Earnings Call: Q3 2020

Nov 4, 2020

Earnings release

Good morning, ladies and gentlemen. Welcome to the Dream Industrial REACH Third Quarter Conference Call for Wednesday, November 4, 2020. During this call, management of Dream Industrial REIT may make statements containing forward looking information with the meaning of applicable securities legislation. Forward looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Industrial REIT's control that could cause actual results to differ materially from those that are disclosed in or implied by such forward looking information. Additional information about these assumptions and risks and uncertainties is contained in Dream Industrial REIT's filings with securities regulators, including its latest annual information form and MD and A. These filings are also available on Dream Industrial REIT's website at www.dreamindustrialreit. Ca. Later in the presentation, we'll have a question and answer session. Your host for today will be Mr. Brian Pauls, CEO of Dream Industrial REIT. Mr. Kalls, please go ahead. Thank you. Good morning, everyone. Thank you for joining us today for Dream Industrial REIT's 2023rd quarter conference call. Speaking with me today is Lennis Kwan, our Chief Financial Officer and Alex Sannikoff, our Chief Operating Officer. 2020 remains a uniquely challenging year and the COVID-nineteen pandemic continues to result in widespread uncertainty. However, our business has been firing on all cylinders and we continue to make progress on a number of strategic fronts. Our FFO per unit is trending upwards compared to the first half of the year, in line with our expectations. Our operations are strong and we are building both our near term and long term organic growth profile through leasing and redevelopment initiatives. We continue to deploy our excess liquidity into high quality assets. The strength of our balance sheet and business has been endorsed by DBRS with a BBB credit rating and we started executing on our euro debt strategy with the goal of significantly reducing our overall cost of borrowing over time. Starting with our operations, our fundamentals remain robust with strong rent growth collections and over 1,000,000 square feet of leasing completed since last quarter at Healthy Spreads. These operational successes will help build the organic growth profile of the company for 2021 and beyond. Our ample balance sheet capacity and global acquisition platform allows us to access high quality acquisition opportunities in North America and Europe. During the Q3, we acquired 4 assets totaling $86,000,000 across the GTA, Montreal, Germany and the Netherlands. And we have over $100,000,000 of additional assets under contract or in exclusivity across Canada, Germany and the Netherlands. Following these acquisitions, we will have acquired or contracted more than $600,000,000 of high quality industrial product in 2020, adding over 5,500,000 square feet of well located GLA to our portfolio. All of these assets fit nicely within our focused investment strategy of acquiring high quality mid to large paid distribution and urban logistics facilities in strong industrial markets. Over the past 3 years, we have significantly reduced leverage, grown our uncovered asset pool and improved balance sheet flexibility, while improving overall portfolio quality. Last month, we received a BBB mid rating from DBRS, which is a strong reflection of our strategic initiatives as well as our superior tenant and geographic diversification. The investment grade credit rating allows us to execute our debt strategy more efficiently and further improve balance sheet flexibility. With a strong and flexible balance sheet and favorable fundamentals, we are increasing our focus on our development program. We are equally focused on ground up development and accessing the growth opportunities within our portfolio where we have a significant urban land position. In Las Vegas, we are finalizing the planning and permitting process with a target construction commencement date in 2021. We expect to build a 36 Foot Clear Class A 460,000 Foot distribution facility that will be a great addition to the portfolio. We are forecasting a development yield of 6%, which is 100 basis points to 150 basis points higher than comparable stabilized product in the market. Turning to our income producing portfolio, we have identified over 20 sites with about 70 acres of access land that can support over 1,500,000 square feet of additional GLA as well as a handful of redevelopment opportunities where we could roughly double the existing density to just under 1,000,000 square feet. These sites are located mainly in the GTA, Montreal and the Randstad in the Netherlands, where availability rates are low and newer high quality space would be in strong demand. In some cases, we can access the intensification and redevelopment opportunities gradually as leases roll. In others, such as our site in Richmond Hill, we can pursue the expansion in the next 12 to 18 months. Overall, we expect that our land bank will be a meaningful driver of organic NAV growth over time. With strong and well covered distributions, flexible balance sheet and improved organic growth outlook, we believe DIR is well positioned to deliver superior total returns to its unitholders. I'll turn it over to Alex to talk about our operations. Thank you, Brian. Good morning. Our portfolio has proven to be resilient as we continue to address the transitory vacancies and increased rents. Leasing volume has increased significantly in all our markets, and we completed more than 1,000,000 square feet of leasing since the end of the second quarter. We are achieving rental