Good morning, and welcome to H and R Real Estate Investment Trust 2021 Second Quarter Earnings Conference Call. Before beginning the call, H and R would like to remind listeners that certain statements, which may include predictions, conclusions, forecasts or projections, and the remarks that follow, may contain forward looking information, which reflect the current expectations of management regarding future events and performance and speak only as of today's date. Forward looking information requires management to make assumptions or rely on certain material factors and is subject to inherent risks and uncertainties, that actual results could differ materially from the statements in the forward looking information. In discussing H and R's financial and operating performance in responding to your questions, we may reference certain financial measures, which do not have a meaning recognized or standardized under IFRS Canadian Generally Accepted Accounting Principles and are therefore unlikely to be comparable to similar measures presented by other Boarding issuers. Non GAAP measures should not be considered as alternatives to net income or comparable metrics determined in accordance with IFRS as indicators of H and R's performance, liquidity, cash flows and profitability.
H and R's management uses these measures to aid in assessing the REIT's underlying performance and provides these additional measures that investors can do the same. Additional information about the material factors, assumptions, risks certain uncertainties that could cause actual results to differ materially from the statements in the forward looking information and the material factors or assumptions statements may have been applied in making such statements, together with details on H and R's use of non GAAP financial measures, are described in more detail in H and R's public filings, which can be found on our website and www.sedar.com. I would now like to introduce Mr. Tom Hofstetter, Chief Executive Officer of H and R Retail. Please go ahead, Mr.
Hofstetter.
That Good morning. I'd like to thank everyone for joining us today. With me on the call are Larry Frum, our CFO Patrick Sullivan, COO of Primaris Philippe Lapointe, CEO of Lantower Alex Avery, Executive Vice President, Asset Management and Strategic Initiatives and Robin Kestenberg, Executive Vice President, Corporate Development. I'm very pleased to report H and R's stable and consistent second quarter financial and operating results reflecting the quality, strength and resilience of our portfolio and balance sheet. We are in exciting times with H and R with the impact of the pandemic fading, accelerating lease up that of our residential development properties and of course, the execution of our strategic initiatives.
As we detailed in our announcement last week with the $1,500,000,000 office portfolio sales of the Bell and the Bell office campus, we have laid the foundation for the next steps. Post transaction, H and R will approve its tenant concentration profile, reduced Calgary office exposure and enhanced our strategic flexibility. I'll now turn it over to our team to provide details of the Q2 2021 financial and operating results. Philippe will review our multi residential operations, followed by Pat, who will provide an update on our retail portfolio. Larry will then provide a brief update on office and industrial before providing some context for our financial results.
And finally, I'll make some closing remarks. Over to you, Philippe. That
Good morning, everyone. I'm delighted to be on this call today to provide you with the latest significant progress made within the Lantau Residential platform. We continue to make strides with our strategic initiatives referenced in the past, while also adding new and innovative strategies to further our mission of becoming amongst the best it's fully integrated residential operating and development platforms in North America. On the topic of portfolio performance, when excluding Jackson Park, same asset property operating income from our portfolio in U. S.
Dollars increased by 5.7% and 4.9%, respectively, for the 3 6 month periods ending on June 30, 2021 compared to the respective 2020 periods. As you've probably heard from our publicly traded peers in Canada and the U. S, the U. S. Multifamily industry is experiencing explosive leasing momentum, supported by pent up demand and favorable supply and demand fundamentals predominantly in the U.
S. Sunbelt markets, Land Tower's lease trade outs with a delta between the unit's previous lease rate to its new lease rate has drastically increased over the past few months. For example, our lease trade off for our entire portfolio, excluding Jackson Park was over 18% in the month of July, led by the Tampa market at over 30% and the Austin market at over 25%. Additionally, our same store occupancy as of this week is over 96% compared to 92% 12 months prior. While we certainly do not expect this rental rate growth trend to continue at this level for an extended period of time, we are certainly encouraged by the strong demand fundamentals we are proud to announce that our Q2 operating income growth represents over 13 consecutive quarters that same asset quarter over quarter positive NOI growth, once again, when excluding Jackson Park.
