Allied Properties Real Estate Investment Trust

Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Allied Properties' fourth quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star 1 again. I would now like to turn the conference over to Cecilia. Please go ahead.

Thanks, Bella. Good morning and welcome to our conference call. I'll summarize what we achieved in 2024 and what we're focused on in 2025. NAN will do the same from a financial perspective. JP will outline the leasing momentum by urban market and strong results from our third-party user engagement survey. then we're pleased to answer questions. We may, in the course of this conference call, make forward-looking statements about future events or future performance. By their nature, these statements are subject to risks and uncertainties that may cause actual events or results to differ materially, including those described under the heading Risks and Uncertainties in our 2024 Annual Report. Material assumptions underpinning any forward-looking statements we make include those described under forward-looking statements in our 2024 annual report. First, leasing. We outperformed the urban centers in which we operate, where our occupied area was higher than each of the markets. The only exception was Vancouver, where we acquired vacancy that we'll address by year end. our national portfolio's leased area remained steady over the year, and with challenges starting to ease, we're focused on improving both occupied and leased areas to at least 90% by the end of 2025. Another positive metric in 2024 was our improved retention rate to 69%, up from 61% in 2023. We expect retention to continue improving in 2025, getting closer to our historical rate of 75%. Deals continue to take longer due to the availability of options in both the sublease market and in direct vacancy. As sublease space is absorbed and direct vacancy falls, I expect those timelines to shorten. It's helpful that there's no new supply beyond this year. with the last delivery to the urban office market in Canada being the second tower of CIBC Square. Also helpful are 2024 user engagement survey results. They were very strong, with a net promoter score of 150% above the index average and a 30% increase year over year. This is a testament to the strength of our operating platform, which will also support leasing activity. We made progress on our development and upgrade activity as well. Transfers from the development to the rental portfolio in 2025 are expected to total 340,000 square feet of completed urban workspace and 218 rental residential units. In 2025 alone, we'll add $13 million to our annual EBITDA run rate from development completions. We're focused on completing all development and upgrade projects currently underway by the end of next year. Last but certainly not least, the balance sheet. We flexed it in 2024 and will strengthen it in 2025. We completed dispositions of non-core assets at or above IFRS value, totaling $229 million in 2024, above our target of $200 million. All proceeds were allocated to debt repayment. We also opportunistically acquired $677 million of strategic assets in 2024, converting non-cash interest income into a growing operating cash revenue stream while upgrading the quality of our portfolio. While the timing was not optimal, as it resulted in a temporary increase to our debt to EBITDA metric and added short-term vacancy, we're focused on our path to get under 10 times by the end of 2025. Part of that involves increasing our targeted dispositions in 2025 to at least $300 million, an amount we're confident in our ability to achieve based on the success of our disposition program last year. Nan will now elaborate on our balance sheet. Thank you, Cecilia.

