Earnings Call: Q4 2018

Feb 28, 2019

Earnings release

Good morning, ladies and gentlemen. Thank you for standing by. I would like to welcome everyone to the Plaza Retail REIT 4th Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up for questions. I would like to advise everyone that this conference is being recorded. I will now turn the conference over to Mr. Michael Zukuda, Plas' Chief Executive Officer. Please go ahead, Mr. Zukuda. Thank you, operator. Good morning. Thank you for joining us on our Q4 2018 results conference call. I'm legally obliged to tell you that today's discussion includes forward looking statements. We'd like to caution you that such statements are based on management's assumptions and beliefs. These forward looking statements are subject to uncertainty and other factors that could cause actual results to differ materially from such statements. Please refer to Plazas public filings for a discussion of these risk factors. In 2018, we sacrificed the short term for medium and long term gain. We are real estate entrepreneurs operating in a public market environment. We have taken a real estate first approach to our decision making. We invested $85,000,000 in new developments, redevelopments and high yield structured deals. This was a record year for new investment for Plaza. We sold non core assets for proceeds of $37,000,000 This capital recycling temporarily reduces NOI and FFO due to the lag between asset sales and the reinvestment of these proceeds in new developments and redevelopments. We look forward to the benefits of the real allocation of capital that will ultimately provide growth and create value for unitholders. Plaza's pipeline remains strong. We foresee continued growth and opportunity for both redevelopments and new development projects. We are pursuing a number of joint venture initiatives with various types of partners such as residential land developers with excess retail lands and institutions and property owners seeking a strong and capable development partner such as Plaza. We will continue to recycle capital in order to fund our growth and we will pursue structured deals with private institutional style investors. We expect that we will recycle in the range of $25,000,000 to $30,000,000 in 2019. 1 third of this amount will come from the sale of non core assets and 2 thirds from property refinancing proceeds. We are continuing to see large retail property owners working to exit all but the big six markets in Canada. This trend has created a temporary oversupply of retail assets in certain regions. Plaza has been able to execute on several opportunities to purchase income producing assets with value add potential at attractive prices. We see this sell off continuing through 2019 and we are excited about the prospect of acquiring more properties with upside potential at compelling going in yields. At the recent ICSC conference in Whistler, our leasing team met 66 different retailers or their representatives during the 2 day event. The majority of retailers present were looking to open stores or improve their locations. They will be described as value specialty or necessity based retailers. We had no discussions about rent reduction or meetings about retailers wanting to get out their leases. In 2018, we were burdened with the comparison and the impact of lease termination deals that we made in 2017. We anticipated that we will be burdening ourselves once again. In the first half of twenty nineteen, we expect to conclude lease termination deals that will generate in the order of $5,500,000 After incurring the cost of downtime and the installation of replacement tenants, we expect to make a substantial profit from these transactions. Plaza's unit price has been significantly impacted by investors exiting retail REITs across North America as they maintain a negative view of bricks and mortar retail. We believe that many of the reasons for this strong exit are not relevant to Plaza. Our properties are typically smaller and very community centric, attracting customers on a regular basis as they conduct their pre and post work routines. Positive tenant lineup features value specialty and necessity based retailers that require a local physical presence. Plaza possesses strong leasing and development infrastructures and can see interesting growth opportunities. We have always focused on developing or redeveloping properties for value, specialty and necessity based retailers. Over the years, we've built a stable and geographically diversified portfolio to support our monthly distributions. We are confident that our value add business model is poised to take advantage of current retail trends and will create significant value for our unitholders. I will now turn the call over to Florian Cipollone, Plaza's Chief Financial Officer, who will provide you with a brief summary of our results for the quarter the year. Thanks, Michael. For the Q4, funds from operations or FFO per unit was down 3.7% and adjusted funds from operations or AFFO per unit was down 5.3% from the same period in 2017. Positively impacting FFO and AFFO per unit for the