Good day, and welcome to the SmartCenters REIT Q1 2019 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Peter Ford. Please go ahead, sir.
Thank you. Good evening, and welcome to the SmartCenters Q1 2019 conference call. I'm Peter Ford, President and CEO of SmartCentre REIT. Joining me on the call today are Mitchel Woldhar, Executive Chairman Peter Sweeney, Chief Financial Officer Laurel Hambianchi, Chief Development Officer Rudy Govan, EVP, Portfolio Management and Investments and Stephen Champion, EVP, Development. The agenda for the call will be a few overall comments by me, followed by Peter Sweeney, who will talk about our results for the quarter and our financing activities, followed by Mitch speaking about our exciting project developments, and then we will take your questions.
At your suggestion, we will try and shorten our opening comments to allow more time for questions. Our comments will mostly refer to the first ten pages and Pages 2425 of our supplemental information package and the outlook section of our MD and A, which are posted on our website. I refer you specifically to the cautionary language at the front of the supplemental material, which also applies to any comments any of the speakers make this evening. First, some overall comments. SmartCenters REIT is a stable portfolio of well located, value oriented shopping centers with tremendous mixed use intensification opportunities.
As we've said before, real estate development takes time, and it would take a couple of years before the many new mixed use initiatives commence yielding positive results. But when it starts, which it is about to next year, it is expected to continue for the years to come. We accomplished many things in the last quarter that sets us up nicely for the future. For Vaughan Metropolitan Centre, VMC, we announced execution of partnership agreements for the 2019 launch of Transit City 45 condo towers and that we are moving forward with an adjoining purpose built residential rental tower. Like the first two towers, these two towers sold out in approximately 2 weeks.
More about this great accomplishment later. We executed an overall agreement with Rivera to build and operate many retirement living residences together on Smart Center's owned land, including the first three projects, 2 in Vaughan and 1 in Oakville. We are close to a final agreement with another retirement residence operator for 2 towers on our site in at Clyde and Baseline in Ottawa. And we have executed agreements with SmartStop for 2 more self storage facilities, bringing the total so far to 6, all in the GTA. And last and certainly not least, a very successful opening of the new 144,000 square foot expansion of the Toronto Premium Outlet Centre in November of 2018, which continues to outperform our expectations.
As you will hear from Peter Sweeney, all in all, a strong and stable quarter performance from our existing retail portfolio as we wait for the development pipeline to fill and deliver even more, with notable mention going to the full year's results from the Toronto Premium outlet expansion, which opened only in November at the end of last year
the completion
of the VMC PWC tower and the full occupancy of the remaining office space in the KPMG tower, in 2020 'twenty 1, as the profits from the first of many recurring residential developments are completed. And on a go forward basis from a variety of new business initiatives and developments, some of which are described this evening and in our coordinating reports. Our core retail portfolio remains strong and with its value oriented nationally focused tenant base is well suited to the changes taking place in the retail marketplace. On executed leases, our shopping centers are 98% leased. We continue to hear from tenants at Walmart's strategy for selecting and being in locations where the community can come to a larger center with convenient and easy access and find everything it needs works for most other retailers as well.
With continuing expansion of Walmart's food offering and the resulting store customer traffic increase, our portfolio remains strong and uniquely positioned. Our shopping centers are often the only significant value oriented center in many markets across the country and therefore dominate those markets. This includes the 28% of our portfolio, which is in large and medium secondary markets, where virtually all of these centers have a Walmart anchor or a shadow anchor and a better than average occupancy of 99%. Bombay and Bawi Canada closed all their locations before March 12. We had 12 term leases with Bombay and Bawi
in our portfolio, along with
a few temp deals, representing less than onethree of 1% of our portfolio. All locations are in shopping centers and anchored by a Walmart Supercenter. Payless Shoes closed all locations in Canada, including its 46 locations with us after the end of the quarter through a CCAA process. All but one of these locations are in the center anchored by a Walmart store. Accordingly, we anticipate executing new deals for all of these locations within the next 12 to 18 months, and we are well along the way in doing so.
And the Toronto Premium Outlet expansion of 144,000 square feet opened in November was virtually fully leased at the time and is exceeding expectations. The expansion and high caliber tenant mix makes this center one of the top performing premium outlet centers in the world. Our strong and stable retail portfolio provides a solid base upon which we can grow income and NAV through mixed use intensification. Again, we just need to be a bit patient until next year when these new initiatives start to produce FFO. A few general reminders about our development pipeline and capabilities.