Good morning, everyone. We're pleased with our performance in the fourth quarter. I'll provide a brief overview of what we achieved in 2024 and we'll speak to 2025. This quarter, we achieved a 6.5% increase in net operating income compared to Q4 2023. We also saw an increase of 5.4% to our average in-place net rent per occupied square foot from $24.10 to $25.41. Additionally, same asset NOI of the total portfolio increased by 2.2% for the year. Our development completions added approximately $26 million to our 2024 EBITDA, enhancing operating performance. The corresponding impact to FFO net of decapitalization of interest was $14 million. This is consistent with our expectation that approximately 50% of incremental EBITDA converts to FFO due to decapitalization. Over the course of 2024, we fixed $818 million of variable rate debt, improving our maturity ladder and addressing refinancing risk. We ended the year with our unsecured facility fully available and liquidity of $863 million. Our investment properties are 83% unencumbered. Moving to 2025, we have considerable optionality in addressing the $985 million of debt maturity in 2025. This includes proceeds from our dispositions, our unsecured facility, and the unsecured debenture market, which is becoming increasingly attractive. Net interest expense is expected to increase in 2025 as a result of the 2024 acquisitions and lower capitalized interest as we continue transferring properties to the rental portfolio. Capitalized interest in 2025 is expected to come down to the low $60 million range. By the end of 2025, we're targeting net debt to EBITDA to be below 10 times, despite a temporary increase anticipated in the first quarter of 2025. Same as with NOI of the rental portfolio, will increase by approximately 2%. Montreal and Toronto will contribute meaningfully to this increase due to organic growth and cash NOI commencement from development completions. Same as with NOI for the total portfolio will increase by approximately 4.8%. We expect our development completions to contribute to this growth by generating 13 million of incremental EBITDA and 6.5 million of FFO. Approximately half of this is contractual. While this demonstrates improving market fundamentals and the operating performance of our portfolio, we may see a contraction of approximately 4% on FFO and ASFO. This is largely driven by lower interest income and higher interest expense. While the timing of the 2024 acquisitions resulted in short-term downward pressure on our debt metrics, They will contribute positively to our earnings as they stabilize. Our operating goals are to achieve our leasing objectives, complete our development projects, meet our disposition target, and advance our deleveraging plan. Our confidence is underpinned by the stabilization of our leased area for the third consecutive quarter and the strong leasing activity which JP will now speak about. Over to you, JP.

