Good morning. My name is Joelle, and I will be your conference coordinator today. At this time, I would like to welcome everyone to the Minto Apartment REIT 2024 Second Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question- and- answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the number two. Before we begin, I want to remind listeners that certain statements about future events made on this conference call are forward-looking in nature. Any such information is subject to risks, uncertainties, and assumptions that could cause actual results to differ materially.
Please refer to the cautionary statements on forward-looking information in the REIT's news release and MD&A, dated August 13th, 2024, for more information. During the call, management will also reference certain non-IFRS financial measures. Although the REIT believes these measures provide useful supplemental information about its financial performance, they're not recognized measures and do not have standardized meanings under IFRS. Please see the REIT's MD&A for additional information regarding non-IFRS financial measures, including reconciliations to the nearest IFRS measures. Thank you. Mr. Li, you may begin your conference.
Thank you, operator, and good morning. This is Jonathan Li, CEO of Minto Apartment REIT. Also on the call is Eddie Fu, our CFO, and Paul Baron, our SVP of Operations. In Q2 2024, we maintained the strong operating performance that characterized the start of the year. As illustrated in the table on slide three, we generated 6.3% growth in average monthly rent for the same property portfolio compared to Q2 last year, and increased occupancy by 20 basis points. Same property revenue growth in the unfurnished suite portfolio was strong at 6.8%. The total same-property revenue growth of 4.8% was impacted by lower occupancy in our furnished suites and temporary vacancy in our retail space at Minto Yorkville.
Normalized SPNOI and normalized SPNOI margin increased by 7.5% and 160 basis points, respectively, reflecting continued strong revenue growth and flat operating expenses, resulting from disciplined cost containment and lower utility rates relative to the prior year. Normalized FFO per unit increased 15.4%, and our normalized AFFO per unit increased by 18.7%. Our strategy to translate NOI growth into cash flow per unit growth has been successful, and our strong cash flow growth performance is a result of disciplined capital allocation decisions and successful asset sales that contributed to reducing our interest expense compared to prior periods. Our debt to GBV was 41.8%, while its debt to adjusted EBITDA continued to sequentially improve, decreasing to 10.9 x as a result of our strong performance.
We also continue to work towards the upward refinancing of 4 properties located in Ottawa that have total estimated net proceeds of between CAD 70 million and CAD 80 million that will be used to reduce the outstanding balance on our revolver. Current interest rates have trended favorably. I'll now invite Eddie Fu to discuss our second quarter financial and operating performance in greater detail. Eddie?
Thank you, Jon. Turning to slide four, same property portfolio revenue was CAD 38.9 million, an increase of 4.8% from Q2 last year, primarily reflecting a 6.3% increase in average monthly rent to CAD 1,939 at quarter end, partially offset by the decline in furnished suite and commercial revenue. Normalized same-property portfolio NOI increased 7.5% year-over-year to CAD 24.9 million, as revenue growth was offset by small increase in same-property normalized operating expenses. Same-property normalized NOI margin increased by 160 basis points to 64%. Average occupancy remained steady at 96.9%. Our strong normalized FFO and AFFO growth has resulted in a normalized AFFO payout ratio of 57.2%, a reduction of 870 basis points from Q2 2023.
Turning to slide five, this chart highlights the REIT's steady quarter-over-quarter growth in average monthly rent and strong realized quarterly gain on lease performance. Moving to slide six, we signed 420 new leases in the second quarter, generating gain on lease of 11%. We generated double-digit increases in both Ottawa and Calgary, while Montreal was up 9.1%. Toronto was up 9.2%, despite a larger proportion of new leases signed for suites with a shorter average length of stay, which resulted in a smaller gap to market rents. Moreover, approximately 50% of the new leases in Toronto were signed at Niagara West, a non-rent-controlled property, where expiring rents are closer to market. Excluding Niagara West, realized gain on lease in Toronto was 14.4% and was 12% across the portfolio.
As indicated in the lower table, the embedded gain to lease potential at the end of Q2 remains strong at 15.7%. Moving to slide seven, the same property portfolio annualized turnover was 20% in the second quarter, in line with seasonal norms. Move-ins outpaced move-outs, resulting in improved closing occupancy. Annualized turnover was 34% in Calgary, a non-rent controlled market, where the greater availability of affordable homes gives tenants more flexibility to consider other housing options. But strong demand still drove high closing occupancy of 98.6%. Annualized turnover for Ottawa was 19%, while closing occupancy increased under strong demand conditions. In Montreal, annualized turnover was 18%, and closing occupancy increased to 96.8%, the highest occupancy level in recent years, supported by strong demand in that market.