Virtually all of the development initiatives we are planning are on land we already own, unlocking value and not requiring us to buy very expensive land to develop this density. With 34,500,000 square feet built on approximately 3,500 acres of land with less than 24% utilization and primarily all at ground level. We have over 100,000,000 square feet of land to accommodate this used growth throughout the country. We are developing a diverse selection of new real estate types, not just 1 or 2, but taking advantage of the opportunity while dispersing the risk and driving customer traffic to our shopping centers. More about the developments from Mitch in a couple of minutes, but first, I'm going to turn it over to Peter Sweeney.
Thank you very much, Peter, and good evening, everyone. It is important to remember that the development initiatives that SmartCenters is embarking upon are heavily dependent upon having a strong and stable cash flow generating operating platform. In this regard, our financial results for the Q1 of 2019 reflect the continued strength, stability and security of our 34,000,000 square foot predominantly Walmart anchored shopping center portfolio. During the Q1, this portfolio generated the following improved results. Number 1, rental revenue from investment properties was $206,400,000 representing a 4% increase over the comparable quarter in 2018.
Number 2, NOI as a percentage of net base rent was 98.9%, representing a 1.2% increase over the comparable quarter in 2018. Number 3, FFO with onetime adjustment and before transactional FFO increased by $2,500,000 to $91,800,000 representing a 2.8% increase over the comparable quarter. However, FFO per unit decreased by $0.01 to $0.55 per unit. This decrease was predominantly caused by the dilutive impact of our $230,000,000 equity issuance in January of 2019. Number 4, ACFO with onetime adjustment increased by $2,100,000 or 2.6 percent to $83,900,000 as compared to the same period in 2018.
Number 5, a CFO exceeded both distributions declared and distributions paid by $7,200,000 $24,200,000 respectively. Number 6, same property NOI growth declined by 0.2%, which was principally caused by the closure of Bombay and Bowering at the beginning of the year. And however, excluding the impact of the closure of Bombay and Bowering, same property NOI growth would have been 0.4% for the quarter. And finally, number 7, we renewed or are near completion of renewing over 2,700,000 square feet of tenancies, which represents 76% of our 2019 lease maturities at average rental increases of 4.2%. And after excluding anchor tenants, this metric increases to 5.2%.
For the Q1, these improved results can be attributed to the following primary factors: number 1, the incremental NOI now being generated from both the 144,000 square feet of virtually fully leased expansion space at TPO and recent earn outs and developments number 2, the incremental NOI now being generated from new tenants at the KPMG Tower in Transit City and Vaughan number 3, our portfolio of maturing mortgages and unsecured debt continues to provide unsecured fixed rate refinancing opportunities at lower rates than the outgoing maturing rates. And number 4, additional percentage rent, lease termination fees and other miscellaneous revenue. These results, however, were impacted by both the dilutive impact arising from the issuance of the $230,000,000 of equity that was issued in January of 'nineteen and also from the bankruptcy of Bowring in Bombay, which resulted in 103,000 square feet of additional vacancy during the quarter. From a financing perspective, with the assistance of our syndicate of banking partners, it was a very busy quarter that started in January with the very successful issuance of the $230,000,000 of equity. These proceeds were applied against some of our credit facilities to reduce our overall debt levels and related debt metrics to appropriately and conservatively accommodate future levels of expected development financing.
The equity issue was followed in February with the early redemption of $150,000,000 of Series H debentures and a replacement with a $150,000,000 7 year fixed rate bank loan and concluded in March with the issuance of $350,000,000 in new Series T2.3 year debentures, the proceeds from which were used to repay outstanding variable rate mortgage and construction facility debt. As compared to the comparable quarter last year, these capital initiatives have now resulted in the following improved credit metrics. Number 1, our adjusted debt to adjusted aggregate assets ratio has improved to 41.7% from 45%. Number 2, our debt to adjusted EBITDA ratio has been reduced to 8.0x from 8.5x. Number 3, our interest coverage ratio has improved to 3.3x from 3.1x number 4, our unencumbered pool of high quality assets has now increased by $1,000,000,000 to $4,500,000,000 And lastly, our secured to unsecured debt ratio has now improved to 48% to 52% from 53% to 47%, marking the first time that SmartCenters have more unsecured debt than secured debt.