Thanks, Nan. We continue to observe improved utilization across our portfolio as more and more organizations recognize the many advantages of an office-centric model, driving a resurgence in demand for our urban workspace. This is demonstrated by three notable trends emerging across our national portfolio. First, leasing activity is accelerated. Our conversion rate for new leasing activity in the second half of 2024 was 55%, a significant increase from 38% in the first half of the year. Second, expansion activity is increasing across all markets and sectors, which is primarily driven by higher utilization rates. In 2024, the amount of square feet leased for expansion purposes represented a 77% increase compared to the prior year. And we are currently engaged in discussions with 29 existing users that are exploring expansion options representing approximately 150 to 200,000 square feet of net new leasing in aggregate. Third, we are observing a shift towards larger space requirements among prospective users, a trend I'll speak to in greater detail as I provide an update on each market. As a result of these three trends, we entered 2025 with a high degree of optimism. In Q4, our leased area held steady for the third consecutive quarter, and the number of transactions completed was up 23% compared to the previous quarter. In 2024, total leasing activity represented a 14% increase in the amount of square feet leased compared to the prior year, and new leasing activity was up 41%. We remain extremely encouraged by the number of existing users in our portfolio that continue to require more space. In Q4, 56,000 square feet of new leasing activity in the quarter represented expansions. We are also encouraged by our improving retention rate, which was 69% in both Q4 and 2024, closer to our historical level of 75%. The average rental rate was up 2% when comparing the ending to starting base rent and up 5.9% when comparing average to average. The observed moderation in rental rate growth upon renewal is in line with our expectations and reflects the anticipated impact of increased supply, a message we have been communicating for several years. Tour activity continues to be strong. Total tour activity in Q4 was in line with the prior quarter, which is encouraging considering seasonality. and total tour activity for 2024 was up 6% compared to the prior year. Industries represented by touring organizations continue to be technology, media, professional services, education, and medical uses. At the end of last quarter, we reported we had 960,000 square feet of leasing activity under negotiation or at the prospect stage, including 423,000 square feet of new leasing activity. In Q4, we completed 528,000 square feet of leasing activity, including 188,000 square feet of new leasing, resulting in a 44% conversion rate compared to 24% in the prior year. As of today, we have 933,000 square feet of leasing activity under negotiation or at the prospect stage, of which 61% represents new leasing requirements and 39% represents renewals. I'll now provide a brief overview of each market. In Montreal, we're seeing an increase in demand from prospective users, including technology users, for larger space requirements that are greater than 50,000 square feet. There are currently eight groups in the market with mandates between 50,000 and 200,000 square feet that are considering space in Allied's portfolio. Last quarter, we reported robust expansion activity, including a large renewal and expansion in Montreal. We are now able to disclose that the user was Ubisoft, a large technology user at 5445 Degaste in Montreal's Mile End neighborhood that extended its term and expanded 49,000 square feet. Ubisoft's expansion is an example of an emerging trend in Montreal and across our national portfolio of existing users pursuing expansion opportunities. Most of our vacancy in Montreal is located at La Cité, a portfolio of assets located between Old Montreal and Griffintown, comprising eight buildings totaling more than 1.1 million square feet. La Cité offers allied modern and allied heritage workspace solutions, as well as an enhanced amenity experience for users and an improved necessity-based retail and service component consistent with amenity-rich urban neighbourhoods. We are extremely pleased with the progress of the transformation of the retail offering as we have completed or are finalizing leases for the entirety of the retail space at 111 Boulevard Robert Barassa, totaling 21,000 square feet, including a lease with a national brochure that will anchor the retail component. We are also very pleased to report that we recently renewed Morgan Stanley, the anchor office user within La Cité. In Toronto and Kitchener, we continue to see an increase in demand from prospective users with larger space requirements that are greater than 10,000 square feet. There are presently 23 users with mandates in excess of 10,000 square feet that are evaluating space in our portfolio, split evenly between the technology and professional services sectors. We continue to make great progress with the leasing of the retail component at King Toronto. We are finalizing lease terms with an ideal anchor user that will occupy most of the space in the lower level and look forward to sharing more in subsequent quarters. We believe the retail offering at King Toronto will propel the continued transformation of King West Village and drive office leasing activity. At 19 Duncan, West Bank has leased 20% of the residential units. Leasing progress in Q4 was impacted by an insurable event during construction affecting select suites and the building's vertical transportation. We are also working to complete three levels of amenities, which will be delivered in phases in the second half of 2025. As a result, we anticipate we will achieve stabilized lease-up in the first half of 2026. In Calgary, Phase 2 of the Downtown Development Incentive Program was introduced to support office conversions and the eligible catchment area was expanded to include the Beltline. While we have no intention of pursuing residential conversions, we've started to observe an increase in near-term demand from users and buildings slated for conversion, as evidenced by recent groups that have toured our portfolio. We are also seeing an increase in the size of mandates in the market, as there are currently 12 prospective users with mandates ranging between 10,000 and 50,000 square feet evaluating options in our portfolio. In Vancouver, there has been an influx of new entrants to the market and increased demand for urban workspace among organizations currently located in suburban environments. In addition, we are starting to see an increase in demand from prospective users with larger space requirements that are greater than 10,000 square feet. There are presently eight users with mandates in excess of 10,000 square feet evaluating space in our portfolio. Vancouver remains the strongest leasing market in Canada. 400 West Georgia is currently 82% leased. There are four floors totaling 64,000 square feet that remain available. There are presently four prospective organizations representing the technology and professional services sectors with requirements ranging from one to four floors currently touring the property. As previously communicated, we anticipate the remaining vacancy will be leased with users in possession in the second half of 2025. At the very core of our operating platform is an unrelenting commitment to user experience. For the past five years, Allied has retained Grace Hill Kingsley surveys to assess user satisfaction within our portfolio. The results for 2024 were very encouraging. All performance indicators improved or maintained parity with the previous year. In addition, 85% of users were satisfied with Allied's commitment to sustainability, and 93% were satisfied with Allied's commitment to EDI. Most importantly, Allied's Net Promoter Score, a leading indicator for tenant retention and leasing activity, increased 30% and exceeded the industry average by 150%. These exceptional results are a direct reflection of the unwavering commitment and hard work of the entire Allied team to provide our users with great workplace experiences. We expect these strong results will support our leasing efforts in 2025 to achieve at least 90% occupied and leased area by year end. I will now turn the call back to Cecilia.

