Good morning, ladies and gentlemen, welcome to the conference call of Granite REIT. Speaking to you on the call this morning is Kevan Gorrie, President and Chief Executive Officer, and Teresa Neto, Chief Financial Officer. Before we begin today's call, I would like to remind you that statements and information made in today's discussion may constitute forward-looking statements and forward-looking information, and that actual results could differ materially from any conclusion, forecast or projection. These statements and information are based on certain material facts or assumptions, reflect management's current expectations, and are subject to known and unknown risks and uncertainties. These risks and uncertainties are discussed in Granite's regulatory filings with Canadian securities administrators and the U.S. Securities and Exchange Commission from time to time, including the Risk Factors section of its Annual Information Form for 2019, filed on March 4th, 2020.
Readers are cautioned not to place reliance on any of these forward-looking statements and forward-looking information. Granite undertakes no intention or obligation to update or revise any of these forward-looking statements or forward-looking information, whether as a result of new information, future events, or otherwise, except as required by law. In addition, the remarks this morning may include financial terms and measures that do not have a standardized meaning under international financial reporting standards. Please refer to the audited combined financial results and management's discussion and analysis for the year ended December 31st, 2019, for Granite Real Estate Investment Trust and Granite REIT Inc., and other materials filed with the Canadian securities administrators and U.S. Securities and Exchange Commission from time- to- time for additional relevant information. I will now turn the call over to Kevan Gorrie. Please go ahead.
Thank you, operator. Good morning, everyone. Thank you for taking the time to join us for our final earnings call for 2019. As usual, I am pleased to be joined this morning by Teresa Neto, our CFO, Lorne Kumer, our Executive Vice President of Global Real Estate, and Michael Ramparas, our Senior Vice President of Investments in Global Real Estate. Teresa will begin our discussion with a review of the financial highlights, and I will follow with brief comments on acquisitions, operations, development, strategy, and thoughts on the impact of the COVID-19 virus, then open up the call to any questions that you may have.
Thanks, Kevan, and good morning all. Granite posted a solid fourth quarter, delivering strong same property NOI and a continuation of investment activity, with Granite closing acquisitions of five investment properties totaling approximately CAD 487 million, followed by an additional CAD 130 million of new investments for 2020 announced in December. FFO per unit in Q4 was CAD 0.91, a CAD 0.01 increase relative to prior year, but down CAD 0.02 relative to Q3 2019.
Included in this quarter's FFO is the temporary dilutive impact of the CAD 294 million equity offering that closed on October 31st, where proceeds have not yet been fully deployed, and the negative impact of a stronger Canadian dollar relative to the euro and a net CAD 2 million expense related to real estate transfer taxes, net of tax recovery, related to the internal reorganization of the REIT's Austrian entity previously communicated on our Q3 conference call.
As mentioned on the call, this reorganization will result in future savings relating to withholding tax on Austrian dividends and will facilitate a potential future share sale efficiently. We expect to realize savings of the same 2+ million in 2020, when we anticipate distributing approximately EUR 36 million from Austria to the Netherlands or Canada, and will continue to realize withholding tax savings every year thereafter on Austrian distributions of approximately EUR 0.7 million or about CAD 1 million, based on current distribution forecasts. Positively offsetting these items was the reversal of CAD 2.3 million of current income tax provisions in Canada and Europe for tax positions relating to taxation years that have become statute-barred. Granite's AFFO on a per-unit basis in Q4 was CAD 0.89, which is CAD 0.02 higher than prior year and CAD 0.01 lower than Q3 2019.
AFFO per unit was favorably impacted by higher FFO per unit and lower AFFO-related capital expenditures, leasing costs, and tenant incentives incurred in the quarter of CAD 1.1 million, compared to CAD 1.6 million in the same period last year and CAD 1.4 million in Q3. Looking forward to 2020, we are expecting total maintenance, capital expenditures, leasing costs, and commissions to reach approximately CAD 11 million for the year. As a result of a relatively low CapEx quarter and strong FFO performance, the AFFO payout ratio came in at 82% in Q4. Operating metrics continue to demonstrate positive momentum. NOI on a cash basis for the quarter increased by CAD 10.9 million or 20.6% from the same quarter in 2018 and by CAD 3.5 million or 5.8% from the third quarter of 2019.
