AGM 2018

Jun 14, 2018

Slides

So good morning and welcome everyone. Many of you have traveled quite a distance to be here and we appreciate that and you are all welcome. So thank you. My name is Ed Worthington and I'm the Board Chair. This is the Annual Meeting of the Unit Holders of ARTIS REIT, which I will refer to today also as ARTIS or the REIT or the Trust. After some initial comments and introductions, today's meeting will consist as it normally does of two parts. The first part will be the formal business part and we'll deal with the matters set out in the agenda in the management information circular. And in the second part, Armen Martins, our CEO will address the meeting and respond to any questions. If required meeting materials, which include the agenda, the information circular and the annual report together with the twenty seventeen consolidated financial statements can be found on the table near the entrance to the room. At the outset, I would like to introduce those of the senior management team who are in attendance today. And I would ask that you please identify yourself as I call your name. Our President and Chief Executive Officer, Armen Martens Chief Financial Officer, Jim Green Executive Vice President, Asset Management, Central Region, David Johnson Executive Vice President, U. S. Region, Philip Martins Executive Vice President, Property Management, Frank Sherlock Executive Vice President, Asset Management, Dennis Wong. Unable to be here today, but shown on the screen is Patrick Devine, who is Senior Vice President, Leasing U. S. Region. Senior Vice President, Asset Management, U. S. Region is Marie Dunn. Senior Vice President, Leasing, Central Region, Brad Gertsen. Senior Vice President, Asset Management, Minnesota, Amy Melkior. Senior Vice President, Asset Management, Western Region, Greg Moore Senior Vice President, Investments and Development, Kim Reilly and Senior Vice President, Construction and Development, U. S. Region, Ron Wheeler and Senior Vice President, Asset Management in Wisconsin is Leon Wilkos. Thank you very much. This meeting of the unitholders of Artis is hereby called to order. As Chair of the REIT, I will act as Chair and Secretary of the meeting and ask Kara Watson to act as Recording Secretary of the meeting. I appoint Gloria Gratham, AST Trust Company to act as scrutineer. All unitholders of record who are present should now be registered with the scrutineer and all proxies should now have been deposited. If you have not done so, please do so now. The notice calling this meeting of unitholders was sent to all of the unitholders of record as required thirty days prior to the date of this meeting. An affidavit of mailing indicating a mailing date of May 1538 has been submitted to the chair and will be attached to the minutes of this meeting. The scrutineer submitted its report on attendance and it reads as follows. We are pleased to report that there are 69 unit holders holding 75,000,007 and 29,040 units represented in person or by proxy at this meeting. This represents 49.24% of the 153,795,779 issued and outstanding units. I declare the scrutineers report adopted. Notice of this meeting having been given as required and a quorum of at least 5% of the units being represented in person or by proxy, I declare that this meeting is duly constituted for the transaction of business. The first item of business is to have a drink of water. I'll do a Trump thing. The first item of business is to receive the annual consolidated financial statements of the REIT for the year ended December 3137. The twenty seventeen annual financial statements together with management's discussion and analysis were sent to all ARTUS unitholders that requested them. Deloitte LLP, the auditors of the REIT have certified that in their opinion, the consolidated financial statements present fairly in all material respects, the financial position of Artis Real Estate Investment Trust as at December 3137 and December 3136 and its financial performance and its cash flows for the years ended December 3137 and December 3136. We will take the financial statements and the auditor's report thereon received and considered and thank you auditor representatives for being here this morning. In addition, we have copies of the financial statements of the REIT for the interim period ended March 3138 and the related MD and A available on the table near the entrance to the room. These documents are also publicly available on SEDAR and on the REIT's website. The next item of business is to fix the number of trustees of the REIT for the ensuing year and to elect the persons who will hold office from the close of this meeting until the next Annual Meeting of Unit holders. I requested that Vic Tillman move and Cornelius Martin second the following motion be it resolved that the number of trustees be fixed at 10. Vic? Thank you, thank you. Are there any questions on that motion? All in favor, so indicate. Are there any opposed indicate? Thank