All participants, please stand by. Your conference is ready to begin. Good morning. My name is Elena, and I will be your conference operator today. At this time, I would like to welcome everyone to CT REIT's Q1 2020 earnings results 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 would like to ask a question during that time, simply press star then the number one on your telephone keypad. To withdraw your question, press the pound key. The speakers on the call today are Ken Silver, Chief Executive Officer of CT REIT, Lesley Gibson, Chief Financial Officer of CT REIT, and Kevin Salsberg, Chief Operating Officer of CT REIT. Today's discussion may include forward-looking statements. 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 CT REIT's public filings for a discussion of these risk factors, which are included in their 2019 MD&A and AIF, which can be found on CT REIT's website and on SEDAR. I will now turn the call over to Ken Silver, Chief Executive Officer, CT REIT. Ken?
Thank you, operator, and good morning, everyone. We're very pleased to welcome you to CT REIT's first quarter 2020 investor conference call. This is also our first virtual conference call, as Lesley, Kevin, and I are observing social distancing by calling in from separate locations. We hope this goes well and also hope that you and your families are all healthy and staying safe. Yesterday, we released our 2020 first quarter results, and Lesley and Kevin will touch on highlights of what was another strong quarter. Probably more importantly, given the unique circumstances we're all living through, they will share some actions we've taken that will have implications for the current and future quarters. For my part, I'd like to focus on some higher-level themes that are relevant to where we are today and where we're going.
From the REIT's inception in 2013, we have consistently described ourselves as reliable, durable, and growing. At first, beginning with our IPO roadshow, I would've described these words as aspirational. Over the past six and a half years, our focus has remained on them as our strategic foundation and guideposts. A measure of our success over that time is reflected in an unbroken track record of annual distribution increases. Where does that leave us today, when the world is facing previously unimaginable challenges? In the simplest terms, the strategic objectives we have pursued from day one put us in a strong position to weather the storm and plan for a post-COVID future. Our reliability is grounded in the large portfolio of primarily single-tenant assets leased to Canadian Tire Corporation for terms that average almost 10 years, amongst the longest in the sector, and provide predictable annual rental growth.
Our core competitive advantage is our privileged relationship with Canadian Tire, our majority unit holder and most significant tenant. The Canadian Tire brand, nearly 100 years old, has succeeded through the Great Depression, the Second World War, and every economic cycle and business disruption since then, continuing to grow along with Canada, meeting the needs of Canadians from coast to coast, and always with a truly local approach that resonates with its customers. I have no doubt that Canadian Tire will emerge stronger than ever from this pandemic with a clear understanding as to how to leverage its unparalleled store network and supply chain, its digital properties, including its website, apps, and Triangle Rewards loyalty program, and consumer credit offering to compete successfully and grow market share. We will continue to benefit from our relationship with Canadian Tire, which provides such a firm foundation to our enterprise.
Our durability is grounded in the strength of our balance sheet and our ample liquidity. From the time of our IPO, we have worked to make our balance sheet and financial metrics stronger, reducing leverage, reducing our payout ratio, and driving more conservative debt coverage ratios to the point that our financial position coming into the crisis was amongst the best in the Canadian REIT sector. Lesley and Kevin will provide further details on what we have done to bolster our already strong financial position and reduce risk with the primary goals of navigating the current economic disruption and emerging well-positioned for the future. Over our history, we have delivered attractive growth in adjusted funds from operations per unit and net asset value per unit, both driven by solid organic growth in additions to our portfolio.
There's no question that delivering growth in this environment, however long it lasts, will be a significant challenge. Nevertheless, with over 95% of our revenues derived from investment-grade tenants and with the contractual growth built into our leases, we are well insulated. Our rent collections through the crisis so far are amongst the highest of any REIT in the sector across all asset classes. At the same time, we are committed to working with those of our tenants who are truly wrestling with survival. As we do in all things, we are taking a long-term and conservative approach to improve the chances of these tenants emerging from the downturn.