Same property NOI for Q4 2019 was strong relative to Q4 last year, increasing 2.9% on a constant currency basis, increasing by 4.6%, driven mostly by contractual rent increases and re-leasing and renewals of leases in the U.S., Netherlands, and Canada. For fiscal year 2019, same property NOI is up CAD 5.6 million or 3.2%, but on a constant currency basis, 4.5%. G&A for the quarter was CAD 800,000 higher than the same quarter last year, and CAD 1.1 million higher than the third quarter of 2019. Mostly driven by increased unit-based compensation amortization expense due to an increase in awards outstanding, and the fair value loss associated with the increase in non-cash compensation liabilities due to the increase in Granite's unit price.
Looking out to fiscal 2020, G&A is estimated to be approximately CAD 3 million, which includes about CAD 6 million of non-cash compensation expense, but assumes no fair value losses or gains associated with the increase or decrease in non-cash compensation liabilities, which cannot be predicted. The trust balance sheet remains very strong, comprising total assets of approximately CAD 420 billion at the end of 2019, an increase of CAD 300 million since the end of the third quarter, driven mostly by the net proceeds received from the CAD 294 million October equity offering, and a CAD 47 million fair value gain realized on the trust investment property portfolio. This fair value gain is primarily attributable to the trust properties located in the GTA and U.S.A.
The increase in total assets was partially offset by a decrease of approximately CAD 47 million on the trust's U.S. investment property portfolio due to the strengthening of the Canadian dollar against the US dollar since Q3, but positively impacted by an increase of about CAD 12 million on trust European assets due to a weaker Canadian dollar against the EUR since September 30th. The trust's overall weighted average cap rate also decreased 10 basis points to 6.1% relative to Q3. As disclosed in December, the refinance and extended its CAD 300 million term loan late in the quarter, which will result in interest expense savings of CAD 0.04 per unit going forward. When combined with the financing of its US dollar term loan disclosed in Q3, total interest cost savings amount to CAD 0.07 per unit commencing this year.
Total net leverage as at the end of the year was 21%, essentially flat from Q3. The trust's current liquidity is about CAD 790 million, representing cash of CAD 290 million and the undrawn operating line of CAD 500 million. I will now turn the call back to Kevan.
Thanks, Teresa. As always, I will keep my comments brief, as I trust you've had an opportunity to review our MD&A and press release. I think as Teresa mentioned, I would characterize the fourth quarter as being slightly ahead of our expectations financially when accounting for the one-time REIT charge in the fourth quarter, and the lag in deploying proceeds from the equity offerings in April and October. I think we are also ahead of schedule slightly in terms of progress against our strategic plan. As Teresa mentioned, during the quarter, we acquired five modern distribution and e-commerce fulfillment centers totaling 8.5 million square feet , representing importantly, growth in four of our target markets in the U.S.
In all, we acquired over CAD 900 million in income-producing properties located in our target markets in Canada, the U.S., and the Netherlands, at an average cap rate of 5.5%, and CAD 33.4 million on a 191 acre development site in Houston, Texas, which will eventually accommodate roughly 2.5 million square feet of new distribution space upon completion. During the quarter, we also closed on the disposition of six assets in Canada and the U.S., bringing our total disposition program for the year to CAD 105.8 million, which was admittedly at the low end of our guidance for 2019. As I mentioned on the last call, we expect our dispositions for 2020 to come in at roughly CAD 50 million in total.
As a result of this acquisition and disposition activity, our Magna concentration by revenue and GLA decreased to 42% and 35% respectively, putting us well ahead of schedule on a previously announced target of reducing our Magna concentration to under 50% on a revenue basis by the end of 2019. Operationally, we completed a total of roughly 2.8 million square feet of leasing in 2019 at an average increase in rental rate of 7.7%. Further, we have negotiated extensions on roughly 70% of the 2.2 million square feet of lease expiries in 2020, at an average increase in rental rate of approximately 7%. The remaining 650,000 sq ft of expiries in 2020 occur in the second half of the year. We anticipate an average increase in rental rate of 7%-8% on those renewals or new leases.