This is a key strategic initiative that we've been working on for over the last 2 years. And you will recall that when we embarked upon this initiative, 2 thirds of our debt was sourced from secured lenders. For our payout ratio and distributions, in addition to the dilutive impact of the $230,000,000 equity issuance, We saw higher sustaining maintenance CapEx during the quarter, a large portion of which is recoverable from our tenants. And because of the seasonality of the quarter, higher prepaid property taxes. When applied against our distributions, our ACFO payout ratio increased to 91.4%, which we expect to return to lower levels over the course of the year.
Our surplus of ACFO over distributions declared of $7,200,000 shows a continued very healthy level of cash generation, reflecting the unique strength and core stability of our business model. And when factoring in our highly successful DRIP program, the surplus of ACFO over distributions actually paid during the quarter totaled $24,200,000 Our financial and operating results for the Q1 reflect our strong and stable business model that we believe positions us well to continue to provide our unitholders with stable and growing distributions while concurrently supporting our existing business, funding our growing development pipeline of retail and mixed use initiatives and lastly, permitting us to consider appropriate acquisition opportunities as they become available. As we have previously noted, the successful BAWT deal that was completed in January will dilute our growth expectations in 2019 by approximately 3%, thus resulting in expected FFO per unit growth for 2019 of 1% to 1.5%. This improvement in growth will be principally driven by expected acquisitions, new leasing and further financing benefits in Q3 and Q4. Additionally, we are looking forward to 2020 when Transit City 12 begin to come on stream, and we expect growth in FFO per unit to exceed 10%.
We look forward to your attendance at our upcoming AGM, which will be held on May 31 at 9 a. M. At the Vantage Venue Conference Center. And Mitch has been very active as our Executive Chairman in all aspects of the REITs business, but in particular, our new development initiatives. I will now turn things over to Mitch for him to tell you more about some of these.
Mitch?
Thanks, Peter. In our seniors' residence partnerships with Rivera and our self storage partnership with SmartStop, SmartCenters will be developing and constructing the buildings and our fifty-fifty partners will operate the facilities once complete. We expect each of these relationships to produce 5 new projects per year. For seniors' residence, we recently announced 3 specific projects on REIT owned sites, 2 in Bonn and 1 in Oakville, with an additional 5 in the planning stages for 2019 in the GTA. For self storage, we are under construction in Leaside and soon to be approved and under construction in Brampton, Oshawa and Bonn.
And we recently announced 2 additional projects, Scarborough and a second location in Brampton. We're in the planning stages for several additional re owned sites in Ontario and the Greater Montreal area as well as in cities in Western Canada with SmartSpot. Now a quick update on the Bonn Metropolitan Center project with JUUL in the crown of our portfolio. Things are advancing quickly. With the vast ranging subway commuters and the more than 1300 employees already working out of the KPMG building, the project is quickly becoming a metropolitan area.
This will only increase in intensity as we have now completed the office leasing of the KPMG tower. 2nd, completed the mixed use tower in which the PWC will open for business in the fall of this year and the YMCA in the first half of twenty twenty. An additional 500 PwC employees and an estimated 1200 daily visitors to the YMCA. We are in final negotiations with a significant named tenant for the 1 unleased floor in this building. This additional floor was built for the potential future expansion of PWC and this significant main tenant have a relocation provision in the case of PWC's expansion.
3rd, we previously sold our 355 storey Transit City Condo Towers for delivery in 2020, now just around the corner. 17 50 units, all three towers are under construction and are on schedule and ahead of budget. As we expected, that we will top off each of these three towers by the end of this year. And fourthly, the execution of yet another new partnership with CenterCourt for 2 additional residential condo towers, 10 15 units in total in a 4550 storey condo tower in a 45 and 50 storey condo towers. And we are thrilled to report that these two towers sold out in essentially 2 weeks, the 45 storey tower at an average of $8.35 per square foot and the 50 story tower at $8.65 per square foot, well above the $7.10 average of the first three towers.
Lastly, we also announced a 35 storey rental residential tower and podium rental units under the condo towers totaling 550 apartment units. We expect this will be built concurrently with the 2 new condo towers. A rendering of these 3 towers is in the supplemental information package. We are already designing the next phase of the BMC to include a 600,000 square foot office tower and additional residential towers. Overall, we now see 9,000,000 to 11,000,000 square feet being developed on the approximately 50 acres of BMC lands The REIT owns with My Company as partner.
