Choice Properties Real Estate Investment Trust

Good morning, my name is Audra and I will be your conference operator today. At this time, I would like to welcome everyone to the Choice Properties Real Estate Investment Trust first quarter 2025 earnings 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 followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I will now hand the call over to Simone Cole, General Counsel and Secretary. Please go ahead.

Thank you. Good morning, and welcome to Choice Properties Q1 2025 conference call. I am joined this morning by Rail Diamond, President and Chief Executive Officer, Niall Collins, Chief Operating Officer, and Erin Johnston, Chief Financial Officer. Rail will start the call today by providing a brief recap of the first quarter performance and providing an update on our transaction activity. Niall will discuss our operational results and development pipeline, and Erin will conclude the call with a review of our financial results before we open the line for Q&A. Before we begin today's call, I would like to remind you that by discussing our financial and operating performance and responding to your questions, we may make forward-looking statements, including statements regarding choice properties, objectives, strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, intentions, outlook, and similar statements concerning anticipated future events, results, circumstances, performance, or exceptions that are not historical facts. These statements are based on current estimates and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from the conclusions in these forward-looking statements. Additional information on the material risks that can impact our financial results and estimates and the assumptions that were made in applying and making these statements can be found in the recently filed Q1 2025 financial statements and management discussion and analysis, which are available on the website and on CDAR. And with that, I turn the call over to Raoul.

Thank you, Simone, and good morning, everyone. Welcome to our Q1 conference call. We had a very strong start to the year, and our Q1 operating and financial results were solid. Our high-quality necessity-based portfolio continued to deliver stability and growth. In the first quarter, we maintained near-full occupancy at 97.7%, achieved strong same-asset cash NOI growth of 2.9%, and FFO growth of 1.9%. In light of the current macroeconomic environment, I'd like to start by expressing my confidence in our portfolio's exceptional positioning amidst broader economic uncertainty. Before diving into the details of our quarterly activities, it's important to highlight that choice remains in an enviable position. In retail, we continue to see strong performance and retention in our well-located necessity-based properties. Our portfolio continues to demonstrate its ability to deliver stable and growing cash flows throughout varying economic cycles and conditions, and we believe this year will be no different. Our industrial portfolio is extremely high quality and generic in nature, with properties located in key distribution markets across the country. Based on the current tariffs announced, our industrial portfolio has limited exposure to sectors impacted by these tariffs, and will continue to capitalize on embedded rate growth within the portfolio from strong leasing demand for our properties. In our transit-orientated mixed-use and residential portfolio, our portfolio is benefiting from the lease-up and stabilization of our two most recent residential development completions, which are now near full occupancy. Our remaining mixed-use and residential portfolio continues to perform well. Choice's strong balance sheet and prudent approach to financial management has allowed our team to focus on executing our strategic goals, including our active capital recycling program that is focused on maintaining the quality of our portfolio. During the first quarter, we completed approximately $95 million in total real estate transactions, including approximately $33 million of strategic acquisitions and $62 million of non-core asset dispositions. In the quarter, we continue to buy high-quality assets from Loblaw, acquiring a retail property in Brampton for a purchase price of approximately $33 million. The property totals approximately 120,000 square feet and is anchored by Fortino's banner with a 15-year lease term and annual rent increases of 2%. The asset benefits from favorable demographic trends, and is exceptionally well located nearby the Mount Pleasant Go Station and our recently completed residential asset, Unity, at Mount Pleasant Village. On the disposition funds, in the quarter we completed the sale of three non-core retail properties, including two assets in Aurora and one in Montreal, for combined proceeds of approximately $54 million. In addition, we sold a land parcel in Edmonton for approximately $8 million. Subsequent to quarter end, we're able to leverage our relationships and industry-leading value to take advantage of acquisition opportunities. In April, we completed two industrial transactions totaling $340 million, bringing year-to-date acquisitions to approximately $373 million. These acquisitions included a $1.1 million square foot industrial distribution asset from Lavalore for approximately $182 million, which was concurrently leased back to Lavalore for a 10-year term with 2% annual growth. The asset also has significant excess land that offers 1.2 million square feet of future intensification potential and is well located in Ajax along Highway 401, providing 30-minute access to the city. We also buy the portfolio of eight industrial outdoor storage sites for approximately $158 million. The portfolio includes approximately 140 acres of land across core Canadian markets. These sites are complementary to our existing industrial portfolio and are leased to 10 Canada, one of Canada's largest commercial, trailer, rental, leasing, and maintenance companies, at an attractive price per acre and yield. Our team also continued to advance our development pipeline in the first quarter, with approximately $44 million of development spend primarily related to active construction at Choice Caledon Business Park. We also transferred two retail intensifications in Ontario and one in Alberta, totaling 97,000 square feet. Our intensification pipeline is another example of how we continue to take advantage of the demand for retail space to add value to our portfolio. Now we'll speak more about our intensification initiative shortly. Finally, I want to acknowledge the release of our 2024 Environmental, Social and Governance Report. This year's report summarizes many of CHOICE's successes over the last year and showcases CHOICE's commitment to ESG and the great work being done by teams across the business. The report can be found in the sustainability section of our website, and I encourage you to take a read. With that, I'll pass the poll over to Niall to discuss our operation results in more detail. Niall?