Our vacancy increased in Q4 by 70 basis points from the previous quarter, due entirely to the addition of 300,000 sq ft of vacant space related to the Southaven Memphis International Airport acquisition made late in Q4. As Teresa mentioned earlier, as disclosed in our MD&A, Same Property NOI for 2019 increased by 4.5% on a constant currency basis and exceeded our annual guidance of 2%-3% for the year. Same Property NOI growth was positive across all geographic segments on a constant currency basis, ranging from 0.6% in Austria to over 25% in the Netherlands. The increase in the Netherlands, as per the last quarter, was due primarily to leasing activity and occupancy gains in late 2018. We reiterate our Same Property NOI growth guidance of 3%-4% for 2020, excluding intensification, and 4% including intensification.
As an update on our development program, we completed the permitting stage for a development project in Stuttgart, Germany, in Altbach, and hope to commence construction in early second quarter 2020 for completion in early 2021. We are in lease negotiations with a prospective tenant for the entire building. Our 520,000 sq ft development project in AllPoints, Indianapolis, is nearly complete and should be ready for occupancy sometime in early Q2 2020. We are currently responding to four separate RFPs for the entire space. In Houston, wet conditions have delayed the site preparation of our development project on Highway 90 in the northeast of Houston. We hope to commence construction of the first two buildings, comprising 650,000 sq ft, in the second quarter, with completion scheduled for late 2020 or early 2021.
As previously discussed, we anticipate that these active development projects will further enhance the quality of our portfolio, generate superior long-term returns, and create significant NAV growth for our unitholders upon stabilization, which is a major component of our corporate strategy and philosophy. As Teresa mentioned, the combination of the Austrian restructuring charge and additional units from the October 31st equity offering negatively impacted FFO and AFFO per unit for the quarter. The restructuring charge will help to improve our cash flow in 2020 and beyond. The equity raise will enable us to execute on our growth plans in conjunction with planned refinancing and potential financing activities in 2020. ESG will also be an important focus for myself and the team in 2020.
Building upon the principles outlined in our sustainability plan released in 2019, we plan to issue a comprehensive update on our ESG activities and objectives for 2020 within the next 60 days. We look forward to sharing that with you all. Given recent developments regarding the COVID-19, I think it would be appropriate to include a comment at this time. While I'm certainly no expert on this matter, there is no question that the spread of the virus has and will have a significant impact on the global supply chain, which by extension could impact a number of our tenants' businesses as their access to product, particularly from Asia, may be temporarily disrupted. With that said, we are in regular contact with our tenants and to date have not received any reports or observed any major reduction in activity at our properties.
Further, I think that the strength of our covenant of our tenant roster positions us relatively well in periods of disruption such as this. By any measure, we have a defensive tenant roster and lease profile. We will, of course, continue to monitor the situation and provide any updates to you all if necessary. In closing, our major financial and strategic objectives for 2020 remain similar from 2019. That is driving FFO and AFFO per unit growth and increasing our scale and diversification in our target markets while maintaining conservative capital ratios.
As I have mentioned previously, the addition of Jon and Witsard as the heads of our U.S. and European programs respectively, the opening of our new offices in Amsterdam and Dallas significantly enhances our investment and asset management reach and capabilities locally in those markets and positions us to pursue and execute on a higher proportion of value-add opportunities, particularly in the U.S., where we already have a very strong foundation of newer generation distribution and e-commerce fulfillment centers in key distribution markets. The recent announcement of our acquisition of three state-of-the-art assets being developed in the Netherlands also expands our foundation of core distribution and e-commerce assets in our target markets in Europe on which we will continue to build. On that note, I will open up the floor for any questions.
Thank you. If you would like to register a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. Once again, to register for a question, press the one followed by the four. Our first question comes from the line of Sam Damiani with TD Securities. Please proceed.
Thank you. Good morning, everyone. I just want to congratulate you on a very good year. I want to talk about the strategic plan that you announced about 18 months ago. You're making very significant progress, as you noted. What are your thoughts about those targets that you set late in 2018, and any thoughts of updating them?
It's a great question, Sam. I think when we drafted the strategic plan in 2018, we did not make the assumption that the equity markets per se would be supportive. We wrote the strategy in such a way where we can execute on it using our balance sheet. The markets, I think, were very supportive. I think we took advantage of that. I would say that we, in terms of scale, and in terms of diversification, are certainly well ahead of the plan. I think as we move forward, we're in a position where we don't want to assume things from a growth perspective. Every year, we look at it primarily on a conservative basis. Certainly, I think the actions we took in 2019 position us to exceed those targets for 2020 and 2023.
