Welcome to Vital Infrastructure Property Trust Third Quarter 2026 Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded today, November 12, 2026. I would now like to turn the conference over to Steven Hong, Vice President of Investor Relations.
Thank you, operator. Good morning, everyone, and thanks for participating in our third quarter results conference call. This is Steven Hong speaking. Joining me are Zach Vaughan, CEO, Stephanie Karamarkovic, CFO, Mike Brady, President, Tracey Whittall, COO, and Dave Casimiro, EVP. The earnings announcement was released yesterday evening, and we posted an updated investor relations presentation on our website, and which listeners can refer to during the call. Following comments, we will be glad to take questions from analysts. Today's discussion includes forward-looking statements. As always, we want to caution you that 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 our public filings on SEDAR+, including our MD&A and annual information form for discussion of these risk factors.
During this call, we will also reference certain Non-GAAP financial measures. A reconciliation to the most directly comparable IFRS measure is provided in our MD&A and earnings release. Unless otherwise noted, all amounts discussed today are in Canadian dollars. With that, I will now hand it over to our CEO, Zach Vaughan.
Thanks, Steven. Thank you, everyone, for joining us today. Starting with our quarterly results, we are pleased with how the portfolio performed this quarter. Same property NOI grew by 3.5%, excluding a step-up in costs relating to facilities outsourcing. Portfolio occupancy ended the quarter at 97%. We generated AFFO of CAD 0.10 per unit and ended the quarter with over CAD 350 million of liquidity. Our debt currently sits at 50% of book value and 8.5 x EBITDA, well within our target ranges. Beyond the financial results that Stephanie is going to detail shortly, we executed several key initiatives across our balance sheet, our property portfolio, our cost structure, and our capital allocation strategy. Starting with our balance sheet and capital structure. In August, we established a new CAD 500 million unsecured credit facility, replacing our previous secured facility.
Following quarter end, we also completed a CAD 300 million unsecured debenture offering at a coupon of 4.86%, using a portion of the proceeds to redeem our outstanding 6.25% Series H convertible debentures. I am very pleased with this execution. We achieved a credit spread more than 100 basis points tighter than our inaugural bond offering last year and attracted significant new institutional investors to our debt register, a clear reflection of our progress and improved credit profile. Together, these transactions diversify our funding sources, extend our debt maturities, and strengthen our financial flexibility. Turning to our property portfolio. A critical milestone this quarter was the resolution of the Healthscope situation in Australia. As previously announced, Healthscope's creditors approved the sale of its remaining hospital operations, and Calvary Health Care is expected to become our new tenant across all of our 12 properties.
Key components of this transaction include rent incentives over the first 48 months of the lease, an extended lease term that brings the portfolio WALE to approximately 18 years, enhanced annual rent indexation, and a future rent review mechanism tied to property-level profitability. This arrangement provides long-term certainty and brings in a top-tier operator with an integrated healthcare business that includes retirement living, home care, and residential aged care, all of which are going to further support the performance and profitability of our hospitals. The broader fundamentals in the Australian hospital sector also continue to improve. Currently, the hospital benefit ratio, which is the proportion of private insurance premiums paid back to hospital operators, sits at about 86%, which is still below the pre-pandemic average of 90%.
As this ratio continues to normalize upward, operator margins are going to improve, which is going to allow us to participate in that upside through our future rent review. Onto our cost structure. Our efforts to streamline the business continue to flow through to the bottom line. Stephanie is going to walk through the specifics, but we remain on track to achieve our targeted annualized G&A run rate by year-end. With a more focused operating platform, we can now scale and support new investments with minimal incremental overhead, creating meaningful operating leverage and driving longer-term earnings growth for unitholders as we reposition our portfolio. That brings me to capital allocation, where we continue to redeploy capital into attractive investments across North America. During the quarter, we completed approximately CAD 170 million of acquisitions across three properties in Brooklyn, N.Y., Burlington, Ontario, and Edmonton, Alberta.