We are reviewing and planning for residential, rental, condo and or townhouses on all our sites over time. Master planning and active participation with the various municipalities are well underway on most of these sites. Redevelopment plans for the following shopping centers are well underway. A retail site of 20 acres on the west side of the 400 in Vaughan directly across from our BMC project is slated for intensification with approximately 2,500,000 square feet of redevelopment, including residential office and retail. The site is a primary site under the bond official plan and is just east of 2 new 35 storeys sold out and occupied condo towers at Westin Road at Highway 7.
Pointe Claire, Quebec on the island of Montreal. We have obtained zoning for up to 2,000,000 square feet of density. Detailed planning is underway for the 1st residential rental tower expected to be complete in 2022. South Oakville Centre. This infill center in South Oakville was anchored by a Target store.
We have now initiated discussions with the municipality, with tenants and with potential partners. As we continue to execute our plan, this site will become a reconfigured 180 square foot shopping center anchored by a Metro Food Store, Shoppers Drug Mart, LCBO and Good Life Fitness winners and other strong retailers with an adjoining Rivera Seniors Residence building and a townhouse development. A sketch of the plan for this project is included in the supplemental package. Westside Mall in Toronto. Our 12 acre property on Eglinton Avenue West, will benefit from the LRT station being built on our lands and a pedestrian bridge connection to the new GO train stop adjacent to our site.
This site is now designated in the official plan for just over 2,000,000 square feet of mixed use development, primarily residential. With our center, this 43 acre site is anchored by 160,000 square foot Walmart. Construction of our first two apartment towers that we own on-site with our partner, JADCO, are underway. We expect to develop the remaining lands with primary residential rental apartments, condominiums and retail. Western Road in 401, 167,000 square feet, which is Smart Center Share Retail Center, is under review for a major reconfiguration and retenanting of the retail on the site in a long and long term for residential rental.
This site has great visibility and access from the 401, one of the busiest intersections in Canada, if not North America. Other sites for which residential plans are evolving include Oakville North at Trafalgar and Dundas, Vaughan Northwest at Major Mack and Western Road, Pickering, Hamilton Stone Creek, Hamilton Mountain Plaza, Mississauga locations, Markham at Highway 7 in Woodbine, Mirabelle next to our outlet center Fadelle East, Laudroy, Muscouche in Quebec and Langley, Maple Ridge, Chilliwack and U. S. Meester in British Columbia. We have been in discussions with potential residential partners for many of our sites and will likely be developing some on our own.
We are also in discussions with hotel operators about partnering on various sites. More news to come on these in future quarters. The potential intensification and development program continues to grow as we further review our portfolio for opportunities. The number of potential projects and towers to commence construction in addition to our retail development pipeline within the next 5 years is currently estimated at 82. This mixed use and retail development will have an estimated value of $9,000,000,000 on completion, with SmartCenters REIT's estimated share being somewhat over $3,000,000,000 In addition, another 86 projects or towers have been identified on which we will commence rezoning design and site plan approvals and marketing during the same 5 years with construction commencing after that.
And the review continues. We estimate that 10 years from now, we will be generating recurring NOI from these new rental businesses, seniors' homes, apartments, offices and self storage, in excess of 20% of our total rental NOI, plus significant profits in the tens of millions every year starting in 2020 from the sale of condominiums and townhouses. With that, I will turn it back to the operator to coordinate us in addressing your questions.
Thank you. Thank you, sir.
Sir.
I do see we have our first question from Dean Wilkinson with CIBC.
Please go ahead, Dean.
Thanks. Good afternoon, everybody.
Good afternoon.
Mitch, on Transit City 45, I think the only thing more impressive than selling it out in 2 weeks is the 20% bump in the average selling cost or average selling price over the first three phases. How does that increase compare to any cost inflation that you may have seen sort of creeping up between 1, 2, 3 and 4 and 5?
Yes. I mean, we're feeling pretty good on the cost side. We haven't fully tendered the building yet. But our early sort of prognosis is that there'll be some increase in costs but not anywhere close to the bump in the price, the sale price per square foot, not even close. So we're feeling yes, we're feeling pretty good, yes, about that part, yes.
Awesome. And I'm assuming that the funding mechanism for the rental is rolling the equity profit coming out of Phases 1, 2 and 3. Would that be correct?
Well, I mean, you could say that theoretically. I mean, the timing is quite good with 1, 2 and 3 and the start of the rental building. So we are now just finalizing the design of the rental building. The outline of it and the superstructure is designed. We're still into some details of suite mixes and suite designs and amenity spaces.