Thanks, JP. We continue to monitor international trade and the effect of potential tariffs. On review of our development supply chain, we don't have meaningful exposure as we're at the end of our projects. On the demand for workspace, it's too early to tell whether there will be an impact. Before we turn to questions, I want to reiterate my confidence that our portfolio will continue to hold up well in this economic environment. Yes, we're aware of the headwinds, but we see more upside and are optimistic because of the strength of our operating platform. We recently updated our website to reflect our expanded offering. In addition to the allied heritage, modern and flex spaces, It now includes the rental residential units in Toronto and Calgary, as well as extensive amenities. It's this one-of-a-kind urban properties we own combined with the services provided by our team that gives us confidence in 2025 and beyond. We'd now be pleased to answer any questions.

At this time, I would like to remind everyone in order to ask a question, Press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Lauren Calmar with the Jardines. Please go ahead. Your line is now open.

Thanks. Good morning, everybody. Just firstly, on the occupancy outlook, I was just wondering, when you're looking at that 90%, is that on a same asset basis, i.e., kind of on the 14.3 million square feet, or is there some other adjustments that are going to be made as part of that?

No, no adjustments. It would be just 90%, at least 90% on the total portfolio.

Okay, perfect. Thank you for that. And then on the 150 West Georgia disposition, obviously a priority for you guys this year. I was wondering if you had any visibility in terms of the timing as to when that might come to fruition, when you guys could repatriate the capital from that.

We're expecting repayment by the end of the year.

Okay, fair enough. And then lastly, on 19 Duncan, I was just wondering if there was any update to the timing of the receipt of CMHC financing.

No, we're going to be addressing all of our options given the change in the underlying mortgage bond rate. We may have more attractive options.

Okay, but is it fair to say that this will not be a first quarter event?

Not sure, not committing to that, but we have the availability to access CMHC over the course of 2025, and we'll do so based on what makes the most sense for our business.

Okay, that seems reasonable. And then sorry, just one last one for me. Just JP had mentioned Ubisoft. We had seen some headlines. They were in talks about a potential buyout. I was just wondering if that's something that was on your guys' radar and if there was any potential implications to their office space usage as a result of that.

No, their renewal and expansion reflects business growth and a continued flight to quality and experience as part of their broader workplace strategy.

Okay, fabulous. Thank you so much. I will turn it back.

Thanks. Your next question comes from the line of Jonathan Culture with TD Cowan. Please go ahead.

Thanks. Good morning. First question, just on the 4% decline in FFO, I guess we'd call it a target, a little surprising that it's that specific. What gives you confidence that you're going to hit right at around 209? And I guess, what would need to happen for you to either be a little bit above that or a little bit below that?

Well, it would depend on the timing of our leasing assumptions, and it would also depend on different debt rates than what we've assumed for 2025. and the timing of debt repayment as well. So those would be the puts and the takes.

Okay, that's fair enough. And then on the 2% NOI growth, I guess that assumes you're reaching 90% occupancy and based on JP's comments, it sounds like you guys have a lot of confidence in that. What's sort of your expectation in terms of the cadence of the gains? It's sort of equally weighted or more front half or back half weighted this year?

No, they're back end weighted, Jonathan.

Okay, so a slow start and then a ramp up into 2026?

Correct, a ramp up to the end of 2025.

Okay, I will turn it back. Thanks.

Thanks.

Your next question comes from the line of Brad Sturges with Raymond James. Please go ahead.

Hey, good morning. Just to circle back on 150 West Georgia, just to be clear, I guess the timing or the success on a transaction there, that's still tied to West Bank's ability to sell air rights, particularly for the data center air rights, or how are you thinking about what will drive that transition? ability to to get uh repaid on that loan no that's right it's based on the data center air rights okay and um with the uh the disposition outlook i think you know 300 million this year um you know how would you compare uh i guess the potential types or pool of buyers for the second tranche for this year compared to last year would be kind of a similar sort of size and mix of potential buyers in terms of the interest you're seeing in the assets you're looking potentially to sell?

