Good morning, ladies and gentlemen, welcome to the Crombie REIT third quarter fiscal 2019 conference call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question- and- answer session. If at any time during this call you require assistance, please press star zero for the operator. This call is being recorded on Thursday, November 7, 2019. I would now like to turn the conference over to Clinton Keay. Please go ahead.
Thank you, Joanna. Good day, everyone, and welcome to Crombie REIT's third quarter 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 investor section of our website, under presentations and events. On the call today are Don Clow, President and Chief Executive Officer, Glenn Hynes, Executive Vice President and Chief Operating Officer, and myself, Clinton Keay, Chief Financial Officer and Secretary. Today's discussion includes 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. I will conclude our remarks with a discussion of financial results, capital allocation, and approach to funding. Don?
Thank you, Clinton, and good day, everyone. Last month, we held our first investor day in Toronto. We were very pleased to see many of our analysts and investors in the room that day, and to have the time to explain our strategy, showcase the strength and depth of our team, and share some exciting details about our major development pipeline. I want to pass on our thanks to those of you who were able to attend. If you missed it, or you'd like another look at that presentation, you can find it in the investor section of our website. Crombie's strategy is clear.
We are relentless in our focus on accelerating AFFO and NAV growth by delivering solid fundamentals from our grocery-anchored retail portfolio, uniquely creating value from our relationships with Empire Company and Sobeys, as well as driving extraordinary cash flow and NAV growth from our mixed-use development pipeline. All while maintaining a strong financial condition with ample liquidity and multiple and innovative sources of capital. We are very pleased with our solid fundamentals, including our strong occupancy of 96.1%, our 3.3% same asset NOI growth, and rental growth in Q3 renewals of 4.7%. These performance indicators show the strength of our grocery-anchored retail office and retail-related industrial portfolio. Empire is one of Canada's strongest retailers and accounts for over 50% of Crombie's annual minimum rent.
At our recent investor day, Michael Medline and Mike Vels shared that they're very confident that bricks and mortar will drive growth in grocery retail sales and profitability for years to come. In addition to building the Voilà by Sobeys e-commerce platform, Empire recognizes the need to maintain and modernize their stores across the country. As their largest landlord, we are working together to align our strategies to capitalize on a wide range of strategic and accretive transactions. Modernizations and conversions to discount drive AFFO and NAV growth, as well as enhance our portfolio quality. Collaboration on land use intensification creates additional CRU opportunities and can lead to increases in NOI, NAV, and weighted average lease terms.
Our relationship also allows us to unlock major development opportunities, increase our presence in VECTOM and major markets, and further diversify our portfolio as residential and retail-related industrial real estate solutions like the Montreal Voilà par IGA CFC using the Ocado platform. This collaboration and strategic alignment with Empire enables us to unlock synergistic value creation in the short, medium, and long term. Crombie is acutely focused on maximizing value creation through our development program. We have curated a 33-property development pipeline representing CAD 4 billion-CAD 5.8 billion of investment in potential mixed-use developments. 19 of these sites are in Vancouver, Toronto, and Montreal. These development opportunities have the potential to produce 1.3 million sq ft of additional commercial area, 9.8 million sq ft of residential space, and over 11,000 residential units in what are truly world-class cities.
There is significant value embedded in our portfolio that is not recognized under IFRS. Overall, we are very pleased with our execution and progress to date, on which Glenn will provide an update shortly. Construction continues on our six active developments, as we expect revenue will continue to ramp up and nicely increase in 2020. We are also pushing forward with our seven projects in the pre-planning phase. We expect to invest CAD 150 million-CAD 200 million in our development program annually, with project completions accelerating over the next few years. Crombie has embarked on our development journey from a position of financial strength. Cornerstone of our financial strategy is to effectively allocate capital to accelerate both NAV and AFFO per unit growth, while funding with multiple sources of equity, debt, and debt financing through capital recycling, capital markets, and joint ventures.
In Q3, we have total gross sale proceeds of CAD 342 million on assets in full or partial interests, allowing us to redirect capital to our growth with Sobeys and our major mixed-use development pipeline. These disposition transactions completed at values in line with or above IFRS fair value speak to the quality of our portfolio, our desirability as a partner, and provide ongoing validation of our NAV. The third quarter dispositions included an 89% interest in a retail property in Charlottetown, PEI, a 100% interest in a retail property in Grimsby, Ontario, and the transfer of air rights at our Davie Street property into our joint venture. Subsequent to the quarter, on October 7th, Crombie closed our second tranche of property dispositions with Oak Street Real Estate Capital, selling 89% non-managing interest in a 15-property portfolio for total proceeds of approximately CAD 193 million, bringing our year-to-date total to CAD 535 million.