rates that are outperforming given our pandemic expectations. Our 300,000 square foot vertical property is receiving strong interest from prospective occupiers. We're currently in discussions with the Fortune 500 tenants for the space and we expect to have a lease finalized by year end 2020 with lease commencement in early 2021. Our recent leasing activity has addressed over 20% of our vacancies and we're in discussions with another third of our vacancies, including Louisville, leading to significantly improved organic growth outlook for next year. We're currently forecasting mid single digit organic NOI growth in 2021. Many of our new leases are commencing in 2020 one. For the Q4, we expect that our in place occupancy will modestly trend upwards compared to Q3, leading to directionally improving same property NOI growth. At the onset of the pandemic, perhaps there was a perception that our portfolio had a significant weighting towards smaller tenants and would hence struggle during the disruption. In our Q3 MD and A, we provided additional information on our tenant base. Over 75% of our revenues derived from 288 tenants with an average size of approximately 70,000 square feet. These tenants are from diverse set of industries with no industry accounting for more than 12% of total revenue. The resiliency of our portfolio is evident in our rent collection stats. Our rent collections for Q2 increased over the course of the quarter to over 99% adjusted for rent deferrals and CPRA. In Q3, we have collected over 98% of rents adjusted for CCRA, and we have not signed any material deferrals for the 3rd quarter. In fact, we have already collected the majority of the deferred rents from the Q2. Our Seeker participation also declined by 25% in August September compared to Q2 in July. Lastly, our collections so far for October are approximately 97% without any rent deferrals or the impact of CCAR, which is in line with pre COVID collection rates. During the quarter, the value of our portfolio by over $65,000,000 reflecting the robust demand for industrial assets in our markets, strong leasing activity and rental growth. The outlook for rental growth remains strong, and we look forward to engaging in value add initiatives to increase returns and surface additional value from our portfolio. I will now turn it over to Lenis, who will provide our financial update. Thank you, Alex. Q3 was an exciting quarter for us as we made significant progress in improving the quality and stability of our balance sheet and executing on our announced debt strategy. Our financial results for the Q3 were in line with our expectations. Diluted funds from operations was $0.18 per unit for the quarter. FFO per unit was modestly lower compared to the prior year compared to the prior year period quarter, primarily due to dilution from the timing of deployment of our ample acquisition capacity. Other items impacting FFO per unit for the Q3 totaled $0.05 and related to COVID-nineteen related adjustments and provisions. Our balance sheet continues to be robust with ample liquidity and significant acquisition capacity. We ended the quarter with net debt to assets at just under 30%, net debt to EBITDA at 5.8x and $272,000,000 in liquidity between cash on hand and undrawn capacity on our unsecured credit facility. During the quarter, we commenced the execution of our strategy to transition our borrowings to euros in order to lower our average cost of borrowing. At quarter end, we had €82,000,000 of borrowings swapped to euros with an effective interest rate of 1.1 percent. And the average interest rate on our total outstanding debt declined by 7% year over year. Subsequent to the quarter, we closed on a $150,000,000 3 year unsecured term loan, which after swapping to euros is expected to bear interest at approximately 90 basis points, which is 250 basis points lower than our current average in place interest rate on debt, providing a meaningful driver of FFO per unit growth. The proceeds are expected to be utilized towards future acquisitions and repaying existing debt. Pro form a the acquisitions that we have under contract or in exclusivity, our leverage will increase to approximately 32% with our unencumbered asset pool totaling $1,400,000,000 or 44 percent of our investment property value. We could acquire about $275,000,000 of additional properties with our available liquidity, which would bring our leverage to the high 30% range. As we deploy this capacity over the balance of 2020 early 2021, continue to access additional euro denominated debt and our comparative properties NOI increases from our recent leasing momentum, we expect our FFO per unit run rate to be stronger in 2021. For the Q4 of 2020, we expect our FFO per unit to be higher than Q3 2020 in the low single percentage range. I will turn it back to Brian to wrap up. Thank you, Lenis. We continue to take significant steps in positioning DIR as the premier industrial REIT in Canada and delivering attractive overall returns to our unitholders. We will now open it up for questions. Thank you. We will now begin the question and answer session. And our first question comes from Chris Hauptrey from CIBC. Your line is open. Good morning. Just wanted to touch on the new development disclosure. With respect to the portfolio review, have you essentially at this point gone over every asset and the amount of development opportunity that you have, that's basically all that would exist on the current portfolio. And just when you think about development, how are you thinking about yields or returns? Thanks. Yes. Thanks, Chris. Let me start in and then I'll ask Alex to follow-up. But obviously, we've got 460,000 