But the pricing of that will be, I would say, will be commenced shortly. And the timing would be, you could say that the profits from 1, 2 and 3 could be used to fund the equity portion, but it's all coming into the same place. Right. And we're both partners together in both. So it does have a lot of eloquence, but we're not it's all in the REIT's case, it's all coming into the same place.
Yes. The point is it's effectively self funding at that point. In terms of what you're building on the rental, would you intend it to be sort of the same quality and mix as the condos? Or is there going to be a bit of a sort of a bifurcation of the different kind of buildings? Or are they intended to all sort of be similar?
So if I wanted to rent one of your units, it would look just like as if I was going to buy one of the condos?
No, no. The rental will be different. The rental will be a little bit high street, a little bit higher end. It's not to say the condos are not high end. It's just that the rental is going to be High Street.
And that doesn't mean it's not downtown rents. It's but in terms of the standard, it will be a notch, let's say, noticeably higher than the condo in terms of certain amenities and certain finishes, which is a statement because the condos are highly finished and very well equipped with amenities. The units may be on average a little bit bigger and a little bit more services. So it will be differentiated. So and that's in the service separating the market as well as we think that is where we want to be lined up for that rental building, and it's in the service of the development, the balance of the land.
For this our development, we have separated ourselves from the rest of the what's going on up here, and there's a lot going on up here. We're not the only ones doing things up here. But we have a strong position with the subway and a strong position in terms of our master planning and our architecture and urban design. So that building will also be in the service of all of future phases of our developments here as well. Right.
No, it totally makes sense.
What do you think that the ultimate rental density is that you can get onto that site?
Rental density, you mean rental rates?
No, just in terms of the mix of how much you would build for purpose built?
On the whole site, on the overall well, we certainly anticipate doing quite a bit more rental over the future phases. I mean, we will do other types of potentially other types of rental here. We may do some student rental up here. We're 1 or 2 we're 2 stops away from York University. Just for your information, York University does not have certain modern facilities.
We are, I think, seen by York, and we, vice versa, think there's some synergies there. Yes, we will do all kinds of I think we'll have many different forms of rental up here over the years. We certainly anticipate doing a regular program of rental residential up here. We also see storage. We also see seniors.
We also see hotel. So there's lots of forms of rental to come along with retail and urban retail as well, by the way, and more office. So yes, there'll be a lot of various forms of rental opportunities here.
Okay, great. That's it for me. I'll hand it back. Thanks, everyone.
Thank you.
I can see we have our next question ready here. We'll take a question from Pammi Bir with Scotia Capital. Please go ahead, Pammi.
Thanks. Good evening. Just on condos 45 again at BMC. Any sense of what the buyer mix was between end users versus investors?
Percentage, hard to say, but I will say this much. I would say significantly materially higher end user percentage than you would see downtown. So but still, the most significant percentage is investors. I'm just curious if
that data is that tracked at all during the sales process?
Not officially, but I'd say we have an okay sense of it. Most of the deals most of the sales are transacted through a broker. So you don't necessarily but we know the majority of we know a lot of the brokers. So we sort of have a sense of who their clientele is. And then there's lots of so there's lots of brokers that are focused on selling to investors, but we also are able to sort of understand which ones are buying on behalf of end users.
By the way, a lot of the end users come in with their brokers in all of them, and particularly 45, but even 123. So you sort of can tell, but we don't announce or officially necessarily insist on them disclosing exactly that particular spec.
Okay. That's helpful. And just maybe switching gears and looking at the retail. Given the downtime from Payless and Bombay Bowery, what are your updated thoughts on 2019 same property NOI growth for the year? It looks like I think you maybe stripped out sort of commentary around the outlook for that particular item in your supplemental.
So just curious what you're feeling about that?
We started the year without the knowledge of Payless and again, in the range of somewhere between 0.5% and 1.5% on the same property basis. And with the Payless, we're anticipating leasing up. And the Payless has been going very, very well with more than half the space now already in very advanced stages with specific interest tenant interested tenants. So that will lease up over the course of the year. So it will be muted from that range, but still over the lower end of that range, I would say.
Okay. And then if we think about maybe a little further ahead 2020 and assuming both of those spaces with those retailers are backfilled and then again, maybe perhaps no material hiccups into 2020. Is it fair to assume that next year's growth would be above your typical, call it, 1% range?
Or are there other,
I guess, things to consider that may be or other potential closures that you see on the horizon?