We genuinely believe in retention as a landlord's best option and are working with our tenants to improve their odds of staying in business. To this point in our history, our deliberate and conservative management of the REIT has succeeded in delivering attractive financial results. It has also positioned us well coming into this unprecedented crisis. Never did we imagine such a deep and global interruption in economic activity. Yet in consistently steering away from acquisitions or developments that were priced to perfection or large relative to the size of our balance sheet, combined with our focus on quality net lease assets leased to investment-grade tenants, we have built-in resiliency.
We have been opportunistic at the margin and have selectively invested in particularly attractive value-add opportunities, whether a redevelopment project where we have leveraged tenancies with Canadian Tire and other banners, or the Canada Square property at Yonge and Eglinton in Toronto, which we believe to be one of the best located redevelopment sites in the country. Several years ago, as some in the REIT sector turned to significant programs of mixed use and high-rise development, we decided to remain on our own path, a path that provides visibility to predictable results in a business model less challenging and risky to execute. We viewed CT REIT, with its high-quality assets and investment-grade tenants, as Canada's premier net lease REIT, a unique positioning and business model within our sector. CT REIT's core attributes have never been more relevant.
For our investors, this means continued focus on leveraging our key competitive advantage, our relationship with Canadian Tire, to deliver over time the reliable, durable and growing results that have always been our core purpose. With that, I'll turn things over to Kevin.
Thanks, Ken. Good morning, and I hope you're all keeping well. As disclosed in our press release yesterday, in the first quarter, CT REIT completed the development of a Mark's store in Bradford, Ontario, and the development of third-party pad buildings at two existing REIT properties. We also completed the acquisition of a further 1/6 interest in the Canada Square complex located at the corner of Yonge and Eglinton in Toronto, Ontario, thereby bringing our ownership interest in the property to 50%. We are very pleased to have increased our ownership level in this premier redevelopment site as we continue to advance design development for the property. In total, CT REIT invested approximately CAD 42.6 million in these previously announced projects, which added nearly 155,000 sq ft of incremental GLA in the quarter.
In line with the REIT's focus on preserving liquidity as we navigate our way through the COVID-19 pandemic, we have opted to cancel, delay or defer all non-committed and non-essential capital expenditures at this time. All projects that are currently under construction will continue and will be completed once construction can restart in any provinces currently impacted by a shutdown. At the end of the first quarter, CT REIT had 19 properties that were at various stages of development. These projects represent a total committed investment of approximately CAD 222 million upon completion, CAD 76 million of which has already been spent, and a total incremental gross leasable area of just over 1 million sq ft, nearly 95% of which has been pre-leased. Over the next 12 months, the REIT anticipates spending roughly CAD 80 million on furthering and completing these development projects.
As at March 31st, 2020, CT REIT's occupancy rate was 99.4%, which was slightly above the occupancy level as at Q1 2019 and year-end, primarily due to the temporary lease-up of a portion of the 11 Dufferin Place Southeast property in Calgary, Alberta. With respect to the impact that the current crisis has had on property operations, there have been many measures put in place by various governmental and public health authorities across the country that have limited the ability of some of our tenants to conduct their businesses. As a result of these actions, tenants representing approximately 96.5% of annual base minimum rent fulfilled their financial obligations to the REIT on May 1st, compared to 97.2% on April 1st. Tenants comprising approximately 6.2% of the REIT's annual base minimum rent are not open and remain closed until further notice.
Tenants representing another 33.4% of the REIT's annual base minimum rent are now operating on a limited basis. This includes 132 Canadian Tire retail stores in the province of Ontario that are owned by the REIT and that are servicing customers only through curbside pickup, e-commerce home delivery, as well as through their auto service centers. We remain focused on preserving occupancy levels within our portfolio and doing our part to help our tenants through this difficult time. The impact that this pandemic is having on our tenants is dependent on the nature of their businesses. As such, we have attempted to remain flexible in determining the optimal strategy to fairly and equitably support each of them through this crisis, including assessing the availability and potential benefits of government-sponsored rent relief measures on a case-by-case basis.