In Toronto, annualized turnover was 16%, driven by move-outs in non-rent-controlled suites. Toronto has experienced high vacancy for one-bedroom suites, resulting in lower closing occupancy of 95.1%. We are working to increase occupancy in these suites through a combination of targeted promotions, marketing campaigns, and a tailored renewal program. On slide eight, we provide an update on our commercial and furnished suites portfolios. For our commercial portfolio, we experienced a year-over-year revenue decrease of 27.4%, reflecting the retail vacancy at Minto Yorkville. There is continued interest in the ground floor space with a variety of tenants, and we anticipate executing a lease this year, with lease payments expected to commence in early 2026, following a period of fixturing.
While our furnished suite portfolio saw aggregate occupancy improve sequentially over Q1 2024, revenue declined by 12.8% compared to Q2 last year. This was the result of lower occupancy at Minto Yorkville due to fewer transient stays, partially offset by higher occupancy at Minto One80five and a 5.1 increase in average monthly rent. Since Q2 2023, we have converted six furnished suites to unfurnished, including five at Minto Yorkville. We expect to complete additional suite conversions at Minto Yorkville in the second half of 2024 to optimize revenue and occupancy. Turning to slide nine, normalized operating expenses for the same property portfolio were up slightly from last year, as increases in salaries and wages were largely offset by lower repairs and maintenance.
Same property, normalized property taxes increased 3.8% due to increases in assessed values in Calgary and Montreal and rates in Toronto and Ottawa. Utility costs in the same property portfolio declined 7.5%, primarily due to decreases in natural gas and electricity rates. Moving to suite repositioning on slide 10, we repositioned 13 suites in the second quarter, generating an ROI of 9.7%. Over the last four quarters, we've repositioned 71 suites and generated an average ROI of 9.9%. We expect to reposition 35-70 suites this year. Turning to slide 11, we have provided our key debt statistics. Our maturity schedule remains balanced.
As of June 30th, 2024, the weighted average term to maturity on our term debt was 5.57 years, with a weighted average effective interest rate of 3.43%. We have steadily reduced our exposure to expensive variable rate debt to 8% of total debt at the end of Q2. Upon completion of the anticipated refinancing mentioned earlier, our variable rate debt will be reduced to low single digits as a percentage of total debt. Total liquidity was approximately CAD 164 million at June 30th, 2024. I'll now turn it back over to Jon.
Thanks, Eddie. Moving to slide 12, we continue to advance our attractive pipeline of growth projects. The on-balance sheet intensifications at Richgrove and Leslie York Mills continue to progress well, and stabilization of both projects is expected in 2026. In addition, construction continues to progress well at the CDL properties. Lonsdale Square in North Vancouver is the most advanced and consists of 113 suites. It opened its doors to tenants on April 1st, 2024, and residential leasing is already over 73% complete, which is a testament to the attractiveness of the asset and its desirable location. In addition, the ground floor commercial space is 100% leased, highlighted by an upscale brewpub and a pharmacy. The purchase option expires on November 30th of this year.
We will continue to evaluate the upcoming CDL purchase opportunities in the context of our cost of capital, impact on future cash flow per unit, pro forma leverage, market sentiment, and other factors. You can find updated photos and details on the projects on slides 13 and 14. I'll conclude with our business outlook on slide 15. The fundamentals underlying the rental housing demand in Canada are strong. Canada has robust population growth relative to all other G7 countries. There is insufficient supply of new housing, and building new supply remains challenging. We continue to focus on the strategy that is delivering our current solid performance, optimizing revenue and expenses, growing FFO and AFFO per unit, exploring attractive refinancing opportunities, making disciplined capital allocation decisions, and critically assessing growth opportunities in our attractive pipeline. With our high-quality portfolio and strengthened balance sheet, we are well positioned for sustained success.
That concludes our prepared remarks. Operator, please open the line for questions.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear three-tone prompt acknowledging your request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Mark Rothschild with Canaccord. Your line is now open.
