4 of 2020.
Our unencumbered asset pool remained consistent at approximately CAD 1.5 billion, and our balance sheet remains flexible with approximately CAD 400 million of available liquidity. Our debt to gross book value on a fair value basis was 49.2% at the end of Q2, compared to 50% for Q1 2020 or 48.9% adjusted for cash on hand in Q1. We ended the quarter with debt to trailing 12-month EBITDA at 9.12x versus 8.86x at Q1 2020. Adjusting for bad debts recorded in the quarter, debt to EBITDA would have been 8.73x . Subsequent to the quarter end, Crombie put in place a CAD 1 billion base shelf prospectus for 25 months to allow the issuance of units, debt, and other related securities on an accelerated basis. This is a proactive, ordinary course step, and we do not see an immediate need to access the capital markets.
As we continue to navigate through this difficult time. Crombie grocery and pharmacy anchor portfolio of essential service tenants will support our communities, businesses, tenants, and employees, while never losing sight of our long-term strategy to effectively allocate capital to accelerate NAV and AFFO growth per unit, delivering value. I will now turn the call over to Don for a few closing comments.
Thank you, Clinton. Before we conclude for questions, I'd like to take a moment to reflect on current events and their impact on Crombie. As Crombie continues to grow and evolve, so too does our focus on ESG priorities. In developing a comprehensive ESG program, we have identified key areas in which we can improve our business and our impact. In recent months, the world has watched as social protests led by Black Lives Matter and other organizations have mobilized our communities to commit to eliminating racial injustices. Diversity and inclusion is a critically important element of our social impact commitment and is essential to the success of every organization. We can and must do a better job of ensuring this work is ingrained in our hiring and employment practices, and we are committed to doing just that.
Like many CEOs across Canada, I recently signed the BlackNorth CEO pledge, which was initiated by the Canadian Council of Business Leaders Against Anti-Black Systemic Racism. Signing the pledge, I've committed myself and Crombie to work diligently to uphold its underlying promise. Working diligently is the unspoken mantra of the Crombie team. I've often said that one of my priorities as CEO is to ensure Crombie is well-prepared if, quote, the world falls off a cliff. unquote. While we envision different potential scenarios that might play out, a global pandemic wasn't at the top of the list. As we saw the virus take hold across China and Italy, our business continuity team met daily to plan our response in case Canada faced a similar crisis. I knew we had a strong team at Crombie, and they proved me correct.
People who are the backbone of our business are smart, focused, and committed to excellence. What we have seen over the past months is that our team is also incredibly resilient and nimble in the face of a fast-changing and unprecedented environment. Every week, our team successfully faces a new challenge, whether it is supporting tenants through rent relief, adapting our operations to evolving health and safety protocols, maintaining strong relationships, or preparing comprehensive quarterly reports from home. We continue to work diligently to ensure our commitment to all of our stakeholders remains steadfast. I want to again thank each and every member of the Crombie team for their perseverance and excellence over the last six months.
Lastly, as I've said many times, we believe in and are deeply committed to our long-term strategy of creating value with our strategic partner, Empire, together with a strong real estate development program in Canada's major urban markets that is layered on top of one of the best grocery-anchored real estate portfolios in Canada. We believe this strategy, when combined with our solid financial condition, our access to capital, and our entrepreneurial talent, will generate solid total unit holder returns for our stakeholders for years to come. That concludes our prepared remarks. We're now happy to answer your questions.
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you do you have a question, please press star, followed by one on your touchtone phone. You will then hear a three-tone prompt acknowledging your request. Should you wish to withdraw your question, simply press star, followed by two and if you’re using a speakerphone, we ask that you please lift the handset before pressing any keys. Please go ahead and press star, one now if you have any questions. Your first question will be from Mike Markidis at Desjardins. Please go ahead.
Hi, everyone.
Hi, Michael.
Thank you very much for providing the breakdown of the bad debt expense on page 18 of the investor presentation, the call deck. Just wanted to clarify a few things, if you don't mind. First off, do you, off the top of your head, just have the I mean, I'm sure we could back it up, but what the total gross rent billed for the quarter was?
Yeah, Michael. The gross rent billed for the quarter would be around CAD 103 million.
Perfect. Okay.
It's a bit higher than the revenue per the financials, but yeah, about CAD 103 million.
Right. Yeah, we've been learning that you got to include the tax on some of this stuff as you go forward, which I don't think is reflected in your P&L. With the collected amount, just to confirm it's consistent with everybody else, the government receivable on CECRA, which I guess would be about 2%, would be included in the 90, correct?
Correct.
Okay, good. Just curious on the abatement expense, sort of how you're looking at that versus the deferrals. I guess a two-part question. Is some of that a permanent reduction, i.e., you abated 2% for the quarter and therefore there's a rent reduction going forward of maybe 25%? I'm just trying to get a sense how much of that is just an ongoing reduction versus a free rent.