feet of greenfield, new development starting in the City of North Las Vegas that's near term. We reviewed the whole portfolio and found a lot of opportunities to expand buildings and not only enhance density, but also redevelopment opportunities. So we think there's probably 100000 to 300000 square feet of relatively near term opportunities to either add construction or add density to our properties. That's and when I say in the near term, call it in the next couple of years, there's much more of that beyond that in the portfolio. We've got a team that consistently looks at opportunities in ways that we can create value and add quality to the portfolio that we have. Alex, why don't you comment on just what we the exercise we've done to go through the whole portfolio and the opportunity that it represents? Yes. Thanks, Mike. So the land bank that we would quantify in our disclosure is 1st cut, these are very tangible opportunities. There are additional opportunities that we're not including in the land bank right now. They are primarily in Western Canada. There is quite a bit of excess land in that portfolio as well. But until the market is becoming more robust, we can improve those opportunities, however, they're there. From the yield on cost perspective, the advantage of developing excess land is in many cases, the land is already embedded in our IFRS value. And if you look at the as an example of a project like Enrichment Hill, we can be building to yield on cost of well over 8% and that's yield on construction cost because that land really cannot be sold as a stand alone asset, but it has value to the owner of the existing income producing property. And there are many, many more examples like this in the land bank that we've quantified. So is there a minimum return that you're looking for before you would kick off a development project? Well, I think what Alex is saying, Chris, is that on the expansion on the existing portfolio, the land is already embedded in there. So you're getting the land basically for free. The new construction cost, the yield is much higher than if you were starting from scratch. So it's quite accretive when you can add when you've got underutilized land, expanding an existing building is almost always going to be accretive. So in Branson Hill, for example, it's a 100 110,000 foot building, we're adding 40,000 feet to it and getting a yield on the new cost of 8%. So it enhances the yield of the overall asset. Would in terms of acquisitions going forward, will you be looking at assets that have looking more at assets that have this development future development or redevelopment potential? We certainly take that into consideration when we're reviewing the attributes of an acquisition. You can see in Europe, we've bought some properties that have some expansion potential. However, they yield really well in the short term. So that's kind of the perfect bull's eye for us. If they have expansion ability than we or expansion land, then we find that attractive because we've got the ability to create that value in house. We can underwrite it in house and we can execute on that with our team. Thank you. Your next question comes from Lan Chu Gupta from Scotiabank. Your line is open. Thank you and good morning. So on the leasing activity, you're getting 40% to 50% higher value in GTU on recent diesel yield. And I noticed some of these properties are 50,000 square feet or higher in size. So just wondering if the recent demand is so strong for only certain tenant types or size of properties in the GTA? Or is it across all categories? Hamed, I'm having a hard time hearing your question. I know it's around GTA leasing, but I couldn't hear the specifics of it. I'm sorry. Sorry, Alex. The question was the demand is strong. You're getting 70%, 50% higher rents. Is it only for certain property types or property sizes? Or is it across the properties? We are seeing strong demand in the GTA across the board, and we're seeing rents strengthening, I would say, across the board. What we are seeing in terms of relative demand is it is a little bit stronger in the larger sort of snack brackets of 50,000 square feet upwards. The demand is stronger, but it's pretty robust across the board. An interesting trend we're also seeing is that there is stronger demand and higher rents for vacancy. So if you have an asset that is physically vacant, you're just getting much more robust activity on it than if you are marketing something for occupancy 2 to 3 months out. So it's an interesting phenomenon we are seeing right now in the DTA. Sure. And just a follow-up there. And you look at the contractual annual rent growth on these leases is anywhere from 10% to 3.5%. Is this something higher, I mean, compared to some of the diesel deals you have done in the last 2 years? And also, do you think if there was no COVID, you could have achieved even higher rents than 50%? And actually, I didn't catch everything, but I think your question was around contractual growth and where we think rents are trending. So on the contractual rental growth side, we are seeing the range between 3% to 4.5% in the GTA. And it is trending through the work towards kind of that upper end of that range in the recent leasing activity. All of the leases we've signed in the GTA, virtually all of them have contractual rent steps in that mid-three percent market. We are also seeing that market trends are trending upwards and we continue to have that outlook for not only Toronto, but also called the broader GTA markets like Cambridge, markets like Kitchener are also seeing rental growth and there's wide expectation that, that rental growth is going to continue. Sure. Thank