With that, I will turn it over to Lesley for a review of our financial results.
Thanks, Kevin. Good morning, everyone. I will also provide an update on the impact of the COVID-19 pandemic following my Q1 results remarks. We are again pleased with the Q1 2020 results that CT REIT has delivered. In the quarter, we reported diluted AFFO per unit of CAD 0.254, an increase of 3.7% compared to CAD 0.245 per unit in Q1 of 2019. Diluted FFO per unit increased 1.7% to CAD 0.293 versus CAD 0.288 in Q1 of 2019. Sorry. Reported net operating income increased 6% in the quarter compared to the prior year. The primary contributor of the 6% NOI growth was the acquisition of income-producing properties and properties under development completed in 2020 and 2019. Same-store NOI increased by CAD 2.2 million, or 2.4%, in Q1 2020 compared to the prior year.
Same-property NOI increased by CAD 2.9 million, or 3.2%, compared to Q1 2019 and was driven by several factors, primarily from the contractual annual rent escalations of 1.5% on average contained within the Canadian Tire store leases, which contributed nearly CAD 1.1 million to NOI growth. As well as from the intensifications completed in 2020 and 2019, which contributed roughly CAD 720,000. Lastly, the recovery of capital expenditures and interest earned on the unrecovered balance added CAD 420,000 to NOI growth. Though the interest component of the recovery is less than in prior quarters due to the decrease in the prime rate of interest on which the interest portion of the recovery is based. With our continued lean management structure, G&A expenses amounted to 2.4% of property revenue versus 3.9% for Q1 2019.
This decline was primarily due to the decrease in personnel compensation trustee fees due to the fair value adjustment on the unit-based awards and the decrease in the service agreement cost as a result of the new ERP system implemented in Q2 2019. The interest-covered ratio increased to 3.43 x as of Q1 2020 compared to 3.35 x for the same period in 2019. Turning to our balance sheet, we continue to be focused on maintaining liquidity. Our balance sheet remains strong, and we are in a stable financial position as of March 31st, 2020. We have CAD 294 million available in our bank credit facility, as well as CAD 20 million in cash. During the quarter, we completed the refinancing of the mortgage secured by Canada Square, which now matures in 2023.
Subsequent to quarter end, we also reset the rate on five series of Class C LP Units totaling CAD 252 million for a five-year term at 2.37% commencing May 31, 2020. These Class C LP Units are held by Canadian Tire Corporation, and the interest rate was determined in accordance with the terms of the limited partnership agreement and set at 200 basis points above the spread above the benchmark Government of Canada bond yield rate. With these transactions completed, the REIT has no further debt maturities until the second quarter of 2021. CT REIT's indebtedness ratio was 42.7%, with no change from year end. The indebtedness to EBITDA FV ratio was a solid 6.85 x at quarter end, lower than the 6.94 x reported at year end 2019.
In addition, as of March 31, 2020, the book value per unit was CAD 14.60, remaining quite consistent with the year-end value of CAD 14.61. Despite the fact that net income during the quarter included a CAD 24 million negative fair value adjustment on investment property, primarily driven by the COVID-19 pandemic. Before I turn the call back to Ken, I'd like to add a few remarks to address the impact of the COVID-19 pandemic and how we think about our financial flexibility. I would emphasize that while CT REIT's objectives remain intact, the priority at this time is preserving liquidity. We have provided a combination of rent deferrals and abatements for the months of April and May to a portion of the 3.5% of tenants who did not fulfill their financial obligations on May 1st.