Thanks. Thanks. Good morning, guys. Focusing on the Toronto market, it appears, you know, after several years that rent growth has maybe stopped or it's peaked. Can you talk a little bit about what you're seeing and what your expectations are, for this market in particular, as far as the rent growth you're able to achieve, and is this impacting at all the turnover that has been declining for some time?
Hey, Mark, it's Paul Baron speaking. So consistent to what we've been communicating for the last few quarters, market rents in Toronto appear to have plateaued. Most notably, we're seeing that in the one-bedroom suites. There's been that large condo deliveries through 2024. Those newly completed condo projects are having an outsized impact on the rental market. Buildings registered since 2020 actually represented more than half of all rental transactions in Q2. That's a 65% year-over-year increase in that leasing activity. The continued downward pressure on rents as condo owners look to fill suites quickly to recover those increased mortgage payments that they're all on the hook for.
I would say with that said, we still see a significant gain to lease potential in that market at 16.9%, so we do anticipate some decent growth going forward.
Okay, great. Thanks. Maybe just one more from me. You know, the unit price, as you know, doesn't seem to be showing any traction as far as getting back closer to NAV, at least in the near term. And clearly, you're not looking to issue equity to fund acquisitions. To what extent has your strategy shifted or your thoughts as far as external growth, whether it's in regards to acquiring properties or from the development loans? Would you allow leverage to maybe rise somewhat, not necessarily with variable rate debt, but to take advantage of the opportunity to acquire a quality asset if it was accretive, or is, you know, maintaining or improving the balance sheet further paramount, and you just won't grow externally?
Hey, Mark, it's Jon here. You know, I think you've touched on a couple of things, and maybe I'll address each of them or at least provide some thoughts on each of them. You know, our share price, like many REITs, has been frustrating. I don't think there's a management team out there that thinks that their share price is where it should be. But a couple of, you know, interesting facts that I think are encouraging. I think, transaction activity behind the scenes in the private investment market seems to be picking up. I think, that's going to be positive for us in a few ways. I think, one, it'll show that institutional money is coming back into the sector in a meaningful way, I think, which is positive.
I think, two, we're just getting more inbounds for some of our assets at more attractive pricing. I think, three, based on what we know, the purchase prices of those transactions will highlight the discount that we trade at is not warranted, right? Like, if we see a large sample size of individual transactions where institutional parties are buying assets for cap rate well below our implied trading cap rate and closer to our book cap rate, it'll highlight that it doesn't make sense for our share price to be trading at a 25% discount to NAV. And, you know, you kind of add some of the capital markets factors at play, which, you know, we're hearing that many generalist investors are becoming much more interested in the space.
We're hearing retail investors are much more interested as, you know, GIC alternatives are becoming less and less attractive as interest rates come down. And you kind of add all that together, and we're... Look, we're hopeful that it'll really put some wind in the back of our sails because we have such a high-quality portfolio. And if we see a plethora of transactions that support valuations that are significantly higher than where we're trading, I think that's, I think that's good for us. I think as it relates to your second question around, you know, I'll just break it down to sort of capital allocation decisions and leverage. Look, I think, I think we've been pretty successful in reducing our variable rate debt exposure. I think, it's been accretive.
We have a number of refis that once complete, net proceeds will be used to continue to reduce our variable rate debt. So that'll be, I think, positive, and it'll be quite low. So as long as there's variable rate debt, you know, I think that's probably the highest on our priority list to pay down, as it's the most accretive. And should we be in a position where we have excess capital, you know, that's when it becomes more interesting, and we'll consider share buybacks, and we'll consider, you know, potential acquisitions. I think, you know, we're pretty comfortable with leverage kind of below that 45%, debt to gross book value range. I think we're pretty significantly below that. And we're cognizant of our cash flow going forward.
So, you know, long way of saying kind of, I think things are fluid. I think, many options are on the table in terms of growth. I think external growth is probably less likely. So sorry, an external third party growth is less likely than potentially buying one of the CDL opportunities. But, you know, I think we've demonstrated that we've been quite disciplined, and I think we're going to maintain that discipline. And we have some time to figure it out, and, you know, all options remain on the table. And I think, you know, we've been pretty successful at raising equity internally by asset sales, and if it makes sense to do more, you know, we'd consider it.
I appreciate that. I apologize for touching on five things at once, but I'll turn it back. Thanks so much.
Yeah. Maybe it'll reduce the number of questions going forward, so it's okay.