Despite COVID's impact on our industry in 2020, in addition to the reinstated yet legally questionable CDC eviction moratorium, Lantower's ability to produce consecutive quarters of positive growth during this turmoil is particularly remarkable. And I'd like to personally thank our property management division led by Emily Watson and her team who are entitled to most of the credit. That furthermore, we are especially proud that Lantar Residential is only one of few publicly traded multifamily platforms that reported positive quarter over quarter net operating income growth throughout 2020 2021 when excluding Jackson Park. On the technology front, I'd like to provide an exciting update on our Smart Apartment strategic initiative program. By the end of this upcoming September, our entire portfolio will have been fully converted to smart apartments.
As a reminder, these smart apartment packages include smart locks, smart thermostats that and leak sensors that will provide the resident full apartment control all from a single app. The results to date have been nothing short, but exceptional as we are experiencing the operational efficiencies and NOI growth, namely thanks to the keyless and remote access unit control, as well as the ability to climate control the few remaining vacant units more efficiently by leveraging the management software. While we are pleased with the Smart Apartment packages installed to date, we are continuing to further expand our technology based initiatives to drive NOI growth and further differentiate Land Tower's offerings. We are in the early stages of implementation of our virtual leasing platform to be rolled out across our entire portfolio, allowing future residents Square and leased an apartment 20 fourseven without requiring a visit to our leasing office. We are extremely excited about this next strategic this initiative as we expect it to yield numerous additional financial and operational benefits.
As mentioned Q1, our primary strategic growth initiative is our wholly owned development platform within Land Tower. We currently have 3 active development projects in our U. S. Sunbelt markets. Firstly, I would like to provide an update on Land Tower West Love, our infill site in Dallas, Texas with proximity to the Dallas Love Field Airport and Medical District.
That the 5 story, 413 unit wrap development is expected to break ground around the end of this year. Also in the works in Dallas, Texas is Land Tower Midtown, a 4.2 acre infill site with direct frontage and visibility to the North Central Expressway, we have a significant number of customers that we have in place, we are currently drafting construction drawings we expect to break ground on Land Tower Midtown in the Q1 of 2022. That Lastly, we are commencing construction drawings for our garden style property called Lantar Bayside in Tampa, Florida. This development with approximately 271 units is adjacent to Highway 19, one of the most dominant thoroughfares in all of Pinellas County. This development is also expected to break ground in the Q1 of 2022.
As a follow-up to our ESG as the key initiatives mentioned in previous quarters, it is worth noting that we are carrying that same focus into our land tower development efforts. Every land tower development will be pursuing the National Green Building Standard or NGBS certification, which is one of the most prominent and recognized certifications in the residential sector. In addition to these pipeline developments, we have additional owned sites and sites under contract that will soon join the land tower development pipeline. For context, if we continue our projected development pipeline on the developments under our control, we will add over 2,000 units or over $0.5 billion worth of multifamily over the next few years, eclipsing the 10,000 unit portfolio mark. From a return perspective, we are targeting development yields between it's 5.5% and 6% for all projects in Land Tower's development pipeline.
The expected development yields relative to historically low Class A cap rates it provides strong value creation and risk adjusted returns. And with over 175 bps of yield coverage, coupled with the benefit of retaining the upside economics and almost just as importantly, designing to Land Tower's best in class design and quality standards, our intent is to continue the expansion we are confident that this highly accretive growth strategy
for the foreseeable future.