quarter was considerable growth in net property operating income or NOI of $1,000,000 from developments, redevelopments and acquisitions, offset by a large decrease in NOI from property sales of $500,000 Some lease buyout revenues recorded in the prior year and higher interest expense in the current year, mainly due to the record amount invested in developments, redevelopments and acquisitions. For the year, impacting the results was $1,700,000 in lease buyout revenues recorded in the prior year. Excluding this and other non recurring items, FFO per unit would have been 1.7% higher than the prior year, mainly from net growth in NOI. Notably, NOI grew by $3,600,000 from developments, redevelopments and acquisitions, well in excess of $1,800,000 in lost NOI due to a large amount of property dispositions. Excluding the non recurring items, AFFO per unit for the year would have only been 2.3% lower than the prior year impacted by higher leasing costs related to new tenant fees. Total NOI was up 1.6% for the quarter and up 2.4% for the year to date excluding the impact of the lease buyout revenues recorded in the prior year. Same asset NOI was down 5.7% for the quarter and was up 0.1% for the year to date excluding the impact of the lease buyouts. Same asset NOI for the quarter was impacted by higher operating costs and maintenance expenses, particularly at Plaza's enclosed malls. Same asset NOI for the year to date was impacted by new lease up and rent increases in the portfolio, partly offset by bad debt expense recorded due to a tenant going into creditor protection and vacancies at 1 of Plaza's enclosed malls. Plaza is in the process of stabilizing occupancy at the 1 enclosed mall. Occupancy at that mall is up 5% from December 31, 2017 and rents from some new tenants have commenced late in Q4 of this year. Those are the key points relating to our financial results for Q4 2018. With that, we'll now proceed to open up the lines for any questions. Operator? Okay. Thank Your first question comes from Jenny Ma from BMO Capital Markets. Your line is open. Hi, good morning, Michael and Floriana. Good morning. Good morning. I couldn't help but notice the weighted average cap rate on the IFRS moved quite a bit. I think you guys are stable at 7% for the longest time and it looks like it was small increases pretty much across the board. Can you give us a little bit more color on what led to that and sort of when you think about the magnitude and the locations, just a little bit of color to help us understand that move in cap rates and why at this time in particular? It's I don't know if I can give you the appropriate color in terms of why this time in particular. I mean, we are quarterly getting updates from an updated matrix on cap rates. And we certainly have discussions with the evaluators about cap rates on a regular basis. But I think it really a lot of the increases is coming from secondary markets. That's where most of the increases are coming from. And I think a lot of it is due to some of the oversupply at the moment that's out there with sales from some of the other REITs in secondary markets. So I guess now they've got maybe some additional data points to point to when they're putting their matrices together. So that would be kind of the color that I'm seeing. But So it's really It does appear to be a big jump in 1 quarter, but I think it's just more data points really. Okay. So it's really in response to actual transactions we've seen as opposed to sort of a preemptive move on a view of the secondary markets? Well, there's always some of that. I think there's always been some of that within the evaluators putting together their matrices. In my mind that's always out there, but I do think that the increase in Q4 is partly related to more data points. Okay. So Jenny, Michael, I just have a little bit of a different view. And but we do we have a system, which we've used now for a number of years, where Altus supplies a cap rate matrix and they give, I think, a low, medium and a high range of the cap rate. We take the medium. I just started to maintain my own list of cap rates based on my knowledge of each property. And we have the Altus number and then I put in my number. And sometimes we agree, but very often we do not agree. So it's a process and it's supposed to be very objective. Does it reflect true market value? I don't believe so. That's the system and we live with that system. Okay. Yes, there's a lot of talk about where the secondary markets will shake out relative to the primary. So given that you guys more or less specialize in the secondary side, obviously, there are some markets there that will do just fine and there are some that will see some weakness. So when you assess the markets, a couple of questions. Number 1 is, do you think there are a handful of markets that you're currently in that you think might be on the weaker side that you might look to exit out of? And what proportion of that is in your portfolio? And then number 2 is when you're looking at new markets to enter, what are the metrics that you look at to measure sort of the medium to longer term