This transaction once again highlights our ability to creatively execute partial interest property dispositions, innovatively identify new and expanding sources of capital, and successfully pre-fund our major mixed-use development commitments well into 2020, all while aligning with our long-term funding strategy. I have full confidence in our collective ability to continue to unlock value at Crombie for years to come. Our team values relationships and is committed to the long-term sustainable growth of Crombie and our stakeholders. Our solid operating fundamentals, entrepreneurial leasing, high occupancy rates, and strong operation of our properties provide the foundation to enable us to create significant value from our relationship with Empire and Sobeys and our major development pipeline, as I said at the beginning of my comments.
We are relentless in our efforts to accelerate the growth of AFFO and NAV and are very pleased to see our first major developments coming online and beginning to produce high-quality cash flow and recognize net asset value. With that, I will now turn the call over to Glenn, who will provide an update on our development and operational highlights.
Thank you, Don, and good morning, everyone. Our sustainable competitive advantage with Empire and our substantial major mixed-use development pipeline are vital to driving AFFO and NAV growth in the short, medium, and long term. However, the core fundamentals of our 284-property portfolio must be emphasized. In fact, Crombie's solid fundamentals, enabled by our needs-based retail portfolio, act as a wonderful platform and foundation to the successful execution of our strategy. Our consistent improving financial metrics that anchor us are driven by solid leasing activity. Q3 committed occupancy was 96.1%, an improvement from 95.9% at Q2 of this year. This includes new leasing, which has been impressive in Atlantic Canada, and strong renewal activity, especially in the Halifax office market. New leases and expansions increased occupancy by 201,000 sq ft at September 30th at an average first-year rate of CAD 19.81 per sq ft.
We ended the quarter with 81,000 square feet of committed space at an average first-year rent of CAD 25.29 per square foot, which will boost future NOI growth. A busy third quarter had 627,000 square feet of renewals completed with a solid increase of 4.7% over expiring rental rates. As previously mentioned, what is particularly impressive is the renewal activity in the Halifax office market, with 292,000 square feet executed in the quarter. Notable deals include a five-year renewal with the Department of Health and Wellness at Barrington Tower and a 10-year renewal of the Department of Education at Brunswick Place. Both province of Nova Scotia leases are close to 100,000 square feet each, which helped increase their weighted average lease term to eight years compared to the two to three years it was a few months ago.
Year-to-date, we have renewed 926,000 sq ft at an increase of 3.9% over expiring rent. During the first nine months, retail renewals were strong, with 422,000 sq ft renewed at rental increases of 5.9%. Our core portfolio is performing very well and our team is dedicated to ensuring our underlying business fundamentals and core portfolio remain solid as we build out our mixed-use development pipeline. Strides were made during the quarter to bring the repurposing of certain properties to completion. Algonquin Avenue in North Bay, Ontario, and Uptown Center in Fredericton, New Brunswick, are catching up to the Sydney Shopping Centre in Sydney, Nova Scotia, with the backfilling of the former Target space. After Target's exit from Canada, repurposing of these three sites commenced and have earned strong returns. HomeSense, at approximately 20,000 sq ft, opened in North Bay, bringing occupancy to 80%.
Occupancy at Uptown Centre in Fredericton is now at 94% after the approximate 26,000 sq ft Marshalls opened during the quarter. Overall, we have more than replaced all the Target, Zellers, and Sears revenue that was lost a few years ago by backfilling with better tenants that are more suited to these markets. Not all retail is created equal. Retailers that focus on providing value, convenience, and experience will do well in the evolving digital economy. Discount off-price retailers with strong value focus lead the way. Recognizing that, our needs-based properties are performing very well in the evolving retail landscape and are poised for future growth. The types of tenants frequenting our properties are growing and opening new stores, not shrinking. Examples of these tenants are Dollarama, Farm Boy, Giant Tiger, and Marshalls/Winners.