you, Alex. And maybe final question from my side and the acquisition. In the Netherlands, you completed a 300,000 property in Zetta. So what was the track rate on that property? And how does the CapEx compare to the best portfolio which we acquired as applied before COVID? Is it something you have CapEx moved since then? I can ask you again, a little bit distant, but I think your question is around Breda acquisition. So Breda is a high quality distribution asset, was substantially renovated and modernized over the last 2 years, It really caters to modern distribution and logistics users and hence the tenants we have in there and the kind of the attributes of the building with the clear hike speak for themselves. The cap rate is higher because we secured the assets early on in the pandemic and took advantage of that process. It was tied up previously by another group that didn't as soon as the pandemic hit, decided not to proceed. And we had the opportunity to jump in and get the asset at a pretty attractive valuation. But based on the demand we're seeing in the Netherlands and Europe as a whole for these kinds of assets that yield wouldn't be achievable today if we were just starting on that process. Sure. Thank you, guys. I'll turn it back. Your next question comes from Lian Chen from ICE Securities. Your line is open. Hi. Just a quick FYI. I work with Patrick von Do at the I Securities. And good morning. So just two quick questions for me. I think you might have answered the first one, but I missed the answer. So I apologize if you have to briefly reiterate. You mentioned the 6% expected yield on the Las Vegas project and as well as the 8 percent expected yield on the Richmond Steel project. So should we so I was wondering if we should consider that 8% to be indicative of what we should expect on other developments? And secondly, how would you characterize the trends on those yields today versus pre COVID? Sure. Let me start, and I'll also have Alex chime in as well. But the 6% is on a greenfield new development, that's on the 460,000 feet that we're building in City of North Las Vegas. The 8% by contrast is an expansion of a building and that's the yield on the new cost to grow that building. So the land is already embedded in the existing asset and the new construction costs will return 8% on that new cost. So it's not necessarily apples to apples in those two examples you gave. We would expect returns on expansion properties to be similar to the Richmond Hill example, and the development yields will vary depending on which market we're in on a ground up development. Alex, what would you add to that? Just to add, so on the redevelopment front, so a component of our land bank is that we develop an asset. So these are expanding assets that have density potential. And from just fiscal year perspective, it's going to be difficult or not very functional to expand these buildings. So the projects that we're working on are to demolish the existing structures and rebuild these assets. So the yield on costs there are going to be lower than the Richmond Hill example because there's obviously a cost of the asset embedded in the calculation, but they are still representing healthy 100, 125 basis points spread to what we could acquire comparable assets in the market today. And lastly, in terms of U. S. Cost and new lands, obviously, the 6% and perhaps even lower in the GTA is what we're seeing based on where the land is trading. So we're underwriting a few land opportunities across the GTA and in some case in Montreal. And obviously, land prices have been increasing for high quality industrial land and that is a contributing factor to when you're looking at new land. And as Brian said, we don't have that factor just to the same extent in our expansion opportunities. Perfect. Thank you. I'll turn it back. And your next question comes from Alex Leon from Desjardins Capital. Your line is open. Good morning, everyone. I have a few questions relating to the collection figures, specifically relating to collections from tenants who qualify for a sector. So I was wondering what you guys were seeing in terms of the collections from the 25% responsible from the tenant And how much of your remaining rent that's currently outstanding would be attributable to this group? Thank you for the question. Can you again, the line isn't very clear. Are you referring to secret tenants? Yes, that's right. Okay. So with respect to secret tenants, there's no meaningful outstanding amount from our secret tenants. So the secret tenants have contributed what they the majority of them or the vast majority of them have contributed what they were meant to contribute pursuant to the program. And there are limited amounts outstanding from these tenants. And we are in general on the collections, if you look at our, for example, Q2 statistics for the Q2, we were at roughly 98% adjusting for deferrals, adjusting for Seeker at the time of publishing our Q2 results. And today, we are at over 99%. So what we're generally seeing in collections is, it's not a matter of if we can collect if the rent gets collected, it's more a matter of when. So sometimes it takes a little bit longer for tenants to contribute and we're working with tenants on that. And lastly, I just want to emphasize that Seeker program is over. We managed to reduce the participation in the program throughout the Q3 by conducting a tenant outreach and asking our tenants whether they would still like the program and roughly 25% of them declined that program in August. And also you perhaps know that there's a new program that has been announced that is directed at tenants. No details are available yet, but