you. That motion is carried unanimously. The next item of business is to elect the persons who will hold office as trustees from the close of this meeting until the next annual meeting of unit holders. Before doing so, I would like to introduce the current trustees of ARTIS, all of whom are in attendance today and are being nominated. Please identify yourself as I call your name, number one, Bruce Jack Number two, Stephen Joyce. Number three, Armen Martins. Number four, Cornelius Martins. Number five, Ronald Reimer. Number six, Victor Tillman. Number seven, Wayne Townsend. Number eight is myself. Patrick Ryan, who served on our board since 2013 decided not to stand for reelection for the forthcoming year. Pat is not here today, but we take this opportunity to thank him for his time and contributions to ARTIS. Also being nominated today for the first time to our board and for the upcoming year are Ida Elbow and Lauren Zucker. We will conduct individual voting for the trustees and the following resolution will apply to each namely, be it resolved that the following nominee who is named in the information circular be elected as trustee for the ensuing year to hold office from the close of this meeting until the close of the next annual meeting of unitholders. Number one for nominee Ida Elbow, I asked Bruce Jack to move and Wayne Townsend to second this motion. Bruce? Wayne? Second? Thank you. All in favor? Any opposed? None opposed? Thank you. That motion is carried. Number two, for nominee Bruce Jack, I ask Vic Tillman to move and Cornelius Martins to second this motion. Vic? So moved. Cornelius? Second. Thank you. All in favor? Any opposed? No opposed, that motion is carried. Number three, for nominee Stephen Joyce, I ask Ron Reimer to move and Vic Tillman to second this motion, Ron. Thank you, Vic. I second motion. Thank you, all in favor? Any opposed? None opposed, thank you. That motion is carried. Number four for nominee Armin Martens, I ask Bruce Jack to move and Wayne Townsend to second that motion. Bruce? So moved. Thank you, Wayne. Second. Thank you. All in favor, please indicate. Any opposed? No opposed. Thank you. That motion is carried. Number five for nominee Cornelius Martins, ask Ron Reimer to move and Stephen Joyce to second this motion. Ron? No move. Stephen? Second. Thank you. All in favor, indicate. Any opposed? None opposed. Thank you. That motion is carried. For nominee Ronald Reimer, I ask Stephen Joyce to move and Cornelius Martins to second this motion. Stephen? I so move. Thank you. All in favor? Any opposed so indicate? None opposed, thank you. That motion is carried. Number seven, for nominee Victor Tillman, I ask Bruce Jack to move and Wayne Townsend to second this motion. Bruce? I move. Thank you. Wayne? Second. Thank you. All in favor? Any opposed? None opposed. Thank you. That motion is carried. Number eight for nominee Wayne Townsend, I ask Cornelius Martins to move and Vic Tillman to second. This motion Cornelius? I move. Thank you. Vic? Thank you. All in favor? Any opposed? Thank you. None opposed? That motion is carried. For nominee Edward Warkenton, I ask Armen Martins to move and Ron Reimer to second this motion. Armen? I move. Thank you. Ron? Second. Thank you. All in favor? Any opposed? None, thank you. That motion is carried. Number 10 for Lauren Zucker, I ask Bruce Jack to move and Stephen Joyce to second this motion. Bruce? I move. Thank you, Stephen. I second. Thank you. All in favor? Thank you. Any opposed? None. I declare that motion carried. The next item of business is to consider resolution reappointing the external auditors of the REIT for the ensuing year and to authorize the trustees to fix the remuneration of the auditors. I requested that Bruce Jack move and Ron Reimer second the following motion be it resolved that Deloitte LLP be and is hereby appointed the external auditor of ARTIS for the ensuing year and that the trustees be and are hereby authorized to fix the remuneration of the external auditor. Bruce? I move the motion. Thank you. Ron? Thank you. Are there any questions on that motion? No questions, all those in favor, please indicate. Thank you. Any opposed? None opposed, I declare that motion carried. This then concludes the formal business part of the meeting And then I'll call on Armen to present and to address any questions. Thank you. Thank you, Ed. There we go. Thanks again, everyone, for joining us today. I'll go along with a glass of water. Yes. So welcome again to our twenty eighteen AGM, everyone, in the Belkusen Conference Center. We appreciate your support and your interest. So let's talk a little bit about this week then. You've heard us say that our core mission, folks, we feel is to create economic value for our investors through the active investment and management of commercial real estate in our target market. In terms of objectives, we feel let's start by just staying on the path of continuous improvement. That's a broad statement. But we want to be able