On the Lantaro River Landing front, our leasing pace continues to beat our expectations and budget. As of today, we are 78% occupied and have leased 4 66 apartments or over 88% leased. Since September, when we opened our doors, we have averaged over it's 45 leases per month and have increased rents multiple times while simultaneously decreasing leasing concessions without any noticeable reduction in traffic. On the Jackson Park front, we would like to share a very promising update. As we have disclosed in recent weeks, Jackson Park's recovery has been nothing short but exceptional.
Signed leases over the last few months have returned the property to stabilization. For example, Jackson Park signed a record 456 leases in June, which represented the most leases ever signed in a single month at Jackson Park by a large margin. For context, the most leases the sale of the property was under 200 leases. When including pending applications and leases the sale of the property is 99% leased as of July 31. We expect the occupancy to catch up we expect to incur a lease percentage at the end of the Q3 or early Q4 as this is when the majority of our pre leased units will take occupancy.
On the JV development front, we and our partners have taken advantage of the favorable disposition environment and have successfully marketed for sale a few of our JV developments. Over the next 60 days, we intend to close on the disposition of Hercules Phase 1 in Hercules, California and Astera Park in the Seattle, Washington market. With a weighted IOR of nearly 30% and an equity multiple of 2x, we are proud to dispose of these 2 successful developments it's been redeployed into accretive opportunities. We would also like to highlight the hard work of our JV partners and just as importantly congratulate them on 2 very successful developments. That as for the JV developments that are not currently in the market, the Pearl in Austin, Texas is scheduled to fully deliver in the Q3 of 2021.
Leasing has begun and been met with incredible demand as evidenced by a lease percentage of 42%. Construction of Phase 2 of our Hercules development named Grande has remained on schedule and is set to be delivered in the Q3 of 2021. Lastly, Shoreline Gateway, our 35 Story Tower in Long Beach, California is also on schedule and expected to obtain final CO in early September 2021. That In summary, there's lots of good news coming from Lantar Residential and I'm excited to deliver more news next quarter. And with that, I will pass along the conversation to Pat.
That
Thank you,
Philippe. The 39.9% increase in retail same asset property operating income for the quarter was it's primarily due to a material improvement from the enclosed model portfolio. Same asset NOI rose due to a significant decline in bad debt expense within the enclosed mall portfolio to approximately 0.6 $1,000,000 down from $22,800,000 in Q2 2020. Q2 same asset NOI was also impacted by lease surrender revenue of $2,000,000 it's related to a Starbucks termination of 2 locations and a payment related to the Sears CCAA filing. On a sequential basis, the retail portfolio delivered continued momentum with Q2 same asset NOI rising 3.9% for the retail division and 6.9% for enclosed malls compared to it's Q1 2021.
Throughout the pandemic, our primary focus has been to maintain occupancy. Occupancy at the end of the second quarter was it's 91.4% for the retail division as compared to 91.5% at the end of Q1 and higher than the 90.5% at the end of Q2 2020. For enclosed malls, occupancy at the end of Q2 2021 remained relatively stable at 87.1% sales were not as strong as compared to 87.2 percent at the end of Q1 2021, but have improved from the 85.8% at the end of Q2 2020. There have been no significant CCAA filings to date in 2021, and we do not anticipate additional filings to occur the remainder of the year. That Moving on to rent collections.
Collections in the retail portfolio continue to trend higher since our low point in May of 2020. In Q2, we collected 89% from closed malls compared to 94% in Q1 2021. That our 4 Ontario enclosed malls account for just over 20% of gross rent and they were closed for the entire second quarter. In June, we received 95% of rent from malls outside of Ontario despite continued occupancy restrictions in many provinces and just under 71% from rent for malls in Ontario. That with all malls now open and occupancy restrictions lifted in the majority of our markets, we anticipate a return to normal collections moving forward.