In 2018 and 2019, within our portfolio, we have had four new Dollarama open and two existing locations expanded, two new Marshalls/Winners and one relocation to a new and larger space, and one new Giant Tiger open. We are focused on fostering these relationships. In our needs-based space, and by a wide margin, we are seeing more stores opening than closing. Of equal importance, there are many retailers who are faced with store closures. Traditional retailers with weak value propositions, aged and static merchandising plans, and absence of an omni-channel strategy failed to adapt to the evolving digital economy. Examples of these retailers are Payless Shoes, Gymboree, Forever 21, Bombay, Nine West. Crombie is very limited to no exposure to these retailers and categories.
As Don previously mentioned, to date, we're extremely pleased with the progress of our active development pipeline, having invested approximately CAD 324 million while remaining on track and on budget. We anticipate our active major development pipeline creating significant value for our unit holders, with estimated yields on cost for our first six projects in the range of 5.6%-6%, which we expect will translate into CAD 1 to CAD 2 of net asset value per unit within the next one to two years, assuming current market and cap rate conditions continue. Our estimated yields on costs are calculated using the expected full-year NOI divided by the total cost of development. Rental rates used in the expected full-year NOI are derived from market studies and validated on a regular basis. Included in our development costs are construction costs, including hard and soft costs, tenant costs, capitalized interest, and land at fair value.
Beatty Street is our first active major mixed-use development with a potential NAV creation of CAD 65 million-CAD 81 million. The retail podium has been constructed, and tower concrete is complete, with residential glazing now being installed. Safeway and ancillary retail space are expected to open in Q1 of next year, with 330 rental residential units opening in Q3 of next year. Belmont Market is 80% tendered and has potential NAV creation of CAD 17 million-CAD 23 million. Construction of the final portion of the project, totaling 23,000 sq ft in three buildings, should commence in early 2020. Currently, active pre-leasing is taking place, with deals pending on approximately 11,000 sq ft of available space. The approximate 50,000 sq ft Thrifty Foods store and our first phase of retail and service tenants are in occupancy and paying rent.
Avalon Mall is estimated to have a yield on cost of 10.3%-11% and the potential to create CAD 33 million to CAD 44 million of NAV. During the quarter, Winners HomeSense opened in their new space. Advanced discussions with other potential national anchor and CRU tenants continued. Occupancy of the new retail units is expected to continue into 2020. In Montreal, our Le Duke project is estimated to have a yield on cost of 5.4%-5.8%. Concrete work for the below-grade parking structure and retail level is now complete. The residential structure for our 390 units is well underway. Completion of this project is expected to be in the first quarter of 2021. Le Duke is estimated to have potential NAV creation of CAD 21 million to CAD 26 million. Bronte Village is 87% tendered. Construction of 480 residential units in Oakville is actively progressing.
Potential NAV creation for this development is approximately CAD 51 million-CAD 64 million. Site work is well underway, with construction to commence in early 2020 at Pointe-Claire in Montreal. The estimated yield on cost for this project is 6.1%-6.4%, with potential NAV creation of CAD 19 million-CAD 32 million. Upon completion, all these properties are expected to create significant NAV and AFFO growth, increase our presence in the country's top urban markets, while diversifying and improving our overall portfolio quality and income stream. With that, I will now turn the call over to Clinton, who will highlight our third quarter financial results and discuss our capital and development program funding approach.
Thank you, Glenn. The consistent, stable, and strong fundamental growth of Crombie REIT continues to deliver positive same asset NOI growth this quarter. On a cash basis, quarterly same asset NOI increased by 3.3% and 3.5% for the year-to-date. Quarter-to-date and year-to-date, same asset NOI, excluding the impact of IFRS 16, increased 2.8% and 3.1% respectively. AFFO per unit decreased slightly to CAD 0.24 from CAD 0.25 for the same quarter last year. Our Q3 AFFO payout ratio was 92.7% versus the same quarter last year at 89%. FFO for the quarter decreased CAD 0.01 to CAD 0.29 per unit, and our FFO payout ratio was 77.8% versus 74.3% in Q3 2018. Considering our significant disposition activity this year, reduction in leverage, and our continued investment in our development pipeline, we are pleased with these results.