No. I would say, Mike, it's essentially, never use the word one time, but it's not an ongoing rent abatement. It's a cost that's recognized in the quarter. One of the other matters I would say is that part of the consideration in exchange for the rent abatement is some other things that are valuable to Crombie, whether it's term extensions or whether it's some restrictions of development rights, et cetera. Donnie may speak to this a little bit later as well, but the abatement piece, we would think, what's covered in the quarter should be the vast majority of any abatement cost, assuming things continue on the current trajectory that we're currently feeling.
You read my mind with that one, Glenn, so thank you very much for providing that. Just lastly, I guess you guys have the 5% of anticipated uncollectibles that are grouped together with the deferrals and the unpaid. Is that to say that basically the provision is solely? Yeah, I guess that would be the case because you don't have an abatement. There's no abatement, there's no receivable. Okay, I think you just answered my question.
You asked a question there and it's a good question, which is exactly right. I think us and others, what we've really said is we have the bad debt cost for the quarter of 8%. You can earmark 1% specifically for CECRA, the 25% piece, that's straightforward. The abatement piece is straightforward. The remaining 5% is a provision against what's in the deferral category. We're confident and optimistic that the deferrals will be collected, as we're confident and optimistic that a chunk of the unpaid will be. We were, I would say, Mike, a bit prudent or even conservative in that piece, the 5% provision against that remaining seven.
I think the biggest piece of why, as we look at it today, why we feel it was very conservative, is that Avalon has really turned the corner nicely with 93% of tenants now open and moving from a 42% rent collection in the quarter up to 60% in July and feeling really good about foot traffic and the mood at Avalon. We're feeling much better. Your interpretation of those numbers is correct.
Okay. Appreciate all those clarifications, just because everyone's presenting things a little bit differently, and we're just trying to make sure it's all comparable. Your guys' collection rates obviously stand up very well versus peers. Just last one for me. With respect to your office portfolio, just curious if you have a sense of how much of the tenant base is actually back in force in the office portfolio.
Yeah, the office space is interesting, and ours is primarily in Halifax. We have about 97% of the tenants are operational. Only about half of them have workforce that's back on site. I think with work from home going well for many of these companies, we're not expecting to see a big resurgence in that office return until the fall. We're seeing, like if we look at our parking piece, which is very much tied to office, that's really slowed down. The food court at Scotia Square is slowed down. Our guess is we're going to start to see a doubling of our office population by mid-September. I think from there, it's just going to be a gradual confidence piece as vaccines in place, et cetera.
I think the fact that work from home seems to be going relatively famously for many has reduced the urgency. I would also say, this is a cultural thing maybe in Atlantic Canada, the two markets where we have a lot of office, which is principally Halifax, but a bit in Moncton, there seems to be not an urgent rush to get back. We're expecting to see significant ramp-up in the fall. Hopefully, that helps. The good news is that 97% of the tenants are operational. Rent collection has been strong. I think you noted, or you may have noted that our same asset NOI drop in office for the quarter was principally on the parking side. That's where most of our parking disaffection was, or at least a good portion was. Beyond that, we're still feeling good about office fundamentals.
It's going to take a bit of time with elevator concern and other concern to get all the traffic back.
That's very useful, Glenn. Thank you very much. I'll turn it back.
Thank you. Once again, ladies and gentlemen, if you do have a question at this time, please press star followed by one on your touch-tone phone. Your next question will be from Tal Woolley at National Bank Financial. Please go ahead.
Hi, good morning or good afternoon.
Good afternoon, Tal.
You guys, your geographic concentration is a little bit different than your peers, skewed a little bit more to the Maritimes and Western Canada. Just the pandemic sort of spread has been obviously very different across the country. I'm just wondering if you can talk maybe a little bit to what leasing demand looks like across some of the regions, just to try and understand some of the regional trends that might be out there.
It's interesting. We're not seeing anything dramatically different. The beauty of our portfolio, for example, in Alberta, where you might be worried more so, we just have a very strong grocery anchored portfolio there. The ancillary, the lease up is very strong. We're 99% occupied in Western Canada. As we look at our renewal spreads over expiry, it's actually pretty balanced. That's 4% year-to-date, 3.6% for the quarter, and 4.9% on our retail renewals, Tal. If I look across the country, and it's not a huge canvas because with our long lease terms, we don't have a ton of renewal activity. For the first half year, it's been very consistently positive in terms of the renewal spread. There's not pockets of market that are negative and other pockets that are more positive. It's pretty well balanced.