Yes.

Okay. And what's driving the increase? I think the guidance before was for less amounts. So what's driving the increase to get to $300 million this year?

To strengthen the balance sheet and have proceeds to pay down debt.

Is it more just on more unsolicited interest or you just have gone through more of a comprehensive process to determine this is the right amount to be selling this year?

No, it's still based on unsolicited interest.

Okay.

Thank you.

Yep. Comes from the line of Marlo Serik with Douche Bank. Please go ahead.

Okay. Thank you for taking the questions. Coming back to the occupancy gains, the target occupancy gains, the 400 basis points at least, within that expectation, what is your expectation for the broader allied market move? I guess what I'm trying to get at is how much of the 400 basis points or so do you think is allied specific versus a broader strengthening in the broader competitive landscape that you face?

Well, we expect to continue outperforming the market, and the bulk of the occupancy gains will come from Montreal and Toronto. So we're feeling pretty confident about our ability to do that.

Okay. And then just to clarify a comment that you made earlier, if we look at your on page 50 of the MD&A, if you're disclosing 165,000 square feet, there where the rent commencement is taking place in 25, at least about 400,000 square feet to go based on the 400 basis points of occupancy gains. And your comment was that you expected in Q4 of 25, the vast majority of it, so that the 2% seems to align expectation for the year. Is it fair to say that it reflects very little of the 400 basis points expected increase?

Sorry. I can confirm that our leasing assumptions are back-end weighted. I don't know if I understood the last part of your question.

I'm just trying to get a sense of how much of the 400 base points of expected occupancy gains is in the 2% seems to run a line number. If, for example, all of the gains were recorded at the start of the year, would the 2% be closer to 45% kind of thing?

Mario, I can talk to that. So part of that 2% growth is coming from the cash NOI commencement of development completions that are currently in the rental portfolio, but that don't make it to same asset NOI in 2024. And then the other part is coming from organic growth in Montreal and Toronto, of which part of it is already leased, and the other half is based on leasing assumptions.

Okay. Just on the $300 million of potential dispositions, is the target disposition cap rate similar to what you achieved in 2024?

It'll continue to be lower-yielding non-core assets, yes.

Okay. Just two more really quick ones on my end. The total cost of PUDs that you listed on page 70 of the MD&A, it's $1.9 billion. How much of that cost remains in PUD today, and what is the target by year-end?

Tomorrow, there's $138 million remaining cost to complete. That's on that page, if that's what you're referencing. That's 2025. In 2025, yeah. Remaining has of Q4 cost to complete.

Okay. But just in terms of, like, the question is more on the total cost in PUD today, because presumably some of what is on page 70 has been transferred to IPP already. Like, what is the existing total cost? of the PUDs today. Not their value, but the actual total cost that's on the books.

Maria, let me call you on that. I'm not quite understanding the question.

Sure. Okay. My last one, just for JP. Good to hear the Morgan Stanley. Renewal at La Cite, was there any change in the footprint there, and what are the implications of the renewal on your ability to release the remainder of the space, which you mentioned is

a big part of your vacancy control the morgan stanley's presence mario at la cite represents their technology center it's a part of their business that has grown materially started with 170 employees in 2008 and now hosts more than 3 000 so they remain committed to montreal and uh we we value that relationship and that gives us confidence in the balance of uh our leasing progress there in large part because of the success we've had with the improved retail offering that we are now pursuing. So we remain confident in our ability to address the vacancy over the course of the year.

Okay. Was it fair to say the footprint was roughly intact on the renewal? Sorry? Was it fair to say that the New Orleans family footprint was intact on the renewal?

There was no change in footprint at all.

Okay. That's a good one. Thank you.

Your next question comes from the line of Pammy Beer with RBC Capital Markets. Please go ahead.

Thanks. Good morning. I just wanted to clarify maybe one of the answers to the earlier questions, but how much of, if any, of the occupancy improvement that you expect this year would come from maybe shifting any assets into developments or sections or portions of assets into developments? And also, is there any impact in that 90% target from asset sales?

