All participants, please stand by. Your conference is ready to begin. Ladies and gentlemen, thank you for standing by. Welcome to the First Capital Realty Q3 2018 Results Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. At that time, if you have a question, please press star one on your telephone keypad. I would now like to turn the conference over to Alison. Please proceed with your presentation.
Thank you. Good afternoon, everyone. In discussing our financial and operating performance, and in responding to your questions during today's conference call, we may make forward-looking statements. These statements are based on our current estimates and assumptions, many of which are beyond our control and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements. A summary of these underlying assumptions, risks, and uncertainties is contained in our various securities filings, including our MD&A for the year ended December 31st, 2017, and our current AIF, which are available on SEDAR and on our website. These forward-looking statements are made as of today's date, and except as required by securities law, we undertake no obligation to publicly update or revise any such statements.
During today's call, we will also be referencing certain financial measures that are non-IFRS. These do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Management provides these measures as a complement to IFRS measures to aid in assessing the company's performance. These non-IFRS measures are further defined and discussed in our MD&A, which should be read in conjunction with this conference call. I'll now turn the call over to Adam.
Okay. Thank you very much, Alison. Good afternoon, everyone, and thank you for joining us today. With three quarters of the year now behind us, 2018 is shaping up to be another very strong year for First Capital. At 96.5%, we've now posted our highest occupancy level ever in our nearly two-decade history. It's a wonderful milestone that's a result of a high-quality portfolio that only continues to get better, proactive asset management and investment in our properties, and a very strong leasing team who is supported by the collaboration of many other teams in the company. At the same time, our in-place rents continue to climb from new leasing at market rents, as well as development properties coming online.
Our average net rental rate increased by 3.4% year-over-year to CAD 20.14 at the end of Q3, which is also at our highest level ever, and continues to be well above all of our peers. Highest occupancy ever with our highest rents ever. Not all retail is created equally. All of our key operating metrics were very solid in Q3, we know this isn't a quarter-to-quarter business, I'll cover the balance of our metrics on a year-to-date basis, which I think is more relevant. Same property NOI is up 3.1%, including lease termination fees, and a similar 3.0% excluding them. Far this year, we've completed 2 million square feet of renewals, which is nearly double the 1.1 million square feet we did through the first nine months of 2017.
The lease rates on that 2 million square feet of renewals increased by 8% when comparing the rent in the last year of the expiring term to the first year of the renewal term, and 10.5% when compared to the average rent during the renewal term, which sets us up nicely for continued contractual rent growth. In July, we announced several new strategic investments together with a corresponding equity issue. We noted at the time those new properties have an above-average growth profile consistent with the high end of our existing portfolio, and that these transactions, combined with our equity issue, were immediately neutral to NAV. At quarter end, which includes the impact of the equity issue, our NAV per share grew to CAD 22.54, up 1.5% from Q2 and 3.2% year-to-date. Our operating metrics continued to be strong through the first nine months of 2018.
This has contributed to FFO per share growth of 7.2% so far, with our full-year expectation unchanged in the mid-single-digit range after factoring in our expectation for Q4, which will be a bit of the opposite of Q1 and Q2. Last year, we had non-recurring items in Q4 that we don't expect to comp against, as well as short-term dilution and de-leveraging from our recent equity issue until the proceeds are fully deployed. On to our properties. Largely owing to their high level of excitement, our new development properties often get the most focus on conference calls and investor meetings and the like, which is great, and I'll certainly touch on them. Our business is much deeper than these projects, and the ongoing strength in our operating metrics demonstrate the significant growth from our same property portfolio.
These assets represent the majority of our properties, with stable and growing cash flow in the short term and tremendous opportunity through redevelopment or repositioning in the future. In the meantime, we continue to work them day in and day out. As these properties and the urban neighborhoods in which they're located continue to mature, they too will garner more of the spotlight as they transition from our 22-million-square-foot density pipeline into active redevelopments. In many cases, removing tenant rights make way for a strategic repositioning. Our 2 former Target spaces are a good example. We've demonstrated before how successful the outcome was from repositioning those spaces, both qualitatively and quantitatively. Our TransCanada shopping center in Calgary is another example. Our former food store was paying significantly below-market rent, and notwithstanding, they vacated. Save-On quickly took the space, and we've upgraded the property with some capital and a new future pad.