That with Ontario malls closed during the majority of 2021 and occupancy restrictions in place in other provinces, leasing momentum that was realized in Q1 slowed in Q2. Over the past 30 days, our leasing team has experienced a recovery in leasing activity that with a number of national tenants based in Eastern Canada and the United States, including fashion tenants, with restrictions lifted and sales rebounding, we believe that we will continue to improve our occupancy level throughout the remainder of the year. In terms of impact, we anticipate approximately $1,100,000 incremental contribution we have a significant contribution from new lease commencements with large format tenants during the remainder of 2021. In addition, we have completed significant transactions that will create incremental rental the growth of over $3,200,000 in 2022, including rent from 65,000 square feet of new tenant leasing that has been that with medical and office tenants. Throughout the past year, our suburban malls located primarily in secondary markets have performed well compared to urban centers.
That with restrictions easing in the 2nd quarter, mall sales in our properties outside of Ontario and Manitoba posted strong sales figures compared the pre pandemic levels in 2019. By way of example, in June 2021, Plasteroyam and Shikutimi reported sales that were 112% that for the most part, our malls in Ontario and Manitoba reported sales for June 2021 that were 90% or more compared to June 2019. With Ontario malls now open and occupancy restrictions lift since easing in Manitoba, we anticipate sales to rebound to levels similar to those generated prior to the pandemic for the remainder of 2021. That while challenges remain for retailers selling goods and services related to work apparel, we have seen strong sales numbers from junior and casual apparel retailers as well as footwear retailers. We've been encouraged by strong sales productivity reported during the past several months by many national fashion tenants as well as tenants in the health and beauty, jewelry and footwear categories.
FoodCorps tenants and other fast casual food tenants selected inside our malls are realizing improved sales and have generally rebounded to 80% or more of their 2019 sales figures. That I'll now move on to an update on several development projects. We've recently sold just over 2 acres of land at Northland Village for approximately $5,800,000 we are a residential development company who has commenced construction on a 6 story building incorporating approximately 240 residential units. The overall plan for Northland Village is to redevelop the Walmart anchored enclosed mall into a mixed use open air center over the next few years it's in several phases subject to pre leasing. In July 2019, we submitted combined applications for rezoning and redevelopment for the north end of the property that Dufferin Mall to create Dufferin Grove Village.
The project is anticipated to include approximately 1200 residential units. That discussions with the city are almost complete and we anticipate rezoning and site approval in Q4 2021 and commencement of construction it's Q4 of 2022. Upon completion, this redevelopment project will transform a successful inner established inner city regional shopping center we are committed to executing our strategy into a vibrant mixed use development. Thank you, and I'll now turn it back to Larry.
Thank you, Pat, and good morning, everyone. For the Q2 of 2021, our FFO was $0.38 per unit, no change from the $0.38 for Q2 2020. That On last quarter's call, we spoke about a few items, which were expected to influence 2021 financial results, that And I'd like to now review their impact on Q3 results. Firstly, as our River Landing development has been completed, less interest has been capitalized for the project. The aggregate interest capitalized on all development projects amounted to 500 and $4,000 for Q2 twenty twenty one compared to $5,200,000 for Q2 twenty twenty.
With accelerated leasing momentum, as Philippe mentioned, the operating income from River Landing will begin to offset this interest factor. Property operating income on a cash basis from River Landing was US2.3 million dollars for Q2 2021, And we expect that to grow to approximately US6 $1,000,000 per quarter in 2022. That Secondly, Jackson Park in Long Island City, New York is particularly hard hit by COVID, but it has begun to recover, as Philippe mentioned, as well. Property operating income from this property in Q2, 2021 was approximately US2.3 million dollars at H and R's ownership interest that compared to US6.9 million dollars in Q2 of 2020, we are encouraged by the recent pickup in leasing activity and the committed occupancy, which should result in a return to more normalized operating results from Jackson Park in Q4 of this year. Thirdly, in January 2021, H and R converted a US146 million dollars mezzanine loan on a the 12.4 acre development site in Jersey City to an equity ownership position.
