Spin-off

Sep 8, 2020

Good afternoon, ladies and gentlemen. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to ArtisSuite's conference call to discuss the proposed spin off of its retail portfolio and strategic debt reduction initiative. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer Today's discussion may include forward looking statements, which include statements that are not statements of historical fact and statements regarding Artis REIT's future financial performance and its execution of initiatives to deliver unitholder value, including the proposed transaction initiatives disclosed in its news release issued today. Such statements are based on management's assumptions and beliefs. These forward looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see Artis REIT's public filings for a discussion of these risk factors, which are included in their annual and quarterly filings, which can be found on Artis REIT's website and on SEDAR. Thank you. And I would like to turn the meeting over to Mr. Armand Martins. Please go ahead, sir. Thank you, moderator, and thank you everyone for joining us. Again, my name is Armin Martens, the CEO of Artis Reach. And with me on this call is Jim Green, our CFO Jacky Kurniak, SVP, Accounting and Kim Reilly, EVP of Investments. So this call is a supplemental call that we will to the press release that we issued this morning pertaining to the spin off of our retail portfolio. And we do draw your attention to an investor presentation pertaining specifically to this retail spin off that we've uploaded last night or first thing this morning as well. So in our website, you can follow the links and download this presentation, 14 or 15 pages. If you don't already have it, still worth downloading, but in any event, download it later and take a good walk through it. So then I'll begin and bear with me. As I present, I'll be following this presentation. It won't take too long and then we'll be looking forward to questions. So again, in summary of what we're doing, so the press release told you a lot, but the background isn't very complicated. Artis is a diversified commercial REIT. We own 3 asset classes, office, industrial and retail. Really, we're primarily in office and industrial REIT, 83% office industrial and 70% retail. And our retail is Open Air, primarily Open Air needs based retail, very good. We're performing well in terms of numbers, but we are caught in this chronic and structural vortex of diversified REITs trading, Algonvo, analyst NAV, never mind their own NAV, and we are not trading at one of the price multiples of the 3 asset classes we own. And this is just briefly demonstrated on Page 3 and the chart there. And You see this time and time again. And after a while, it gets old. It becomes you realize after a while, well, we're just exactly structural, Investors everywhere from Toronto to Red Deer, New York to London and Singapore, all institutional investors and particularly wealth managers have made a decision to strongly prefer pure play REITs. And that's so we're taking a play with we're announcing that we're taking a big step in that direction. And so it's a twofold strategic initiative, if you will. But one, we've already commenced with, and that's selling on core properties to pay down debt, improve our balance sheet. We already have a very conservative payout ratio. We're working to make give us and create a pristine balance sheet by paying down, assign more properties, paying down more debt. We're grateful that we're getting good traction this year already, good traction already. We thought this might be a loss year, but it's not a loss year at all in terms of selling properties and paying down debt and again, at price that correspond to our values. And then, of course, spinning off the retail to further unlock value, improve price multiples. We don't know what value we're getting for our retail and our portfolio. Some people say little or no value. It's probably might be negative value. It's better for our retail portfolio to be in a separate retail REIT. It's better for our investors, better for the portfolio, better for everybody involved. One way or another, it will unlock value of easy to analysts and investors to assess, to analyze, to appreciate and put a value on. And as we move forward quarter by quarter, we think we'll be able to do a very good job with that Retail REIT and have opportunities to grow. We have opportunity M and A opportunities as well on both sides of the ledger. And of course, it's good for Artis REIT, which will become, I'll say in quotations, a pure play office and industrial REIT, as pure plays we've ever been, and that's better for artists as well, better for the dealers, as we think, very good for our unitholders in terms of unlocking value. Moving on to Page 5, if you're following the booklet, we give you a glimpse of the new structure. More info on this will be in our information circuit that comes out in mid October. We don't need to discuss everything here, but you'll see there the diagram showing a pure play retail rate that holds the limited partnership that owns all the Canadian properties on the left side. And we basically are making slight tweak here. We're creating new LPs, pure play, pure, so to speak, play, so to speak, for the industrial for the office. And the U. S. Will have pure play sub REITs that will hold the industrial property separately and the office property separately. Again, making things more efficient and easier if there ever is an opportunity for M and A. Next Page 6, we show you all the pie