As previously guided, we remain on track to complete about CAD 250 million of acquisitions by the end of the year. Our acquisition pipeline continues to build across both Canada and the U.S., and we are well-positioned to deploy capital at compelling returns. Recent volatility in the bond markets is creating opportunities as certain owners face pressure to either refinance at higher rates or sell. Increasingly, we are seeing sellers place a premium on execution certainty rather than basing their decisions on price alone. Our ready access to debt capital and asset recycling proceeds, combined with a favorable transaction environment, positions us well to capitalize on these opportunities as we reorient the portfolio. Before concluding, I want to address Brazil. Following the surprise election results, Brazilian equity and currency markets experienced a significant pullback, and our unit price was not immune. However, it is important to look at the fundamentals.
Our Brazilian assets are 100% leased under long-term, triple-net, uncapped inflation-linked contracts. Our primary tenant, Rede D'Or, continues to deliver strong operational performance, both within our properties and at the corporate level. A critical gauge of the caliber and sustainability of triple-net leased real estate is rent cover, or what the U.S. peers often refer to as four-wall coverage, which measures the EBITDA generated within a specific property or portfolio of properties against the rent paid. The higher this number is, the greater is a tenant's ability to meet its existing lease obligations and absorb future rent increases. For context, Realty Income, the largest U.S. net lease REIT with over 15,000 properties, whose credit is A-rated and who has a market cap exceeding the entire Canadian REIT index, typically cites four-wall coverage in the 2.5x-3x range.
Across our Brazilian portfolio, our four-wall coverage sits at approximately 7x. Given that exceptional unit-level profitability and the fact that nothing in the recent election alters the structural demand for private healthcare in Brazil, we have high conviction in the durability of our properties and the creditworthiness of our tenant. The credit markets agree. Post-election, bond spreads for Rede D'Or's debt have not moved and are, in fact, down by 20 basis points year-over-year. While Stephanie is going to touch on near-term foreign exchange impacts, the underlying operating fundamentals and profitability at our Brazilian assets remains exceptionally strong. To summarize, I want to leave you with four key takeaways. First, our portfolio is performing well, and the Healthscope resolution has removed significant uncertainty. Second, we have enhanced our financial flexibility through highly successful financings, while our simplification efforts continue to drive down G&A.
Third, we continue to find attractive acquisitions across North America, supported by a growing pipeline and an increasingly favorable pricing environment. Fourth, despite recent market volatility in Brazil, the fundamental impact on our business is minimal, and our portfolio continues to deliver strong performance backed by exceptional rent coverage. With that, I'll turn the call over to Stephanie.
Thanks, Zach, and good morning, everyone. We've made good progress on our strategic initiatives this quarter, supported by stable operating performance. I will review our third quarter results, cost reductions, and NAV movements, followed by an update on our balance sheet, liquidity, and recent financing activities before we move to Q&A. Starting with our third quarter operating results. Our portfolio continued to deliver stable operating performance, supported by contractual rent growth and the strong fundamentals of our healthcare real estate assets. Same property NOI on a proportionate basis increased by 3.5% year-over-year, excluding the impact of the transition to outsourced facilities operations in Canada. Growth was driven by contractual rent increases, rentalized capital expenditures, improved cost recovery, and higher parking income. Including these transition costs, same property NOI increased 2.6% year-over-year to $51.8 million. Moving to earnings.
Reported FFO was $0.10 per unit, or $0.11 excluding accelerated amortization of deferred financing costs. On this adjusted basis, FFO was consistent with the prior period. AFFO was $0.10 per unit compared with $0.11 in both the second quarter and the same period last year. The modest decline from Q2 primarily reflects the timing of capital redeployment. We fully redeployed the European sale proceeds into North American acquisitions by quarter end, but because these investments closed during the quarter, they did not fully offset the earnings from the disposition. In addition, the related G&A savings are still being realized and will benefit future quarters. Year-over-year, AFFO reflects an approximately $1.6 million reduction from the deconsolidation of Vital Trust, and this was partially offset by North American acquisitions, lower financing costs, favorable foreign exchange, and G&A savings.