This is the primary reason for the reduced finance income $4,300,000 earned in Q2 2021 compared to $9,200,000 earned in Q2 of 2020. Finally, bad debt expense decreased dramatically from the $23,500,000 recorded last year in Q2 that's $1,200,000 for Q2 of this year. As at June 30, 2021, we had a provision for expected credit losses of $14,000,000 against the gross accounts receivables of 29,000,000 that Turning to our office segment. Same asset property operating income on a cash basis decreased by 9.9% as compared to Q2 2020 that and was primarily due to Hess receiving a 7 month free rent period commencing December 2020 that part of a lease extension and amending agreement completed in November 2020. Under this agreement, Hess agreed to extend the term of its lease on approximately 2 thirds of the building for an additional term of 10 years beyond its current expiry of June 30, 2026.
Excluding the impact of the Hess lease amendment, same as the property operating income increased by 2.5% for the quarter. That Hess' free rent period ended on June 30, 2021, so we will see an improvement in our office segment beginning in Q3 2021. As Tom had already mentioned last week, we announced the $1,500,000,000 office portfolio sale, including the Bow and the Bell office campus. Once these sales are closed, we will have significantly reduced Calgary office exposure, improved our tenant concentration risks that improved our credit metrics. Turning briefly to our Industrial segment.
Same asset property operating income on a cash basis decreased 3.4% compared to Q2 2020 due to the decrease in occupancy from 99% to 98%. In June 2021, H and R sold its 50 percent ownership interest in a portfolio of 5 single tenanted industrial properties totaling 215,000 Square Feet Located Throughout Atlantic Canada for approximately $21,000,000 In addition, H and R sold its 50 percent interest in a 37,000 square foot multi tenanted property located in Kitchener, Ontario for $12,000,000 subsequent to quarter end, H and R sold its 50 percent ownership interest in a portfolio of 9 single tenanted cold storage properties located across Canada for $117,500,000 These industrial transactions resulted in total proceeds of approximately 100 and $50,000,000 compared to the IFRS value of $121,000,000 as at March 31, 2021. The weighted overall capitalization rate for these dispositions was approximately 4%. Moving to the balance sheet. That at quarter end, debt to total assets with the REIT's proportionate share was 50% compared to 51.1% at the start of the year, And unencumbered assets as a percentage of unsecured debt was 1.65 times coverage consistent with Q1.
Debt to EBITDA was 9.85 times. Pro form a second quarter results, taking into account the office property dispositions announced last week that the lease up of River Landing in Jackson Park, we expect our credit metrics to improve dramatically and are modeling debt to EBITDA of 8.6 times, Debt to total assets of 43.7 percent and unencumbered assets to unencumbered debt of 2.25 times. That At quarter end, H and R had ample liquidity with cash on hand of approximately $60,000,000 we have a significant amount of cash and $990,000,000 available under our unused lines of credit. In addition, we have an unencumbered property pool of approximately $4,000,000,000 that And with that, I will turn
it back
to Tom.
Thanks, Larry.
After challenging 17 months, we are seeing and experiencing signs of recovery. Activity has accelerated dramatically, lifting occupancy sharply at Jackson Park, and we are seeing strong leasing momentum at our largest recent development, River Landing in Miami. Vaccination rates are climbing every day and where restrictions have been lifted, it's the more retail sales have surged. Over the last few quarters, we've outlined plans to create at least one new entity in 2021. And as is evident by the Bowenville office campus sale, we remain on track to achieve that goal.
We are currently working through the final stages of this initiative and appreciate the patience and support of our unitholders and investment community. We look forward to providing more details in this regard in the coming weeks months. We'd now be pleased to answer any questions from the call participants. Operator, please open the line for questions.
That And our first question is from Sumayya Syed with CIBC. Your line is open.
Thanks. Good morning. That Just in the disclosures for tenant inducements for office, that there was a reference to a major tenant signed in Toronto. Can you share anything about size, which property and just anything on The terms of that lease?