Thank you, Raylan. Good morning, everyone. As Raylan mentioned, once again, we are delivered stable operation results in the first quarter, and we continue to see strong demand across our portfolio. The overall portfolio remains at near full occupancy, ending the quarter at 97.7%. This reflected an increase of 10 basis points compared to the prior quarter. During the quarter, We had approximately 1.1 million square feet of leases expire, of which we renewed 934,000 square feet, achieving an 82% tenant retention. These renewals were completed at an average rent spread of 11.7%. We also completed 253,000 square feet of new leasing, resulting in positive absorption of 53,000 square feet, which was largely driven by our Alberta retail portfolio. Turning to each of our asset classes, In our necessity-based retail portfolio, occupancy increased 20 basis points to 97.8%. During the quarter, 715,000 square feet expired, of which we renewed 635,000 square feet for an 89% tenant retention rate. These renewal spreads averaged 10% above expiring rents, with particularly strong growth in the speciality and value sector. We also completed 165,000 square feet of new leasing in the quarter, with average rents over the lease term 42% higher than our average in-place rents. This more than offsets the 80,000 square feet of expiries that did not renew in the quarter. To date, 42% of the space is committed to backfill in 2025, with rents 28% higher than prior tenants expiring rent, and our team is actively working on deals for the remaining space. In our industrial portfolio, occupancy of 97.7% was 20 pips lower than last quarter. We had 418,000 square feet of expiries, all within our Alberta and Atlantic portfolios, and renewed 299,000 square feet for a 72% retention rate. These renewal spreads remain strong, average 17% above expiry, and are indicative of the geographic market. We also completed 78,000 square feet of new leasing in the quarter, where the average rent over the lease term is 55% higher than our average in-place rents. The small occupancy decline in the quarter was expected and will be temporary as our leasing team is already in negotiations on 24,000 square feet and actively working to address the remaining space. As I communicated on the last call, we expect industrial occupancy to improve in the second half of 2025, ending the year above 98%, based on strong tenant retention, vacant space being released. Lastly, our mixed use and residential portfolio continues to perform well, with occupancy at 94.9%, which is up 80 basis points from the last quarter. Finally, turning to developments, as Rayl mentioned, our team continues to deliver on our development pipeline. During the quarter, we completed three intensifications, totaling 97,600 square feet. These included intensifications included a 72,600 square foot ground lease to the Nautica Lands Group in Belleville, Ontario, at a yield of 9.9% directly adjacent to a choice on property, no frills. This was our second ground lease intensification with Nautica Lands, and we continue to believe this great partnership for choice generating stable and growing cash flow stream while augmenting the performance of adjacent retail sites. A shoppers drug mart in Mississauga totaling 17,000 square feet at a yield of 6.3%, which was one of eight shoppers drug mart intensifications in our active development pipeline. We also have an additional five shoppers drug marts in planning. And finally, a CRU strip at a 50% co-owned site in Edmonton, totaling 8,000 square feet at share, delivering a 5.7% yield. Overall, our active development pipeline totals 17 projects of approximately 1.1 million square feet at an average forecasted yield of approximately 7%. Looking ahead for the remainder of the year, our major active development is progressing well at Joyce, Caledon, and Byzant Park. Construction is on schedule on our NLS building with possession in September of this year. I will now pass it over to Erin to discuss her financial performance.