We are beginning to feel the effect of approximately CAD 800 million in dispositions over the past 18 months and the investment of approximately CAD 324 million of capital in major developments at no initial return. However, we will have projects emerging from our pipeline in 2020, which will begin contributing to both NAV and AFFO growth. G&A as a percentage of property revenue for Q3 was 6.3%, or CAD 6.1 million, up from Q3 '18 at 4.9%, or CAD 4.9 million. This increase was primarily driven by salaries and benefit costs, the majority of which is related to the impact of our significant unit price increase year to date, which has resulted in higher stock-based compensation expense. Excluding the impact of our unit price increase and asset dispositions, G&A would be at approximately 5.5% of property revenue for Q3 and 5.2% year to date.
Our debt to gross book value on a fair value basis improved to 48.9% at the end of Q3, compared to 49.2% at Q2 and 51% at the end of Q4 2018. We ended the quarter with debt to trailing 12-month EBITDA at 8.35 times, an improvement compared to 8.66 times at Q4 2018. During the quarter, Crombie REIT issued a seven-year, CAD 200 million Series F unsecured note bearing a desirable interest rate of 3.677%. Our unencumbered asset pool increased to CAD 960 million from approximately CAD 954 million at Q2, and our balance sheet remains flexible with approximately CAD 451 million of available liquidity. During the quarter, our bilateral bank facility was extended and now expires June 30th, 2023. Subsequent to the quarter end, we renewed our revolver for an additional year.
In the next 14 months, Crombie has approximately CAD 300 million of mortgages maturing with a weighted average interest rate of 4.87%. Of the approximate CAD 300 million in maturities, CAD 100 million is coming due prior to the end of 2019, and a CAD 153 million mortgage at Scotia Square in Halifax, Nova Scotia, is coming due in February 2020. As I noted at our investor day in October, there is substantial opportunity to harvest interest savings and extend our weighted average term to maturity. We will continue to focus on reducing our total leverage over the medium term while maintaining ample liquidity in our bank credit facilities. Crombie has long weighted average lease terms of approximately 10 years, and we believe in matching such leases with longer duration debt. We plan to increase our weighted average term to maturity while taking advantage of the current low-interest-rate environment.
Crombie is successfully executing on our strategy to secure multiple sources of cost-effective capital while prioritizing our investments to drive growth in both NAV and AFFO per unit. Our solid balance sheet, ample liquidity, access to multiple sources of capital, and our strong underlying fundamentals support our robust development pipeline. Lastly, Crombie anticipates that it will declare a special distribution to unitholders in the fourth quarter of 2019 as a result of the increase in taxable income generated by the capital recycling transactions completed during the nine-month period ending September 30th, 2019, and those anticipated to be completed during the fourth quarter of 2019.
Crombie intends to make a special distribution payable partially in cash and partially in units to provide unitholders with cash to help fund any additional tax that may arise associated with the special distribution while preserving most of the net cash proceeds generated by the sale transaction for reinvestment in our value creation opportunities with Empire and other major developments in line with our strategy. The amount of this special distribution is expected to be between CAD 0.55-CAD 0.65 per unit based on the number of units outstanding as of the date hereof, which will be declared payable on or before December 31st, 2019, to unitholders of record on the date the distribution becomes payable. Thank you for listening, and we're now happy to respond to your questions.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. If you are using a speakerphone, please lift the handset before pressing any key. Your first question is from Dean Wilkinson of CIBC. Dean, please go ahead.
Thanks. Morning, everybody.
Morning.
Don, just given the success of the development projects to date and the size of the pipeline, you've effectively delevered the balance sheet now down into, probably post this transaction, sort of mid high 40-ish range. Where would you need to see the balance sheet vis-à-vis either debt or equity to ramp up that development process and maybe bring some of that development forward to try and capture a little more of that with some immediacy?
We've talked about having debt-to-GBV in the high 40s with a medium-term target to get it to the mid-40s. We've made progress on that front. On the development, it is an exceptionally high-quality development pipeline, which we're very proud of. As we've indicated, I think I did so in my remarks, we're looking to spend about CAD 150 million-CAD 200 million-
Yeah
on that pipeline annually. We think is a good, solid bit of progress on our development pipeline. We are working very closely today with Sobeys in terms of, call it a systematic approach to unlocking the value over time. We have a very good relationship, obviously, with our sister company, and we have a very good process. In terms of increasing the pace, it is going to depend a lot on their network planning and what they're planning to do. I guess the answer to your question, Dean, is we would like to ramp it up over time. In the near term, I think that CAD 150 million-CAD 200 million estimate annual spending is something that's achievable.