charts you could hope to see. On the left is where we are today as of Q2 in terms of and it's always based on NOI. You can see that, again, we're 48% office, 35% industrial. So that's 83% office industrial today at Q2 and retail only 17%. At the bottom, we show you which provinces and states we're in. Going to the right is where we would be pro form a, but it's a snapshot as of Q2. You see that Artis REIT will or is 58% office, 42% industrial post spin. And at the bottom, you see what states and provinces we are. Now this means we'd be about 63% today invested in the U. S. And 37% in Canada. So this gets skewed more to the U. S. On the right side, you see the retail REIT, 100% retail owned Western Canada and 3 Prairie provinces, 92% open air, unenclosed malls, needs based retail. We have 1 mall representing 8% of the retail NOI, and it is held for sale. We expect that one property in Regina to be sold, and that proceeds will be used to pay down debt and improve the balance sheet even more. In the bottom, you see where our breakdown by province in the 3 Prairie provinces. Now moving to the next slide on Page 7, we'll give you the next couple of slides are all about Artis REIT, Artis REIT 2.0, if you will, the Office Industrial REIT. You can see in the top tables what we own in Canada in terms of office probably, we break it down by asset class, office in Canada, office in the United States by GLA, occupancy vault, book value, property NOI and the total. Same thing with Industrial Canada and the U. S. And then the total is at the bottom. And you can see what the NOI was at Q2 and the breakdown again was close to 40% Canada and 60% U. S. Net range. The bottom is all about our tenant profile. Bottom two pie charts on the right, you see the office profile, national tenant breakdown by national tenant, government, local and regional and then industrial, same thing with industrial. As we move forward, we'll be able to become even more granular with the top tenants we have in our asset classes and our MD and A. So on the next Page 8, we highlight pro form a credit metrics for our Suite. And this won't we think we'll get there by the end of next year. So it's all about improvement, improving the REIT. Our debt to GBV will improve down to 46%. EBITDA interest coverage ratio will improve also up to 4.3%. Debt to EBITDA will move down to 8.4%. Liquidity will improve. Our payout ratio, We think we've gravitated to 60%. Today, it's about 52%. So very good improvement on that front. It should be great for our investors, great for in our common hold unitholders, great for our preferred unitholders as well. On the last page in terms of the office industrial portfolio REIT, the highlights, this is our industrial portfolio does represent a healthy it's a healthy industrial portfolio with a strong growth profile. I think we've been averaging 5% St. Robert NOI growth over the past 10 years. We're in great markets on both sides of the border. We have a great history of a great track record in terms of our industrial and greenfield development, and we have continued to have a very strong industrial development pipeline right now. So we really have a blue chip institutional grade industrial portfolio in our portfolio right now, full stop. Our office portfolio has been improving nicely over the years as we've gotten past the Calgary office market and sold on our Calgary office portfolio, and it's stabilized nicely. Over the past 10 years, it's actually given us an average of 1% same property growth. That number would have been a lot higher. We haven't been hijacked, if you will, by the Calgary office market. But today, that's the Calgary office market is behind us, and our growth profile has improved very nicely. So we like those two portfolios a lot. And in terms of spinning off the retail, it reduces that distraction. It eliminates that distraction and it reduces artist's exposure to Alberta in general. And again, as I said, our credit profile improves. Now a bit about the retail REIT. Again, I think we think it's a win win for both REITs. The retail REIT will be a smaller REIT. It's, of course, 40 properties, about 2,800,000 square feet in the 3 priority provinces. I mean, largely unenclosed open air strip malls, needs based tenants, defensive, if you will. As I said, we've got 1 enclosed mall that is held for sale. Value IRFS value today is about $780,000,000 Again, and we think we're in good markets, good neighborhoods with good underlying fundamentals to support these properties. The cash flow is positive, and it's designed to be successful. The balance sheet will be just fine and improving. Our payout ratio will be low, and it will be a cash flow positive REIT. It will not be a REIT that's under stress looking for capital. On Page 11, you see the map of where we own our properties also by city, not just by province. And then on the bottom right, you see the type of properties we own in terms of neighborhood centers, convenience centers and community centers. And then on Page 12, and I'm moving I think we're making good time here. It gives you another different snapshot of an overview and $780,000,000 in total ARFS value. The NAV per unit is $2.55 on our books. So we're going to end up with a good balance sheet, a conservative payout ratio, again, cash flow positive. The balance sheet will be improving as we sell some properties and we will, the balance sheet will improve. Now this REIT will be externally managed by ARTIS REIT. And that's the right thing to do, we think, right now in year 1 over time. In a perfect world, we want this