to say to our investors every year in Europe that ARTUS is a better REIT today than a year ago. So it's about our real estate. The REIT stands for real estate. So we want to improve the caliber of our real estate, slowly but surely during the course of the year, our earnings profile, our balance sheet and the reliability and sustainability of our income. Our strategy and our business model has been clear. You can probably clear it, so we go straight to the map. But it starts with diversification. We're diversified REIT by geography. We're in two countries, 10 major markets, and then we're diversified REIT by asset class. We're in three asset classes right now, office, retail and industrial. Internal growth has been the mantra for us for a couple of years now. We haven't raised new equity to grow externally for several years. It's about external growth, about accretively recycling capital, about harvesting our development pipeline, about bringing rents up to market and pushing up our same property, same store NOI. So here on the map, you see, again, what we own and where we own it. Again, we're in two countries, 10 markets, the major markets, the office properties are in green, industrial in blue and retail in yellow. To be more specific, in Canada, we're just West Of Quebec. So we're not in Quebec and we're not East Of Quebec. We're just West Of Quebec. We're not going so that means we're in Ottawa and Toronto. We're in Winnipeg. We're in Regina, Saskatoon. We're in Calgary, Edmonton, we're in the Greater Vancouver area as well. In The U. S, by design, we stayed down the Central Corridor. We stayed away from the coastal markets, which are more competitive, lower yielding. We stayed down the Central Corridor, and we focused on cities that are state capitals and university capital. So Madison, Wisconsin, great state capital, great university capital Minneapolis, Minnesota Denver, Colorado and Phoenix, Arizona. We're also in Texas right now in Houston, not the state capital, but it's got an M and A over 7,000,000 people. Texas by Canadian standards is a country of its own 28,000,000 people. Your state your personal tax, your corporate tax, so end of presentation, so to speak. In Houston, second biggest port in the country, Texas, as a result of all that, it's got great geographic location. It's got unfettered access to the global market. So anything they make and they want to sell, they can get to the market. No state or province can say, no, you can't have access to the ocean. So a lot of good reasons to be in that state and we're performing things are performing very well for us there. These pie charts tell you then how we make our money and where in terms of how you see that last year, 21% of our income came from retail properties in yellow, 26% industrial, 53 office. Now looking ahead, you'll see a shrink in retail to about 15%. We're not we don't have a big problem with retail, but the winds have changed all the retail. E commerce is upon us. So we're careful about the type of retail we want to own, and we'll see a shrinking to about 15% in a year or two years ahead. Industrial, you see us moving that up to north of 30%. Industrial market and the winds of change are positive for industrial. On both sides of the border, industrial growth is performing very well. In Canada, possibly primarily because our dollar is under $0.08 0, but things are performing very well in Canada. Occupancy levels in the last four years have moved from basically 92% to 98% and rents have gone up 50% in our industrial portfolio in Canada. Similar story in The United States, but the economic fundamentals are quite structurally positive there. You've got the largest economy in the world now, and that's energy self sufficient. This is a major catalyst for the industrial sector, manufacturing, industrial job creation, and it's pushing. All of our industrial developments are performing well also. On the right side, by geography, you see we're it's not there's one thing missing. We're up to 60% in Canada and in the middle 60% in Canada, 40% in The U. S. It wasn't that long ago, we're eighty-twenty and ninety-ten in favor of Canada. Looking ahead, we're probably fifty-fifty Canada in The U. S. Again, there's a great value proposition so far in favor of The U. S. In terms of higher unlevered yields and a good economic profile. If that ever changes, that ever changes, we'll switch. So for example, the last several years, what we've done is we've been able to sell noncore assets in Canada at lower unlevered yields than we've been able to acquire in our target markets in The U. S. But if that ever changes, then you'll see us change our strategy as well. We'll be selling lower yielding noncore assets in The U. S. To invest in Canada. But we don't see that changing in the years ahead. It's not just the economic profile in The U. S, but you add layer on top of that, the tax reform we've implemented in The U. S, that's attracting a lot of capital. It's made Canada less