Again, it's also dependent, as you know, very much on what happens with the various communities and the cities and the individual projects. It's Sobeys, the cities, all the planning efforts. It's a pretty complicated process. Overall, we think we can hit those numbers in terms of rate of spending. The big news with us is that we'll start to see completions on those big mixed-use developments. As you know, when you have spending without completions, it's dilutive.
Right. Yeah, the drag comes back in.
Delays in completions do not, we think, materially impact our numbers.
What's your comfort level in terms of percentage of the balance sheet that you want to go to in terms of development? Is it 5%, 10%, something in that range?
In that range. I'm comfortable with that given the quality of the developments and obviously given the fact that we're working on longer-term plans to sequence the developments over time, which I think, again, the unique relationship we have with Sobeys.
Should allow us to develop a three-year to five-year plan to unlock developments, therefore you can get sequencing and at scale. Ultimately, the goal is to have consistency. The consistency we think, unitholders will like that. Investors will like that because then people will be able to plan out what the growth rate improvement will be, I think, model it out. It's driving that consistency of the pipeline. That's, I think, one of the most critical things that we have as an opportunity, and we're working very hard on that.
Yeah, I agree with that. Thanks for that. Just a question for Clinton. On the same asset NOI, do you have handy what that would've been without the lease termination income?
Yeah. Glenn, go ahead.
Sure. In the quarter, we had about CAD 800,000 of lease termination income, but only half of that was for properties in same asset category.
Okay.
The 3.3% reported would adjust down to 2.6%. Just a quick comment. The two settlements in the quarter from Target, one was Fredericton, New Brunswick, Uptown, which is a redevelopment property, and I spoke of in my remarks. The second one is Sydney, Nova Scotia, which is back in the same-asset. Short answer, 2.6% would be the adjusted same-asset NOI for Q3.
Perfect. Thanks a lot. I will hand it back, guys. Thanks.
Thanks.
Thanks.
Thank you. Ladies and gentlemen, as a reminder, should you have any questions, please press star followed by one. The next question is from Sam Damiani of TD. Please go ahead.
Thanks. Good morning, everyone.
Good morning.
Just to start off on, I guess, on the leasing side. The portfolio, very resilient, occupancy rates are indicating that. Just wondering if you're seeing any areas of weakness. You did have some lease termination fees in the quarter, and what your outlook is for 2020 bankruptcy season, for the retail sector generally.
Well, feel pretty good. I think the lease termination income, though, is all in the quarter from Target. That's just the last hangnail of that long journey with Target. We're very pleased to get that money. Now we're seeing conditions, and I've said both in my remarks today and on Investor Day, we really have to acknowledge that not all retail is created equal. We look at the deals we're doing with the Dollaramas and with the TJXs, and with the Giant Tiger and others. We're finding the retail landscape pretty good. There was an article the other day, I think about Lowe's, for example. Lowe's in the country, we have two locations, actually, both I think are quite strong in Nova Scotia, but represents CAD 0.5 million of annual minimum rent.
The good news, if you look at our top 20 tenants, you'll see that they're all very vibrant, mostly investment-grade, extremely strong, dynamic tenants that are not going anywhere, but progressing forward. Losing a Lowe's or Toys Us was in the market. We've got one Toys Us in St. John's, Newfoundland, which does quite well as well. We feel very good. You can never expect the future. There's certain tenants out there that could go wayward and go out of business. As we look at our tenant roster and the types of tenants that we're pursuing across the country, we're very pleased. The success that we've had in improving our occupancy has been doing deals of scale with the Giant Tigers and the Dollarama and those types of tenants. They've actually been very complimentary for the most part to our grocery-anchored centers.
As we look to the West, for example, as we're getting into FreshCo conversions, with cooperation with Sobeys, some of the tenants that we're working there that are in the value space are extremely complimentary to the FreshCo offering. We're quite bullish going forward and can't really see anything in the 2020 offing that's concerning. I know you watch the office space pretty closely. That place is an area where we're concerned. Halifax, for example, Sam, is about 80% occupancy. Our Scotia Square complex, I believe, is around 93% occupied. We're defining the marketplace. To get the two 100,000 square foot renewals done in the quarter, was a big coup for us. One was a five-year, as we mentioned, one was 10. The net effect of rents were very strong.