This is only a minor repositioning, but it increased the property value by 24%. While the real estate economics are very compelling, the repositioning has been a drag on same property NOI in 2018, as Save-On doesn't commence rental payments until next year. These are the ebbs and flows that we need to balance. We'll have more opportunity to do something similar in two of our properties, where Walmart will be vacating next year. Given the single-digit flat net rent, this represents a wonderful opportunity as we redevelop or repurpose their existing spaces, free up no-builds that have prevented additional density, and accommodate new retailers to add to our merchandising mix, who have a strong desire to be at our properties but where we've lacked available space to accommodate them, given both properties are over 99% occupied. In 2018 year to date, we have completed 2.6 million square feet of lease transactions, which is 33% higher than the 1.9 million square feet done during the first nine months of 2017. New deals include PetSmart and Brampton Corners, Canadian Appliance at South Park, Kids & Co Daycare at Royal Oak, SAIL in L'Acadie and Winners in both Semiahmoo and King High Line. Some notable new tenants to FCR's business include Jollibee, a very successful Filipino QSR retailer aiming to open 100 locations in Canada over the short term, as well as MINISO, a great concept from China with a Japanese flair, whom FCR has now done 11 deals with on their entry into Canada. In our development properties, construction is now in full swing at our Wilderton property in Montreal and at Dundas and Auckland in downtown Toronto.
Both are significant mixed-use, transit-oriented properties that fit our portfolio exceptionally well. We're also preparing to commence construction over the next 12 months on 50 townhomes on our Rutherford Marketplace property, and following that, 420 residential units and 40,000 square feet of new retail at Yonge and Royal Orchard, both with Green Park as our partner, although FCR will own 100% of the retail. We've also agreed to pursue the redevelopment of an under-intensified area of our Humbertown property in Toronto as phase 1 of the redevelopment. Together with Tridel, we plan to develop a substantial residential tower with retail at grade on one and a half acres of the nine-acre property.
There's only 8,400 square feet of built space in this area, which we plan to intensify by adding 30 times the existing density while leaving all of the 140,000 square foot main shopping center intact through this initial redevelopment phase. During Q3, we sold a 50% interest in our 200 Esplanade property in North Vancouver to Cressey, one of the most experienced and well-capitalized residential and mixed-use developers in Vancouver. Together, we plan to redevelop the property into a mixed-use residential and retail project. Another milestone was hit at our Mount Royal West project, with Canadian Tire opening their first downtown Calgary location last month. They'll soon be followed by Urban Fare, who collectively anchor this 94,000 square foot urban development phase, which increases our position in this high-growth neighborhood to 385,000 square feet.
In Toronto, most of our CAD 50 million, 102 to 108 Yorkville redevelopment, our tenants in it, including Versace, Brunello Cucinelli, Her Majesty's Pleasure, and ABURI Group, are all now in possession of their space and are preparing to open over the next few months. Over in Liberty Village, a few weeks ago, we were excited to host our analysts to a hard hat tour of our King High Line development. Where many retail tenants, including a state-of-the-art 10,000 sq ft daycare, are getting ready to open next year, as will the first residential tenants. We are now leased or in advanced negotiations with tenants for 95% of 155,000 sq ft of retail space.
Feedback from CAPREIT, our residential partner, is that the retail amenities, including a Canadian Tire, Longo's, Shoppers, Winners, the daycare I mentioned, and restaurants fully integrated into the property, has a direct impact on higher demand and higher residential rents. That is a big reason why we chose to be invested in the res and to keep it as rental. This project increases our position in Liberty Village to nearly half a million sq ft of mainly retail space, but with some office, plus over 500 residential units, representing over CAD 500 million of investment at First Capital share. Feedback from the tour is a deeper appreciation for the connectivity, public realm, and overall community building this project represents. As well as a better understanding of the functionality and flexibility of the urban space we are creating for today's and tomorrow's world.
Transit enhancements, the inner workings of this truly mixed-use project, and value creation were also highlighted. That is it from me in terms of prepared remarks. I will now pass it over to Kay will review our quarter in more detail, after which we would be happy to open up the lines for questions. Kay?
Thank you, Adam. Good afternoon, everyone, and thank you for joining us today. As Adam mentioned, we are very pleased with the results we achieved in the first nine months of the year and in the third quarter. I would now like to take you through the Q3 results in more detail. On slide six of our conference call deck, we show the factors driving the growth in FFO for the quarter and the year-to-date period. Our Q3 FFO increased by CAD 2.8 million, or 3.8% in dollar terms versus the same prior year periods. This increase was due to two key factors, growth in same-property NOI of CAD 2.4 million, driven primarily by rent escalations and higher occupancy levels, and growth in NOI from new acquisitions exceeding the NOI loss as a result of disposition activity.
