Earnings Call: Q3 2019

Nov 6, 2019

Earnings release

Good morning, ladies and gentlemen. Welcome to the Dream Industrial REIT Third Quarter 2019 Conference Call for Wednesday, November 6, 2019. During this call, management of Dream Industrial REIT may make statements containing forward looking information within 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 results to differ materially from those that are disclosed in or implied by such forward looking information. Additional information about these assumptions and or risks and uncertainties is contained in Dream Industrial REIT's filings with securities regulators, including its latest annual information form 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. Paul Bryan, CEO of Dream Industrial REIT. Mr. Pauls, please go ahead. Thank you. Good morning, everyone. Thank you for joining us today for Dream Industrial REIT's 2019 Q3 conference call. Speaking with me today is Launice Kwan, our Chief Financial Officer. Through 2019, we've been focused on driving same property NOI growth, adding scale in our target markets and enhancing overall portfolio quality. We have and continue to make progress on each front and have done so in conjunction with improving and maintaining a safe and flexible balance sheet. During the quarter, we completed the sale of the Eastern Canada portfolio providing enhanced flexibility to add scale in our target markets and acquire properties with stronger future cash flow and asset value growth. We will continue to look at opportunities to selectively prune our portfolio, including assets in non core markets and or those that we believe are fully valued with lower growth potential. One of these opportunities is 439 Sovereign Road in London, Ontario, which we have agreed to sell. This 78,000 square foot property is currently vacant and we expect to complete this disposition in the Q4. Consistent with our strategy to recycle capital into higher quality assets, we are pleased to announce that the Trust, Dream Unlimited and Paulscorp are in exclusive negotiations to acquire an interest in a 24 acre development site in North Las Vegas. This is an attractive parcel that will support the development of a 400,000 square foot plus Class A industrial building. The site is well located in a strong industrial sub node that includes e commerce players such as Amazon, Embed Bath and Beyond. Pauls Corp. Is expected to serve as a development manager and has a strong development platform with an extensive track record in commercial development, having developed over 16,000,000 square feet of real estate across Canada and the U. S, including Las Vegas. The industrial market in Las Vegas is one of the fastest growing markets in the U. S. Overall vacancy remains low and net absorption continues to outpace completions with increasing well rates, driven largely by the increase in e commerce. Several California companies are choosing to relocate or expand into Las Vegas due to lower rents, access to lower cost labor, close proximity to large population centers and a faster permitting process. We are excited to initiate our development program and will provide further details in upcoming quarters. We are also currently under contract to acquire 600,000 square feet industrial portfolio in Kitchener, Ontario. The expected purchase price of $62,500,000 represents a going in cap rate of 5.2% and we see opportunities to increase rents and drive free cash flow growth. The portfolio consists of small and mid bay buildings and has a strong and diverse tenant base that are well situated in an attractive business park. The acquisition is expected to close in December. Separately, we are in advanced negotiations to add an additional 40,000 square foot property within the same park for 5,700,000 dollars The Waterloo industrial market is comprised of Kitchener, Waterloo, Cambridge, Guelph and Brantford. It has and continues to benefit from strong fundamentals as modest new supply, minimal availability and solid demand have resulted in strong rental growth across the market. Within the Kitchener market, rental rates have increased by 14% year to date with availability currently sitting at 1.4%. Our acquisition pipeline continues to be robust with approximately $300,000,000 of properties that we are actively in the process of evaluating and underwriting. We are well positioned to capitalize on these opportunities with a solid balance sheet and strong liquidity. We are currently in advanced negotiations on approximately $80,000,000 of acquisitions, predominantly in the GTA, which should close in the Q1 of 2020. As we deploy our acquisition capacity, we expect target leverage to be in the high 30s to low 40s. We will remain disciplined with our acquisition strategy, targeting properties in markets that improve our portfolio quality with opportunities to grow free cash flow and increase net asset value per unit. This year, we've