Our AFFO payout ratio was 89% as compared to 85% last year. Moving to our cost structure. Proportionate G&A, excluding unit-based compensation and employee termination-related costs, declined to $8.9 million. This compares with $11.6 million in Q3 last year and $10 million in Q2, reductions of approximately 24% year-over-year and 12% quarter-over-quarter. These results reflect restructuring and efficiencies achieved over the past year. We remain on track to achieve our targeted annualized G&A run rate of approximately $35 million by the end of 2026. Turning to NAV and recent valuation adjustments. Our NAV per unit was $7.43 compared with $7.66 at the end of Q2. The decline reflects three principal items. Firstly, fair value adjustments from the revised Calvary lease terms.
which was a $7.5 million reduction at our share of the Australian hospital properties and a $19 million reduction in our management platform valuation, together reducing NAV by approximately $27 million. Secondly, mark-to-market adjustments in our Vital Trust investment, and lastly, the reclassification of certain tax liabilities tied to the Vital Trust internalization from deferred to current. These impacts were partially offset by operating earnings and favorable foreign exchange movements. As Zach noted, the Brazilian real has been volatile following the recent election. While the appreciation of the real earlier this year provided a favorable foreign exchange benefit to our reported FFO, AFFO, and NAV when translated into Canadian dollars, the currency has since moderated and is now trading at approximately the same level it was at the beginning of 2026. We will continue to monitor the developments in Brazil as part of our normal quarterly valuation process.
Moving to our balance sheet and leverage, debt to gross book value was 49.9% on a proportionate basis, compared with approximately 52% at the end of 2025. Debt to annualized adjusted EBITDA was 8.5 x, within our eight to nine times target range. As outlined in our Non-GAAP disclosures, this measure annualizes quarterly adjusted EBITDA and adjusts for acquisition and disposition activity that occurred during the quarter. Given the level of capital recycling, we believe it is a more representative view of our leverage based on our portfolio at quarter end. Turning to liquidity and debt maturities, we ended the quarter with approximately $357 million of available liquidity on a proportionate basis. That is comprised of $297 million of undrawn borrowing capacity and $60 million of cash. As Zach noted, we also completed several important financings during and after the quarter.
In August, we established our new $500 million unsecured credit facility, replacing our secured facility and extending the maturity to August 2031. Importantly, the transition to an unsecured facility was supported by our growing pool of unencumbered assets, which reached approximately $2.1 billion at quarter end, up from $1.2 billion at the end of 2025. In October, we completed a $300 million Series C senior unsecured debenture offering at a coupon of 4.865%, maturing in October 2029. We subsequently used a portion of the proceeds to redeem all outstanding 6.25% Series H convertible debentures, eliminating our August 2027 maturity and lowering financing costs, which will benefit our results starting in the fourth quarter. In Australia, we refinanced approximately AUD 715 million of joint venture debt, representing approximately CAD 210 million at our share, extending the maturity from December 2026 to December 2028.
Together, these financing transactions have addressed significant near-term maturities, diversified our funding sources, and improved our financial flexibility. Our economic weighted average interest rate was 5.33% as compared with 4.71% at the end of 2025. This increase reflects the repayment of lower-cost European mortgages last quarter, higher floating rates in Australia, and changes in our overall debt mix. With approximately 72% of proportionate debt at fixed rates, including hedges, and an improved maturity profile, we do not anticipate material refinancing headwinds over the next 12 to 24 months. Finally, on capital deployment, we deployed approximately $170 million of North American acquisitions in the quarter, funded through capital recycling and available liquidity.
We have also received TSX approval for the renewal of our normal course issuer bid, or NCIB, allowing us to repurchase approximately 22 million trust units and 8.5 million principal amount of our Series I convertible debentures over the next 12 months. Any repurchases will be evaluated alongside other capital allocation priorities, considering market conditions, relative value, and available liquidity. In closing, this quarter demonstrated the resilience of our portfolio and the real progress on our priorities. We have strengthened the balance sheet and redeployed capital to North America and moved closer to our G&A target. Our earnings still reflect the transitional impact of dispositions and redeployment, but we believe these initiatives position us well for the next phase of our strategy. With that, I'll turn it back to the operator to open the line for Q&A.
Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Your first question comes from the line of Himanshu Gupta with Scotiabank. Your line is now open.
Thank you and good morning.
Morning
I have a couple of Brazil questions. First on the currency exposure, I mean, we saw some volatility. Is there a way to hedge the currency exposure here? I mean, have you guys looked into that?