We're also reviewing the various government relief programs to evaluate how we can find the best outcome and maximize the benefit for our tenants. As Kevin mentioned earlier, we have canceled, delayed, or deferred all non-committed and non-essential capital projects. The CAD 80 million of capital we anticipate spending in the next 12 months can largely be funded by our retained cash of CAD 55 million-CAD 60 million per year and the CAD 20 million of cash we currently have on hand before any need to use our bank credit facility. We also took advantage of certain property tax deferral programs to further preserve our cash position and assist our tenants. The REIT continues to have some of the strongest financial metrics in the Canadian REIT sector.
As of Q1 2020, the REIT's portfolio was 99.4% occupied with a conservative 77.6% payout ratio, with over 97% unencumbered asset base on a CAD 6 billion IFRS value. Lastly, the REIT's debt to gross book value was approximately 43%, and there's a total of roughly CAD 315 million in liquidity between our undrawn credit facilities and cash on hand. This positions the REIT well to manage through these unprecedented times. With that, I hope everyone is staying safe and healthy, and I will turn things back to you, Ken.
Thank you, Lesley. With that, I'll turn the call back to the operator for any questions from our listeners.
Thank you. At this time, I would like to remind everyone in order to ask a question, please press star then the number one on your telephone keypad. We ask that you please pick up the handset or step close to your speakerphone system when asking your question to provide maximum audio clarity. We will pause for just a moment to compile the Q&A roster. The first question is from Himanshu Gupta with Scotiabank. Please go ahead.
Thank you. Good morning.
Good morning.
For the May rent collections, almost 97% collected, similar to the last month. Are there any specific segments or categories of tenants which did not pay, like restaurants, et cetera?
Thanks, Himanshu. I'm going to pass that question over to Kevin and let him speak to it.
Sure. Thanks, Ken. Hi, Himanshu. As you'd imagine, we have about 95% of our tenant base that consists of what we would describe as either essential services or Canadian Tire. It's really the other almost 5% we're talking about here. Obviously, any retailer that their business has been closed as a result of the government requirements has been impacted, and their ability to pay rent has been similarly impacted. As you'd imagine, restaurants fit a portion of that segment. Retail, apparel, cinema, gym would all be comparable from that perspective.
Got it. On collection from these tenants, how do you plan to provide for, let's say, bad debt reserve in the financials based on your discussion with these tenants? It sounds about that you're offering around two months of rent deferral. Will that be enough for some of these tenants, and do you expect them paying back after 60 days?
Sorry, go ahead, Ken.
Himanshu, maybe I'll just give you sort of a high-level discussion, then I'll pass it back to Kevin. First of all, just recognize that, as Kevin noted, that the ancillary tenants represent a pretty small proportion of our overall portfolio. That has a couple of implications for us. One is first, obviously the potential total impact of them on our results. Also given the relatively small base of ancillary tenants we have, it gives us an opportunity to truly engage with them on a case-by-case basis. Kevin and his team have been speaking with our tenants. In some limited circumstances, we've gone straight to abatements to give these tenants some hope, frankly, and visibility to a path back from the crisis.
I can tell you, I've heard from the team that we've had a couple of tenants who broke down in tears when they got that news, and it's just a reflection of the fragility that some tenants are experiencing. We think it's important to allow the tenants, as I said, some hope that they hang in there and try to reopen. At the end of the day, the numbers aren't huge for us, but at the same time, we don't have absolute clarity at the moment to how it will all shake out, how long this will last, how much help these tenants will need, what the implications of any emergency rental support programs might have for us for our tenants. With that, I'll ask Kevin or Lesley to chime in and see if they had anything else they wanted to add. Kevin?
The only thing I'd add to that, Ken, is we've been taking a pretty pragmatic lens to this situation from the outset. Really, as we mentioned in our comments, believe in retention as the best strategy. I think from a retail landlord perspective, the leasing market coming out of the crisis is not going to be strong. We're not sure, obviously, where market rents are going to trend. The extent to which we can offer terms to our tenants in terms of either repayment or, as Ken mentioned, select abatements, we felt it was incumbent upon us to help them weather the storm and get through this crisis so that they can be there to pay us rent on the other side of it.