it's going to be incrementally helpful for some of our tenants or just generally the occupiers in the I appreciate that. And you kind of led on to my next question, the Canada Emergency Rent Club City program. How are you thinking about maybe the tenants who qualified for Seccra and the trends you're seeing there relating to this new program? We only had a very small universe of our tenants who qualified for Seeker and needed Seeker. There's just over 100 tenants. It's a relatively small sample size. And then as we said, some of them didn't need it halfway through the program. There are no meaningful details available yet on the new program. We are monitoring it very closely. We are in touch with various government agencies to be on top of it. We've advised all of our tenants that there is there are additional support that is available, so they're aware of it. But so far, we don't have any statistics to comment on. Thanks. I'll turn it back. Thank you. And the next question comes from Sam Damani from TD Securities. Thank you. Good morning, everyone. Three quick questions. First on the occupancy, when we look at the U. S. Portfolio sitting at around 92%, what do you see as the stabilized occupancy for that region? And when do you think you'll get there? Thank you, Sam. Every property in our U. S. Portfolio, and I believe you've seen many of the assets are high quality functional assets. There's no structural vacancy in these properties. Louisville is obviously the most meaningful contributor and we are we're putting discussions with the tenants and in negotiations of the lease and we expect that lease to be finalized in this year. So that's going to meaningfully increase our occupancies. Our 2nd largest pockets of vacancy is in Columbus. And we've seen very robust touring activity and there's quite a bit of prospects for the vacancy buckets there. So as that gets leased, we don't see any reason why the portfolio cannot be running in the high 90s occupancy over the medium term. That's great. That's helpful. And just on the Q4 guidance, which I think the comment was modest positive change in in place occupancy, I think, is what was said. Is there a particular region that will drive most of that gain? Or was it pretty evenly spread throughout the regions in the 4th quarter? Relatively even spread, Sam. But as we said, the 4th quarter is going to be modestly trending, trending upwards. The meaningful contribution will be in 2021. Yes. That makes sense with all the leasing that's set to take effect. And then my final question is just on the market rents. Between last night's announcement and the news release from a couple of weeks ago, the leasing seems to be achieving rents perhaps in excess of the market rents that you put in the MD and A. I'm just wondering if it's possible that those market rent estimates maybe don't fully capture the change in markets in the last 3 to 9 months. Just wondering if there's a possibility there that those markets might be a little bit understated given recent dynamics. That is a good observation. Sorry, I was just going to say it's a good observation, Sam, because rents are moving quickly. There's certainly no real significant new supply in the areas that we are announcing these leases being done. So I think rent is moving fast. We're certainly leading the rent growth charge in areas in Oakville and around the GTA. We've got significant spreads to expiry, and we're trying to find where market is, but it's certainly a lot higher than where it has been and continues to move. Usually, when we're reporting market rents, those are backward looking metrics and those are over a time period that's already passed. The new leasing announcements that we make are real time. So I think it does continue continue to move. We see certainly more and more runway for rents to continue to go upward as demand increases and as the supply demand imbalance continues to grow. Alex, do you want to comment further on kind of where you see market rents going? Yes. Thanks, Ryan. So as we said, some of our leasing activity that we've announced has been post quarter. So the movements in rents have not been reflected in our MD and A yet. And generally, as we commented also early on the call, the rents that we're seeing in the GTA in Montreal have exceeded our expectations that we've set at the beginning of the year. And that's generally a trend that we're seeing. And our expectations are also our estimates of the market trends at the time. There's some of that definitely happening. Thank you. And maybe I'll squeeze in one quick one. Just on leverage, Lennox, you talked about the capacity for another, I think it was $2,500,000 of acquisitions that would take leverage up into the high 30s. Can you talk about what the current target leverage is on a sort of steady state for the REIT, let's say, 6, 12 months from now? Sure, Sam. I mean, as I mentioned, we've got about acquisition capacity of about $275,000,000 that brings leverage to the high thirty percent range. We're going to bounce up and around that ideally, we'd be in that mid- to high 30% range. We've got the capacity to get there about that in the 37% 38% range. It will depend on acquisition opportunities as they present themselves. We'll obviously take advantage of good opportunities and then find ways to bring. And then we're also monitoring our debt levels and net debt to EBITDA, but certainly within that high 30% range. We're well within our parameters and what the BBB rating would allow for. Perfect. Thank you very much. Your next question comes from Eddy Ekater from Exela Bank. Edim? Yes. Hello? Your line is open. Okay. I wanted to ask a question about Western