As expected, our Q3 FFO of CAD 0.30 per share remained consistent with the prior year period, primarily due to the temporary dilution and deleveraging impact of the July equity offering, as the proceeds have not yet been fully invested. We would expect our Q4 FFO per share to also be relatively consistent with the prior year, given the deleveraging impact of the offering and given we are comping against CAD 1 million in other gains last year, as well as CAD 1.4 million in prior year tax recoveries that we do not expect to repeat in Q4 of this year. On our Q2 call, we talked about our FFO growth being heavily weighted to the first half of the year due to some shifts in timing in the recognition of lease termination fees and other gains versus the prior year periods.
We continue to expect our growth in FFO per share for the full year to be comfortably in line with our prior expectations of mid-single-digit growth. Moving to slide seven, our Q3 same-property NOI increased by a strong 3.6%, excluding the CAD 1 million in lease termination fees recognized in Q3 of last year and the minimal amount recognized in Q3 of this year. This growth was primarily driven by higher same-property rental rates due to rent escalations and by increased occupancy levels. On slide eight, our Q3 total portfolio lease renewal lift was 8.7% on 643,000 sq ft of renewals when comparing the rental rate in the last year of the expiring term to the first year of the renewal term.
For the quarter, the lease renewal lift was 11.7% when comparing the rental rate in the last year of the expiring term to the average rental rate in the renewal term. We present this additional metric as it is more common today that our renewals include escalations over the renewal term than it was in the past. This metric captures those escalations and conveys a more relevant picture, especially considering the average renewal term is less than five years. Moving to slide nine, our average net rental rate grew a healthy 3.4%, or CAD 0.66 over the third quarter of 2017 to a record high of CAD 20.14 per sq ft, primarily due to rent escalations, development completions, and renewal lifts. The first nine months of 2018 have been a big year for development completions, with 197,000 sq ft of new GLA being transferred from development to income-producing properties.
This included 61,000 sq ft in our Mount Royal West project in Calgary in Q2 and 15,000 sq ft in our 102 to 108 Yorkville project during Q3, both of which Adam mentioned. We also completed new space in our King High Line, Yorkville Village, One Bloor, Brampton Corners, 3080 Yonge, and Brewery District projects, amongst others. On slide 10, our total portfolio occupancy rate increased by 120 basis points since Q3 of last year to an all-time high of 96.5% due to significant leasing activity over the last 12 months. Slide 11 highlights our six largest developments that accounted for the majority of the CAD 55 million in development and redevelopment spend in the quarter, bringing our year-to-date spend to CAD 165 million.
As of September 30th, we had identified approximately 22.3 million sq ft of additional density within our portfolio, including 2.6 million sq ft of commercial density, which is primarily retail, and 19.7 million sq ft of residential density. This represents a substantial opportunity relative to the size of our existing portfolio, which is 24 million sq ft. Approximately 2.9 million of the 22.3 million sq ft of incremental density is included in the fair value of investment properties on our balance sheet. This 2.9 million sq ft includes approximately 400,000 sq ft that is under active development and is valued as part of our development projects, and 2.5 million sq ft of incremental density, which is included in our IFRS values at approximately CAD 151 million. The remaining 19.4 million sq ft of density is not included in our IFRS values, primarily due to lease encumbrances, which will free up over time.
As we continue to close on our recently announced acquisitions, we expect our pipeline to grow by approximately 800,000 sq ft. As substantially all of our portfolio is located in urban markets, where significant land use intensification continues to occur, we expect our future incremental density will continue to grow over time, providing us with future opportunity to realize value from this density. Slide 12 shows the factors driving the growth in FFO during the quarter and the year-to-date period. This slide also highlights our year-to-date FFO payout ratio, which improved to 69.9% from 74.9% over the same prior year period. Slide 13 touches on our other gains, losses, and expenses, which are included in FFO. We recognized a Q3 2018 other loss of CAD 600,000 versus a Q3 2017 other gain of CAD 400,000. This was primarily due to lower net gains on marketable securities in the current year period.