looked at over $1,000,000,000 of properties with portfolios both marketed and off market. We remain focused on acquiring higher quality properties that will increase in value over time. These trade at lower going in yields but offer tremendous growth opportunities, which we expect to unlock through our active asset management strategies. As a result, we expect the yield on targeted assets and their values to increase over an extended period of time. Looking at our markets, Canadian industrial market fundamentals remain strong with the national availability rate continuing to trend lower at 2.9%. This marks the first time that national availability has dipped beneath 3%. We'd note that Toronto and Montreal have amongst the lowest availability of any North American industrial market. The national average net asking rent increased to $8.63 per square foot, representing a 3.5% increase quarter over quarter and a 16% increase year over year. The increase has been largely driven by gateway industrial markets, including Toronto and Montreal. In Q3, the market experienced 8,500,000 square feet of absorption with 5,700,000 square feet of new supply. In our U. S. Markets, we continue to see strong demand for industrial real estate, resulting in low availability and growth in property values. Active asset management is an important foundation to our strategy. Our focus on driving rents, capturing leasing spreads and renewals or expires has led to strong same property growth in Ontario and Quebec. In Ontario, approximately 312,000 square feet of leases commenced during the quarter, with an average spread of 22% over prior rents. On approximately 1,000,000 square feet of lease commitments taking occupancy in 2019, we achieved an average spread of 16% over prior rents. Occupancy dipped 100 basis points, largely due to the anticipated departure of a 111,000 square foot tenant in Mississauga. We have already seen solid leasing interest given the property's attractive location at Highway 401 in Mississauga Road. We are actively trading paper at rates over 10% above what the last tenant was paying. We see this as an opportunity to drive rent growth upon lease up due to the tight market availability. As an example, we recently completed a 5 year renewal with the tenant occupying 80,000 square feet in the GTA. On this deal, we achieved a 94% spread to expiring rent with only $1.50 per square foot in total leasing capital. The lease commences in May of 2020 and includes 3.5% annual escalators over the 5 year term. In Quebec, approximately 117,000 square feet of leases commenced during the quarter at an average spread of 12.3% over prior rents. In 2019, we had 757,000 square feet of lease commitments in Quebec at an average spread of 12.1% over expiring rents. In Western Canada, we've been focused on driving occupancy and we are seeing results with positive net absorption of 77,000 square feet this quarter and committed occupancy at 96%. Across our comparative portfolio, year over year, we have seen a 3.1% increase in average occupancy and comparative properties NOI growth of 7%. While there continues to be some pressure on expiring rental rates, we are building contractual rent growth in our leases and we remain focused on investing capital prudently. Occupancy in our U. S. Portfolio is strong at 94%. We had 2 anticipated vacancies in Columbus totaling 121,000 square feet. We are in the process of divising the units into smaller suites are confident these will result in equipments at higher rental rates. At one of the locations, 66,000 square feet has been demised into 3 units. 2 out of the 3 leases have been signed. These leases are expected to commence over the next two quarters, and we are achieving nearly 20% rental increases over prior rates. In 2019, we have signed 371,000 square feet of leases commencing this year in our Midwest U. S. Portfolio. These leases are an average spread of 21% over prior rents. We received strong interest from potential tenants at our 303,000 square foot property in Louisville due to a strategic location right off the I-sixty five in close proximity to the UPS Worldport, and we expect this space to be leased in early 2020. Overall, our strategic initiatives have positioned us well for above average free cash flow and net asset value growth over the long term. I will now turn it over to Lenis, who will provide our financial update. Thank you, Brian. Diluted funds from operations for the Q3 was $0.19 per unit compared to $0.21 in the Q3 of 2018. Higher FFO from strong comparative properties NOI growth across all regions and acquisitions was offset by the impact of lower average leverage, which decreased by approximately 9% year over year and is consistent with our strategy to maintain a stronger balance sheet with financial flexibility. Comparative property NOI increased by 6.4% compared to the Q3 of 2018, largely driven by increased occupancy in Western Canada