Thank you, Noel, and good morning, everyone. We are very pleased with our financial performance in the first quarter as our business continued to deliver stable and consistent growth. Our reported funds from operations for the first quarter was 190.9 million or 26.4 cents on a per unit diluted basis, reflecting an increase of 1.9% compared to the first quarter of 2024. In the quarter, we had a modest amount of non-recurring items totaling 2.9 million limited to a property tax incentive of $1.4 million recognized at 500 Lakeshore and $1.5 million of fee income recognized in relation to the termination of the Golden Mile Purchase Agreement. Comparatively, in the prior year, we had $4.5 million of non-recurring items, which included a $2 million condo gain and $2.5 million of lease termination income. Normalizing for these non-recurring items, FFO per unit growth was approximately 3.2%. This increase was primarily due to higher same-asset cash NOI and contributions from developments, partially offset by higher interest expense and lower interest income. Turning to our properties, same-asset cash NOI increased by $7.2 million, or 2.9%, compared to the first quarter of 2024, driven by strong leasing and renewal activities. By asset class, Retail same asset cash NOI increased by $2.8 million, or 1.5%. The increase was primarily driven by higher base rent for renewals, new leasing, and contractual rent steps. Industrial same asset cash NOI increased by approximately $2.8 million, or 6.1%. This increase was also primarily due to higher base rent for renewals, new leasing, and rent steps. and mixed-use and residential same-asset cash NOI increased by approximately 1.5 million, or 15.3%. This increase was primarily due to the property tax incentive recognized at 500 Lakeshore and higher base rents from leasing activity and rent steps. Excluding the previously noted property tax incentive, total same-asset cash NOI growth would have been 2.3%. Turning to our balance sheet, our RFS NAV for the quarter was $14.17 per unit, an increase of 76 million or 0.7% over the last quarter. Our NAV growth was driven by a net contribution of 46 million from operations and a net fair value gain of 48 million on our investment properties, offset by a decline of 9 million on our investment and allied properties. As a reminder, we are required under IFRS to mark to market this investment to its trading price each period end. Our fair value gain on investment properties in the quarter was primarily driven by favorable leasing activity and contractual rent steps across the retail portfolio. Turning to our financing activities, we continue to take a prudent approach to capital management and benefit from the stability provided by our industry leading balance sheet. Once again, we ended the quarter in a solid financial position with strong debt metrics and ample liquidity. Our debt to EBITDA ratio was seven times and we continue to maintain a fully undrawn $1.5 billion corporate facility. This is further supported by approximately $13.1 billion of unencumbered properties. As we mentioned on our last conference call, we had two major financing activities during the quarter. We issued our $300 million Series B senior unsecured debenture at an all-in rate of 4.293%, with proceeds used to partially repay our $350 million Series J senior unsecured debenture. We also funded $136 million mortgage at share on the LABLA ground lease at Choice Caledon Business Park. This loan is coterminous with LABLA's 25-year ground lease with an all-in interest rate of 4.88%. Overall, we are pleased with another strong quarter. The first quarter was a solid start to the year. And looking ahead, we continue to have conviction in our ability to deliver on our operational and financial goals, and we are well-positioned to achieve our 2025 outlook. We plan to continue to advance our development pipeline with the majority of our spend focused on the advancement of our industrial development at Choice Caledon Business Park and our retail intensification program. Lastly, we remain committed to maintaining the strength of our industry-leading balance sheet and expect debt to EBITDA to remain below 7.5 times. With our financing activity in the quarter, we have addressed a significant portion of our 2025 maturities. With that, Rayl, Niall, and I would be glad to answer your questions.

Thank you. 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'll take our first question from Mark Rothschild at Canaccord.

Thanks, Anne. Good morning, everyone. Real, you made a comment that you don't expect tariffs either way to really impact your industrial portfolios too much, if at all. But there has been a notable increase in vacancy in industrial markets in general. To what extent do you believe that the same property NOI growth that you've had of late can be sustained over the next year or two based on where your in-place rents are and where market is now?

Yeah, look, I think just coming back to the tariffs and then I'll speak to, you know, the sustaining of our NOI growth. But look, we've spoken before that we've completed a real detailed review of our industrial portfolio. And, you know, we've looked at every single tenant and where we believe, you know, they have exposure. And we do not believe there is any material risk in our portfolio. You know, if we take a very negative view, we maybe think there's a couple of million dollars of negative, you know, or potential exposure, but it's not material for us. And then when you look at 2025, you have to remember that 80% of our renewals are really committed and locked in, and we have pretty good visibility on next year as well, just given we're already in discussion with those tenants. Maybe I'll just let Niall comment on the growth.

Yeah, just to support what you're saying, for the balance of the year, the vast majority of our leasing is done, so we feel quite confident for 2025. And again, we have a very generic portfolio and great location, so we don't see a lot of impact. The tenant base we have, we don't see any major impact. None of them are in that category that's sensitive to some of the tariffs that are being floated today.