Yes. I mean, we'll have a few things happening. One is, with the interest in that space and some of that space we're subdividing into smaller spaces, and there's a lot of interest in service tenants and a number of tenants who are we're looking at in terms of adding services to the site. And in addition to that, you'd have another year of the Toronto Premium Outlets full build out in total. So it would be same property for the entire center and Montreal happening at the same time.
So yes, we expect that it will be on the higher end of that range when we get into 2020.
Great. I will turn it back. Thank you.
We'll take our next question from Tal Woolley from National Bank Financial. Please go ahead.
Hi, good evening. When you're looking at
adding residential seniors and storage to your original Walmart anchored retail sites outside of BMC. Is the goal here with those additional asset classes similar to Walmart to provide like the real value in the market? Like I'm just trying to understand how you're thinking about positioning those properties relative to what's hopefully out there in the market?
Well, we are we do philosophically see Canada as a place to provide value. So we believe that is the right position in this country. However, when it comes to rental or residential, I mean, each market is different. So it really will depend. We're going to customize our development strategy within each market.
On the storage side, though, I mean, for sure, we want to be competitive, and it's very much aligned with Walmart and our sites. So but each market will dictate the residential side will be dictated by each individual market.
I might also add that there is alignment even between those different uses on the site that you mentioned in terms of people moving into apartments or self storage or sorry, or seniors' home and downsizing and having a self storage facility nearby. There's a number of things and having an apartment building that people, as they get older, can then move into a seniors' home or on the same site. There is some thinking going into that on a number of our sites.
Okay. That's great. Thank you very much.
Thank you. I think we have our next question, Sam Damiani with TD Securities. Please go ahead.
Thank you. Just a couple of little follow ups because most of my questions have been answered. I did notice there was a lease termination fee income in the quarter, I think, of around $1,400,000 Is there any color you can provide around that in terms of what tenant?
It wasn't a single tenant, Sam. There were at least 3, maybe 4 tenants that contributed to that number.
Okay. Just on the occupancy, the same property NOI growth going forward between the Bombay and Payless, what are you looking at in terms of Home Outfitters in terms of their plans to hand space back to landlords?
Interestingly, we chatted with them very, very recently off debtors, as you know, is operating and continues to operate until probably the Q3 across the country. And what they're doing is while they're closing the operations, they're continuing to pay rent. So in all of the locations with us, they're going to continue paying rent for the foreseeable future till the end of their term, which runs into 'twenty one, 'twenty two and 'twenty three. So we'll they've come to us and said, hey, they're flexible about that. So we're going to look at that, look at what we can do with the space.
And to the extent we can utilize the space for a higher value use, we will go to them and talk to them about that. But financially, it's not going to be an impact on us because we as and now we have a lot more time to prepare for the utilization of that space.
And there are a number of
sorry. Go ahead.
Yes. So I was going to say, there are a number of retailers coming into the market and the number of retailers expanding more than there have been in the last number of years. So some retailers in the last few years have been sitting back but are now a little bit more active. So actually, the timing in that case, and some of the other sources is good for some of the things you're asking about.
And who would be maybe the
top number 1 or 2 sort of U. S. Retailers that are looking at coming into Canada? There was impressive couple of weeks ago about Ulta Beauty coming up to Canada.
Yes. I mean they're looking all over the market. There are a few that are looking around the market, and they're looking around confidentially into the market. So there are not only the health and beauty, there is sports, there are health business that's also looking at it. So for the big space that we're looking at, there are those big guys.
And then there's always the smaller guys who come in and do both the open air and the enclosed format. So we're talking to all of them, including very, what I'm going to call, boutique fitness that are looking at we're looking at adding services to our site and so on. So lots of new uses being added to the centers.
Interesting. And just to clarify regarding Bombay and Bowring. I think you said the spaces were vacated in March. Does that mean the REIT collected 1 or 2 months of rent from them before they close-up shop?
Yes. They paid rent early in the year. Then what they did was they stopped paying for a week or 2. And then when they filed, they were compelled to pay rent under their proceedings. And during that proceedings, they are required to pay rent until they stop, which was the end of the quarter.
That was for Payless. That was and Sam, just for clarity, that was the Payless situation. Bombay and Powering essentially closed up shop early on in January.
Okay. So there's no revenue from Bombay in Q1?
Yes, there were because they were going through their CCAA during the month during the quarter in January. So we did receive for approximately 2 of the 3 months, and we didn't for 1 of those, which is the 2 weeks or 3 weeks just before they file. But once they file, they're obligated under proceedings to pay.