and higher rents in Quebec and Ontario. Western Canada experienced comparative property NOI growth of 7% with Quebec and Ontario at 10.7% and 3.6% respectively. At the end of the 3rd quarter, the IFRS value of our portfolio was $2,300,000,000 This reflects $353,000,000 of investment property acquisitions during the year, the sale of the Eastern Canada portfolio and $89,000,000 in fair value gains, driven primarily in Ontario and Quebec. The fair value increase reflects strong leasing activity, market rent growth and lower capitalization rates. The Trust's reported net asset value or NAV per unit has increased by $0.55 this year or 5% to $11.09 at the end of the 3rd quarter. On a year over year basis, NAV per unit has increased by $0.97 or approximately 10%. We have made excellent progress in improving the safety of our business. Our net debt to assets ended the quarter at 31.4 percent and our net debt to EBITDA was 5.4 times. At quarter end, our balance sheet was solid and liquidity remained strong with unencumbered assets totaling $345,000,000 $130,000,000 of cash on hand and full availability on our $150,000,000 credit facility. This provides significant financial flexibility to execute on our acquisition pipeline and to pursue development opportunities. We expect comparative properties NOI growth to be at the upper end of our previously communicated 3% to 3.5% range for 2019, excluding assets held for sale. We are finalizing the budgets for our annual December strategy planning session and will provide more detailed guidance for our 2020 performance on our year end conference call in February. We expect Q4 FFO per unit to be lower than Q3 due to the timing of capital deployment following the sale of the Eastern Canada portfolio this quarter. We have $150,000,000 of acquisitions that are currently under contract or in advanced negotiations are expected to close in December 2019 early 2020. We expect our leverage to increase to approximately 35% after these acquisitions close with an additional $170,000,000 of acquisition capacity assuming 40% leverage. As Brian noted, we are focused on improving our overall portfolio quality, and this includes acquiring higher quality properties in our target markets that are consistent with our investment criteria. With that, we will be prudent in deploying our capital and maintain a strong balance sheet, ample liquidity and flexibility to pursue attractive opportunities. Over the long term, we are targeting leverage in the high 30s to low 40s. We are confident that this strategy will result in a more stable portfolio with higher quality as well as stronger cash flow and NAV growth potential over the long term. I will now turn it back to Brian to wrap up. Thank you, Lenis. We are pleased with the progress made in transforming the Dream Industrial portfolio and at the same time improving and maintaining a strong and flexible balance sheet. We remain committed to driving unitholder value through organic income growth and using our balance sheet strength for attractive investment opportunities, including income property acquisitions and developments that meet our investment criteria. We would now be happy to take any questions. Thank you. We'll now begin the question and answer session. And our first question comes from Fred Blumbeau from Ashland Wealth. Your line is open. Thanks and good morning. Just looking at the capital structure, Lemus, you're just mentioning, I guess, post acquisition, high 30s to low 40s. Is it fair to say that you're at your target leverage at this stage? Yes, our target leverage over the long term is going to be around in the high-30s to low 40%. So I think that's the that's what the that's what our acquisition capacity would be. Okay. And And lower than that, right now, Fred, we sit lower than that. So we've got some acquisitions that we can do within that kind of leverage target. Yes. You said 35 post acquisition. So yes. Yes. Okay. And it looks like you will put a greater interest in some development. What are your views on development yields? And I guess what would be your internal required development yield? It will depend on the market. Right now, we're looking at 6 or high fives in terms of development yield. We're building to core. We're building to hold. It's an opportunity for us to get Class A, kind of best in class properties that we couldn't necessarily afford to buy. In many cases, in the markets that we're looking at building, when you buy, you're buying it above replacement COGS, so building makes a lot of sense. So in round numbers, to answer your question specifically, 6% is a good target development yield, although it may be lower than that in some markets. So for example, like maybe more specifically on Vegas, what will be your expected yield there? 6. 