attractiveness of a certain market? Because we don't want to paint all the secondary markets with 1 brush. Okay. A few questions in there. So I'm not sure where I want to start. What we're seeing is the move in cap rates, what we've seen the large real estate players, some of them REITs, mostly REITs, the product that they're selling into secondary markets is a format, which is difficult for a lot of investors to deal with, meaning the deals are larger size. We've been selling small bite sized at very, very low cap rates, completely different from the cap rates that somebody will be dealing with for a $15,000,000 or $20,000,000 or $40,000,000 acquisition in a secondary market. If you're selling a $1,000,000 property or $1,500,000 or $2,000,000 property, we're seeing substantially lower cap rates than we're seeing for $15,000,000 $25,000,000 or $40,000,000 property. So there's no liquidity in the $10,000,000 and up world. There is liquidity in the smaller, I call it, bite sized style assets across our geography, small markets or medium markets or large markets. Is that why the cap rates on the QSR boxes haven't moved and I think they're actually down a touch? Yes, because we're I mean, we're sitting in the market And I'm telling you, we're surprised. I tell the disposition guys that if you can get below that number, we're a seller and all of a sudden the offers are coming in below that number. So I guess there is a very, very important difference today between small asset cap rates and larger asset cap rates. How will that continue? Who knows? Okay. But it's real. Okay. So as far as markets go, are there any within the portfolio that you think will have a little bit of weakness going forward? Well, we've exited the markets that we don't like. Maybe there's maybe 1 or 2 properties in markets that I don't have great belief in. But no, we've cleansed the portfolio in our minds. And we look at I've talked about this in the past. We have our 4 step process. Our first step is the market. And if we don't like the market, we don't move any further in looking at a deal. And you can pass sometimes we don't pass the market test. As we pass the market test and we get into locations and vision for the property and numbers. So clearly, we're not venturing into markets that we don't believe in. We never have and I'll expect that we will. I don't see why we would change that. So we're careful. We're experienced operators. We're very experienced secondary market operators. I think we know our way around it very well. And we're doing deals based on very often on tenant orders, meaning that we have a real tenant seeking a location or seeking to relocate or upgrade somehow. And that's the basis of how we do business as a retail developer. So what is it what are the metrics that you look for in a market? Are you looking at diversified industries, population growth? What is it that you measure? Yes, obviously, if you get population growth, that's really interesting. But yes, we're looking at whether it's whether we believe it's sustainable or not. And so it's often quite clear that some markets are not sustainable and therefore should be avoided. And there are small markets that are robust for all kinds of reasons. You tend to see us very often in tourist related markets, in secondary markets because they have growth. And where I say tourism is not just like PEI tourism, but it's cottage country tourism and stuff like that. That's always been something that we followed. But clearly, we're looking at every market carefully, and that's often the most difficult part of the decision making is do we believe in the market or not? And we have some real debates about that internally. Okay. That's helpful. And then turning to the residential development. Michael, I know in the past, you have mentioned that that's something that you're not interested in doing, certainly not through Plaza directly. Is this a little bit of a shift in your strategy in terms of trying to bring in a partner and getting a little bit of the economics over the duration of the development? Or would you still be more inclined to sort of sell the option to a developer? I'm just trying to think if there's been a little bit of an evolution in Plaza thinking about how to intensify with res at the sites that have the opportunity. So I don't think we've made any mention of anything change of strategy. So we have been involved in residential style projects where we organize a site, we sell the site to the condo developer, we buy back the commercial condo. So we've done that successfully. We have sold land that's integrated into a project. Our example is in Sherbrooke, Quebec, where we have a very nice property. And in the back corner, Reso Selection built a seniors tower. We're actually about to close on a sale of additional lands in that project for a second res tower, which is integrated to the project. It's not integrated to our buildings, it's integrated to our project. You have to be very careful. And we are looking at some of our mall situations where we think that the residential can be attached. Clearly, there are certain types of