Slide 14 summarizes our ACFO metric. On a year-to-date basis, ACFO increased by CAD 15 million, or 8.4%, versus the prior year period, while our ACFO payout ratio improved to 81.3% from 89.4%. Slide 15 summarizes our year-to-date financing activities. During the first nine months of the year, we completed CAD 176 million of new mortgages with 10 to 12-year terms at a very attractive average effective interest rate of 3.8%. This was much lower than the effective interest rate on the debt we repaid, which included CAD 96 million of mortgages at 5.4%, CAD 55 million of convertible debentures at 5.3%, and CAD 50 million of unsecured debentures at 5.7%. As previously discussed, we completed a CAD 200 million equity offering in July. We continue to see attractive pricing for new long-term debt with maturities of 10 to 12 years, and expect to continue to pursue these types of long-term financing opportunities.
Slide 16 summarizes the size of our operating credit facility, our unencumbered asset pool, as well as our key financial ratios. 71%, or CAD 7.3 billion of our total assets are unencumbered, which gives us significant financing flexibility. Our net debt to EBITDA ratio and our debt-to-asset ratios both improved in the first nine months of the year as a result of significant disposition activity in Q1, increased EBITDA driven by higher NOI, and the impact of the July equity offering. Slide 17 shows our term debt ladder. As a result of our year-to-date refinancing activities, our weighted average interest rate declined to 4.3% at the end of the quarter. Our weighted average term to maturity is now 5.1 years, and we continue to have future opportunity for interest rate roll-down in our near-term maturities.
Overall, we are very pleased with the quarter and our year-to-date results and would be happy to answer any questions you have. Operator, can you please open the call for questions?
Thank you. Please press star one at this time if you have a question. There will be a brief pause while the participants register for questions. Thank you for your patience. The first question is from Sam Damiani. Please proceed. Mr. Damiani, your line is open. You may ask your question. If you're using a speakerphone, Mr. Damiani, please pick up your handset. Unfortunately, hearing no response, I will proceed with the second question now. Question is from Dean Wilkinson. Please proceed.
Thanks. Can you hear me?
We can hear you.
Adam, more of a conceptual question. You've pointed out that making acquisitions in this environment, not that a lot of assets have traded, tend not to sort of drive any accretion near term, maybe even intermediate term. How do you balance the view between growth and asset quality, knowing that to own and have the stuff that is coveted that people are willing to pay up for may necessarily not mean as much growth in the near term. How do you balance that, and how do you look at that and the opportunities that sit there?
Well, look, I think that's an excellent question because one of my biggest challenges, if not the biggest challenge, as CEO is to balance delivering respectable, consistent FFO growth in the short term, while we make appropriate investments to drive and enhance that growth in the future. If you look at the last few years, our FFO growth has been very good on an absolute basis and on a relative basis. The reality is, it would've been even better if we invested less over that period. That's where the balance starts to come in. That's the case over the next couple of years. We expect decent FFO growth, but it would be higher if we didn't invest.
We're running a long-term business here, and the investments that we've made, including the recent ones that we just made, we are firm believers, and I'm a firm believer, that those will contribute to more growth in two years, in three years, in five years, and beyond. It's a huge challenge, probably the biggest. It's easy to drive short-term growth. We just stop investing.
Right.
That's not in the best long-term interest of maximizing value over that period. Given we're a public vehicle and other things, the trick is getting that balance right. I wish we had a wonderful Excel model that told us exactly the right amount to invest and at the right yields and in the right locations and properties. We don't, and that's our job as an executive team and ultimately as a board, to oversee.
No, that's great. It's a bit of a leading question, but I guess being a public vehicle kind of hamstrings you in terms of having the freedom of a longer-term view.
Yeah. Look, I don't know if I'd describe it as hamstrings, but it introduces some important things that you have to be aware of and keep in mind when you make those decisions. In a different structure, those things are a little bit different, or the emphasis on some of them could be a little bit different.
Yeah, fair enough. That's it. I'll hand it back. Thanks.
Okay, thanks, Dean.
Thank you. The next question is from Pammi Bir. Please proceed.
Thanks. Good afternoon. Adam, can you maybe just expand on the Walmart vacancies that you mentioned that are expected for next year and which properties they relate to? Then maybe if there's some comments you can provide on re-leasing prospects for some of the redevelopment plans that you cited.
Yeah, absolutely. I'd say, in addition to Kay and Alison, we've got Jordie Robins here, Jody Shpigel, and Carm Francella, all executives prepared to take remarks. The two Walmarts, Carm is very close to them and the situation, so I'm going to ask him to respond to you, Pammi.