So the impact on same property NOI growth would be continued, maybe even a little bigger in Q2 versus Q1 as a result of the Bombay filing?
That notwithstanding what we would lease up in both that and the Payless, yes.
Okay. Thank you.
Thank you. We have our next question from Jenny Ma with BMO Capital Markets. Please go ahead, Jenny.
Hi, good evening.
Good evening.
I just had a question with regards to the seniors housing developments that you're doing with Rivera. Just wanted to get some color on sort of how you target the locations where you want to be building, how you think about that versus building conventional residential? And then also, in terms of we're hearing a lot of new supply coming up in a number of markets. How do you think about that when picking your locations?
I'll start and then Peter will add. Most of the time, Kenny, we actually have room to do both. So we don't really have to choose. It's just that we're doing we have a program now with Rivera, who are seniors home specialty seniors home operator across the country. So but there's very few maybe there's one I don't think there's really only more than one that's not even a REIT property, I don't think that we can't do that it does not preclude doing a seniors' home is not precluding we're not choosing between doing a seniors' home and a rental home rental housing.
Like the 2 locations in Vaughan Northwest where we're doing 2 seniors tower seniors apartment and then seniors' home with more care that are joined together, we're also that same corner piece of 6 Acres is going to have 2 or 3 other residential buildings or towers on it as well. And then in Oakville, which is the other location that we've announced there again, which is the old target space that will be coming down. There, we're going to do a seniors' home, and we're going to do 2, let's call it, 2 to 5 storey residential on the rest of that portion of the site adjoining what will become a neighborhood shopping center with the food store and Shoppers Drug Mart and fitness and so on. So again, room for both.
Okay. So when you're putting up the seniors housing, is it going to essentially look very much like the residential, so more of a low rise build?
Not necessarily. I mean, they can get up there. They can be get up to 15 stories. But yes, they can also be it depends on the market And it's just a lot of times driven by, obviously, the number of units, it's driven by the parking situation. But they can get up there to sort of the
yes, they can get
up into as high as 15 to 30. But looks wise, yes, they could look the same. I mean, seniors housing today, newly built, can look very, very attractive. I mean, it's not the seniors housing developments of my parents' era or our grandparents' era. They're very modern, thoughtful.
This is the way it's done today, so they're really meant to look like something you really want to live in. It's not something that you have to live in. So yes, they're really quite attractive and we're blending quite nicely.
Okay. So putting aside that there's a lot of opportunity to put up the seniors housing. The second part of my question was, when you think about sort of the fundamentals and the supply situation in a number of markets, How much input do you have in choosing where to build this? Or is it really driven by Revera? Just trying to think through how you target the specific markets.
Well, first of all, they are currently in the market operating. So not unlike a retailer, when we do a new Walmart or a new food store or whatever it may be, I mean, we kind of all understand the country. We sort of slice and dice the country, if you will, by the markets that are being served well, some that are being underserved. So we sort of start by understanding where there's opportunities, and they already have that intelligence. That's their core business.
So yes, I mean, along with them, we also have good intelligence in each market. So they do actually appreciate our insight into the various markets that we're in. So but their information is extremely valuable in terms of them understanding where the best opportunities are. We're not putting these I mean, we're by the time we announce that we're doing something like that, we've probably together looked at dozens and dozens of others that we've decided are not interesting enough. So that's kind of the process of how we ultimately determine where the most viable locations for seniors housing are.
And believe me, there's many that are not. There's many that we're not interested in. The ones we're announcing are very interesting.
Now have you just really focused on the local market so far? Or have you actually looked across the portfolio and whether or not there might be some opportunities in other provinces and further out?
It has been focused mostly on Ontario thus far, but they have worked with us on a couple of West situations as well. And then in the case of Quebec, Rivera has a relationship with a well known, I think, with another operator in Quebec. So Quebec with Rivera is not likely something we would be doing, but we are talking or looking at Quebec and talking with others about potential opportunities on our sites in that province. So but it has been with Rivera, their Ontario focus so far. So far.
Okay. So does Rivera have an exclusivity with that partner?
I don't actually know how.
Oh, in Quebec?
In Quebec. In Quebec.
Yes. We're not sure. They because that particular operator is actually coming into Ontario now. So it's hard to say what they do, but they really do respect each other. Like they've been partners for a long time and they really do respect each other because we're actually dealing with both.