Okay. Just to follow up on the special purpose properties, they're down to just 23% of fair value today, down significantly. Of the seven assets, four have remaining lease terms between three and four years. Just wondering how you're looking at the potential timing of those lease extensions at those specific properties.
Well, I think as the remaining lease term goes down, I think ironically, we have more comfort because I think the plan for we wanted to do in Austria. When you go in these assets, in these facilities, and you see the amount of investment and commitment made by Magna in these facilities, they're impossible to replicate. They're extremely, prohibitively expensive to recreate. As we've said, rebalancing the portfolio is a long-term strategy of ours. I think the deeper we go into this, I think the better opportunity we have to create better conditions for that potential rebalancing. I think we're going to remain patient, and I think the conditions for us continue to improve. That's how we're looking at it. I think we're looking at it with even more confidence than we did two years ago.
That's great. That's helpful. One last question. Appreciate the comments on the COVID-19, on the existing portfolio. Are you seeing any impact on leasing discussions?
We have not yet. I think that that's a fair question and a fair point. We are in active discussions on a number of fronts involving a number of properties. We have not seen any delay, not to say it can't happen. I think what gives us confidence is we're 70% through our leasing activity in 2020. We don't have that much roll in 2021. It could, I will admit that it could have an impact, not because failure of businesses and that, just as you can imagine, a number of companies will start to hoard cash. A number of companies will delay decisions until they see how this is going to develop or end. We haven't seen anything yet. We haven't seen an interruption in our leasing discussions to date.
Thank you. That's helpful.
Our next question comes from the line of Chris Couprie with CIBC. Please proceed.
Morning. Maybe carrying on with the leasing discussion. Just in general, are you approaching leasing and renewals much differently between the various geographies?
I think 100%. Remember, a lot of the lease expiries have extension rights in there. Now, it may be set to market rent, so there's a discussion on that. In terms of the extension term, sometimes we're locked in. That's per the lease. Number one, I'll start there. Obviously, we're going to push harder, in the GTA. We're going to be more comfortable with shorter lease terms in the GTA than other markets. I think that goes without saying. I will tell you this, it does feel, with very few exceptions, that broadly speaking, our market fundamentals remain strong and are growing, getting stronger. The approach that we would take in the GTA, for example, we may apply more broadly across our portfolio moving forward.
Okay. With respect to the investment and asset management teams that you're looking to build on in Europe and the U.S., maybe if you can just give some color on terms of what's kind of left to do there and maybe if there's any sense for the potential G&A impact this could have.
I think Teresa mentioned the budget. That includes the addition of asset management and investment teams. We've already budgeted that in. The number you have has that in there. I think we want to remain a small and nimble team. I don't think that there is too much additional overhead being contemplated. We're already in discussions. Jon and Witsard are already in discussions with a few key people, to add to the team. We should be able to round out those teams in 2020, and that would be in the budgeted number that's been communicated.
Okay, great. Maybe just last one from me, with respect to Magna, you've got a year-end target to have it below 40% of revenues. You were at 42% end of the year. There could be a wide range between 40 and something less than 40. Maybe just walk through what you could potentially see that number looking like at the end of the year?
I think, as we mentioned, we're only looking at a small number of non-core dispositions in 2020. We're not anticipating any large transactions. On that basis, it would all be because of the growth of the denominator. We are expecting. We did over CAD 950 million in acquisitions in total in 2019. Maybe we don't repeat that in 2020, but we do expect to be busy. If we add a similar amount of assets to the portfolio in 2020. If you do the math, we should be close to 30%- 35%.
Got it. Thanks so much.
That would be our expectation.
Okay, thanks a lot.
Our next question comes from the line of Mike Markidis with Desjardins. Please proceed.
Hi there. Teresa, thank you for the budget on the G&A. Very helpful. I was just wondering if you could give us a similar expectation for cash taxes next year.