The only shift between the rental and the development portfolio in 2025 will be from development to rental. We're not expecting to shift anything from rental to development. And what was your second question?

Yeah, and is there any portion of the 90% occupancy target by year end being driven by sales of some of the dispositions this year?

No, that wouldn't have a material impact.

OK, and then just again to clarify that 90% target is committed or in place.

Both occupied and leased area to be at least 90% by the end of 2025.

Got it. And then on the FFOL look, just curious, where does that sit maybe in terms of the range of outcomes that you sort of thought about when you put together your budget for 2025? Is this conservative or kind of in the middle of sort of the expectations for the year?

Well, it's where it lands based on reaching occupied and leased area of 90% by year end. I'm not going to add labels to how we considered it, whether it was aggressive or conservative. It's what we're striving towards, and it's what we expect to be able to achieve by the end of 2025. Okay.

Last one for me, just again with the expectation for AFO to contract this year in that 4% level. Can you talk about the rationale for holding the distribution at current levels, given where the payout ratio already is? And a cut could certainly help with respect to achieving some of your debt reduction targets.

Our distribution is a commitment that we've made with our investors, and we take it very seriously. And we have a path to be able to strengthen the balance sheet without having to cut the distribution, which is why we're not cutting it.

Okay. I'll turn it back. Thank you.

Thank you. Your next question comes from the line of Matt Kornack with National Bank Financial. Please go ahead.

Good morning, guys. Just wanted to quickly, on the occupancy front, do you have a view as to where in-place occupancy will finish the year? And then can you kind of also speak to the time delay between signing leases today and getting to kind of economic occupancy where you're actually getting cash rent in?

Yeah, sorry, I thought we were pretty clear in the press release. Maybe I'm not understanding the question, but we're targeting to have occupied and leased area of at least 90% by year end. I don't know what you mean by in place. Like to me, occupied...

So, yeah, I mean, you disclosed the 87.2% and the 85.9%. So like the 87.2% I understand is going to 90 plus, but kind of the 85.9%, which is, I guess, tenants in place today, not the commitments for the future.

Right. So that's our occupied area.

Yeah. So where would the 85.9% be?

percent figure trend to will it go up by 300 basis points as well well both of those both of those metrics being to at least 90 percent by december 31st 2025 okay okay so there's no so you're there's going to be no spread between the two at the end of the day um well no i'm just saying that we're targeting for them to both be At least 90%. I would expect there to be, you know, I would expect there to be some committed space that isn't occupied, but at least, but we're not giving that kind of detailed disclosure.

Okay. So that's fair. I understand what you're saying now on those two metrics, but I guess in terms of economic kind of excluding the impact of the straight line rent and whatever free rent or fixturing periods like how long should we expect before you kind of see the the true cash impact of that move that's something that we can give updates over the course of the year but not in a position to comment on today okay And then also on 150 West Georgia, I mean, you put out a precise 4% number. Are you assuming mid-year for that? It's only because we were talking to an investor earlier today. And if I moved the timing of just the repayment of that loan, I think anywhere from a 10 cent impact if it's Q1 versus Q4. But did you just assume mid-year in your 4% figure for that repayment?

No, we assume the end of the year.

Okay. And then I guess the only other thing is on maybe for Nan on the capitalized interest front, are you assuming current interest rates or maybe when you wrote the MD&A interest rates, or are you assuming some decrease in the short end of the curves? over the forecast period when you come to that capitalized interest figure, because arguably your interest expense will go up and down with where the short end of the curve goes based on your construction facilities.

Yeah, Matt, we fixed a lot of our variable rate debt, so it's not really interest rate driven. It's more around transfers from the developments under the development projects to rental portfolio. That's where it's decapitalization impact, not so much on the weighted average cost of debt for 2025.