Hi, Pammi. It's Carm.
Hi, Carm.
As referenced by Adam, we'll be getting two Walmart boxes back, and they're situated at our Cedarbrae and Fairview Mall properties. Although this will result in some short-term cash flow interruption, we expect to generate significant upside similar to what we've experienced with our Target experience. As demand has been strong from tenants, we have been getting calls from gyms, entertainment, home improvements, and specialty boxes. At Fairview, we also have the ability to unlock some development controls on a very key piece of the property with high exposure, which will now be able to build a free-stand pad.
Just on those two locations, are they relocating, or are they just shutting down in those markets?
I don't think it's for us to comment on tenant strategies. We're just focusing our efforts on creating value and improving the tenant mix.
Yeah. What we know right now is they're leaving. In the case of Fairview, it's safe to say, Carm, we have more inbound interest from uses we view as complementary to the merchandising mix than we have available space.
Yes. Fair.
In Cedarbrae, it's a little more complicated because I think that stands true, but there may be a broader opportunity in terms of the density that frees up and what we may do there.
It's fair to say that downtime on those two properties, these maturities, are they toward the end of next year and then more of a 2020 type event in terms of getting them back up?
They're second half. I think one's at the beginning of Q3, and one's at the beginning of Q4. That's when the rent moves on.
Maybe just switching gears on One Bloor East. I think the rents, if I'm not mistaken, started in Q2. Was there much contribution in NOI in Q3, and can you maybe just provide an update on the lease-up of the remaining space there?
Why don't we start with the lease-up part, Jordie?
Hi, Pammi. It's Jordie.
Hey, Jordie.
As you know, Nordstrom Rack opened in Q2 and has been performing incredibly well. I think, by virtue of that, it's spurned or spawned additional interest. McEwan is going to open their 18,000 sq ft premises in the latter half of Q4 or potentially even Q1. Starbucks is now open. We have a binding lease with a new-to-market, exciting tenant for all of the Yonge Street premises, about 4,300 sq ft. We'd like to be making an announcement with respect to that tenant and some additional tenancies within the sign as well in the coming months. I would say with respect to the Bloor Street space, it's been harder than we thought to find the right tenant. Having said that, we're currently in negotiations with a tenant to take all the space, and we expect to update you on that shortly as well.
Yeah. The Bloor Street side's taken longer than we would've thought when we invested, but that's also a result of us being quite sticky on finding the right tenant at the right rent. The reality is we're going to end up doing a longer-term deal there, and so it's important to get that first part right. Given the other leasing that we've done, what's also very clear is that our cost is well below market value. On the first part of your question, based on what I think the question is, the only contribution We closed on the property in May, and it was only Nordstrom at the time that was in occupancy and would've been an IPP. Is that right, Kay?
That's correct. Since that time, McEwan has taken occupancy, and Starbucks as well. The combination would be cash NOI as well as straight-line rent.
Yeah. Cash NOI is only coming from Nordstrom
Nordstrom
at this point.
Okay. It's fair to say, I guess, this stabilization of the property or getting it close to full occupancy, cash NOI is more of a perhaps late 2019 timeline?
Probably too early to say, yeah, that's not an unreasonable estimate.
Okay. All right, last one from me. There was a jump in the fee income in the quarter, I think, to CAD 4 million. Any color you can provide there on what drove that and what do you sort of see as the normalized run rate?
The fee income in the quarter, part of that relates to our investment in Main and Main Urban Realty, that really depends on the timing of property completions or property sales. It can move up and down from quarter to quarter. It doesn't have a stable trend.
Okay, CAD 4 million would not be normal. Is that fair to say?
That is correct.
Yeah.
Yeah. It's lumpy.
Yeah
normal will never happen again, absolutely not. It certainly will happen again. In some cases, it'll be higher than that number, but in terms of it being a regular, reliable quarterly number, it's lumpy.
Got it. Okay, thanks very much.
Thanks, Pammi.
Thank you. Once again, please press star one on your telephone keypad if you have a question. The next question is from Michael Markidis. Please proceed.
Thank you. Good afternoon. Your operating results were strong once again. They have been for some time. It belies the current negative narrative on retail. I wonder if you could just give us some color on the leasing market by market or sub-market by sub-market. Just give us a little color what it's like, what the demand is, who's expanding, who's contracting within your portfolio.