competitive than The U. S. Attracting money like ours into real estate there. The bottom, the two different shades of brown, you see it's Calgary office in Alberta. Have 22% of our income comes from Alberta right now. Just three, four years ago, it was 38%. So we brought that down over the years to 22% to improve our diversification. We still expect to bring that down to about 15%. Calgary office at one time was 18%, now it's down to 9%. We expect to bring that down to about 5%. But we don't expect to vacate the province at all. Sunny day will be there again. The market will turn around. It's all about pipeline and infrastructure for Alberta and then the geographic market and other things will turn around. So we won't move it altogether, but we want to bring it down some more just to improve and add better balance, if you will, to our diversification. I mentioned internal growth. Capital recycling is the essence of our internal growth. In the past three years, we've cycled over $1,000,000,000 of real estate very accretively. And so in essence, it's about buying low and selling high or for us, it's about selling our lower yielding non core assets and purchasing higher yielding assets in our target market. And so what this does is it improves our diversification again by geography and by asset class and the caliber of our real estate. So last year, for example, we sold 200 or $320,000,000 of properties. At cap rates, you can see in the 5.5 range and then we're able to acquire most of that was redeployed into new generation real estate in our target markets at a spread of almost one hundred percent one hundred points rather. And in addition to that, some of that was deployed into our greenfield developments, which are achieving yields on the yield in the 7% range. The new developments are excellent projects. We'll show you some examples in a minute because it gives us new generation institutional caliber real estate, getting at higher unlevered yields than we could get if we were to buy them. There are some examples of capital recycling at work. These are just examples of acquisitions. All of these are industrial properties. I never when I was younger, I'd be excited about industrial properties. But as I said, they're performing very well both sides of the border. You see on the left, up and down on the left, industrial properties in Phoenix. We're able to acquire some good properties there to add to our industrial position in Phoenix. Bottom right, a new generation distribution center in Minneapolis, fifteen year lease, annual rental increases, great acquisition, adds to our position there. We're the third largest industrial landlord in Minneapolis. We have a good position there. Upper right is an industrial development center, the project in Denver. It's our first acquisition in Denver for industrial. We've got office properties there. You'll see us adding to that this year, building up and beginning construction on a 400,000 square foot industrial development near that site in the Denver Airport area as well. Very good market to be in, one of many good markets. So we're very bullish on those assets we bought and it's definitely improved the REIT. Here's examples of new developments under construction. This is all new generation. At the bottom right, it's Phoenix. Only thing missing is a palm to keep asking my people to put one in there. So this is we're now under construction with Phase 4 at Park Lucero in Phoenix. And this is that will make it 600,000 square feet of Class AA institutional grade industrial property, just a great asset. We're breaking 7% on the unlevered yield there. And again, great it took us three years, but it's performed very well, great traction, great results for us. Far left, you see Park 890. This is again a Class AA industrial business park in Houston. It will be 1,800,000 square feet when it's finished. And we're on Phase two now, getting good leasing momentum, leasing traction, already dealing with prospects for Phase three. In the middle is another project that's in Houston Cedar Port, got water access to the port as well as dual rail access and freeway access. It's in a major distribution district across from a large Walmart distribution center across from an IKEA distribution center. This will be a two phase million square foot development. The first phase of 5,000,000 square feet is pre leased already twelve year term and the rental increases and construction will be starting this summer. So a lot of good things happening for the REIT. It takes a little bit of patience, but it's worth it. And the active cap rates for these are under 6%. So the spread is anywhere from 100 points to 150 roughly in terms of the profit we can make if we want to sell them later. But in the meantime, because of the high unlevered yields, we see ourselves just enjoying the income as we develop out and lease out these projects. And now for something completely different. The next two slides, I'll show you multifamily. That's the