res developers that can command higher rents if they're attached to commercial to retail. So we're trying to take advantage of that. That's a slow process, but definitely something that we're looking at. I do not see us being involved in the ownership in any way. I think that's we're renting land or we're selling land. I think it's a different skill set that we would have to develop and we're not at this moment in time prepared to do that. Okay. So you won't economically expose the REIT to residential development? No, no. Look at the returns and our returns are a lot stronger. Now obviously, there are stronger arguments for being in residential and that's not our strength. And I can't get we can't get our heads around the types of returns that one can get. And really the way to make money, what I see is that you could develop res, but you have to sell it. So I'm not interested in that. We're looking for cash flow and for income producing properties. Okay. So the res is really just to augment the strength of your commercial properties then? And to realize on excess land or create additional cash flow if you're able to rent land. Right. Okay, great. That's fantastic colors. Thank you very much. Thank you. Your next question comes from Mike Markidis from Desjardins. Your line is open. Hey, good morning. Good morning. I might have missed it during the opening comments, but the $5,500,000 of lease termination income this year for the first half certainly stuck out a little bit. Michael, could you give us a little bit color in terms of potentially who the tenant or tenants are there and the quantity of space? We're looking at 2 deals. The first deal for $1,500,000 will be a tenant exiting about 20,000 square feet. The deal is now conditional on us finishing the replacement tenant. We're not doing this deal without the replacement tenant. Placement tenant is all negotiated. It's down to the last really at the end of the deal, I think we're there. So that's a very straightforward deal. 2nd deal is about a 15,000 square foot building, where we'll be getting present value plus a penalty. So that's somewhat lucrative deal. We don't have a replacement tenant, but we're being paid rent for the next 7 years. We were confident that we will get a replacement tenant. So we expect to execute that deal in the beginning of the second quarter. Okay. So these are 2 very isolated incidents then? Yes. Okay. This number is a little bigger than we've seen in the past. We're just taking advantage of the market. No, that's fair. And so I guess then the associated NOI downtime with that isn't really that material in the grand scheme of your total asset base then. What about in terms of incremental capital you'd have to spend and get these new tenants in place? Well, I guess one is looks like it's a pretty near term possibility and the other one would be potentially a search for new tenant. Well, again, we're more than compensated for that. So in the first case on the $1,500,000 So we need $500,000 to bring in the new tenant. We need $500,000 to subsidize the difference between what the former tenant was paying the new tenant for a substantial number of years and the $500,000 is incremental profit. On the second deal, we expect that out of our $4,000,000 payment, we'll spend $500,000 maybe there may be a subsidy for another $500,000 to 1,000,000 dollars and the balance is profit. Okay. And when you say subsidies, you're saying you anticipate the rents of the new tenants would be somewhat lower than those tenants? That is correct. So when we look at these deals, if they have 7 or 8 years left on the lease, you have to look at if there's a difference of X dollars, we want to be paid for that, and we are paid for that. Okay. And so these are 2 buildings where you think the replacement tenant rent would be lower. How would you are these 2 particularly weak properties? I'm just trying to conceptualize how somebody should think about the rents versus market. No, they're not. And again, the no, I can't say that. And the second property, we haven't marketed yet. These deals come quickly. We think it's a very good location, location of quality, but I'm being cautious. It's very well located. It's a modern building. It's not a piece of junk. So it's really a question of being prudent here. Okay. Florian, I really like the table that you guys have. I know it's been there for a while, but on Page 14, just showing the NOI contribution of the quarter and then you always show for us what the annualized NOI contribution should be from each bucket once the developments that have already been transferred and acquisitions are sort of contributing on a full basis. It looks like there's actually quite a lot of them embedded growth when you add up those 3 individual line items. And specifically, I'm referring the ones that were recently transferred, the acquisitions and the NOI from properties currently under development and redevelopment. Does that bucket or those buckets, does that how do we tie that to the under development table in the beginning of the MD and A on Page 5? I mean, I guess, is it all the projects there