Okay. Thank you very much for the question, Michael. Look, the bottom line is not all retail is created equal. The gap between good retail and bad retail is certainly the widest I've seen in my career. The reason that our results are consistently coming in well ahead of the perception of retail in not only the capital markets but the broader markets in general, is a result of the fact that we own and operate in a very specific sub-sector of retail and the fundamentals have been actually very good and go against what the broader narrative is. There's no point in us trying to go beyond that because it's out of our control, so we'll buckle down. We believe in our strategy and the assets and the direction and the value creation, and then we're focused on execution of that.
In terms of the last part of your question relating to, there are no markets that we're going to be able to point to and say, "These are working better than those." It really has been broad-based. Some quarters, you see Calgary with a big spike. In other quarters, Montreal or Toronto. There's no trend geographically in our portfolio that we can speak to. In terms of where the demand is coming from and who's expanding, I think, Carmine, you can shed some light on that.
Hi, Michael. I think in the previous call, I used the word robust, and I'm going to do so again today. We see a lot of active tenants out there, and the most active categories are fitness, drugstores, dollar stores, sit-down restaurants, specialty
And organic food stores, coffee shops, off-price fashion, and I'd say numerous quick-service retailers. This demand is what's driving our occupancy and our ability to increase rents. A lot of them are looking for properties in urban markets, which aligns itself well with our portfolio.
Great. Thank you. Just for the record, we are full believers as well that not all retail is created equal. Can you give us some color on development costs, trades, material? There's a lot of chatter these days about shortage of trades, costs, what have you. You've got a good-sized development program. Maybe just give us some color on how that's all going.
Yeah. Certainly, there is cost pressure. There's probably more work out there than the availability of qualified trades. We've changed the composition of our construction group over the last two or three years, and so that's been helpful. We have cost estimators in-house who have direct relationships with trades. That's been helpful. Also in estimating cost, we would have a stronger capability today than even a couple of years ago. We're doing the things that you want to do to attract the talent and the subtrades that you want, which is steady work, reliable payment, and things that would just make you a good client, which is also helpful.
Lastly, for some of the big, complicated projects, especially where there's a residential component, one of the several reasons why partnerships make sense for us in a lot of cases is risk management with respect to the execution of the construction. You look at us partnering with Tridel in Humbertown, in Greenpark Group, in Vaughan, and Cressey in Vancouver. These are entities that are doing a massive amount of regular development and have, in many cases, in-house subtrades, that are beneficial for any projects they're working on. Definitely cost pressures. There's a lot of construction in Toronto, specifically, Vancouver as well. More and more in Montreal. These are the markets we've been the most active in. Certainly it's something that is a challenge, and these are some of the things that we've been doing to mitigate those challenges.
Great. Thank you. Just lastly, are you planning anything with The Hazelton Hotel and the entrance to Yorkville Village? I know it's early stages, you're not going to unveil anything, but are you thinking about rejigging that whole entrance?
You're right. It is early. We were pretty clear. Look, the reality is, if you stand across the road and take a look at it's pretty obvious that's not the highest and best use for other property. The hotel has done exceptionally well. It's just had its strongest September ever, its strongest third quarter ever. We tell our partners it's because of our partnership, but that's not the case, obviously. The fundamentals are really strong. It's a 77-room hotel. The infrastructure in the hotel can accommodate more rooms than exist today. The market is there today for more rooms. One option is to expand the hotel, but it's really too early. Clearly, what's obvious is that there is an opportunity to enhance the hotel and our mall by looking at both properties under a common ownership view, and that's what we're doing right now.
We are doing work on it. I don't know where it will lead right now. We're not far enough advanced to be speaking about anything publicly. We think there's a great opportunity there. What that is, we will discuss when we fine-tune it ourselves.
Fair enough. Thank you. That's it for me.
Okay. Thanks very much, Michael.
Thank you. The next question is from Sam Damiani. Please proceed.
Thank you. Good afternoon. Apologize if some of these questions have been answered. I've just been jumping back and forth between a couple of calls. First off, just on Avenue and Lawrence, I wonder if you could just update us on your plans for that assembly. It looks like you've got the full quarter now under ownership.
Well, we're glad to hear your voice based on how the call started. Thanks for the question, Sam. Yeah, Avenue and Lawrence, I guess it depends on how you define the assembly. We're certainly at a stage now, and were even one or two properties ago, where it is a viable redevelopment in the future. We'll continue to look at adjacent properties that improve the economics or the efficiency of a redevelopment. We still would classify it as medium-term. I don't know what else we can tell you at this stage other than we've seen a couple of land comps, like the Fortress site down the road at Brookdale and Avenue Road, which traded. The reports are that it traded at CAD 300 a buildable foot, but there was some construction costs that were incurred that really you should adjust for.