Good morning. Are you referring to, I think, You're showing $1,400,000 of tenant leasing expenditures in the quarter?
Yes.
I actually don't know offhand. I can look I'll talk to it and get back to you on that.
It's not material enough, so I don't know offhand either.
That Okay. We'll get that, Matthew.
Okay. That's fine. And then just wondering with the reopening and recovery that's Underway and I guess improving prospects for asset values. Do you intend to revisit fair values In the near term or are you comfortable with the gains you've recorded year to date?
That It's a regular process of every quarter revaluing our fair values. So, we're comfortable with the positions that we have at June 30 that September 30 will be revalued on our regular process. I can't say now what we expect that to be, but we don't expect material changes.
Okay. And then just turning to land tower that's the strategy there. Just maybe a reminder for us in terms of what's the criteria for what stays In the REIT versus what could be marketed for sale?
Are you specifically referencing the JV developments?
Yes.
So, if you'll recall, initially, the JV developments were a great idea for a variety of reasons, but really what it boils down to is optionality. And so at the time, we decided to do it with a best in class developer in a high barrier market and what has really afforded us the opportunity was to see if we wanted to build a position around the development and ultimately take ownership of the development to add to our position in that market. What we've quickly realized frankly is while those markets are strong in their own respect, frankly, we thought it'd be a better and probably a
it's
more worthwhile investment to consolidate your position in the Sunbelt markets. And so the JV developments, unless a material change in circumstance will all eventually be marketed for sale.
Okay. That's That's helpful. Thank you.
And Sameh, just before you go, I did find that first question you asked about the tenant leasing. It was from our property 25 Shepherds that was a renewal of a lease for $1,000,000 of tenant inducement or a leasing that incentives that we counted on that property.
Okay. Thanks, Larry.
That the next question is from Matt Kornack with National Bank Financial. Your line is open.
Good morning, guys. Apologies if you mentioned this. It's a bit tight on conference calls this morning. But with regards to the Jackson Park that's the lease up. Larry, I think you said it's going to be fully stabilized or back to normal in Q4.
But can you give us a sense that as to I mean it seems like a pretty massive improvement in occupancy from June until August, but when those leases Smitley would commence and is the character of that leasing, is it student leasing or young professionals returning to the office in Manhattan?
Philippe mentioned some of it. Filippo, do you want to answer that question?
Sure. That Sure. Happy to. Good morning, Matt. So we'll deal with the easiest one.
I would say it's a blend of both. There's obviously going to be a healthy representation of international students. And by all accounts, all of the universities and colleges are having in person class in New York. And so that's an explanation for the frankly the outstanding momentum. But there is also young professionals, although I think that that while their impact has been felt, I mean, the property is 99% leased, and so I'm not sure how much more we'll see in the upcoming months.
But to answer your question succinctly, it's it's a blend of both. And as far as the leases are concerned, we think that it's probably going to materialize in the Q4. That so by the time some of the concessions or tenant inducements flush out, the net operating impact will be felt in the 4th quarter.
Okay. So sequentially, we should expect kind of flat performance and then it really to ramp up substantially into Q4?
So I'd have to get back into the exact timing because obviously June, July, September will kind of overlap. Depending on how many are recognized in the end of this month and September. But if you think about conceptually, 4.56 leases being signed in July that and 99% leased, it's going to skyrocket fairly, fairly quickly. And so we're delighted in being able to announce that we're back the regular business and obviously excited to see Jackson Park outperform the Long Island City market as it had prior to COVID. That
And then I guess shifting to the enclosed mall portfolio, Pat, again, I apologize I missed most your preamble and I'm sure it was pretty detailed, so I'll go back and listen to it, so don't repeat that. But just interested in your thoughts going into the balance of the year, obviously Christmas is going to be important from a sales perspective. We're seeing some normalization that in shopping patterns, I think there's some stats out that traffic is up in the U. S. Back to pre pandemic levels.