Yeah. Next year, I'm expecting around CAD 7 million-CAD 7.5 million, and that would be kind of a normal state. We do have a similar position where I've got about CAD 2.4 million of provisions that could potentially turn back, which would then take our provision down to around CAD 5 million, similar to this year, CAD 5 million-CAD 5.5 million. Right now I'm assuming CAD 7 million-CAD 7.5 million, but we'll have to see. It's too early to determine whether or not those provisions will be statute barred. There is another CAD 2.4 million potentially that could be reversed.
Okay, also equally as helpful, Kevan, thank you for the Same Property NOI growth guidance of 3%- 4% next year. Are you able to walk through just sort of the different components, like roughly how much of that would be occupancy-driven, how much of that would be contractual bumps versus leasing activity?
Yeah. Almost entirely. It would be rent growth, Mike, because the 300,000 vacancy that came on with the Southaven acquisition, that was just when we had our Q3 call. We're maintaining our Same Property NOI guidance from Q3, which I think is appropriate, but that is entirely rent growth.
Okay. It sounds like you got some pretty nice escalators built in then for 2020.
Well, some lease deals as well. I think we can reach the 3% based on the rent escalations plus leasing that we did in 2019 and leasing that we're doing now for 2020.
Okay. That's helpful. Thanks, and congrats on the good year.
Thank you.
As a reminder, to register for a question, press the one followed by the four. Our next question comes from the line of Neil Downey with RBC Capital Markets. Please proceed.
Hi. Good morning. Thank you. My questions might be a bit more mundane being late in the queue. Teresa, your interest expense was about CAD 7 million in the fourth quarter. With all of the refinancing efforts that occurred through the quarter, what's that look like for Q1 in terms of a run rate?
I'm just looking. I think for next year we are budgeting around CAD 30 million, maybe a little less, like CAD 28 million. If you want to look at that, six, CAD 7 million a quarter.
Yeah. Okay. You've been able to earn a nice carry on cash balances.
Yes.
As we all know, rates just got cut, not inconsequentially this week. Presumably that will have some sort of a modest impact on your interest income, and to the extent it does, how quickly will that show up? Is there a 30, 60, 90-day lag, or will it be effectively instantaneous?
I think it'll be relatively instantaneous. We had a little bit of money tied up for three days, but right now, not really. Our average rate rent, just for, by way of example, in February, we obtained about 1.39% on our cash amongst all the markets. I think we'll probably see that obviously drop now, so we'll be going down. I think you're going to see it probably more immediately. We'll probably see something more closer to the 1% range.
Okay. That's it. Thanks a lot.
Our next question comes from the line of Himanshu Gupta with Scotiabank. Please proceed.
Thank you and good morning. On the Southaven, Memphis property, vacancy of around 300,000 sq ft. What are your thoughts in terms of lease up, and does that include in your 3%-4% Same Property NOI growth?
Yeah, no, as I mentioned, Himanshu, thanks. It does not because we provided guidance without it. I think in looking at our team here, I think we are assuming that is leased up by the fourth quarter of this year, roughly, to give you an indication of our expectations.
Sure.
That could certainly include same property NOI for that quarter.
Fair enough. On the development, looks like you're making good progress on Enfield, Indianapolis. What is your expectation in terms of lease up? When do you plan to announce that, and what rents are you underwriting on that property?
Well, again, I think we have budgeted or are expecting to have that leased up in the second half of this year. With rent commence, I'm not sure if rent commences in the fourth quarter or early in 2021. We would expect to see some rent this year. We did assume 50% leased and 50% leased. 50% of the building rent commencing in Q4 and 50% rent commencing early in 2021. However, from a leasing strategy perspective, we're holding out for one tenant for all 520,000 sq ft. I would say, we would expect by the end of this year at the latest to have the entire building leased and revenue producing.
Okay.
Based on what we've got today.
That's helpful. Maybe just switching to the acquisitions, on the European acquisitions, specifically the Tilburg distribution facility, what going in cap rate is on that property, and what is the near-term and long-term upside on this acquisition?
Sorry, what acquisition?
On the Netherlands property, Tilburg distribution facility.
Oh, yes. That's the three. Those are brand-new assets being built. I think they come on starting in June. There's an expansion piece that comes on in early 2021. These are all core assets. We would consider them core assets in our Netherlands distribution markets. In terms of contractual rent growth, they're all set to CPI, Dutch CPI, which I don't know exactly what it was for 2019. I think it's been averaging around 2.5%. They're all in long-term leases.