once they get delivered? Or is it just the stuff that's right now under construction? Yes, it will be the stuff that it's a mix. It's a mix of things, but it's mostly the stuff that is currently under development and redevelopment on the chart on Page 5 that you're referring to. So it'd be something that's either under construction or to be under construction when it's a very good timeframe? Yes. Okay. That's fair. And then, do you have a rough ballpark? I mean, I know you guys spend X amount in a certain between $30,000,000 $50,000,000 every year. But for the NOI that you've added up here in terms of the opportunity, what the rough range of incremental capital would be to drive that upside? Yes. So we have let's see here. We've sent so for projects in construction, we've got about $13,000,000 to $14,000,000 left in completion costs. So that's just for the ones that are currently under construction. And for projects that are in planning or in development that are expected to be completed by the end of this year, it's only $3,000,000 or $4,000,000 left on that. $3,000,000 or $4,000,000 left. So that would be the bulk of the that $4,500,000 of total NOI, that's what you'd expect is just basically, call it, high teens to $20,000,000 Yes. Okay. And then when you look at the acquisitions, is that, I can't recall what was completed this year, but the acquisitions, I mean, they're separated out, so they're not under development or currently in development. I know you guys sometimes or oftentimes would buy a property that does require some work. So is that just an acquisition that's stabilized and just by virtue of the fact that it hasn't been contributing for a full period is not up to speed yet? I'm just trying to get a sense of the gap there. Yes. So we had we did have most of the acquisitions that we do are things that end up in development or redevelopment and in the chart on Page 5. But like for example, we did have one opportunistic acquisition that needed just a little bit of leasing, but it was basically it didn't need a lot of development or any development or redevelopment from us. It needed a little bit of leasing, which was completed fairly quickly after. It was mostly an opportunistic acquisition. So that would be something that didn't even appear on the chart on Page 5, but is part of our acquisition. So we are seeing more of those opportunities arise. And as long as it's opportunistic and gives us very heavy returns and in markets that we like and that we want to be in and are a part of our core sort of asset class and we'll do those acquisitions, right. Okay. Last question for me, just in terms of the capital you guys look, sounds like a pretty healthy number you're expecting on property refinancing this year. Is there going to be a material amount of is that going to be stuff in the normal course as your maturities come due? Or is there going to be some defeasance associated with that just as we look to model out for 2019? Yes. We are actually in the process right now of looking at not only 2019, but also 2020 expiries, just given that, bond rates have come down recently. I mean, they've been very volatile, but they have come down recently. So we are looking at doing a few discharge fees. I can't tell you right now what the amount will be, because we're just still early stages of us looking at which ones are economic or not for us to do and whether they make sense from a lease maturity standpoint or otherwise. But we are definitely should be modeling some amount of defeasance and early termination fees because we are looking at that. Okay. That's helpful color. Thank you. Okay. Your next question comes from David Brown, private investor. Your line is open. Yes. With respect to your future development projects, can you please describe what steps you take to help the customer have lower costs in the future? And I'm thinking of lower energy costs and anything else that you can make your brand stand out as having a lower cost location for your customers? So what we do is, so first is to understand our business versus perhaps many other shopping centers. So we're basically in the strip shopping center business. That means that we have nothing to do with our individual tenants' energy consumption. What we do control is our parking lot lighting. So our parking lot lighting, any new project would be LED and we've changed over most of our assets to LED progressively over time for our existing buildings. So that's really where we can have an energy impact. Now each tenant has a different approach to energy and it's basically up to them. So we don't have the common meters. We don't heat the premises or air condition the premises of our tenants. So we would that would be their responsibility. So we don't have a lot of opportunity to use energy saving strategies. What about insulating the building? Again, energy costs, a new building is going to be built to the present day standards. Some older buildings may not be as energy efficient. And again, this is very much up to the tenant because we are not paying the energy consumption. Okay. Thanks very much. Your next question