Your next question comes from Mark, I'm sorry, from Mike Markidis, with BMO Capital Markets. Your line is now open.
Thanks, operator. Yeah, I was just about to say, I don't think there's anything left after that explanation, Jon. That was very- But, maybe I'll try. I mean, I guess with private market activity perking up here, how likely should we think about potential dispositions of assets that you own within the next six to 12 months?
I mean, I think as I said earlier, it's, further asset sales will likely be tied to other transactions if we consider them, right? I think, in and of themselves, we got ahead of, I think, the asset sale game, and we were quite successful in executing them, and they're kind of in the rearview mirror. So there's no real catalyst for us to just sell assets for the sell, for the sake of selling more assets. I think our variable rate debt is in a good spot, or it will be after some refinancings. And, you know, I think we would consider other asset sales if we got, pricing that made sense.
You know, if it made sense for us to apply some of those proceeds to a potential acquisition to keep our leverage in a good spot, I think we would consider it. All options on the table, you know, nothing decided yet, but we are, you know, trying to extend option value. We're trying to expand option value in terms of the number of structures that we can apply to potential growth. Again, you know, we're maintaining discipline, and we're going to stay disciplined, and, you know, we'll do what's in the best interest of shareholders in the long term, in our judgment.
Okay. That's fair. Last one for me, and it's a modeling question, and it's far afield, so if you don't have the answer, totally understand, we can follow up. But I guess just I can't believe we're looking at 2026 already, but that's where we're taking our numbers to. And you've got two developments that will look to stabilize. So do you guys have a sense of, all else equal, what the potential drag might be in 2026, as those assets, you know, you stop capitalizing and have an initial down period from an NOI perspective as you lease up?
I mean, I don't think we're going to get into that yet, Mike. We're happy to take it offline. We're really focused on just, you know, the development of these, from now until completion in 2026. And I'm not sure they'll be done until the end of 2026, so this might even be a 2027 question. But maybe we'll get back to you on that one.
All right. Well, I, I told you I had to stretch because everything else had been answered. So thanks for that. Have a great one.
All right. Take care, Mike.
Your next question comes from Jonathan Kelcher with TD Cowen. Your line is now open.
Thanks, good morning. Just, I guess, turning to operations here. On the Toronto vacancy, is that spread out fairly evenly across the portfolio, or is it mostly at one or two properties?
Mostly, yeah, at one or two properties. I should say, breaking that down a little bit further, Jonathan, it's also focused on those one-bedroom suites that are feeling that additional pressure from the condo competition, as we've mentioned before.
That condo competition would mostly be right downtown, correct?
At former City of Toronto borders, so primarily downtown.
Okay. Can you maybe give some examples of, you talked about tactical promotions and tailored renewals, some of the stuff that you're doing?
Yeah, for sure. So, promotion activity, really getting creative by property. I think one great example would be High Park, where we have, an excess amount of parking, so including parking for six months, as part of the promotional package. Very little cost there, as we have so much parking on site. As it relates to renewal activity, we have done some, targeted renewal promotions at 39 Niagara, really focusing on those residents that are at market or slightly above market. Once again, it's really just, the leasing team reaching out, describing the market dynamics, the value proposition of our building, and, if required, a few hundred CAD, to get them to re-sign. It's actually been quite effective at that property.
So, feeling good about some of the unique programs we have going on for the remainder of the year.
Are you, are you still getting renewal uplifts at, at 39 Niagara?
It depends on the suite type. It's about flat.
Okay. And then just secondly, on the suite repositioning, you pulled back your target for this year. Is that 100% due to just lower turnover, not being able to get out in the suites? Or is there some... Are you making some decisions that the best cash flow or a use would be just to release the suite quickly?
Yeah. So it's actually a combination of both. So we have a declining balance at those repositioning projects that have been ongoing for a number of years. Where we're making really the active decisions is around the Montreal portfolio, specifically Rockhill. And actually, you saw this come through on the gain on lease numbers this quarter. And really, we have the opportunity to take the suites back to market, where there's a tremendous amount of demand for that property, with simply a paint and clean. So managing cash flow there, quite effectively.
Okay. So would you expect that to sort of trend down as we go forward into 2025 and 2026?
Yeah, but it's, it's a tricky one to say at this point. It's really what suites you get back. And we know that, length of suite, length of stay, pardon me, on turnover is going down, but it, it really is a bit of a crap shoot, depending on what you get back.