Okay. Maybe just generally speaking, how different is the European market versus the U.S. industrial market in terms of e-commerce penetration or sophistication of supply chains? How much product is available on sale in the Dutch or German markets?
Well, I think it's been a very competitive market in Europe. We were talking about it internally the other day. A lot of the assets in Europe are institutionally held, and they're not selling. You look at the U.S., and you could say the same thing from an ownership perspective profile. However, you have a 1031 exchange rule in the U.S. You tend to get a lot more investment volume, just by nature, in the U.S., and maybe a lot more merchant building in the U.S. itself and a lot more supply. It's much more supply-constrained in Europe. I think I'm stating the obvious.
There is a lack of supply, and combined with that, one of the reasons we really like the fundamentals in Europe is e-commerce on the continent is quite nascent when you compare it to the U.S., certainly when you compare it to Asia, and even when you compare it to the U.K. We combine what we think is going to be very strong growth in e-commerce penetration in Europe, a lack of supply. We think the fundamentals are very supportive of strong rent growth over the next 5- 10 years there.
Okay. Maybe just final question from me, how actively are you looking in Canada for acquisitions?
Well, in Canada, the short answer is we are. There's been many opportunities where we're just unwilling to stretch to prices that others are going to. We have admittedly been priced out of a few deals, and we're focused on the GTA. We will look at Montreal. Vancouver, I think, is just too expensive for us. I think also Alberta, as I mentioned before, we had a development deal that fell through last year, and we were unwilling to move on our pro forma for that. The deal economically didn't work in the end. For the right deal in Alberta, we do believe that that's going to be an important distribution market in Canada. There has been some positive net absorption in Calgary, so we look there for the right deal. Really our growth in Canada will focus on the GTA and potentially Montreal.
Thank you. That's excellent color. I'll turn on that.
Our next question comes from the line of Troy MacLean with BMO Capital Markets. Please proceed.
Good morning. For Phase 1 in Houston, you've mentioned a 200 basis points development spread. Are you seeing any cost pressure that would bring down that spread for Phase 2?
I don't think so. We would expect that the cost pressure would be associated with rent pressure as well. I don't anticipate to be a material reduction in the second phase. That's still to be seen. We'll see what happens over the next couple of years, but that's our viewpoint today on that.
If you look out to 2021 or 2022, are there any new markets that you want to develop properties in either the U.S. or Europe?
Well, I think it's a great question. As I intended anyways to illustrate in my comments about Jon and Richard, one of the reasons why Jon and Richard are here is I think it enables us to pursue more management-intensive value-add investments. Not that we didn't look at them before, but I think it gives us much more comfort to pursue potentially different types of assets, and to look at different markets that we feel are complementary. I'll use the U.S. as an example. We have a great portfolio, 20 million square feet, core product, key distribution markets. Now I think we're in a position with our office in Dallas and the team to look at potentially different value-add opportunities, look at more consumption-based markets such as Florida, potentially Denver, as we move forward. Frankly, there are markets where we're reaching our critical mass.
I think we've done a great job of being in centralized locations in our target markets. As we're growing, if we're successful, and we continue to grow, I think we'll look at expanding the footprint in certain markets where we feel could add a little more growth to our story and look at assets that frankly might have a different risk profile to us. I think we can afford to do that based on our tenant roster, the types of assets we already own, our lease expiry profile. We could afford to add a little more risk to generate some higher returns over the next few years.
I know this is probably early, but when you mention higher return, what type of return? I think about 5.5% in 2019. Is it a 100 basis points spread you'd want to have value add?
I think that that would be fair. Look, at the core of our business, we are a logistics real estate company, and we don't want to move away from that. That being said, we've always been open to infill location, to the type of assets that we feel down the road will fulfill that sort of service offering, and generate higher returns. Frankly, it may come with higher turnover, shorter lease terms, et cetera. I always counsel investors that. It is great. Same-property NOI is great, but it is not the only metric. What's really important to us is that we're growing our cash flow. If you're moving rents to market and you're generating higher NOI, but you're paying more to do that, and it's not really translating into your bottom line, that's not the type of business that we want.
It has to be something that fits strategically for us and really generates growth in cash flow over the long term.