Sure. Thank you, guys. Really appreciate your perspective there. Maybe last question on the IFRS cap rates. Almost no movement on a quarter-over-quarter basis. Can you provide any color there? Does the cap rate change for any subcategories, let's say, for third-party tenant portfolio or industrial portfolio? Given that, what we are seeing in the market, like the collection numbers for multi-tenant portfolios for market in general, do you think that will have some kind of cap rate impact for the related properties post-COVID?
Himanshu, it's Ken. With respect to the second question, it's a little bit premature to fully understand the implications of the crisis. Given that the core of our portfolio are single-tenant assets, we think that's the category of asset that will hold up best and are most optimistic about those from a valuation perspective. With respect to the first question, I'm going to actually ask Lesley to comment on what we did in the quarter.
Sure. Thanks, Ken. Himanshu, regarding some of the subcategories, and you mentioned sort of multi-tenant properties. We do have a sort of a handful of what we say is sort of enclosed regional shopping centers, and we did make some changes and did take some write-downs on those assets through a combination of cap rate changes and increases to sort of vacancy in those models. We did take into the factor that those tenants, we feel, will have the toughest time, and there's some potentially sort of missing cash flows, and there'll be no strain in that area. Whereas in the remainder of our portfolio, we have significant portfolio of sort of single-tenant Canadian Tire stores. We really felt that the underlying businesses were still performing, and that at this point in time, it was premature to take any sort of significant change in value for those assets.
Obviously, we'll continue to monitor things during the second quarter and as we get more information leading into Q2.
Sure. Thank you. Thank you so much and really appreciate, and I'll turn it back.
Thank you.
Thank you.
Thank you. The next question is from Sumayya Syed with CIBC. Please go ahead.
Thanks. Morning, everyone.
Good morning.
Morning. Just to follow up on, I guess, rent deferred versus abatements agreed to to date, do you have just a rough split of how much went towards deferment versus abatements?
Sumayya, I'm going to ask Lesley just to speak to that one.
Sumayya, right now it's a really small position of our whole portfolio. It's a subset of 3.5%. Whether it's a 0.5% here and there, is really not going to make any difference. We're really going to sort of stick a higher level on that. At the end of the day, whether we've abated the rent or whether we deferred the rent and have to consider some bad debt expense against that, potentially, we'll kind of end up potentially in a not too wide a range. Really it's just a subset of those sort of 3%, 3.5% of people who haven't paid. It's really small for us.
Okay. That's fair enough. Thanks. What is the payback period for the rent that's been deferred to so far?
Kevin, do you want to speak to that one?
Sure. Typically, it's a two-month deferral with a six-month repayment. The timing of when those six months begins differs slightly by tenant, though.
Okay, thanks. Just lastly from me, have just the discussions around, I guess, Canadian Tire's interest in the REIT and their intention changed at all since the shutdowns went into effect?
Hi, Sumayya. It's Ken. I really couldn't speak to Canadian Tire's intentions with respect to their ownership position at this point. I'm not aware of any changes one way or the other.
Okay. Thank you. That's all from me. I'll turn it back.
Thank you.
Thank you. Again, as a reminder, please press star then the number one on your telephone keypad to ask a question. The next question is from Tal Woolley with National Bank Financial. Please go ahead.
Hi. Good morning.
Morning, Tal.
I just wanted to ask about some of the operational questions in terms of how things will restart, so to speak. In terms of your dialogue with public health, is that dialogue primarily with the landlords, or is it with the retailers about how to operate going forward? Who sort of bears the public health responsibility on this?
Tal, it's a great question. Clearly, every jurisdiction is taking different approaches to reopening and setting different rules and whatnot with respect to that. We certainly have been keeping in touch with REALPAC, the industry organization that's kind of representing the various asset classes. We'll certainly be following whatever guidance we get, either from the public jurisdictions or industries or peers, as well as working with our tenants to understand how best to reopen safely.