We definitely have looked into it, Himanshu. The problem is, it's quite punitive to try to hedge the Brazilian real through any kind of derivative. Therefore, what we try to do is just have local debt to the extent it makes sense from an interest rate perspective. But yeah, we're not able to, in an economic way, hedge the currency otherwise.
Got it. Okay. Zach, obviously with the new government in place, any stated policy changes with respect to healthcare or which could impact your tenant in favorable or unfavorable way?
Yeah. Nothing that they stated that would have any impact on our tenant, which is primarily private healthcare. I mean, it is a public and private system. In fact, if you look at everything from broader credit spreads to some of the noise recently now coming out of what will be the new administration, it feels pretty positive. They are talking about spending limits, spending controls, changes in tax policy. So, that is for the broader market and economy. But for our tenant, we continue to see very positive results. Their insurance division alone added almost 75,000 members last quarter. So, they seem to be firing on all cylinders and just continuing to get better. There is nothing out there that would impact that.
We think the impact primarily in our units was just pure exposure to Brazil, which is probably unwarranted given the actual cash flows that we are generating there.
Got it. Given that you have rental indexation linked to inflation in Brazil, has there been any change in inflation expectations post the government change?
Yeah. I mean, I think there has been some expectations that it may be slightly higher. If you recall, Himanshu Gupta, interest rates were on a downward path there. I think that sort of halted as kind of just general global economic issues surfaced. I think now people are anticipating when they were anticipating rate cuts, they are sort of anticipating flat interest rates for the next while, so not a cut in the near term. Some of the forecasts have slightly higher inflation, sort of high 4s, right?
Yeah.
So
Got it. Just the last question on Brazil here. What does this mean in terms of your plan to exit the country, exit the exposure? Does it push us out further? Anything you are hearing on investment activity which could slow down or probably stay put or anything on that push?
Look, I think how we have always looked at Brazil is given some of the characteristics I talked about. These are just incredible assets with an incredible tenant, and they are just so incredibly profitable, and they are true triple net lease with a lot of term. Our feeling was in terms of capital recycling, this was one that it was never in our kind of 12-month-ish plan. It was sort of towards the back end to try and figure it out. I do not think it changes our view because we had not anticipated doing anything with Brazil in the near term as compared with Europe, New Zealand, et cetera. I would say it has not changed our plans.
Got it. Thank you so much, and I will turn back.
Thanks.
Your next question comes from the line of Jonathan Kelcher with TD Cowen. Your line is now open.
Thanks. Good morning. Just one more on Brazil. Is there an opportunity to put more debt on that portfolio to sort of, I guess, kind of increase the hedge?
Yeah, I mean, at the moment, interest rates are in that 13%, 14% range in Brazil, and so local debt is probably out of the question for us. Yeah, I think the short answer is no.
Okay. Zach, you talked about the pipeline growing, I guess largely because of volatility in global rates. Is that sort of a double-edged sword for you, kind of impacting what you can sell as well?
Yeah, I think where we're seeing It's interesting. I think it would if we were selling in North America to buy in North America, in essence. But I do feel like given kind of the more leveraged nature, particularly of the U.S. markets and kind of how the debt markets work, and that a lot of assets there are held It's just a big universe of assets that are held by limited life vehicles. We're probably seeing the impact of that more quickly relative to, say, Europe, New Zealand, Australia, et cetera. It's obviously, it's somewhat of a double-edged sword, but given where we're trying to place the capital, we're definitely seeing yields react more quickly in those markets than others. I guess the answer is, I'm probably more bullish on the fact that I think yields are widening.
I think you will see that in the coming quarters on some of our acquisitions. But most importantly, the property levered buyers are increasingly struggling in this market, whereas nine months ago, a year ago, there was a lot of competition from them.
Okay. That is helpful. Then just with Healthscope settled, how do you think about timing for exiting that investment?
Yeah, I think now that it is. Now, I would say settled in that we have a firm contract.
Yeah.
At some point, either by the end of this year or next year, they are going to step into the role of start operating these hospitals. I do think that we are going to need some period of time to just see how those run, which we think will be positive. But I think, in terms of anyone is going to want to look at it and go, "All right, I want to see a bit more of kind of how this is working out with the new tenant." We have never really contemplated exiting Australia in the very near term. Our near-term focus is really Europe, New Zealand. I think in the relatively near term, that is where we will be focused. I just think Australia, the new tenant has to season a bit.