retail REIT to grow and then the management to internalize. We're keeping it simple and nobody has to guess what the G and A is or will be. It's 35 bps for an asset management fee and it's 3% property management fee and this is basically revenue neutral, the property management fee, it's breakeven. So that brings me to the end. End of that. I have 2 more slides, but the more another you heard me talk at the beginning about valuations and sort of the rationale for spinning off into at least 1 pure play REIT at a time. And you can see it on Page 13, we gave you pure multiple valuations. And we're just taking some peers in different assets as peer REITs in different asset class industrial retail and office. And these are the low the bottom of the pack, if you will, with the lowest price multiples. It doesn't mean they're not the best REITs, but they're the bottom of the pack in terms of having the lowest price multiples. So we're not comparing ourselves to the average of every REIT or the top half, but really the bottom. So you look at the 2 industrial REITs, the average price multiple there is 15.3%. You look at the 2 retail REITs at the bottom of the pack here, the average price multiple is 9.1%. And then the bottom 3, we talk of office REITs, average price multiple of $9,200,000 And then you correspondingly multiply that against Artis' retail FFO of $0.23 office FFO of $0.66 industrial $0.48 And you see in these COVID times, we're getting a price of $15.52 of valuation. Pre COVID, the number would even be higher. If you want to take worst case scenario, just take the lowest of all these, take them take the lowest trading retail rate, the lowest trading office rate, the lowest trading industrial rate. Today, in these COVID times, you would get a price of $12.50 for orders. So you can see our frustration. And when you compare that $12.50 $15.52 to our current price of $9.50 in that range, you can see that it doesn't take long after a while to come to conclusion that it is time to take a step forward and pause it in a different direction and look at streamlining and undiversifying, if you will. But basically, that's all about unlocking value for our unitholders. There's no saying the customer is always right. And if the investors want pure play REITs, then that's the direction we have to go and in order to deliver results and increase unitholder value. On the last Page 14, just to remind you of the transaction milestones. We've announced everything. Today is the day. Interim court order is expected to be in the middle of October. The infosurcs will get mailed out in the middle of October as well. Unitholder vote, again, middle of November. And closing will be in Q1 next year as early as possible in the New Year. That's our plan. With that, Dan, we're very pleased about this, very optimistic. And at this time, I'll ask the moderator to open the floor for questions. Thank And your first question, sir, will be from Jonathan Kelcher at TD Securities. Thanks. Good afternoon. Hi, Jonathan. First question, just on the assets held for sale of $550,000,000 Can you maybe give us a breakdown of what type of assets you're selling, maybe geography and how many office, industrial and retail? I'll let Kim weigh in here. Primarily office and some retail, maybe it's about half and half when you look at the listings. And it's most in Canada, but some in the United States. But Ken, can you give me more details? Yes. No, that's a pretty good summary. It's mostly office. There's a couple retail, and they are in a variety of markets kind of across Canada and the U. S. Okay. And then so the I guess the stuff the 42 assets you had at the end of Q2 and you have 40 assets in your presentation here. Would that be would that include I guess it might be smaller if you're selling a bunch of retail assets? Yes, good cash. What is that? Go ahead, Kim. Yes. So there's one asset that will be that is kind of reclassifying from Q2 to now. It's part of our Winnipeg office developments. We're calling it mixed use. So it will move and stay with the main REIT rather than the retail REIT. The Delta Shoppers Mall? Yes. So Delta Shoppers is the one that sell for sale and then 330 Main is the other one that we just completed development of. Okay. So when this spins out, given what you've got listed with brokers and assuming everything sells, how many assets do you think will how many properties do you think will be in there? In the retail? It'll come down, could easily come down by another 5 properties and it could come down by anywhere from another $60,000,000 to 100,000,000 dollars And again, all those proceeds would be used to pay down debt and you get our debt closer to 48%, 47% on retail price. Okay. So that would reduce debt at the pro form a artist and the retail REITs could have slightly higher debt. Is that the way to think about it? No, that would reduce debt on the retail side. I guess in the long it will depend when we get it done. Yes. Right now the plan is to put those 40 assets as if they were going into the retail region. If some of them sell pre closing then retail would spin out with less debt attached to it. Okay. That's it for me for now. I'll turn it back. Thanks. Thank you. Next question will be from Matt Logan at RBC Capital Markets. Please go ahead. Good afternoon. Hi, Matt. Just following up on Jonathan's question with regards to leverage. If we look at the target leverage as it stands without any asset sales, that's about 54% for artist retail REIT. And we compare that to the Q2 balance sheet, it would seem that you plan to place roughly $200,000,000 on the retail portfolio before spinning it out? That's correct. That's correct. How hard is it going to be for you guys to place mortgage debt on these assets? And have you had any discussions with banks or other financing options to date? We have some of them in the market right now. We've actually got, I would say, 3 really good proposals in on 3 different assets. So far, it's going really well. And then and we'll likely have a line of credit available for the retail entity that will form part of the debt. That's great color there. And what sort of a rate would you guys be looking at for new debt on the retail assets today? The only one I have a sort of firm proposal on today for new debt is 5 year term interest rate in the mid-2.5 range. And changing gears in terms of the planned spin out, could you give us some color on why you chose to do a planned spin out just for retail? I mean, why not do all 3? And could we see 3 independent entities over the course of time? Yes. So this is something we can do now. We feel we've got good control of it. Execution, I think, is close to 100% in terms of spinning off the retail. If we waited if we want to spend up all 3, we would have to sell more properties first and improve our balance sheet more. But so we're not quite there. And we didn't want to wait another year and wait for all the stars to land perfectly. We wanted to get do this spin off now. And it's just as well it's only a perfect world, it's more efficient to do 3 at the same time instead of 2. But this is something we can do now and it will be the right thing to do. It will take us as things are stepping in the right direction. And then looking forward, it matters for our price multiple for Artis REIT, which will own only industrial and office. If it doesn't improve, bring us to NAV, then as we sell down properties and improve that balance sheet, we'll definitely look at splitting those that REIT into 2 more REITs. And you guys seem to have really good traction on your asset sale program. Can you talk about maybe just some of the feedback that you've had to date? And if there's any indications to the contrary that you might not achieve your IFRS marks for any reason? Yes. So we're grateful for the traction that we're getting on all fronts, and we've launched some listings. And we've got an office building in Denver that's listed to gain a lot of traction. We expect to have our office building in Hartford sold soon too on the U. S. Side. Here in Winnipeg, we launched 2 office buildings for sale. We're getting a lot of traction, a lot of interest. We've we launched a listing for some of our Saskatchewan retail portfolio, and the bulk of it is our 1 enclosed mall. Again, very good interest. 2 of those profits already under LOI. So we're seeing and we've got a large I mean, we've got another $200,000,000 almost under LOI right now under contract, under contract, still conditional in addition to the properties that I just mentioned. And so we're grateful for that because there was a time when we thought this was going to be a lost year, but it won't be a lost year. And especially on the U. S. Side, we've seen money come back. The debt markets have opened up very nicely. Debt is there. And along with debt, equity is there. The deals are being chased quite aggressively in the United States. And Canada is just getting there. I mean, Jim gave you one example of mortgage debt is there. And it's somewhat agnostic as to the asset class actually if the metrics will all work. We don't ask we never ask for too much debt on any of our properties. On the equity side, that's it's a little shy still, but coming back. Buyers are looking to place their money. I think by now everybody knows that 1,000,000,000,000 of dollars has been printed and pumped into the global economy into North America. And that means that eventually rates interest rates come down, cap rates come down and assets will become rare. So we're glad to see that we're getting as much traction. I don't think we're the only ones. We're sensing that other people in the business looking to sell are finding buyers. Anything else, Kim? That's a pretty good summary. I mean, we're happy to see everything come back. Definitely, the U. S. Came back before Canada, but now it seems like there's lots of appetite out there for deals and we're getting them done. And suffice it to say that in aggregate, you still see your IFRS marks as fair on a post pandemic basis? Yes. That's what we forget. Yes, we're definitely hitting those numbers and some below and some above. And on average, based on what we've got under LOI contract, now we're ahead. Excellent. Well, I appreciate the commentary. That's all for me. You very much. Thank you. Next question will be from Mike Mercatus at Desjardins. Please go ahead. Hi, everybody. Thanks. And no particular order here. Just building on Matt's question on the debt profile of the retail REIT. Jim, do you expect that Artis REIT, Artis 1.0 will have to provide any intercompany debt or loan guarantees to that entity? That's still to be determined, but I suspect a number of those properties that are moving over with existing debt on them do have the artist guarantee on it. And I can't tell you for sure whether we'll get that released prior to spin or whether it will transfer with the debt and then we'll just have to fall off at maturity of those mortgages. So yes, there is a possibility that there will be some of that existing debt that will retain the artist covenant on it. Okay. I think you made some comments about the new structure