Would it be fair to say value add opportunities, there's maybe less competition for those type of properties rather than the fully leased, kind of Class A you've bought so far?
Well, certainly, it's hard to say that it's not totally analogous, but if you look at the older, smaller bay assets in Toronto, it's hard to say they're not competitively bid. Those have been fantastically bid. If we remain disciplined in our target markets, I think we have the relationships where we will see our fair amounts of off-market deals. I think that that is fair. They could be smaller single acquisitions or smaller portfolio acquisitions. Now I think we have the right people, and we'll have the right teams on the ground to find those opportunities.
That's really good color. Thank you. I'll turn it back.
As a reminder, to register for a question, press the one followed by the four. Our next question comes from the line of Mark Rothschild with Canaccord Genuity. Please proceed.
Thanks. Good morning. My questions have generally been asked already, and I appreciate your comments re: the virus. Obviously, there's a lot that's unknown. I'm curious how this is impacting your comfort with buying properties right now. Do you think this will put people on the sidelines for some time? You guys have plenty capacity with the balance sheet.
Well, in short, Mark, we had a long discussion about this internally. We had a long discussion about this with the board. I think our thesis, the consensus in the room with the team, is that we're going to continue to pursue acquisitions. Frankly, from lack of travel alone, this creates some opportunities for us. I think we want to be nimble. We want to remain nimble and creative and capitalize on those opportunities. The short answer is, we are not changing our investment focus. We will monitor the situation. Right now, there's nothing that indicates that we'll be backing off that.
Great. Thank you.
Our next question comes from the line of Brad Sturges with Industrial Alliance Securities. Please proceed.
Hi. Good morning.
Morning.
Just maybe following up on the acquisition environment right now, you've highlighted a pretty strong year last year. I guess, how does the acquisition pipeline look as it stands today, where are you seeing the better opportunities within the current pipeline?
Well, today, Brad, it really does change quarter- to- quarter, at least half- year to half year. Right now, where we sit today, I think we are seriously looking at roughly CAD 400 million in acquisitions. It does feel like roughly 50% or above that is in the U.S. It has been relatively quiet in Germany right now, that might be something that's a little more structural in that people are not letting go of assets, or there hasn't been that much trading that's been going on. There's been more in the Netherlands, if you go back six, seven months ago, there was a lot more activity in Germany, there was nothing going on in the Netherlands.
It really changes, but where we sit today, probably or sorry, more of our acquisition opportunities are emerging in the U.S. versus Canada or Europe.
Okay. Great. One other question. In terms of leasing discussions and negotiations right now, is there any other opportunities within the existing portfolio for intensification or expansion within the current discussions at the moment?
There are a couple. One we're looking at right now in Canada. I don't want to say too much more because I don't want to compromise our efforts there. Keep in mind, on top of the development, we have land in Poland. We have a small parcel of land in Columbus, and we have the remaining land after phase one in Houston. We'll continue to look at intensification within our land holdings in our portfolio. Right now, we do have one we're working on in Canada.
Okay, great. Thank you.
Our next question is a follow-up question from the line of Sam Damiani with TD Securities. Please proceed.
Thanks. Just a couple of quick clarifications. First, on the Same Property NOI growth guidance was for 2020. Was there any sort of meaningful change between the sort of first couple quarters of the year and the last half of the year, or was it expected to be pretty consistent?
You mean in 2020?
Yes.
I don't know the answer to that, Sam. That's a great question. I don't know the answer to that. If I were to guess today, I would guess probably be a little bit stronger earlier than later.
Okay. Lastly, just on the acquisition pipeline. In response to an earlier question, it sounded like you said you kind of expected a similar volume as 2019. Was that what you intended to say? I just want to clarify.
A similar volume to 2019? Yes.
Okay.
What I did say is, we did 950, so we may not do as much in 2020, but I think it will be a similar number. If it is slightly less, I want to make a point, and thanks for asking for the clarification. To clarify, and I want to make a point, if we did less than that, we would still be happy.
That's perfect. Thank you.
There are no further questions at this time.
All right. Thanks, operator. On behalf of the trustees and the management team here at Granite, thank you again for participating on our call today. To our unitholders, thank you for your continued trust and support. Have a great day.
That does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.