Okay. Have you had much dialogue with I know you've got a very small mall portfolio and so like that, but have you had much dialogue with the tenants there just about what they would need in order to get opening back up? I'm just thinking about if there's extra security needs or supplies, things like that. How are you sort of handling all of those types of requests? Are these recoverable? Are they non-recoverable? Can you just give any color on that?
Lesley, do you want to speak to some of the property management aspects in the mall portfolio?
Sure. Thanks, Ken. Hi, Tal. Yes, right now the initial dialogue with the customers is really, as Ken mentioned, talking about their rent and what's going to happen to them. I think more in the background as we get more clarity on reopening, particularly in Ontario where most of them are closed, we will look to things like security and supplies and what they need. Really, the lease will dictate what is actually recoverable from those tenants. We may be able to provide assistance in procuring things directly, sort of on a direct charge back basis to them. Typically things like security and things that happen in the common area sections of the mall is recovered through the common area maintenance part. That would form part of that.
If people needed individual supplies and other things to assist them in getting going, then we'll be able to work through our other channels to help those tenants open as quickly as they can in a safe manner.
Okay. Do you have a sightline on when the Canadian Tire dealers in Ontario will be able to reopen? Are you able to provide any clarity on that?
Tal, I couldn't provide you with any clarity on that beyond what the province of Ontario has been saying in terms of their daily press conferences and whatnot. I guess we'll see how that unfolds.
Okay. Then just lastly, when you started the REIT, I think it's been, what, seven years now. You had created this portfolio of leases with a weighted average rent increase across the portfolio. Seven years out now, when you look at where the rents are for the individual stores, how many do you feel are at market, above market, and below market? Do you feel confident that everything across the board is sort of at market? And granted, it's hard to establish what market is right now, but I'm just wondering, seven years out, how do you feel about where rents are among those individual leases?
Tal, certainly, coming into the crisis, I would have said that certainly the rents were at or below market. We'll have to see how things unfold in the fullness of time. I can look to Canadian Tire's same-store sales track record, which has, on average, exceeded the annual rental growth to feel reasonably comfortable that the rents remain kind of in line. We'll have to see how things unfold, and we'll continue to do further analysis.
Okay. Thanks very much.
Thank you.
Thank you. The next question is from Niki Shi with RBC Capital Markets. Please go ahead.
Hi. Good morning. I was just wondering if you could please comment a bit on the discussions you've had with Canadian Tire regarding rent payments going forward for stores that are both open and closed, and how do rents on the new leases with Canadian Tire compare with the existing rates?
Well, we haven't had any discussions with Canadian Tire with respect to rents going forward. My assumption is they'll fulfill their commitments in the leases.
Okay, great. Thank you. You've previously discussed potential acquisition opportunities surfacing. Would you be able to provide an update on your outlook there and the trends that you're seeing in the market on that front?
Well, generally, right now the outlook's a little bit cloudy, but overall, I would say given the strength of our balance sheet, and we are optimistic about the universe of potential opportunities. I don't know when we'll have better visibility into values and transactions to tell you exactly when we would pick up our investment pace again. It's certainly something that we're thinking about, not only how do we get through the crisis and manage through the crisis and work with our tenants, but what does recovery and growth look like afterwards.
Okay, great. That's all for me. Thank you. I'll pass it on.
Thank you.
Thank you. The next question is from Jenny Ma with BMO Capital Markets. Please go ahead.
Thanks. Good morning, everyone.
Good morning, Jenny.
Can you comment about the business level of Canadian Tire in Ontario post the reclassification of non-essential versus what kind of business Canadian Tires outside of Ontario are doing? I'm not sure if you have insight into that.
Jenny, I couldn't comment on that. Canadian Tire's reporting on May 7th, Thursday, so definitely look to their disclosures.