Okay. So it would be like end of 2027, be into 2028 before you kind of look at that? Is that a fair way to think about it?
Yeah. Yeah, I think so.
Okay. Thanks. I will turn it back.
Your next question comes from the line of Sairam Srinivas with ATB Cormark Capital Markets. Your line is now open.
Thank you, Rabira. Good morning, everybody.
Good morning.
Zach, Stephanie, just one question from me on Brazil, I will keep it at that. That is basically, keeping in mind the cadence of $0.10, $0.11 of FFO on a quarter-to-quarter basis, does that change the impact of Q4 in terms of what you saw in the real and the translation risk?
Yeah. I mean, what we have said is that about a 5% depreciation in the real is about $0.01. So, that could be impacted. I mean, it did not really change until midway through the quarter, so it is probably not a full quarter impact of that. There could be some movement in the quarter based on where the rates end up on average throughout the quarter.
And just to clarify, that's $0.01 on an annualized basis, correct?
Yes.
Okay. All right. That's great. Okay. Switching gears then probably to Europe. I know, Zach, you probably referred to it already, but you've spoken about European dispositions in Q4 being something where you could probably dispose more and probably exit Europe. Is that something still on the cards or is it more of a mid, like Q1, Q2 activity next year?
Yeah, I think so. Sorry, we really have two investments left in Europe. We have a portfolio of triple net lease clinics in Germany, and we have an asset outside of Rotterdam. The clinic assets are probably closer to liquidation, but I think that's probably We've generally assumed it's kind of a Q2 type of thing by the time it's all said and done. Having done a lot of stuff in Europe in my career, it just takes time there. Every transaction just takes longer. And so that's what I would anticipate. Then we're substantially exited from Europe, and then the following asset, I'd assume maybe six to nine months after that.
That's great, Zach. And maybe just looking at the Vital Trust units in Australia, obviously, the units have come down a bit. Does that change your view in terms of the timing of the dispositions there?
No, I don't think so. Slight movements in the unit price aren't that material to us on a net proceeds basis, if we're able to redeploy that at higher rates. I think how we're thinking about those are those are fairly easy to exit, so those are probably our first source of capital should we have stuff to deploy it into. We'll be opportunistic if we're needing capital for redeployment, that is an easier source of liquidity. I think-
So I guess-
they'll probably sell. Yeah.
Sorry. I guess, is it probably fair to think that it's more of an acquisition and deployment opportunity dependent, in terms of when you could exit those and reinvest?
I think so, unless there is something opportunistic that
Yeah, I think I guess how we look at it is, it is something that is mark-to-market every quarter here, and it is a ready source of liquidity when we want it. But we would probably That is one that, unlike exiting Europe or doing something with Brazil or Australia, those are tougher to match fund. This is slightly easier in that sense.
That is great. And Stephanie, remind me, is there any dog loan that is secured by these units anymore?
Yes, we do have some debt there. It is about CAD 70 million.
All right. Fair enough. Thanks, guys. I will turn it back.
Thanks.
Again, if you would like to ask a question, press star one in your telephone keypad. Your next question comes from the line of Giuliano Thornhill with National Bank. Your line is now open.
Hey, guys. Good morning, everyone. Just one on Brazil. Sorry, but I got to ask about it. The cap rate that you guys have in your quarterly report, the 8.9, I am going to assume that has not been adjusted to reflect the recent move. I guess my question is, how do you come up with that 8.9%? What kind of rate or inflation outlook is that based off of, and what would kind of be the impact from the recent election to that?
Yeah, so when we look at our cap rates, we kind of look at them relative to what the bond yields are doing there. I think what we looked at the beginning of the year is we are pretty much back to where we were when we look at rates today, bond yields today versus the year. We did not move them as bond yields were moving over the course of the year, and we are kind of back to back where we were. We do have, we kind of look at the spread on our cap rates relative to bond yields.
Yeah, I think, Giuliano, if you look at it, the implied cap rate sort of reflects a discount rate that is 8.5-ish percent, which was definitely wide of where the NTN-B bonds was before, pre-election, so that never really got adjusted. Now we're essentially, we own an asset-backed inflation-linked bond, and the NTNs have come down. They're sort of 780-ish now. So, we're definitely wide of that.