fourth asset class. We don't know if we'll keep these properties when we finish them because of the opportunity to exercise at the low cap rate. What's happening in urban centers in Canada and core suburban centers is that the highest and best use for surplus property and or densification resuming opportunity has become multifamily. On the right, you see Stampede Station that was supposed to be a 300,000 square foot office building. We're getting it resumed, getting permission or permit to make it a 300 unit apartment building. That will be the highest and best use. And right beside it is an existing office building we own, so make the whole asset worth more just by getting the entitlement, not to mention when we build out the building. And because we're renovating, we have to show you that the artist sign is missing from that building, but it was worth it to get TD Bank in here. You see upper left there on the left side, there's a taller building. So that at one time was supposed to be a 30 storey office building, but the highest and best use now is multifamily. It will be a 40 storey apartment building. And if you know the history of that block that we own there, the land is in place, the parking is in place, three levels of underground parking, got an office tower there, we've got 60,000 square feet of retail and the pad and foundation is in place for this 40 storey apartment. So now we're going ahead. And in addition to that, the stars have aligned very nicely, the city and the province have agreed to provide us with eighteen years, eighteen years of property tax abatement to help with the project. So no school tax, no municipal tax. We ran out of reasons to say no and we're going ahead with the project, very excited about it. Value creation in Toronto, when we bought these two properties, on the right side, you see $4.15 Rand and the left Concorde, we heard more snickering than cheering when we bought them many years ago. But now they are definitely home runs for us for sure. On the left side, Concorde, if you know that area, on the Don Valley Parkway. We've got three office buildings there. We've got room for fourth office buildings, but instead we're building 500 apartment suites. The application for rezoning are in for both of them, personally taking a vested interest in attending these planning meetings with city planners. So there was a plan for 500 suites. The game changer for that site is again the transit and infrastructure. So if you look at the map, looks it like it's close to downtown, but really it's a one hour drive to get to downtown, sometimes ninety minutes. Well, now we're building an RFT line right to our property. So the Edrington line going east west is going to come right to our property that will get an RFT station 100 steps away. So it will take only fifteen minutes to get from our property to the Yonge Street line and then fifteen minutes to get from the Yonge from that station to downtown, thirty minutes in total. That's an economic game changer for that site. We're already seeing it with positive leasing momentum for the office component and we're very optimistic about getting the density approval for that site, which will add a lot of value. Same with Toronto, if you look close at that glass building here, this is going to be 62 stores in total. We're just across the street for the 75 storey building. We're not doing anything new in that sense. We're across the street from the College Park Subway Station, very major subway station. We're between the two universities, U of T just a little bit to the North, Ryerson just adjacent to the South. So there, we've got a twenty third office building. What will happen is main two floors will be retail, next 18 floors will be office, and we will add 42 stories of multifamily purpose built rental, something that really meets the needs of the neighborhood. So we're optimistic again about getting that approval. Land values in Toronto, well, Vancouver has about the highest multifamily land values in the country and Toronto would be second. But by example, today, that land value, if we had been talking, it would be worth about $200 per buildable square foot. And that's 400,000 square feet times $200 $80,000,000 of value creation if we get the zoning. So we don't want get ahead of ourselves, but the application is in and we're working hard to go through the process. But however, it's at least one point five to two year process to get that. Not a problem necessarily, it's because we all we don't mind being patient, right? We are none of us are getting older. But in Toronto and Vancouver, most kind of markets, if it takes longer to get the zone, it's not a problem in the sense that the land is only going up in value anyway. And it's going up in value greater than double digit rate. So ironically, it becomes a good investment for us. So we're looking forward to getting these projects launched. Next year, we'll add one more page. We'll show you a property in Coquitlam in