Okay, thanks. I'll turn it back.
Thank you.
Your next question comes from Kyle Stanley with Desjardins. Your line is now open.
Thanks. Morning, guys. Just a quick kind of modeling one for me. For your 2025 debt maturities, you know, is there any lumpiness there or fairly spread out across the year? And then, I mean, I think we have a good idea of where refinancing rates are today, but just confirming, you're kind of seeing five- and 10-year money in the mid- to high-3% range today?
Morning, Kyle. It's Eddie here. Regarding the first question on maturities, the 2025 would be staggered throughout the year. When it comes to rates, right now, you know, as Jon mentioned, rates are trending favorably, so that works positively for us. Five-year pricing today for CMHC mortgages would be around 3.7%, and a 10-year would be just over 4%. Come down considerably over the last six months.
Right. Okay, thank you for that. And then, Paul, just going back to something you, you said to Jonathan's question. Just on the targeted incentives or promotions you're offering, you said a few hundred dollars. That's in total and not monthly, correct?
Correct, correct. One-timer.
Okay, perfect. Thank you very much. I'll turn it back.
That's all.
Your next question comes from Mario Saric with Scotiabank. Your line is now open.
Hi, hi, good morning. Just coming back to the promotion activity or the tactical incentives, can you comment on the percent of the portfolio that was offering those tactical incentives this quarter and how that compares to Q1? Are you seeing it accelerate, decelerate, kind of remain stable?
So I would say, overall, it's probably decelerated slightly. The market that we're currently focused on is Toronto. Montreal, it was really select suites, but that's largely burned off, Mario. So it's really Toronto that we're focused on, and as we've mentioned, those one-bedroom suites that have just been a little, little sticky to lease out. So overall, a slight deceleration. And as we look forward to the remainder of the summer, July and August have come back to a typical leasing season from a demand standpoint, so looking positive.
Paul, just on the back of that, are you able to share where the Toronto closing occupancy, that was 95.1%, are you able to share kind of roughly where it is today?
Let me just check a file. I'm pretty sure it's, like, right in line. It's pretty close to where it ended in June.
Got it. Okay. And then, I don't know if you provide this disclosure elsewhere, but in terms of, of the portfolio breakdown between the one-bedroom, two-bedroom and other, yeah, can you give us a sense of what that looks like?
Sure. So I would say right now, maybe, maybe just focusing on our vacancy by suite type, we would have of our vacancy in Toronto, for example, 65% of that would be in our one-bedroom suites.
Okay. In terms of the broader portfolio, do you have, do you have a sense on what the composition of the portfolio is between the suite types?
But I don't have that handy, Mario.
Okay.
We can get that to you.
Yeah, maybe we can follow up on that. Okay, perfect. And then lastly, I noted in the call presentation or the outlook slide in the call presentation, kind of a reference to continued balance sheet improvements in 2024 was removed. We've talked about your target at the GBV on the call. Is that removal simply a function of expected up financing on the Ottawa assets this year, or is there something else to that?
No, I mean, there was nothing much to it. I mean, we're gonna continue to. You know, we do have these up financings in front of us, which we'll focus on. But it wasn't meant to indicate anything else, really.
Okay.
I forgot we removed it, to be honest with you. I, I didn't even realize we, we removed it, so there was nothing purposeful about that.
Yep. Maybe, given Eddie's comment on where five-year debt and 10-year debt is today, are transactions in Vancouver for new construction are they generally accretive? Like, are cap rates above or below where financing costs are today?
Yeah, I mean, I think, you and I have spoken much about kind of that, 10-year, I think there does seem to be positive leverage. Don't, don't take that as a teaser that we're going to do the deal necessarily. We are, we still have time. I think time is our friend. And, you know, but I think, I think we've said, you know, cap rates, new construction cap rates, according to CBRE, in Vancouver, are in the 4%-4.5% range, and there have been numerous comps recently, in Vancouver Metro for sub-4%, or, or around 4%. And, and as Eddie said, the financing rates on the five-year are, are below that, and the financing rates for the 10-year are kind of right in that range.
So the math's gone better, I guess, if that's your question, on both the long end and the short end of the curve. But, you know, we're going to stay disciplined and evaluate all the inputs, and we have time, as the purchase option doesn't expire until the end of November.