comes from Sumayya Hussain from CIBC. Your line is open. Thanks. Good morning. Good morning. You guys are following a pretty active year for developments in new investments. Do you expect 2019 to be comparable or would you see maybe a little bit more investment activity and the balance maybe going towards buying back your units? We're going to be active in 2019. We have stuff on the go. I don't think we'll be as active as in 2018. And we are initiating our share buyback in a modest fashion to start. Okay, great. Yes, Maya, we've been budgeting to be more in our normal range in terms of investment. But if certainly as things come up, which they are more and more than it may tick up, but we're certainly not expecting that at this time. Right, right. That's good color. And I know it's not a big piece, but just on your enclosed mall that's going through stabilization and seeing some new tenant fees come in. So generally over there, how is the rent profile compared with maybe the prior tenants you guys had there? Sorry, I'm not sure of your question. Yes. Just you spoke to seeing improving stabilization on one of your enclosed small assets. Just an update in terms of rent before and after? I can tell you rent is not going up, not in the near term. Enclosed malls are the soft spot in the retail industry. We have 3 enclosed malls. In 2 of them, we have managed to increase rents on small stores from deal to deal or keeping them stable. In our mall in Newfoundland, it's a little bit tougher. It's very mixed and rents are not going up. That's quite clear. That's the challenge of the enclosed mall world. There are probably lots of opportunities in that world. We've shied away from them. There are acquisition opportunities. We shied away from them because we look at a rent roll and say it hasn't hit bottom yet. And it's hard to buy something that you think is this hasn't hit bottom. Okay. And generally, how what are the lease terms looking like for when you do get your tenants in? In an enclosed mall? Yes. Yes. They're typically short term, which is probably coming from both sides, tenant and landlord. They are typically short term. Okay. That's it for me. Thank you. Your next question comes from Michael Smith from RBC Capital Markets. Your line is open. Thank you and good morning. Good morning, Michael. Good morning. I joined the call late, so I apologize if you've already dealt with this. I'm just wondering what level of capital recycling do you expect for the balance of the year? And maybe can you talk about joint ventures? Like do you have a new set of partners, potential partners? Or is it the same folks you're typically dealing with? So the first question, yes, we did talk about we expect to recycle between $25,000,000 $30,000,000 this year. A third is property sales, 2 thirds are refinancing proceeds. So that's I hope that answers that question. A third is property sales. Yes. So you're going to see $10,000,000 $12,000,000 maybe of property sales, something in that range. And the balance is refinancing proceeds. Okay. And in terms of we have some we have a number of joint venture partner arrangements and we're pursuing them based on geography and types of deals. So we've done a deal with a private group from Toronto. We're on our second deal with them. Those deals are much more development oriented. Stuff that's more stable, that's more of a syndication style deal to investors that we've worked with in the past. And we also have other we have joint venture partners based on specific locations because they're landowner, for example, or are bringing us a deal. Okay. And what is your thinking in terms of like the economics? Like do you have like what's your philosophy on the economics with your various joint venture partnerships? So I'm not sure exactly your question exactly, but I'll attempt an answer. So the we call it capital partner initiatives. Those are the deals where we own 50%, the partners own 50%, but we only put in 20% of the capital. The partners lend us 30% of the capital, 5 years, 5%, that's the price of admission. We've done that structure of deal now with different parties. We continue to work that structure. There are other instances where the partner is bringing us the deal. It becomes a straight up fifty-fifty transaction. So it goes from one to the other and sometimes you can be somewhere in between. Okay. So those are the 2 general ones? That's correct. Yes. And just switching gears, like how do you think about I know it's early stages. So but in terms of share buybacks, how do you think about that versus a new development or selling an asset, let's say an asset which you think you might be leaving something on the table? I would hope that we're not selling assets. We're thinking we're leaving something on the table. I think it is very early stage and I think we have to do both. I think that we're a developer, that's our DNA, that's our business model. And if we stop developing, I think that would be very good. And it's interesting, we've got a ton of stuff in the pipeline and a lot of opportunities. So therefore, you have to pursue them. And at the same