the Greater Vancouver area. We'll be applying for 600 suites of additional density there. It's a shopping center office building complex, and we'll show you our TransAlta complex in Alberta. Again, it's about transit oriented infrastructure in Vancouver. The green Evergreen Line has come there. There's a Skytrain station just near our site. That's a game changer. And Calgary, the TransAlta site, where the city is bringing in a new LRT line, it will become a subway station just adjacent and connected to our properties, that they're calling the green line. That again is a game changer for the site and for value creation. So looking forward to show discussing that next year. And now back to reality, some flex financial information, we've gone back four years, 2014 is just before the oil crisis in Canada and the collapse of the Calgary office market. We held our own pretty good. If you look at the far right, earnings per unit increasing, this year, did come down. I mean the Calgary we can't fight the fact that change the fact that the Calgary office market is having a negative effect on our earnings. Our earnings are still higher today than they were in 2014 before the office market collapsed in Calgary and our unit price trading at $13 range versus $15 So we think there's room for a multiple upgrade. We do feel we offer a great value proposition. If you look at the bottom, you'll see the analyst consensus information expecting have the analysts have a target price of over $14 for us. And we're set we're comfortable that our NAV is even higher than that. And this is our favorite chart. Once a while investors are concerned as artists of value proposition. Well, if you've been paying attention, we were and we were not only a value not only are we one, we were for five years, three years and one year. So look at those charts. This is a pure comparison, but we're also comparing ourselves to the TSX REIT Index, our total unitholder return. So on the one year, ARDIS is in the red, the TSX Index is in the black and the rest of our peers, these are diversified REITs with $1,000,000,000 market cap or higher, rest of them are in blue. You can see that while in the five year, three year and one year, we've always been a good investment. Now every year is a different year, but generally it's the three and the five year charts that matter, not just one year that goes up or down. So we're very pleased with that, pleased that we've rewarded our investors and that at least any and all of our patient investors have been well rewarded by staying close to us. But down to our last two slides, folks. So looking ahead, here we could talk for a long time. This section could be a 10 page section, but looking ahead, headwinds and opportunities for REITs and for ARTIS. In our case, it's really one headwind. Still, it's Calgary office market. It continues to put negative pressure on our income. It won't bottom out until the end of next year, and then we'll see 25% to 30% vacancy rates depending on the submarket there. And so the challenge in Alberta is, of course, making money. They deliver they produce 4,000,000 barrels a day of oil and they're at full capacity. The pipelines are full, oil by rail is full, they could produce more, they can't sell it. So then the subject of pipelines comes up, while the Enbridge line is under construction, Line three, it will be phased in 2019. Trans Mountain, we believe will now happen by 2020. Collectively, they add 1,000,000 barrels a day, bringing it up to 5,000,000. It adds about 30,000,000,000 a year in economic activity to the province, which will be a great job creator and a great source of demand for Calgary office and other things. So these are the catalysts that are around the corner and why we aren't interested in signing down Alberta completely. But we're looking for a balance in our portfolio. Investors sometimes investors are patient, they don't want to wait that long. But things will turn around in Alberta one year at a time. But we're looking for, of course, is for investors to be optimistic before the pipeline gets completed, right? Then there is what I call a new weak paradigm. We've all heard the expression we're in the eighth or ninth inning or seventh or ninth inning of the ballgame or we're in the tenth year of the six year economic cycle. But we like to say we're in a new paradigm. We're actually in new ballgame. No ballgame is over. It was a friendly. Now we're starting a new ballgame that's a little more serious. It's not the score count. Last ten to twelve years, we've seen interest rates fall and we can make money just by renewing our mortgage at a lower rate and cap rates came down to our net asset value went up every year. Although that friendly game is over. Now interest rates are level arising, cap rates are level arising, and REITs are more like real estate operating companies that just make a distribution every 30 days. And REIT management teams have got to be good at all things real estate, not just