6. Perfect. That's it for me. And the next question comes from Chris Humphries from CIBC. Your line is open. It's a question regarding Vegas. So I guess how did this opportunity come to you? Why did you select Vegas as a market? And can you give us any other kind of color on what the economics might look like in terms of total cost to develop? And additionally, just in terms of how this transaction is going to be structured between yourselves and Dream Unlimited and Pauls Corp? Sure. Sure. To answer the first part of your question, Chris, Dream Industrial, we, along with Pauls Corp and Dream Unlimited, are looking at a number of markets. We're tracking a number of markets looking for development and acquisition opportunities. This is one of those markets. Paulscorp's had a lot of history in Las Vegas as well as other U. S. Markets, so we have been looking for opportunities there. This was a relationship that Paul's core folks had. They had developed very close to this this location. And so it's just a market that we like, we collectively like. We like the growth of this market. We like the distribution kind of metrics and the characteristics of this market given how close it is to California, given where e commerce is heading there, the amount of distribution that flows through there is really in the path of progress, so we like that market. The second part of your question of the economics, this would be a venture between Dream Industrial, Dream and Pulse Corp. Right now, it's set up as an eighty-ten-ten venture where DIR is 80%, Dream Unlimited is 10%, Pulse Corp is 10%, Pulse Corp would manage the development. Total costs are roughly $96 per square foot. That's a rough number. But in general budget terms, that's about what it costs to build, including land and all in costs. There's the structure is just a straight development structure. There's no promoter, there's no premium paid for the development relationship. As we previously announced, we've got a relationship with both Dream Unlimited and Paul's corp to source acquisitions and to source development. And so this is really just a joint venture without a promote. And the property that's going to be developed, is it going to be built on spec? Ideally, yes. The plan is to build it on spec. In many cases, a spec property gets to needs to as it's being built, but we started without any tenant commitments. And what would development yield spreads to kind of market cap rates be right now in that market? Yes, I mentioned on Fred's question that the loan yields are roughly 6. Acquisitions would be if you want to buy a fully leased building, it would be less than that, even 5s, probably close to 100 basis point spread. Okay. And then just in terms of like future development opportunities is in other markets, would it be in a similar type of arrangement? Or would you partner with other developers? It's to be determined. We've looked and we've had plenty of interest from others who would like to partner. This one is, as I've described, and we'll see what happens with other opportunities. But we'd be open to other partners if it was something that was attractive to us and allowed us to maybe spread risk. Is there any kind of target that you have for on balance sheet development? No. We'd like to increase from where we sit today. We don't have a specific amount targeted though. Okay, got it. We're really dependent on opportunities. I think, Chris, we're more limited by opportunities than we are trying to limit it. And our next question comes from Hitesh Gupta from Scotiabank. Your line is open. Thank you and good morning. Just to follow-up on Chris Couprie's question on development yields. So you mentioned 6% development yield. What rent growth are you underwriting on this Vegas property? And you mentioned about spread between California and Vegas market rents. So how big is the spread and what is the Vancouver opportunity there? Sure. Hi, Amex here. So we're looking at 3% annual growth for Vegas. We see I think your question was spread to acquisition to developing yield. Again, I mentioned that's somewhere in the 100 basis point spread. We see a lot of growth in the Las Vegas market and look for that as a great opportunity for the REITs to acquire or own long term Class A Industrial. Sure. You also mentioned about the rent spread between California market and Las Vegas market and some of the tenants migrating from California to Vegas. So what is the rent spread between California and Vegas? I mean, is there a bigger opportunity than just 3%? Yes. I think there's $1 to $2 per square foot per year spread between California and Las Vegas. The bigger challenge is availability of product. The entitlements in the permitting process in California can be really cumbersome, and so that limits supply. So there's higher costs and longer time to market for California products. Companies that domicile in California also pay higher taxes. So there's a lot of reasons for companies to cross the border into Nevada to locate their business. Sure. And generally speaking, how would