That just speaks to the excellent customer service that Terry Doran and the team provide at Scotia Square. Tenants are extremely pleased there. We've got a new rejuvenated food court. We've got just a great offering, both retail, mixed use, and office. With those tenant renewals done, we're very pleased. That was one risk factor, as you well know, that was in place. Now that those renewals are in place for five and 10 years respectively, we're really on solid ground.
That's great. I was going to ask, do you think there's an opportunity to up-finance your office portfolio in downtown Halifax, pull some extra liquidity out of those assets?
Yeah. Certainly something we'll be looking at in terms of the options available. It's one of the many options we're looking at this time.
Okay. Just lastly, you do have a good pipeline of future developments, and I think two or three were highlighted on the Investor Day as potential next starts. I wonder if you could just give us your sense of the timing of the next one or two major mixed-use projects, when they could be started, if it's in 2020, 2021, or 2022.
Sam, again, our target spending is CAD 150 million-CAD 200 million. We've got seven in pre-planning. These things are sometimes longer processes than we would like. I can't really tell you which one falls next. We are looking, I think, very hard in Halifax at our Westhill on Duke project. Possibly could be the next one. The others are, again, works in progress. Our target spending, as I said, is CAD 150 million-CAD 200 million. We think that we can achieve those kind of results.
Very helpful. Thank you very much.
Thank you. The next question is from Howard Leung from Veritas. Please go ahead, Howard.
Thanks, good morning. Just a quick one from me. The TIs for the revenue-enhancing CapEx this year, I saw it kind of stepped up this quarter. Was that mainly to do with the office leasing?
No, actually, it probably had to do with some of the conversions to FreshCo that we're doing in Western Canada. Actually, the TIs on the office were extremely efficient. We're very pleased with the net effect of rents on those. The revenue enhancing TIs would more likely be in Western Canada for some of the FreshCo conversions that we've invested in.
Okay. That makes sense. I guess going forward, because that's still ongoing, we can expect it to continue at that pace or maybe just below that pace?
Well, it varies. As Sobeys proceed with FreshCo conversions, if we are the owner of the store in question and they choose to use capital of Crombie, then yes. We can't sort of look forward with great clarity. That'll just depend as the conversions occur.
Okay, great. That's helpful. Thanks, guys. I'll turn it back.
Thanks, Howard.
Thank you. The next question is from Tal Woolley from National Bank. Please go ahead.
Hi, good morning.
Hi, Tal.
Just wanted to maybe try and understand the timing just on cash flows through 2020, at what point do you see the impact of all the disposition work you've done being offset by the same property NOI growth and the completions on the FFO line?
I think we don't want to give guidance on when things rebound, but it's over the next couple of years, it rebounds in our mind and improves. Obviously you can do the math on the investments in our developments, and we've still got another CAD 300 million to go. We've invested a little over CAD 300 million to date, CAD 300 million to go in our first six. Those will be, as we said, some completed in 2020, some completed in 2021. I think it's roughly half and half. Those things are on average five and a half to 6% yield on cost. That should give you an estimate of the income coming in, and offset to some degree, obviously, by the debt that's in place as well, or the project debt and the long-term financing that's put in place.
I can't really give you the exact number, but I can tell you there's going to be some decline as you've seen in our FFO and AFFO. We expect, obviously, that we wouldn't be doing this if we didn't expect it to rebound significantly. Obviously then be a higher quality of cash flow as well.
in our mind, great over the long term.
I think just to add to that, Tal, I think for us, I think we said 2020 will be a transitory year. The great news is with, as Clinton has noted, with the amount of debt that's coming due at the end of this year and into next year at pretty high interest rates, that's the other factor that's a potential benefit for us. Our same asset NOI growth, we feel really good about. We can harvest some of this interest savings on both CAD 300 million of debt that's got interest rates in the mid-to-high 4s. Also then with cash flows coming forward, as Don mentioned, from the mixed-use. We're getting ready to move forward with aggressiveness. 2020 is the year where I think things really sort of mature.
Okay. If I think about it, the stars sort of start to align in 2020, and 2021 is when we should see an improved kickoff.
Like that.
Yeah. Okay. Got it. Thank you very much.
You're welcome.
Thank you. There are no further questions at this time. I will now turn it back over to Clinton Keay for closing remarks.
All right. Well, thank you all for joining us today, and we look forward to updating you on our progress on our Q4 call in the new year.
Thanks, everyone.
Thank you.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.