But in terms of what you're thinking In terms of new tenants coming in versus maybe losses we'd have from businesses that have been challenged, like where should we the occupancy kind of trend over the next year or so if you had to guess?
I think, Matt, it's going to it's positive. I see a lot of leasing traction starting. We had some pretty good momentum in Q1. It stalled in Q2 primarily because Ontario was shut down. That we've done a we've had a lot of activity in the latter part of June July and typically these are slow months.
That we're seeing activity from fashion tenants. We're seeing activity from a bunch of U. S.-based tenants who are continuing their expansion in Canada that some Canadian based tenants as well that we're I got to admit, I'm really encouraged by the sales reports for June that And reviewing them, the fashion tenants are actually performing very well across the board. Junior unisex specialty is doing very well, footwear is doing well. These are categories that were rather flat or down for the first we have not seen the Q1 and even the Q4 of last year.
So, they've actually shown some pretty good strength. And I think that's going to that as Ontario opens and the retailers kind of get back to business on Ontario, I think it's going to put a lot of guys back in motion in terms of their expansion plans. That.
Okay. That makes sense. And then lastly for me, on the industrial portfolio, obviously, you've generated some interest, got some good cap rates. Clearly it's an exceptionally hot sector. The same property NOI growth, is it a transitory vacancy?
I don't know if it was discussed in the last call there and what the expectation is just in terms of how that portfolio will perform.
Hey, Matt. Yes, the occupancy dipped a little bit, but we believe that's a good thing as the rents we will be able the Gethron releasing will be higher than the tenant leaving. So we just expect it to be a short term impact.
That Which geography is that in?
It was actually a mix, one property in Calgary and one property in Ontario.
Okay, perfect. Thanks guys.
The next question is from Sam Damiani with TD Securities. Your line is open.
That Thank you. Good morning. Just on the Bow and Belt transaction, and I know we had the call last week, but could you just review, I guess the impact on FFO, when that goes through with the amortization? And also do Do you anticipate any fair value impact once that closes?
Good morning, Sam. So first, on the accounting treatment, as you mentioned, because of the option to repurchase that IFRS 15 review regards that as if we have not given up complete control of the assets and therefore for accounting purposes, we will still keep that asset to bow. We're talking just about the bow, not the bow. Bell will be regarded as a true sale. But because the repurchase option is on the bow, The boat will stay on our books and we will continue to say value that every quarter, probably being straight lined down over the 17 years that as we come closer to the end of that 17 year period, the proceeds we receive from the sale transactions will be set up as deferred revenue.
That will kind of be amortized down with an interest accretion factor. So that's all happening on our financial statements. Obviously, and sorry, and we will continue to record the full impact, the full that's So the full rent at 100% on our financial statements. Of course, 85% of that is non cash Because we should we will only be receiving 15% of the rents as opposed to 85%. So on our disclosures, we will Giving you the non cash items that are coming in and we will be adjusting.
I don't know, we're not quite sure how we're going to do it, but probably adjusted through AFFO. The non impact of the Boat transaction in terms of our rent and the interest accretion component for the deferred revenue drawing down. So, but overall, if you treated it as a true sale, our FFO would
dropped
by 20 both sales, Bo and Bell would be dropping by about 0.20 that So if you're looking through the accounting, that's what you should expect to see from the sales, decrease of $0.20 per annum on our FFO. Again, that's largely offset by what we expect to get on the lease ups from Rubber Landing and Jackson Park.
And just on Jackson Park, that Is that a core asset or would you just want to sell that? And is there any hindrance in selling that with your 50% ownership?
No, it's a core asset. We don't have any plans at disposing of it. It's actually one of our best assets.
Okay. Thank you. I'll turn it back.
That it appears that we have no further questions at this time. I'll turn the call back to Mr. Hofstetter for any closing remarks.
Thanks, everybody. Have a great weekend and enjoy the rest of the summer. Bye.