you balance the development between U. S. And Canada? I mean, do you have any kind of target like going more harder in U. S. Or Canada or depending upon the opportunity? Yes. We'd like to have a balanced approach developing in both, and we see that as it will be opportunity driven. But if we could pick, our target would be to develop equally in the U. S. And in Canada. Got you. Okay. And then just switching gears on the acquisition side. And did I hear correctly, you said you almost looked at $1,000,000,000 of product over the last several months. When you said $1,000,000,000 of product, was it the U. S. Or was it Canada? And are most of the new acquisitions focused in Canada, I assume? It's both. The $1,000,000,000 is both. I mentioned we're in advanced discussions on $80,000,000 That's primarily the GTA product. So the more immediate acquisitions will be in Canada, although we're looking at both sides of the border. We've got a really strong pipeline. We'll see a lot of acquisitions coming up in the next 6 to 9 months. The early ones would be primarily in Canada, but we're looking on both sides of the border. Got it. And just on the Kitchener proposed acquisition at 5.2% cap rate. So what is the lease term there and are the in place rents below market, do you think? Yes, sure. The so the weighted average lease term on that portfolio is 2.9 years, and the in place rents we estimate are about 10% below market. Interesting. Okay, awesome. And maybe just last question on the same topic on the rental spreads. I mean, you're obviously very healthy in Ontario and Quebec. Do you break out between what rent growth you're achieving on new leases versus renewals? I'm just trying to understand that, I mean, whether the same tenant I mean, whether the rent growth is much higher on new leases compared to the renewals? We don't break that out any longer just because I think for especially in the strong markets of Ontario and Quebec, we're seeing strong spreads on both renewals and new leases. So we just found that providing the one number, just capturing all the uplift was a bit more informative and useful for people just to understand what we're seeing in the market. So we don't break that out any longer. I think we used to just give out renewals, and that just wasn't a big enough picture of what was happening. Got it. And maybe just sorry one last question on the Columbus vacancy. And I think you mentioned about 20% end increases expected there. How long do you think you'll be able to backfill that vacancy in Columbus? And the next question comes from Brad Sturges from IA Securities. Your line is open. When you think about development and ramping up the program, is there a longer term target in terms of the type the amount of exposure that would be prudent on the balance sheet at any given time? Well, I think 10% would be in round numbers and good exposure to development that will be limited by the opportunities we can find. And as I mentioned, the balance between Canada and U. S. Within the broader $300,000,000 pipeline of acquisition opportunity, are there other development sites or opportunities you're reviewing right now? Yes. Both Canada and the U. S, I assume then? Yes. Both Canada and the U. S. It's all part of our strategy and things that we're looking at. Well, I guess, by the end of the year, early 2020, you said leverage get up to about 35%. If you're getting closer to your target of high 30s, low 40s, is that still more of a timeline of mid-twenty 20 at this point? I would say probably late Q1, early Q2 to complete those acquisitions that we've mentioned. Okay. And then I guess you've identified the asset sale potentially in London. Is there anything else at the moment you're looking at selling opportunistically or in terms of asset sales, is there much more to do at this stage? There's not tons, Brad. We've had interest from users on a few of our properties, a few one offs. We don't have a big strategy or any big portfolio that we'd be looking to sell. I think we're always looking to kind of coal properties that are more valuable in others' hands and provide opportunities to get higher quality assets. So it's an ongoing thing. It's just a management of the business. It's not any one market that we're exiting or any large portfolio, but we are constantly looking at every asset. So this London opportunity came, it was a good one. It made a lot of sense. We are we do have a few other one offs, but I think those will be ongoing as we manage the business. Got it. Okay. Great. I'll turn it back. And our next question comes from Sam Damiani from TD Securities. Your line is open. Thanks. Good morning, everyone. Just to actually most of my questions have been answered, but just to start off on the development, is that eightytenten JV structure with no promote something that you see replicating in other U. S. Markets and potentially in Canada as well? Yes. I think it's a good model