And as Niall and Aaron have mentioned on last call, we do see industrial and AHA growth year-on-year improving in the second half of this year, along with occupancy.

Okay, great. Thanks. Maybe just on the acquisition of the outdoor storage sites, to what extent do you view this as something

little bit different from what you normally acquire from your industrial portfolio how does this strategically fit in is this different at all and what's the opportunity there look i think if you even go back to what nile said on the call he spoke about the partnership with nautical and we've always liked um you know stable growing cash flow you know land east assets and and so this fits in and then if you think about it on the industrial side if you go back i think it was around three years ago We bought a portfolio from Canada Cottage. So a very similar portfolio with 56 acres we bought then. So this is another 140 acres. So we have truly 196 acres of this industrial outdoor storage. And as I said, it's stable, strong cash flow growth, very low capex or no capex from our side. The tenant sometimes has improvements on the site. And it gives us optionality to use the land for something else if they're not there. So, as I said, we have 196 acres of this already. And then if you add, you know, again, think of what we've done with Loblaw recently, two land leases, as well as we have one with Amazon, a land lease. And you add all of that, so we have almost, you know, quarter 365 acres of industrial property on land leases, which we think fits wonderfully in the region. Okay, great. Thank you so much.

We'll go to our next question from Sam Damani at TD Securities.

Thanks, Jen. Good morning, everyone, and congratulations on the acquisitions for sure. I just wonder, Ray, if you could just address, I guess, capital allocation going forward in light of the trade war with the U.S., how it's changed, if at all.

Yeah, look, I think we're in a unique position, Sam, that our balance sheet's really strong. Our assets are performing very well. And if we can find good opportunities, we'll continue to take advantage of those opportunities. And as we said at the start of the year, we believe in 2025 we'll be net acquirers of assets. But there's nothing, you know, nothing else significant that we're currently underwriting.

Okay, and with the rather substantial acquisition already in Q2, you said you'd be a net acquirer, but do you plan to offset that at least to some degree with some dispositions near term to keep the leverage around seven times, or are you happy to let it trip up a bit?

No, some dispositions we're in the process of working on, which hopefully will have more color next quarter, it's probably around $100 million of dispositions.

Okay, that's helpful. And I guess last one for me, you talked about, you know, going through the industrial portfolio in detail. I wonder if you could just describe how you sort of categorized the most risky elements of the tenant base, just in terms of industry or how you looked at that sort of small exposure. You know, what industries are those?

It would be, I'm just trying to find, but it would essentially be Automotive, we're very small exposure, some consumer goods. But our team went tenant by tenant and looked at the type of tenant and how they were using the space and looked at exposure to the US. Again, it's very hard to say exactly how everyone's business will get affected. And that's why I say we took a pretty conservative view.

Okay, great. Thank you. And I'll turn it back.

Our next question comes from Lauren Calmar at Desjardins Capital Markets.

Thanks. Good morning. Maybe switching over to the retail side of things. Obviously, Loblaws is continuing to look to grow. A lot of the major retailers are. But are you seeing any apprehension on the part of any smaller or regional tenants to execute on their growth plans in light of what's been developing south of the border?

Hi, Lauren, it's Niall. I would say, look, there's some cautious optimism with retailers, but as I said, all of our retail leasing of the vast majority for the year is completed. So we're not seeing any challenges. They have the capital and they're continuing to expand. And I think, again, we got to remember that there is limited supply of good retail in the country. So again, that's in our favor too.

If you look at yesterday's news article on interest in HPC boxes, I think that's again an indication that tenants are actively looking for new space.

Yeah, that was a nice surprise to see the high level demand despite everything going on. How do you see retail occupancy trending over the balance of the year? Do you think it kind of sticks around the high 97 range, or do you think you can push it higher?

Lauren, it's going to be flat for these first two quarters, but the back end of the year, it is going to pop, as I mentioned. We do expect it to go into the 98, but it is going to be a Q3, Q4 phenomenon based on our leasing and commencement season.

Okay, that's very helpful. And then just last one, and Rial, I think you kind of alluded to it earlier, but I just wanted to confirm. I think last quarter you talked about there being two industrial assets from Loblaw for about $350 million you were looking at. I'm assuming the Ajax one was one of them. Are you guys no longer looking at the second one?

No, sorry. The two industrial assets we're looking at were the ones we just acquired with the one from Loblaw and the one from the third fund. Got it. Okay.

Thank you very much.

We'll move next to Pommy Burr at RBC Capital Markets.

Thanks. Good morning. Just wanted to come back to the iOS acquisitions. Can you just provide a bit more color on the locations? I didn't catch the tenant that you mentioned, and maybe a cap rate range if that would be helpful.