being more efficient than I guess some of the comments alluded to potentially spinning out or separating the office from industrial down the road. But I was just curious if this new structure, all else equal, would have helped in the strategic review that was completed earlier this year in terms of selling the entity? Yes, good question. For sure, the retail spin off went about for sure. That was definitely a stumbling block for interest in it and I can't say too much about all that, but there's definitely a stumbling block in the process that we had retail as part of the package. Okay. You've on a couple of points made reference to future M and A opportunities. I was just wondering if you could potentially elaborate that and what you're meaning on that point. Is that from a being acquired perspective or going on the offensive and consolidating perspective? So I think Paul, it's just it's easier to value the retail REIT then. And here we are value us, We'll demonstrate good quarter one good quarter at a time. But if retail is not a loved asset class, it could be good opportunities for us to grow assuming we get a good cost of capital or there could be could become a bit of an aggregator of other retail properties of similar asset class or and there could be other REITs and other portfolios out there that institutions own that they want to merge with the REIT like artists as well. Or there could be other REIT institutions that will say our other REIT, our REIT is a great REIT, great portfolio, and we'd be interested in buying the REIT. So we definitely it's all about getting value, getting the value we should be getting for our unitholders, and we're not shy to be on either side of the M and A ledger. Got it. Okay. Last one for me before I turn it back. Just on the valuation and comparing to some of the Canadian peers, I was just curious if given your office concentration in the U. S, if you guys have done some similar P versus consensus FFO or even PNAV on suburban U. S. Office routes as part of your analysis? No, we should. We're not listed in the EBITDA. We should be looking at, I guess, city office REIT, for example, and then now that you mentioned it and we'll take a good look at that as well. Yes, we should be on our side too and we haven't yet. So I was hoping you might have put that. Okay, we'll take a look and we'll see who gets there first. Yes, tell us what you know. Sounds good. Okay, thanks very much. Thank you. And Your next question will be from Jenny Ma at BMO. Please go ahead. Hi, good afternoon. Armin, just wanted to get a little bit of background color on the transaction. Wondering if in your discussions, if you considered spinning off the industrial portfolio given the valuation in the market versus the retail. And then the second question is, now that you've arrived at spinning off the retail portfolio, did you shop that portfolio first before arriving at the spin off? Sorry. No, nothing was SHOP. And a year ago at this time, we would have probably spun off industrial first along with an IPO even and raised money because of the strong demand. But now this is not IPO season. Industrial is a bigger portfolio, I think I mentioned. Dealing with industrial and office means selling more property to pay down debt or raising equity. Well, we don't want to raise equity in this market, and we don't want to wait a year to sell the rest of our properties. But retail just works for us. Retail just works for us. And in these post COVID times, it's become more evident than ever that retail is a concern for investors. So we're seeing fine, take it and separate it from artists. So that's not a concern with respect to artists. And then take a good look at it and you'll realize it's also not a concern when we separate it. We put in an independent need because it's very good retail with the gift that performs well And we don't need the highest price multiple to benefit from it. But so retail is what we can do now and are doing now. But yes, we did contemplate industrial during the past year as well. I'm just curious why you didn't shop the retail portfolio. Is it just because of the size or the geography or you just didn't think the pricing was there and you want to give it more time for price discovery in a public entity? Any color on that would be helpful. Yes. Our sense is that there is no portfolio premium in this market, right? Portfolio discount, we're not interested in that. If we sell retail and we're selling some, it's 1 at a time or small, mini portfolio, that's how to get maximum value. We just didn't see the point, especially in this pandemic season, for us to go over the whole big portfolio of retail properties. And so we didn't even try it. We didn't try it. Having said that, now that we've made this announcement and we're giving more and more disclosure and as we head towards the spin off, the door is open and the phone line is open. And it will be anybody if anybody is interested, they can always call us. We don't say no. But I'm not expecting a lot of interest at this time. But if interest shows up, that's fine. But otherwise, it will be easier to generate interest from investors, all investors, types of investors once we've completed the spin off. Okay. So on the retail portfolio, it looks like the IFRS cap rate audit as of June 30 was about 6.6. And just on back of the envelope math here, based on the 255 NAV that you guys disclosed for AXS, And then using the 12.1 percent of quarterly NOI, which is probably a little bit high given that you'll have a couple of properties fall out. The suggested cap