Canada. Could you provide more details about the trends we've seen then, the occupancy increase? And how do you think they expect it under possible property tax increase next year to the tax leaving spread given that there's a sizable return to the next year? Thank you for the question. We have been quite active on the leasing front in the West. We've completed well over 200,000 square feet of renewals at rents that are in line with what we're quoting in MD and A. Since the 2nd quarter, we've completed over 50,000 square feet of new leases. Those leases have transacted. And we are generally encouraged by the leasing activity. What we're seeing is the rents are generally holding and are in line with our estimates. And we are outperforming the market on average in terms of occupancy, just because of the nature of our portfolio, portfolio is urban and these assets tend to stay full. We as a company have a very long operating history with these assets that dates well prior to the IPO of Industrial REIT. And these assets have always taken hold through many, many cycles and we continue to see that in throughout this disruption. We're not seeing the same rental growth that we're seeing in the GTA or Montreal, but the leasing activity is robust and there is demand for space and we are doing deals. So we are encouraged by that. Do you offer promotions on what kind of free rent on media? Deal? Free rent is in cash. I think your question was around free rent. Is that correct? Yes. Yes. We are seeing some free rent in new leases. It has become more customary in markets like Calgary and Edmonton and Regina. So we're seeing some, but it's not significant. It will be a few months for a 5 term. That will be what has become customary in the market. Should we expect some maybe capital recycling in that geographic region in near term? Again, we've commented on that earlier in the year. We do intend to recycle some capital in Western Canada. And it wouldn't only include things like outright sales. In some cases, we're talking to users who are looking to buy buildings. In some cases, we're looking at converting some of the smaller Bay assets to industrial condos that are still commanding much higher valuations and are in demand compared to an income producing asset. So we're looking at a variety of creative strategies to surface value and recycle some capital. Thank you. And on the possible positive tax increase in calendar next year, would it be possible to pass that to Kennen? Or could you help us share that? Yes. Alex, I can take that. Our leases are all triple net leases. So the property taxes are borne by the tenants. So that would pass through the tenants and certainly have an impact on what the tenants pay, but would not impact the net rents. Okay. Do you have any news on the Spectra building that you are expecting to get back? On the Spectrum building, I just want to clarify, we're not necessarily expecting it to get back. We obviously, the news has been public that there was a filing for the CAAA. Spectra has been paying rent throughout the following the announcement and there have been no issues. We know that the tenant has invested significant amount of capital already since the announcement in the larger Boucherville asset, which is an encouraging trend that they are committed to the asset and committed to the operations in the asset. We understand that their operations in our second facility with them in Laval are also robust and there's quite a bit of activity. So, so far, there hasn't been any indication that we get that they would be giving back these buildings and everything points to them continuing to invest in their operations in these assets. Okay. And my last question, from the increase in base density in Canada, was it driven by some of the cheaper tenants finally moving out and vacate in the building? Or was it driven by something else, maybe unless they're not agreed to rent increase that you propose to them? Excuse me, the line was breaking. Would you mind repeating the question? Alex, I think the question was what's the nature of our increase in vacancy? Was that related to tenants moving out because the rents are going up or secret tenants not necessarily making it? I'll let you go ahead, Alex. Thanks for clarifying. So what we're seeing in the GTA, it is a function of us prioritizing rental growth over occupancy. So we have had some opportunities to part with tenants who were paying significantly below market rents. Our Oakville asset is a great example of that. And we've then managed to release that asset at 50% spread. There is we've had a few unexpected 1 or 2 smaller unexpected vacancies in the U. S. With 1 tenant that gave back stake. But it wasn't a significant tenant, but because the portfolio is relatively small compared to the total, every 50,000 square feet shows up in your occupancy numbers. With respect to secret tenants, we haven't seen any secret tenants giving back space in any meaningful way as they have been. There hasn't been that trend. And yes, as far as and generally, there's normal rollover as the multi tenant portfolio would have. So there's a few factors, but as hopefully our announcements suggest we're making significant progress on leasing out vacant space at well over prior ends, which will be contributing to our overall performance over time. Okay. That's it. Thanks. And we have no further questions. I'll turn the call over to Mr. Brian Pauls for final remarks. Thank you everyone for your time today. We look forward to speaking again soon. And in the meantime, please stay healthy and stay safe. Take care. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating and you may now disconnect.