to use going forward. As I mentioned, we've had interest from other partners, institutions, other structures, it's one that we could replicate and one that would be kind of our base case, I would say. Good. Okay, that's helpful. And just on Louisville. I know you're seeing early 2020 now for that. I mean, could you maybe be a little more specific or granular in terms of the progress that's been made since the August conference call? Sure. We've had a lot of interest in it, 303,000 Square Feet. So it's a unique size. The location is great. We're looking for the right tenant. We've had a lot of interest. We've had a lot of broker activity and interest in the property. Ford recently announced they're going to invest $1,000,000,000 into Louisville, and that is affecting the market. We think that will it's only positive for the whole market. So we see a lot of activity. We see a lot of momentum. The absorption has been good in Louisville. So we feel very good about that. That building is really well located, highly functional. It's just a good asset. So we're looking forward to having it leased and we know when we get there. Okay. And just finally on Western Canada, it doesn't get a lot of attention these days, but are fundamentals there starting to turn in such a way that you could actually see yourselves deploying more capital in that market anytime soon? We've looked at some opportunities in the West. We've been pushing occupancy in our own portfolio. We're more focused I'll tell you this, we're more focused in Toronto and Montreal in the U. S. Than we are in the West. However, we do look at opportunities as they come. And if it's compelling, we're taking a harder look at it. I would say it'd be kind of second tier target to the other markets that we're looking at for acquisitions. That's helpful. So you say it's certainly that market's been promoted in stature from a couple of years ago? Yes. I think it's more stable than it was a couple of years ago. It's by no means out of the woods. We're still working hard to raise occupancy. We're working on some of the old rents are higher than the new rents. So it's still a recovering market. We are even looking at recycling some of our own assets in the West. So coming out of older properties that maybe have so lower growth potential and into new ones within the West that would show higher growth potential. And just sort of one final one on the Vegas project. It is meant to be a single tenant development is the current plan. Is that right? No, no. It's multi tenant. It's on a very flexible building. It's I mentioned it's roughly 400,000 square feet. We could easily do 4 100s or some combination of 4 or 5 tenants. Got it. Thank you. I'll turn it back. And the next question comes from Matt Kornack from National Bank. Your line is open. Hi, guys. Sorry if I missed this in your earlier commentary, but for the acquisitions that you're planning to do in Q1 in the GTA, what sort of going in cap rate should we expect on those? Matt, I'd expect those to be under 5%, 5% or just under 5 percent. I mentioned really focusing on quality. These come at a lower cap rate cost, but offer great growth potential and higher NAV growth and higher free cash flow as the quality is higher. So that's where I expect it to be. And is that growth that you'd be anticipating, is that on turnover of leases? Or is it built into the rent escalations already? Both. It's both. It's in the we have growth built into lease terms. I can't say for things that we haven't acquired yet, but we expect to mark to market as leases roll into that, and that's a big part of the growth. And then I guess given that commentary on cap rates as well as some recent trades in Montreal that I think shocked some people. You're carrying your portfolio in those two markets on the books at 5.3% and 62% cap rates. Is there any view towards potentially taking those lower and taking larger fair value gains? I mean, it would also impact your leverage and some of the guidance that you've given on that front as well. Hi, Matt, it's Lana. Yes, we've had numerous conversations just in terms of the IFRS valuation process. Either we follow a lot of the guidance and criteria from appraisers. And as these transactions that sometimes shock us go through the market, I think there's a bit of a lag time before some of these some of those parameters get updated into the appraiser information. That being said, we focus on continuing to capture the rental growth in our underlying cash flows and NOIs. And that as well would also lead to increasing valuations over time. And I guess, is there if we wanted to take out the potential fair market gains, is there a debt to EBITDA number that you'd be looking at on the leverage side at this point that we could look to as well? So you stabilized sort of long term target on debt to EBITDA? Yes. No, no. We're targeting in the 7s. Okay. Makes sense. And then last question for me. With regards to the vacancies that took place in this quarter, were they at the beginning or end of the quarter? So essentially, was there any NOI attributable to that vacancy that won't be in Q3 just from sorry, in Q4 from a modeling standpoint? Yes. So the vacancy that happened in Ontario and GTA was sort of at the end of July. So you got a couple of months there. The ones in the U. S, I think it was about 1 month. 