Okay.
But again, we'll be revisiting it
Yeah, with our Q4
as part of the Q4.
Okay. So, yeah, just the combination of the inflation and bond yield expectations, really. That is what we should be basing it off of?
Yeah.
Okay. I guess the other question I had was, as you kind of unwind this portfolio through Brazil or Australia or the units, is there any NAV risk here from a tax perspective? I noticed the Vital deconsolidation and the management contract buyout, that led to a little bit of NAV leakage. So, I am just wondering if that risk relates to anywhere else in the portfolio.
Yeah, I think what we have said is that there are inherent tax leakage as we exit these things, depending on how things are structured. Vital Trust units, no, there is no leakage there anticipated from a tax perspective. But I think when you think about exiting full regions, there is bound to be some, kind of in that 15% range, I think is probably safe to assume, depending on how it ultimately gets structured with the buyer. But there definitely is, there will be further movement.
Okay.
Which has been baked into our NAV.
Right. Then just my last one, just on the G&A run rate. You guys have done a good job bringing it down over the balance of the year. I am just wondering if Q3 is a good run rate for going forward. Obviously, you are tracking kind of, I mean, pretty much at your next year target, so I am wondering if there is any more room for that or if there is going to be some normalization.
Yeah, we saw the real benefit this quarter because, again, the team that was supporting the portfolio in Europe fully left with the portfolio. So that was the big impact of the G&A savings that we saw this quarter. The other things that we have left to realize are probably going to be less material and probably will trickle in over some in Q4, but maybe even into next year, because they are things like licenses that we had bought that kind of have to see out the end of their life or audit fee, like those types of professional fees and whatnot that kind of have full-year impacts that then probably won't reset until we renew next year. So, I think in the fourth quarter, you could see a little bit more reduction, but it is going to be much more modest than what we saw this quarter.
Okay. Thanks, Stephanie. I will turn it back.
Your next question comes from the line of Pammi Bir with RBC Capital Markets. Your line is now open.
Thanks. Good morning. Just given the commentary around the acquisition opportunities and the pullback in the units here, of course, what are your thoughts with respect to maybe getting more active on the NCIB versus, I guess, balancing that with keeping some dry powder for acquisitions?
Yeah, well, look, I think you used the right word, balance. I mean, it is. Look, I'd say they do compete, right? To the extent, like, I think when you see something happen to your units that's a reaction to a macro factor that really doesn't have an overly material impact on the sustainability of your business, obviously, you start to look at that. We did renew it. We were active. We were trying to be as active as we could on the Series H converts. We can do the Is, and now we can do the equity. So, I'd say, look, it's competing with new acquisitions. I think what we are seeing, though, Pammi, is people that need to sell in the current market, particularly in the U.S., we're definitely seeing a much more favorable environment.
We just want to be conscious of that and our leverage metrics, that if we're going to lever up slightly for a period, we also want to keep that in mind. So, I guess what I'm saying is we're being flexible, and we're trying to have every lever available. But it's certainly something that's going to compete.
Okay. And just maybe on that last comment with respect to the U.S., how much has maybe pricing moved relative to, or even, I guess, maybe the opportunity set, but how much do you think it's increased in terms of where valuations are or cap rates relative to, let's say, maybe six, nine months ago?
Yeah. I would say in the U.S., probably even though bonds are up, I don't know, 100 basis points in rates, I'd say you could probably say on average, the statistics would tell you it's sort of a- It always lags, Pammi, and so it's probably like 50 basis points or so. But that being said, the levered buyers that have started to enter the market in a bigger way with institutional levered capital, private equity capital, in this type of environment are just struggling. Again, if you're trying to generate a certain levered total return, you have to generate a certain amount from net levered cash flow, and it's harder in this environment today. So we do have an advantage, given that we're recycling out of lower-yielding stuff, and we don't need property-level financing.
So, I guess I'd say, when we were looking at initially when we were first talking about redeploying in the U.S., I think we were sort of thinking in the sort of low to mid-6% range. I mean, I'm targeting 100 basis points wide of that today.