Secondly, as we look at the renewals for the balance of the year, we're feeling pretty good. I think we have another 500,000 sq ft. We have a couple of big deals. We had one, about 100,000 sq ft renewal that actually got renewed in just early Q3. That was a Q4 renewal. We're feeling good about the renewal piece. I think last call, we would've expressed caution about maintaining positive renewal spreads on expiries, but that's been very pleasing so far. I can't tell you that there's a whole lot of anomalies. Maybe Don or Clinton can, or have a different perspective. At this point, the leasing side has been fine. We're expecting it to be a bit slower, post-pandemic or during the pandemic for new leasing. Thankfully so far, the renewal side and not losing many tenants.
Those stats on the CCAA piece that we shared in the script, those are pretty good. We've had 17 leases that are, call it part and parcel of a CCA process. Only two of those are being disclaimed, that speaks to the fact that the other 15 are just great locations and great properties that even through CCAA, the tenant doesn't want to give them up. I think that bodes well, nothing specifically geographically that would be of interest.
Okay. As we get sort of closer to completion on Davie Street on the residential piece, can you just talk a bit about marketing plan, how you sort of might adjust how you approach going to market, given everything that's going on, too?
Yeah, Tal, it's Donnie. Number one, we've been delayed, call it by a quarter, which pushes us into early 2021 in terms of lease up. We've been saying for the last year or so, us and our partner, Westbank, have been saying that we'll be taking our time to ensure we get the rents that we want to get out of the gate, because as you know, there's limits on what can be done after the fact. That will continue to be what we expect to happen. There has been some softening in the market to some degree, and we're concerned about what impacts of Airbnb and other factors have on the market. We still have very solid confidence.
Our partner has projects in the community that have leased throughout the COVID-19 pandemic and shutdown, and they're quite confident that we will also lease up as we get into 2021 over time. And honestly, our pro forma rents are still well above what we initially would've forecasted them that are in our MD&A. Again, we have some margin of safety there in terms of hitting the numbers. The project's been very well managed. They've been very resilient through the construction uncertainties, whether it be supply chain or just the labor forces and managing a number of scares that we thought may have been COVID but were not confirmed and ultimately proved not to be COVID. There's lots of things that happened on that site, and we're very thankful to have a great partner who's done a great job.
Our teams have done, I think, an immense amount of work in bringing this project to completion. We're really excited. It's going to drive a lot of NAV creation for this company and AFFO growth over time. It's center ice in Vancouver, so for us, it's a great asset and great location that's probably the best dirt in the country. We're quite pleased with that. Anyway, some of this stuff is short term in my mind, but I think in the long term, we'll be very thankful that we have that asset moving forward.
Any early word on the performance of the reopened store?
Sorry, the what?
Any early word on the performance of the reopened Safeway there?
Nothing but anecdotal so far, Tal, we're hearing Sobeys is very happy with the store. I think they opened a little softer than normal because of the pandemic timing. It's a beautiful store. We're hearing good comments. They seem quite satisfied. We're not privy to sales numbers, and if we were, I don't think we'd be sharing them.
Yeah.
So far so good is what we're hearing. It's a beautiful store, and it's going to be a great centerpiece to the 330 units above. Good news too, the Scotiabank and the liquor store will commence paying rent in Q3. They'll be taking occupancy in Q4. We'll have almost a full complement of retail there operational as we gear up to rent up the apartments.
Okay. Just lastly, you completed a couple transactions selling some of your grocery-anchored retail to private investors last year. Have you, subsequent to all of this economic tumult, have you received any more inbound interest on that type of product?
Yeah. Tal, we have, call it a constant flow of inbounds, and I would say at scale. In a variety of forms. Whether it be the 100% non-core, what we call non-core. That could be whether it be tertiary, secondary markets, it could be some of our drugstores that we're interested in potentially selling. It could be partial interests like the Northern deal we did a year and a half ago for 50% of the Oak Street deal, where it was an 89/11 more unconventional deal. All of those types of inquiries are, I'll call them consistently inbound. We, I would say with our stock price where it is, we would be looking again at dispositions. Again, it's a form of equity, and we've proved we can do it at or above IFRS through 2018 and 2019.
We'll be starting to look at that program and working on it over the next number of months until the markets sort of settle out and rebound to something that's closer to our NAV. We don't need equity, as we've said a number of times, as Clinton said earlier, really into right now end of 2021 and 2022. We don't really need equity. We're at a place where we're in a pretty good space with a lot of different sources of capital. The inbounds are an important part of that. People that are interested in being our partner on good assets.
Okay, thanks very much, gentlemen.
Thanks, Tal.
Thanks, Tal.
Thank you. As a reminder again, ladies and gentlemen, if you do have any questions, please press star one at this time. Right now, we have no further questions registered. Please proceed.
Thank you for your time today, and we look forward to updating you on our progress on our Q3 call in November. Stay safe and healthy.
Thanks, everyone.
Thanks, everybody.
Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending, and at this time, we do ask that you please disconnect your lines.