I guess it should be said that we are not just exclusively dealing with Rivera. And we do fully and can't assist in any way helps answer the question, doing seniors housing across the country. But at the moment, we have very good and the most going with Rivera. But their partners in Quebec are people we are dealing with as well, both in Quebec and outside of Quebec, for that matter, and others as well.
Okay, great. That's great color. Thanks a lot.
Thank you very much.
And so we have our next question from Brendan Abrams, Canaccord Genuity. Please go ahead, Mr. Abrams.
Hi, good evening. Just turning to your other, I guess, 407 property just west of VMC on the other side of the highway. I see you mentioned here it's one of the highest densities in Vaughan, second only to VMC. Just wondering if you could provide any color or update with respect to that project or that property and kind of what type of potential do you see longer term there? Could it potentially be a VMC number 2, for example?
Yes, very much so. This is a superb property. Just have to go and see it. If we only had that property, I mean, we would be kind of over the moon. It's just honestly, I think it's kind of lucky that we have that property because it's absolutely a continuation of VMC, like if you look at the area from the point of view of Highway 7 and the mass transit.
So yes, there are mass transit infrastructure being built right in front of our site there. The corner, the old Paladine site is now 3 towers and fully built and for all intents and purposes, fully occupied. That's adjoining. That's a bus, our property. We share an access.
We share 2 accesses with that development. So it's an abundance of transportation infrastructure right next to VMC. And just for what it's worth, just west of that property, we own a site called Westridge. We call it Westridge, which is also another retail development that is low density that ties very nicely into the same transportation infrastructure. And don't be surprised if there's a day where we start talking about how we're going to be continuing the urbanization of this area onto our Westridge site, which by the way, I should mention we own with Choice and they have been yes, they've been fantastic partners there.
That goes back to Crete. It's a large property. And if you were to go and look at those properties now having had this discussion, you would understand and be able to imagine how those two properties, the ones you asked about in Westridge, will tie very much into VMC. And our the site you asked about is every bit as good as virtually all most of our VMC property. So we're very excited about it.
It's kind of a thing which is in the shadow in the sense of VMC, but it is an absolutely superb opportunity. So stay tuned, yes.
And just in terms of timing on that, I'm not sure how the process works, but do you have to maybe substantially complete VMC before you can really No,
no, no, no, no, absolutely not, absolutely not. We will be very we will be developing on those lands long before we complete the MCU. We are going in for an application. We've been in discussions with the municipalities the last few years. I don't want to get into all the whatnot.
It's a rezoning, but it is not in any way, shape or form a stretch. The municipalities already initiated their own review of that property. All the infrastructure is there, not to mention the investment in fast transit. The neighbor is already built. He is outside.
We're all outside the technical planning district called VMC. But just effectively, it's in the VMC area. And he was approved for those densities on a one off application basis. We are being included in the review of the area. We are also very in touch and involved with Vaughan, as you can imagine.
We chose not to make this application a couple of years ago for our own just our own reasons, election years and things like that going on. We waited, but now we are going full steam ahead, and the timing is absolutely great. I am very excited about that particular development. I think we are looking at 2,500,000 square feet of density there. It's all over the highway, all over Highway 7, and all the improvements are just being finished now.
So we will not be waiting there. We will be pedal to the metal on that one. And I see a lot of rental there as well because it's just hard to explain over the phone, but it's really conducive to varying types of rental there.
Right. Okay. That's very helpful. And just turning back to the diversification strategy. As your organization gains more experience and expertise with these various asset classes, Over the longer term, I guess, could you foresee a time where you perhaps internalize some of these functions?
Or I know the JVs are very new, but take a go alone strategy over the long term?
Yes. I mean, I think it would be safe to say that we do imagine ourselves having those things internalized. That's not to say that we won't continue to do things in partnerships because we see value in those partnerships beyond just the interest that we give up when we do it. So but yes, I think we can imagine the day and not too distant future where some of those things will be well, I can go on a limb and say that it's certainly our goal to have those things internalized. And so we'll have a choice whether we want to execute on our own or we want to execute with a partner.
Our partners bring a lot to the table, but we also want to be able to do it. So that will not be the case with operating, for example, seniors housing. We do not have any aspirations to operate seniors housing. But with that exception, we see the other areas internalized eventually, yes.
It appears there are no further questions at this time. Mr. Ford, I'd like to turn the conference back to you for any additional or closing remarks.
Okay. Again, thank you all for being part of our Q1 call and thank you for your interest and investing in our lease.
Good evening. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.