When you do that, you're still roughly north of CAD 200 a buildable foot. We think that's a very good comp for a number of our properties, especially the Avenue and Lawrence assembly. At this stage, we would still be in the pre-planning stage.
Ask what your cost is on the assembly so far.
We disclose that, Sam.
I don't have the exact number handy, let us get back to you on it, Sam.
Okay. Just looking over to Edmonton with the Brewery District, how's the leasing going on that development?
Hi, Sam. It's Carm Francella. As disclosed on some of the previous calls, we finalized some significant deals at Brewery with Loblaws, Shoppers, MEC, GoodLife, Winners, and TD. This mix is drawing strong traffic to the center. We have about 34,000 sq ft of FCR share remaining to lease, and we're in active negotiations for the majority of the space.
Would you expect that leased up within the next six months or so?
We're certainly trying.
What sort of uses are you talking to?
Without getting too specific, we're talking to a service retailer who wants about 8,000 square feet. We're talking to a liquor store. We're talking to several restaurants.
Great. Just lastly, maybe you covered this, but what is your outlook sort of next year and beyond for same-property NOI growth, given that you've enjoyed a tailwind with occupancy growth, over the last few years? That's kind of behind you now.
Yeah, look, I think we're going to reserve answering that till the normal time when we've done it historically, which is on our next call. What I would tell you is that the fundamentals that have been coming through have been pretty consistent, and we're encouraged with what we're seeing in the business. We're expecting continued same-property NOI growth, continued growth through development completions. Our intent would be more specific on that on our next call, which is when we've typically talked about the following fiscal year.
Great. Look forward to it. Thank you.
Thanks very much, Sam.
Thank you. The next question is from Pammi Bir. Please proceed.
Sorry, just one follow-up from me. In terms of the credit facilities, you are running with perhaps higher levels than you have relative to maybe two to three years ago. Just curious if there's a plan to term out some of those draws on the unsecured op-lines.
Just so we're clear, Pammi, are you talking the main operating facility or the sum of all? Because you're right, we're carrying a higher amount, but that's because we've got partners on some of our development projects who we've accommodated by putting facilities in place on those specific projects.
Yeah.
Just so we're clear, are you referring to the aggregate? Because if you're referring to the aggregate, that's why. On the credit facility, I don't think that's the case.
Yeah, I'm just looking at the unsecured, not the secured construction lines or the secured facilities, just the unsecured ops, so this will be, the non-revolver and the revolver, call it roughly about CAD 400 million. Is the intent then just to keep that sort of running at that level?
Pammi, in the past, when we did unsecured debenture offerings, we were typically doing CAD 150 million or less at one time. Recently, we've gone to CAD 300 million in an offering all at the same time. When we do that, we want to have sufficient outstanding floating rate debt that we can pay down. That's one of the factors along with the one that Adam mentioned, in terms of partners' desire for construction financing.
I guess partly contingent on maybe better pricing in the unsecured debt markets.
Yeah, we would expect that the aberration we're seeing in the market right now, which is as much as an 80-basis-point spread differential between unsecured and secured 10-year mortgages and unsecured debentures is an aberration and that will not go on forever, and that market will become more attractive over time. We will certainly be looking to access the market in the future when it is more attractive, and the unsecured debt does remain our primary and preferred source of debt financing.
Got it. Thanks very much.
Pammi, I'd just like to go back to your other question on the CAD 4 million of fee and other income. I don't know if you'd stated that as a CAD 4 million increase. I believe it's CAD 4 million total, and I think you're picking up a financial statement number. I just would remind you, for FFO, we moved to proportionate, so that CAD 4 million on a proportionate basis would be less than that coming through. Main and Main is one factor in it, but obviously, we collect other fee income as well.
Thank you. There are no further questions registered at this time. I would now like to return the meeting back over to Mr. Adam Paul. Please proceed.
Okay. Thank you very much. Hopefully, Pammi, you're still out there, and you caught the end of that. In any event, thank you everyone for your time this afternoon and for your continued interest in First Capital. Have a great afternoon. Bye-bye.
Thank you. Thank you. Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation and ask that you now disconnect your lines.