the regular stuff as management and property management. Got to be good at the greenfield developments. We've got to be good at repurposing buildings, fixing broken buildings, seeing value, extracting that value such as rezoning opportunities and then not just selling out when you're finished, but maybe you'll develop and maximize squeeze the other last penny out of that opportunity. So we have to go to all things real estate. I'd like to think we are at Artistry. We've got a team of two twenty million people in seven offices, two countries. We've got a great management team, team of employees. And we do it all. We do our own asset management, leasing, property management, building operations, investments, developments. We drive the bus and we drive the deals, investor services, financial services, accounting. We've got a great well rounded team that knows real estate and that is ready to play in this new ballgame ring and work hard for our investors in the year ahead. So what about AX and the TSX? We do feel that any investor that's confident in us and invest in us will be well rewarded. Our intrinsic value continues to improve folks as we work our way through the Calgary office cycle and as we harvest our development pipeline, investors won't be sorry. And so what you'll see us do not oversimplify, to stay focused and disciplined. If you go there, sometimes institutional investors are and the head funds are the ones that they're that patient, but being focused and disciplined sometimes requires patience and patience in itself can be a strategic decision. Jim and I remember when back in 'fifteen and 'sixteen we'd be criticized, institutional investors in particular said, well, do something, do something because our stock was coming down. But our earnings were going up and our stock was coming down. We said, look, we've got a plan, we've got to be patient. And that eyes have glazed over. But that in itself is a strategic decision. And but our patience paid off. I'm just going back one side. As you can see, our patience did we proved that our patience and our strategy paid off. We look at the five and the three and the one year results. So here's on our last slide now folks, why invest in ARTIS is my favorite rhetorical question. You've heard me say we're a great value proposition. We are actually the highest yielding investment grade REIT listed on the TSX. We are a great value proposition, great opportunity for investors. We have a well diversified platform by geography and by asset class that's improving. We've got a great track record and a good in terms of creating value with our development pipeline and a good development pipeline ahead of us and a great track record of accretively recycling our capital to improve our earnings and the REIT as a whole. And that does bring me to the end of our presentation, Mr. Church Chairman. I want to thank everyone again for joining us and take the time to thank all of our stakeholders. Our stakeholders ring four or five of the key stakeholders, starting with all of our investors for their the faith and confidence they placed in us. Our tenants are the top line of our income. We are here to serve our tenants. Appreciate each and every one of them. Our financial institutions, the real estate is a capital intensive industry, very capital intensive. We appreciate all of our relationships on the debt and the capital market side. Our Board of Trustees, which is getting bigger and better for their great corporate governance and wise counsel. And again, as I've mentioned, our great team of employees, each and every one of them for the contribution they've made to Artis' success. I thank all of you. And folks, CFO just came back from holidays, he's dying to answer your questions. So the floor is open for questions. It's big as deep as you are. Thank you. Are there any questions? Yes, sir. Carmen, in 2016, 2015 and 2014, I asked what it would take to get Artis' stock price back over $15 stock price, I don't know, dollars 13.25 to $13.3 Why is part of trading so much under its book value? What's it going to take to get the stock price up $15 So we've changed the book definition of book value based on IFRS. We're at 15.2 right, Jim, in terms of So both of those and also investor sentiment, as I mentioned, there's still catastrophic market, what's happening in Alberta is still a drag on our revenues. Investors can see that. When investors see that turning around and in fairness, that's the way the market is. It's a show me market, right? And the stock market often shoots first and ask questions later. I think we've been oversold before. I've never felt we've been overbought. But it starts with investor sentiment feeling that things are turning around in Alberta. And then it's our job to keep delivering on the value. I've shown you some value creation projects there. It's our job to deliver on those, we will. And that's how we'll get our NAV up. We think that some of our parts on a bad day is closer to $16 