time, I think you have to do a share buyback. That doesn't mean that we can't make a substantial sale and do a substantial share buyback as well. If the economics work, then that's something that we would seriously consider. But we're not there yet, very, very early. Okay, perfect. All right. Thank you. Your next question comes from Brendan Abrams from Canaccord. Your line is open. Hi, good morning. Good morning. Hi, Michael, in the President's message, I thought it was interesting where you state that the company is not going to sit back and wait for the unit price to improve only after the market eventually recognizes it. I was just wondering if you could perhaps elaborate on this point and some of the options you guys are thinking about or your view on value or some of the conversations you've had at management or Board level? Well, clearly, we think that our share unit price is not reflecting our true value. So we're looking at share buybacks and we're looking at asset sales that could lead to more share buybacks or different partnership arrangements to help us to surface value in our business. I think it's very, very early to get to give us a little bit of time, but I think we have the obligation to look at this and see how we can improve our business and surface value. Right. Okay. And then just on the point of buyback, I don't believe Plaza has really been active in the past in this regard. Is there a target or a quantum that you would say would be a decent level for maybe the medium term? I think we're just working our way through that. So stay tuned. Okay. Just shifting gears to, I believe, your largest greenfield development, The Shoppes of Galloway. Can you just maybe provide an update there in terms of progress on the Costco and perhaps some of the other pre leasing and construction activity? So we're about a year plus behind, but Costco Building is built. It's basically finished, expected opening in June. We have 100,000 square feet leased under construction as we speak, sort of following picking up on the Costco timing. We have another 50,000 feet coming in the pipeline. So that's where we're at today. So we're getting there. It's been slow, been a tough slug to get the to get approvals and get this out of the ground, but we're there. But every time we do a phase, it's the same dance. It's a tough, tough slug to get permitting in that particular market. Great. Okay. And just the last question here, shifting gears. At a high level, I mean, there's been a lot of the largest retailers in Canada for several years now have created their own REITs or align themselves with certain REITs. Just out of curiosity, has that had any impact on your business ability to secure tenants, get deals done? Or is it really they're looking for the best locations and retailers who can deliver sorry, landlords who could deliver? Yes. It's been very, very rare that we live there because we didn't have if we had the best location, you're going to get the deal. That's been my experience. Clearly, that's what we have seen. And therefore, as able developers, as guys capable of assembling land and working through some complicated stuff, we've been able to do deals with the retailers that have an associated real estate structure and we've been very active with all of these parties. And as what we're seeing is those REITs are much more focused on the big six markets and clearly have very little interest in the kinds of markets that we're strong in. So I think there's even more runway today than there was in the past with those types of retailers. And we're working hard to position ourselves as a reliable developer for all retailers. Okay. And we talked a lot on the call about primary versus secondary markets. And I'm just wondering from a debt perspective and lenders, have you seen any changes there or shifts in the marketplace there? We've had absolutely No problems at all. Yes. No issue. There's ample money. There is ample competitive bids. Clearly, we see some changes with respect to credit or spreads over bonds, but not relating to the markets that we're in more relating to what's happening to bond rates, what's happening with the Bank of Canada. But apart from that, very good depth on the lending side across all of our markets. Just give you some color. I mean, that was one of our biggest challenges over the years. I've been in this business now for a long time. And in the early years, it was a tremendous challenge to get a lender to the table in some of our secondary markets. And I think they really missed the boat. And inevitably, they did when you look back. And today, no problem at all. We've seen a complete change in that world, Whether it's because we're bigger and stronger or just people have figured out that you can do retails in the Charlotte towns, in the mountains and places like that or even smaller markets in Canada and have a good solid property and value. Okay, great. Thanks. Mr. Zikuda, there are no further questions at this time. Well, thank you everyone for participating in today's call. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. Please disconnect your lines.