If I take your original comment, it sounds like for every dollar of NOI, kind of 50 cents is capitalized interest. So should we expect for that? So you'd have 20 million of NOI contribution and 10 million of capitalized interest coming off. And then I guess beyond that point, because you still have 60 million of capitalized interest, how should we think of the trajectory maybe in 2026? I know we're not, that's a few years out, but it's within our forecast period. It just seems like there's still a lot to come from that portfolio.

Yeah, there is the ins and outs because it's not just the development portfolio. We've also got the upgrade portfolio where there's capitalization. So there's movement within that. Matt, why don't I call you, but it's $13 million of EBITDA in 2025 and $6.5 million of FFO, so approximately a $6 million impact to decapitalization in 2025 from development completion.

Okay. And then I guess the same property, one more thing on the same property NOI number, that is inclusive of development, correct? That's not your kind of just your rental portfolio, same property NOI.

Is that correct? No. So 4.8% is the total portfolio, which includes transfers that have not moved into rental life for life year over year. But within the 2.2, there is transfers that happen in 2024 that will make it to that rental portfolio comparison for same asset NOI purposes.

Right. It's just a change in the portfolio. Okay. That's very helpful. Thanks, Mary.

Your next question comes from the line of Robert Novoslak with Solumet Investments. Please go ahead.

Oh, thank you. Good morning. I think my question might have already been answered, but I noticed in the press release there was no mention of the distribution or safety or confidence. And I guess my question maybe it's already been answered. It's just a could you provide any commentary on the safety of the distribution? Thank you.

Absolutely. We held the distribution in December for the balance of 2025. And we are, you can expect to continue receiving the distribution at the current levels. We are not needing to cut the distribution, nor do we want to cut it. So you can consider it safe.

Thank you. Thank you.

Your next question comes from the line of Samaya Syed with CIBC World Markets, Inc.

Please go ahead. Thanks. Good morning. First, we had a follow-up question on the CapEx spend for 2025. So last year, you guys spent around $270 million plus another $80 million on leasing costs for development specifically. And given that the cost of HUD left to complete is around $140 million, Is that the right number to use as your development spend for 2025?

Yes, Tamaya, that's correct.

Okay, great. And can you just talk through some of the fair value changes? Not a lot of movement on the cap rate side. I guess moderating some rent assumptions, like how do we square that with your expectations of better organic growth and higher occupancy for the year?

Yeah, the IFRS value changes were really just a reflection of leasing activities. So as our leased and occupied area improves, you could expect that to reverse.

Okay. And then just lastly, wondering about the plan for the debentures coming due in April. Looks like you do have several options on the table, and just wondering which one seems most feasible as of now.

We're going to assess all of our options, Samaya. We have Nan outlined the many ways that we can address that, but we'll do what makes the most sense at any given time.

Okay. And then just lastly, on your occupancy goal, wanted to confirm that the 90% is that of the known move out that were, I think, previously mentioned on the last quarter call?

Correct. Confirmed.

Thank you. I'll turn it back.

Thanks. Your next question comes from the line of Charles Lazier with McKenzie Investments. Please go ahead.

Hi, and thanks for taking the question. Appreciate it. Just wanted to ask a question more high level on the leasing front. Obviously, renewals are improving, which is great, but can you give some more color on generally where those tenants are going? Are they moving to other assets or are they giving back space entirely? And then if you can just comment as well on kind of your market share of leasing broadly, that would be great. Thanks.

We aren't seeing any discernible trends among our non-renewals. Some of our larger non-renewals upcoming this year are a function of M&A activity. But beyond that, no discernible trends. And we expect to continue to outperform the markets, each of the markets in which we operate over 2025. Okay, thanks.

Again, if you would like to ask a question, press star 1 on your telephone keypad. That concludes our Q&A session. I will now turn the conference back over to Cecilia for closing remarks.

Thanks, Bella, and thank you, everyone, for joining our conference call. We'll keep you updated on our progress going forward.

Ladies and gentlemen, that concludes today's call. Thank you all for joining you now.