if we break out our industrial and all of our office and all of our properties separately. The uncertainty that from a buyer's perspective is what they can always put a value on our Calgary office. But as we get to that bottom of that cycle, it goes north of that as well. So we feel good about where we are. But yes, we to be sure, our stride back in 2014, end of 'fourteen when the oil market collapsed and the Calgary office market just evaporated on it, our strategy, so to speak, got hijacked by what happened. And our job is to work through it. We're the only REIT in Canada with an Alberta centric position, so to speak, that did not cut its distribution. We went a different direction to be patient, to work hard and actually kept very busy. But we want our job, one, is to avoid the distribution cut, job two, to grow the NAV and the income stream. Unfortunately, it doesn't happen as quickly as we'd like. Before an artist when it was originally Westfield. Missed that name. Question for you is just, what is artist doing differently between December 3135 and December 3137 and going forward where according to Page 12 of this year's financial report, AFFO payout ratio was changed from 8.6% December 3135 to 103.8% December 3137. And according to a research report from National Bank Financial, it will increase to 110 in 2018 and about 109% in 2019. Where is ARTUS getting the money to continue to pay my? Tim, it's Dan to answer that. He has four questions. We've been in that movie before, by the way, where our distribution has been 120% before, it's been over 100% before and we've grown it back down and we're going to grow it back down again that's the payout ratio. Part of the reason for that spike was the real change in definition of how AFFO is calculated. But that doesn't bother us at all. Our cash flow is good. Our liquidity is very good. As to what we're doing different, while we've diversified out of Alberta, so we used to be just in 2014, we're at 38% weighted in Alberta, now we're at 22%. We're 18% Calgary office. Now we're 9%, and we're bringing that down. So we're improving our diversification and the balance in our portfolio. It's the and in parallel with that, as we diversify, we have been improving the vintage and caliber of our portfolio. But because it's real estate, it's low and steady. It's there's no easy button to push on that. Do you want to add to that, Jim? There was a time back in the two and recession, just under 80% have invested in Alberta and 40% Calgary office. We dodged that bullet. So that didn't hurt Canada much that recession. And after that, we embarked on this diversification mission went first to Ontario and we found to our chagrin that Canadian real estate was becoming priced to perfection way too quickly. And we said, okay, we're diversifying to The United States, great value proposition, we've done that. So we've been on this road path of to diversify geographically for years now, not just in the past two years. Jim and I will fondly remember being in New York at a meeting. For some reason, we're wearing the same coat, these Tip Top Tailored black raincoats. And we asked that same question by Colonial First Capital in New York, says, what do you guys going to do there? What's your distribution? Because we're after we're now, we're back up to 120. I said, look, we're like the Blues Brothers. We're on a mission from God to grow into our distribution. I forget the 2,000,001 million and they said, everybody got a good laugh on me. They are still investors of ours today. They're stuck with it. But it's manageable. If you look at if we were to for example, $0.10 a year, over five years, that's point $50 of NAV. Well, just one rezoning will get us more than that back. So we're not concerned about that. Still see our NAV growing north in the years ahead. Any other questions there? The bankers, you guys good at the back? Well, yes, I'm going to turn the floor over to our Chairman. Thanks again, everybody. Okay. So I also would like to make or conclude with some acknowledgments. And first of all, I'd like to express my appreciation to the trustees. They're very responsive and knowledgeable, they're diligent and they're good people and we really appreciate them. So thank you trustees for your commitment and contributions. And finally and most importantly, I acknowledge the artist team and staff for their dedication during these times, the good times and the challenging times. So we look forward to the opportunities that lie ahead and thank you Armen for articulating them so well to us this morning. And on behalf of the trustees and the unitholders of the REIT and others represented here today, thank you to the Artis team. This concludes our meeting and I'd ask Wayne Townsend to move and Stephen Joyce to second a motion to terminate the meeting. Move, Stephen second, no vote required. So I declare the meeting terminated. And once again, thank you everyone for attending and I wish you all a safe and wonderful summer.