rate is a little bit closer to probably 6.25%. So I'm just wondering if you can reconcile that calc and sort of the outlook on the cap rate of the retail portfolio? I'll let Jim give us a shot at that. Just back with looking accounting? Yes, a little bit. So the actually, I think if you take the NOI from Q2 exclusive of the bad debt allowance, so you would see that in our same property table from the Q2 MD and A disclosure. I should have that right in front of me. The retail NOI disclosed in there exclusive of that debt allowance was actually around $14,000,000 for the quarter. Okay. And if you annualize that, you get to more like a 6.9% cap that coming in at. So but the 6.6% that we use for valuation purposes is the equivalent of forward looking 1 year NOI on those retail properties. And because of the COVID situation, we have updated upped our vacancy allowance a little bit going forward. So that's why it's looking like a 6.6% cap rate. Okay. Okay. Got you. So it looks like when you're going from the 42 to the 40 properties in AXX, the 2 BC properties fall off, one you mentioned as listed for sale. What is the view on Poco Place? Is that something that you're looking to sell? Or is that sort of a reclassification, given the office GLA on it as well? So we've always classified POCO Place specifically as one of our office assets. It's never been in the retail portfolio at the quarter end disclosures. So even though it does have some retail, it's always been lumped in with the office. And yes, that is one of the sites that has future multifamily density. And I guess as we've said all along is that our plan is to dispose of our assets that have future multifamily density on them. So when the time is right, that one will be up to the market. Okay, okay. Got you. And then just with regards to the retail portfolio, could you let us know what some of the top tenants would be in the retail portfolio? I mean, I see TD Bank and Shopper sort of in your aggregate list, but what are some of the other major tenants within that? Do you have any other essentials, grocery tenants or more of a small business mix? We've got some growth we can't, but otherwise and drugstores and liquor stores, of course. And then otherwise, a lot of personal service tenants that ranges from the bakery to the chiropractor to the hair salon to the dentist and the doctors and then the bars and the restaurants. But yes, I wish we could have probably could have done a better job of getting more detail on that, and we will going forward in terms of the retail tenant mix. You see when we're pure play retail REIT, all this will be in the MD and A. Okay. I presume that I'll come up with the circular later on. Yes. And then sorry, go ahead. Yes, go ahead. I was just going to say the usual resale suspects will be in there. But I think as far as the top group of tenants, I believe shoppers will be the biggest in the portfolio. Okay. And then when you look at the pro form a mix, I'm just wondering from a definition point of view, how does Artis differentiate between the convenience centers versus community centers versus neighborhood centers with regards to the retail portfolio? Yes. This is a fine line. I mean neighborhood center would be either food anchored or well shadow anchored. We have a lot of properties that are adjacent to a food store, and you can't tell that we don't own the food store. The park lot is contiguous. We have a lot of that. Community centers, but then you get more into the strip malls, but they're older generation. However, they're in mature neighborhoods where the leases of properties have gone through several iterations of lease renewals and the tenants meet the needs of the neighborhood. Plain and simple. The tenants are there because they're doing well. They meet the needs of the neighborhood. They're not all blue chip credit rated tenants, course, but their tenants are doing well in the neighborhood shops here. And convenience is what it is. The convenience stores and I believe it might maybe includes gas as well. And then of course we said 1 enclosed mall. So by convenience, do you mean sort of standalone pads or just much smaller strip centers? Yes, standalone pads and I believe we've got some 711s in our portfolio as well. Okay, got you. And then my last question is with regards to the view on the distribution for the 2 entities. I presume you're going to maintain a similar payout, but are you is there going to be a differentials between the yields on the 2 entities or is that a little bit too early? Yes, it's a little early, but right now the plan is for sure that the distribution at a minimum will add up to the same distribution from the 2 entities will add up to the same distribution that Artis has today. So that will be a minimum distribution. It will be the same as the ARTIS distribution today. Great. That's all for me. Thank you. Thank you. Ladies and gentlemen, this is all the time allotted for questions today. I would like to turn the call back over to Mr. Martens. Okay. Well, thanks again everyone for your interest and calling in. And you know where to find us. You can reach out to us anytime with the e mails or phone calls, and we'll be happy to continue the dialogue and the information exchange. Again, as we mentioned, the InfoCIRQ will be coming out in mid October at the latest, and we're looking forward to moving this project along into a very successful conclusion. So thanks again. I'm looking forward to meeting and talking again. Have a good day, everyone. Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your line.