Okay, great. Thanks, guys.
Thanks, Mario.
Your next question comes from Matt Kornack with National Bank. Your line is now open.
Hey, guys. Just with regards to the delivery of condos and the cadence of that, we've heard, I guess, on some of the purpose-built rental stuff around 39 Niagara, I think RioCan is now at 75% leased on that project. Can you give us a sense as to kind of the length? And, and obviously, there's a vacuum in condo deliveries behind this delivery, nobody's starting construction. So how should we think of kind of the market normalizing over a period of time and getting back to stable occupancy levels?
Yeah. So, I completely agree with what you described, Matt. So latest fourth quarter total for completions is about 28,000 suites as of Q2. We know that in the back half of 2024, that number is coming down slightly. So it's coming down to about 10,000, 38% decline from the first half of this year, which was 16,000. Completely agree with your comment around the lack of pre-sales. I mean, it's everywhere now, and just about an article weekly, I think, talking about projects getting shelved. So that will certainly create a void of deliveries in the three- to five-year period from what we're seeing. Specifically around Niagara, we've got the same facts as you on The Well, being at about 25% availability. They anticipate stabilizing that property by the end of the year.
I think the other, just on the purpose-built rental, new construction side, the former city of Toronto is seeing less, proposed projects, so it's moving outside of the core, which I think will certainly help, the 39 Niagara property longer term. So overall, I think, as that, condo, market, you know, kind of stabilizes to some degree with those, new deliveries starting to slow, we know that absorption is still in the core, and new purpose-built rentals become stabilized. We're certainly, optimistic on the future, of the core and demand in that market. We know that we are still in a housing crisis, broadly, and Toronto is a very appealing market that's attractive for, for residents and newcomers to Canada. But, the new supply will be with us for a little while longer.
That makes sense. And then, I guess, turning to renewal spreads, because obviously you guys provide the new leasing spreads on turnover. Can you give us a sense how those have trended? Because presumably outside of Ontario, but you have got some non-rent controlled properties in Ontario. But elsewhere, it seems like you're getting better kind of new leasing—sorry, renewal leasing spreads, but any color you can provide there would be helpful.
Sure, Matt. So, it's fairly consistent with the story that Jon's described, around the mid-3s on renewals. We have, in Ontario, a very active AGI program where investors in our properties, and we obviously, increase rents where possible through the AGI program. So overall, rent controlled, non-rent controlled, that puts us in the mid-30s on average.
I know it's shrunken, but we never get the modeling right on your furnished suite portfolio. And so two things: A, can you give us a sense as to whether the summer has seen kind of normal seasonal take up on those furnished suites, particularly in Yorkville? And then what does it look like as you convert one of the Yorkville furnished suites to an unfurnished suite from a kind of apples to apples, taking into account the vacancy versus the rent differential going forward?
Yeah. So, I guess a couple of points on the furnished suite business. So demand at Yorkville has not snapped back in the second half as we had anticipated. We're also seeing a bit of a slowdown in the transient business year-over-year. I think, you know, both of those demand drivers do have some relationship with interest rates. In years past, we've seen folks renovating homes and staying with us at Minto Yorkville for three to six months. We're not seeing that as much anymore. Film business, I think it's slowed down in Toronto, and we know that other cities across Canada are getting very competitive chasing that business. So to your point, Matt, I think being more conservative on the furnished suite business going forward.
We are, as Eddie described, in the opening remarks, looking at converting some furnished suites to unfurnished. It's not, it's a pretty straightforward process. Just the furnished are not sub-metered, so we have to go in and put a sub-meter in, but it's like clockwork now for the team. So we're working through those conversions now, to really optimize demand for the remaining furnished suites at Yorkville, for the remainder of this year and into early next.
Okay. So if I just simply, I appreciate that color. That's very helpful. Like, I guess we should assume that occupancy kind of stays around where it is. Rate hasn't been the issue. Rate's been moving up relatively nicely, but is that a fair assumption on the occupancy side?
Yeah.
Okay.
That would be our assumption.
Okay, perfect. Thanks, guys. Really appreciate it.
Thank you.
Your next question comes from Jimmy Shan with RBC Capital Markets. Your line is now open.
Thanks. So just to follow up on the Toronto condo deliveries. So do you think we've hit the peak delivery in Q2? And do you have visibility on what the deliveries are in 2025?