1 month was in Q3, so 2 months out? Yes. Okay, perfect. Thank you. And our next question comes from Brandon Hebrings from Canaccord. Your line is open. Hi, good morning. Good morning. Brian, just taking a look at the Quebec occupancy, it's now over 99%. I know in the past, you've spoken about kind of the balance between pushing rents and maintaining high occupancy levels. How are you or how is the team kind of positioning the Quebec portfolio looking into 2020, maybe 2021 in terms of that balance? In other words, could you see yourself sacrificing some short term vacancy to drive rental growth? Yes. We are pushing rents. The vacancy is very high there. I mentioned a few examples in the prepared remarks at the beginning. We'll be doing the same thing in Montreal in terms of pushing rents very hard. So I would see us probably taking on a little bit of vacancy in Montreal short term as a result of push events, but that market is very tight. And so I think it's a good observation, and we'll likely see some of that. And then I know it's really growth. As one of the bigger landlords there, what's driving that market in your view? Or what type of tenants are either expanding or seeing new leasing opportunities? Yes. I mean, there's a lot of uses for distribution space right now. A lot of retail goods obviously are going through warehouses as opposed to retail brick and mortar store floors. More and more demand with just very little supply coming on. That's just making it tighter and tighter. So I think what you're seeing in our occupancy rate is a result of just the market getting tighter and tighter with increased demand, very little supply. There's a big imbalance of where economic rent is, rent that justifies new construction and where rents are today. So we see that continuing to grow and we're going to be leaders in that and push it. Okay. And just in terms of the leasing spreads in Ontario, obviously, very strong, over 20%, a little higher than if you look at the year to date numbers or even where market rents are relative to your in place portfolio for region. Was there anything in particular, 1 or 2 leases that kind of drove that outperformance? Or was it just how should we be thinking of that for kind of 2020? I don't know, Lance, if there's one that stood out. We're pushing rents. I mentioned how many square feet have rolled and we're pushing rents in all of those cases. So it's an average of all of them. I mentioned one that was recently done. This has been a 4th quarter one in my remarks at the beginning that's more of an extreme. But there wasn't one that drove it and the others were much lower. I think that's a pretty good representation of everything that rolled during this quarter. Okay. Yes. And I would say that we are expecting to see that trend continue into 2020. I think it's a function of sort of what the in place rents are that are rolling off on the spaces. And so some where Brian had mentioned, we had a 94% increase. You're rolling off a $4 rent. So in most cases, the spreads will be quite higher. But I think on average, we're probably seeing high teens to about even 20% on average for into the next year. Okay. No, that's very helpful. And then last question for me. Brian, I know you're obviously very familiar with the U. S. Industrial market. There was a big Prologis Liberty transaction announced not that long ago. I think in their release, they disclosed they'd be looking to sell almost $3,000,000,000 in kind of non core assets on a combined basis. Just wondering your view on whether you I guess it's a difficult question to answer, but could this be a potential opportunity for Dream Industrial down the road as maybe more product comes to market in some markets that you are familiar with? Possible. We know the Prologis folks quite well. The Liberty Trust properties, there are some good, some bad. We'll look at what we think is good in markets that we like. There's a lot of what we call dogs and cats in there. So we're going to look and see what comes available. It's possible as an opportunity for us, and we'll look at whatever it is the Prologis is looking to dispose of and see if it's an opportunity that fits in well with our strategy. Okay. That's helpful. That's it for me. Thank And we're standing by for more questions. And we have no further questions. Thank you, everyone, for your time today, and we look forward to speaking with you again soon. Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating, and you may now disconnect.