Okay, got it. No, that's helpful. Last one for me, and just coming back to Brazil for a second here, but with the rates, Stephanie, that you quoted in that 13%-14% range versus where you have it on the books, I guess just, is it fair to say that at this point, an exit of that portfolio is just likely not going to happen unless there were a sort of a mature reduction in where rates are, and this is maybe more of a multi-year outlook?
Yeah, I mean, I guess, Pammi, I'd sort of look at it a little differently versus kind of the Selic rate, which is the sort of overnight, you call it the short-term rate, which is right now sitting at under 13.5%ish, or sorry, 13.75. I'd sort of look at, like what we really own is an asset-backed inflation-linked bond in Brazil. And those inflation-linked bonds started the year at 7.5, they dipped to sort of 6.8, now they're back to 7.8. But our yield today is still pretty wide of that. That being said, we never really anticipated we'd probably exit in the very near term. But I'm not sure, given the caliber of the assets, that this has materially changed anything we're thinking about it.
Because it's not like we were saying we're going to exit in the next six months, and if that were the case, we'd probably hold off a bit. I think we're-
Got it.
pretty comfortable right now.
Okay. Yeah, thanks for that clarification. I will turn it back.
Your next question comes from the line of Giuliano Thornhill with National Bank. Your line is now open.
I just had one follow-up. On the same property for North America, was there anything one-time related to recoveries or driving that quarter-over-quarter increase higher?
No, I think there was a little bit of lease up, and I think parking is starting to impact our numbers fairly materially. That is just because we have been more focused on parking operations. We have put in a new parking operator and equipment and are starting to see the benefits of that. Costs are coming down, revenues are slightly up. I think that trend will continue.
Maybe I would just add, Giuliano, North American in general, that when I started, I mean, it was pretty glaring where the Canadian portfolio sat. I think it is a reflection of when you end up in periods where you have to throw back on capital, sometimes that happens, leasing capital and other capital. We have made an effort in the past year to reinvest in that space, in our space, in our leasing, in our marketing, and we are starting to see that come through. I think in terms of same-store growth, particularly in North America, most of our U.S. stuff is longer-term fixed, but in Canada in particular, I think you could see that. I mean, Tracey, do you want to give a few comments on that?
Yeah, sure. I think just what Zach referred to in terms of our renewed focus and efforts to drive performance in the Canadian portfolio. After a period of time where we have been diverting capital to other preservation needs, we have started to invest again both in the team and in the portfolio itself and the assets. What we are starting to see is those efforts coming to fruition as activity across the portfolio has increased over the last quarter. We are seeing future commitments achieved and early renewals coming through with some of our strategic tenants, such as Albany Medical Clinic in Toronto, where we secured an early extension of 15 years, pushing us out to about 49,000 sq ft with them.
Those are the types of things we are now starting to see come into the portfolio and is what we will start to see in our results as we move forward.
The renewal expectations for that segment are still mid-single digits or so?
Yeah, I'd say, sorry, you're talking about renewal spreads?
Yeah, yeah. Like, is it case by case or is it
Yeah, well, I think I'd sort of split it between Canada and the U.S. in that what we see in Canada is a very stable, high renewal environment. In fact, a lot of our tenants have just fixed 3% increases. We recover our capital, plus a lot of tenants have just auto renewals. So although you look at our lease term, a lot of tenants just automatically renew for five years and rents just keep growing by 3%. I do think that the bigger spread opportunity could well be in some of the U.S. multi-tenant assets. And Dave, I don't know, you want to
Sure, sure. Happy to touch on that. And to your point, when we see the multi-tenant outpatient buildings in the U.S., given that there's a consistency on the reimbursements from state to state, we do see year-end or closer term expiries, that opportunity to hit those higher rent spreads on a mark-to-market basis.
Yeah, I think you are seeing that in some of the U.S. publics that sort of focus on outpatient. It is one of the reasons we are pretty excited about it, because it has been an area that where, with some knowledge of the sector and some active and some proactive leasing, I think you can do quite well over time in that space.
Okay. Thank you, everyone. I will turn it back.
Thanks.
That concludes the question and answer session. I will now turn the call back over to Mr. Steven Hong for closing remarks.
We appreciate your time attending our Q3 conference call. Please feel free to reach out to me directly at steven.hong@vitalreit.com. Have a wonderful day. Thank you.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.