Hey, Jimmy. So we do, we have visibility on future years, so there's, there's a lot of shovels in the ground right now. We track Urbanation pretty closely on deliveries. They're anticipating in 2025, about 15,000 units coming online in Toronto proper. That number starts to wane in 2026, going down to 11,000 units. And then 2027, 2028, I think is more of a, more of a jump ball, depending on presales and whether projects continue to some extent. But we will see the supply continue for a, for a few quarters yet.
Yeah. So it comes down quite dramatically in 2025 then, because this year is gonna end around 2026, so it's drop off.
Sorry, Jimmy, I was just focused on Toronto.
Yeah.
The 26,000 number actually references the Greater Toronto and Hamilton area.
Okay.
So, uh-
What would be the comparable, comparable number for Toronto then?
16,000.
Then the condo owners who are trying to minimize their negative cash flows, are you seeing them drop their rent significantly, or is it or is this just a case right now that we're seeing just a lot more rental listings?
Yeah, not significantly. I mean, just, just speaking to some of the condo competition around our 39 Niagara property, they look to the purpose-built rentals as a comp, and, and really a contributor for where they set their pricing. So not significantly, but probably that five... discount of about 5% from what we've seen, in some of the condo competition that we face directly.
Great. Sorry, just last one for me. Just on the transaction activity, can you provide some color on some of the transactions that are in the works that you may have alluded to? Are we looking at large portfolio deals or one-off and any color there would be helpful.
I mean, you know, I would say I can't provide specific color. I mean, we have it, but there are a number of both single property as well as smaller portfolios on the market across the country. Obviously, we're focused more on the urban areas and kind of what's happening there. But, you know, you're seeing it in some of our peers buying new construction assets. There are a number of both new construction and kind of your traditional 50-year-old building, potentially with density as well, for sale. But as we're seeing the financing market firm up, we're seeing that buyer pool expand a little bit. You know, you're seeing more activity from folks who Canadian pension funds that have been underweight multi-res, but on the sidelines, you're seeing them come back.
We're seeing a little bit more international interest in investing money and parking it in a safe jurisdiction like Canada. As I said- as I said, we're seeing the REITs become a bit more active. And so, I, you know, I'd say green shoots, it's all looking more positive. And I think the encouraging thing, as I said earlier, is the cap rates and the values that are being batted around are quite supportive of private market valuations.
Ladies and gentlemen, as a reminder, should you have a question, please press star followed by the one. Your next question comes from Brad Sturges with Raymond James. Your line is now open.
Hey, good morning. Just following on to Jimmy's question there on the transaction market. In your opening comments, you also did allude to that you're starting to see some more inbound, unsolicited interest in some of your assets. I just wanted to know or wondered if you could expand on sort of where the demand is, either by an asset type or market at this point in terms of the inbound interest.
Yeah, look, our. As you know, we don't have a ton of assets, less than 30, and they're all very attractive. And so I think if a buyer could get any one of these, I think they would. And so there's interest across the portfolio. But like I said, there's always interest in high-quality assets, and doesn't mean we're gonna execute on all of them, but definitely assessing options to make sure that if we do decide to grow, you know, we're properly capitalized. And I think you'll, you know, all options are on the table for us.
Okay. My other, my other question is, just looking at your, your, CDLs outstanding today, you've got one in, in Victoria as well, which is, you know, got a lot more lead time than, the Vancouver, options at this point. But, I'm just curious, in terms of your strategic thinking, where would Victoria rank in terms of, expansion or market, potentially, on the radar for the REIT at this point?
Yeah, I mean, look, we think, we think Victoria is a very attractive market. We wouldn't have lent money to the private company, if we didn't think that were the case. And so, you know, I think it's, you know, the, our incremental dollar in terms of a potential acquisition will likely go to, or just expansion, even on balance sheet. It's kind of GTA and West Coast, and I think West Coast is, encompasses both Vancouver and Victoria. You know, we're not gonna say never to other jurisdictions, but I think those would be the, the, the two that are, you know, higher on the radar or more on the, closer to the bull's eye on the radar.
Gotcha. Okay, thanks. I'll turn it back.
Thanks, Brad.
There are no further questions at this time. I will now turn the call over to Jonathan for closing remarks.
Thank you, and thanks, everyone, for your time. We hope you enjoy the rest of the summer, and we'll speak to you all soon. Take care.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.