Okay, sounds good. Also on some of the development projects, it looks like there were a handful that were pushed out about a year. I don't think that falls into the category of the development projects that haven't started and you're pulling yet. I'm just wondering what was behind the delay in those time frames. Is there anything outside of what we'd expect given the current environment?
No. Basically, when the crisis hit, we worked with Canadian Tire in terms of the development schedule and I think both entities were looking to manage liquidity. We worked cooperatively on the time frames for some of those projects. Kevin, anything that you would add to that?
No, I think the ones you're referring to are all store expansion projects, which typically have a shorter construction time frame. Likely those would actually be ones that haven't started construction yet. They were ones that were in the pre-development stage, in terms of entitlements and approvals. Obviously there's impacts in terms of when those store expansions would come on stream in terms of seasonal openings as well. Like Ken said, just working closely with Canadian Tire to reslot those into a later date at this point.
Okay, great. My last question is in relation to the DRIP. You're one of the very few REITs left with one, and just given where the unit price is, have you had any discussion internally about what to do with that, or are you happy keeping it in place?
Jenny, we did think about it. I'll ask Lesley to answer that one.
Thanks, Jenny. I think, Jenny, first of all, the DRIP for us is a relatively small piece. Canadian Tire and their unit ownership don't participate in the DRIP. Obviously with the pare back in unit prices, we've also seen their DRIP participation greatly tail off in the last month. A lot of people have opted out of the DRIP given where things are priced. I think for us, the rest of our non-Canadian Tire unit holders, we have a large still share of retail unit holders. This is fundamental and a key part of their investment strategy. But they continue to reinvest the money in the DRIP just as they look at the dividends. I think at this point in time, any kind of changes to DRIP are really small for us.
Turning it off is just not something that we think is prudent to do at the moment.
Okay. Is it fair to assume that the DRIP participation will go down in Q2 then? I actually would've thought maybe the opposite happened.
No.
Given the stock price is that, but possibly in liquidity.
Yeah, that's it. It's really, I think, driving liquidity. We've seen it actually drop considerably, at least in the month of April. I can't say for the May or June participation, but April is decreased over our historic participation. I think really it is all liquidity driven. We'll see where that goes.
Okay. Well, I guess that's a partial offset to some of the dilutive impact.
Yeah.
Okay, great. That's all for me. Thank you.
Thanks.
Thank you. The next question is from Johann Rodrigues with Raymond James. Please go ahead.
Hi. Lesley, just for modeling purposes, could you tell us what the incremental, either in a dollar figure or percentage basis spend, now that the proper expenses or G&A would be for extra cleaning or staffing costs, anything COVID related?
Johann, maybe I'll ask Lesley to answer that one. I'm not sure it's a huge number, but I'll let her address.
No. Yeah, I figured it'd be small.
Johann, at the vast majority of our centers where they have a standalone Canadian Tire, it's the actual tenant, Canadian Tire, the actual dealer that actually bears all those costs. They will pay for all those directly. The only cost that we would see really go into potentially a CAM pool or something else is perhaps at a few of our multi-tenant centers or some of our enclosed shopping centers. Quite honestly, it's really too hard to predict really how long and to the extent of what they may need right now. There's possibly obviously offsets because some of our occupancy costs have gone down as some of the centers have been closed. If they come up again in the next couple of months when they're reopening, they could easily offset during the year too.
It's just too hard to predict the sort of the net incremental that that could be.
Okay. Thanks a lot. Turn back.
Thank you.
Thank you. As there are no further questions at this time, I will turn the call over to Ken Silver, CEO, for any closing remarks.
Thank you, operator, and thank you all for joining us today. We welcome you to join us later this morning for our first virtual Annual General Meeting to be held at 10:00 A.M. Eastern Time. We also look forward to sharing with you our second quarter results expected the first week of August. Let's hope by then we have all returned to some semblance of normal life. In the meantime, please stay healthy and safe.
Thank you. This concludes today's call. You may now disconnect.