Sure. So, Pommy, there are eight locations across Canada. The tenant is, you know, 10 Canada, which is transportation equipment network. The locations are, you know, anywhere from Toronto, Delta, BC, Calgary, Edmonton, Montreal. There's Winnipeg in there as well. But I'd say the majority of the locations of the eight are all in major markets. And then, you know, 10 Canada is the largest, you know, network of, you know, You know, the largest, I think, trailer leasing network in Canada, and I think they have 26,000, you know, vehicles.

Okay. And just in terms of the, you know, the lease mechanics, what's the duration of these leases, and what sort of rent steps do you see in them?

Yeah. I'm sorry, I didn't answer your first question on the cap rate. I'd say the blended cap rate between both industrial acquisitions is called a mid-sexes. And then the lease terms, you know, they roll over various times, but the years that the tenant has control is around 15 years for each site, and the leases step with CPI on an annual basis.

Got it. Okay. And then just, you know, coming back to maybe one of the earlier questions, you know, are there more of these perhaps with others that you're looking to acquire in the near term, or is this kind of like a one-off opportunity that emerged?

No, look, I think we'll keep leveraging our relationships with, you know, tenants in the industry, and we would love to acquire more tenants. Of these, we think, as I said earlier, it's great asset class to fit within our industrial portfolio.

Okay. Last one for me. Just coming back to the industrial portfolio, obviously it sounds like things have been trending pretty well and quite stable, but are you seeing any changes in terms of how tenants or how long it takes to maybe get leases signed? Any indication that tenants might be slowing their expansion plans or anything of that nature? Just any shift in behavior?

I wouldn't say there's a strong shift in behavior. Probably it's not. The leasing, again, a lot of our leasing for the remainder of the year is completed. We didn't see any challenges. 2026 as well, there is still expansion. There's capital. So again, our generic and our type of user groups They don't seem to be as affected, and it isn't slowing down leasing.

I'll also add that we have seen a pickup in RFPs on our Caledon Business Park. You know, we recently responded to a couple of RFPs, and we're hopeful that they, you know, we get more traction on those.

And would that pickup in RFPs be from domestic companies? I'm curious if there's any change between domestic and foreign tenants, perhaps looking at expansion plans in Canada at all.

Some of them are from large global 3PL networks. So we don't know who the ultimate client is, Tommy, but a strong covenant from our point of view.

Thanks very much, Riel. I'll turn it back.

We'll take our next question from Mike Merquitas at BMO Capital Markets.

Thank you, operator. Well, you kind of stole my thunder a little bit because you touched on it with the HBC lease news, but I was just curious if you could give us a little bit of additional color. Are you concerned at all? I mean, obviously the demand's there. Would you characterize that as being pent-up demand, or are you concerned that maybe this robs from demand a couple of years out that might have been there otherwise?

Look, it would be interesting to see who the ultimate tenants are. We have heard that there's one foreign tenant or like a new entrance into the Canadian market. I don't know, again, how many locations they'd be taking. But generally, we don't really see much of an impact given the nature of our portfolio. And we do see it as an opportunity in some locations to actually try and pull tenants out of some of these malls. Because in some of these locations, we think the mall is now challenged.

Right. And I guess that's the other part of it, right? There's, I guess, 65 plus 95 or 95 plus 65. So there would be properties that you have that might be benefiting from a decline in that joining property. Okay. Got it. And then just maybe a last name for me. You know, your stock's obviously done very well, macro related. Well, I mean, obviously you guys are doing everything you can to justify it, but it's been aided by a macro tailwind. And as you look forward, you've always been conservative in nature. Your stock's in the low sixes from the implied cap rate basis, and you're buying in the mid-sixes. So just with respect to your leverage targets, are you thinking about seven the right number? Are you thinking about maybe testing to see if you should bring that down over time? Just curious as to your thoughts there.

I might get there. And I'd say that we're comfortable where we are with leverage. We've always said that our target's seven and a half. But when we look at the next couple of years, just based on So where our developments are and our capital recycling program, it'll probably stay in the low sevens.

Okay. So no real change there. Great. That's all I have. Thank you so much. Thanks, Mike.

Our next question comes from Humanshu Gupta at Scotiabank.

Thank you, and good morning. Just to follow up on the industrial acquisition, I think, Ray, you mentioned mid-six cap rates. How would you say for Ajax Industrial Distribution Center? Is it like very similar mid-six as well?

Yeah, when I commented on the mid-six, it was the blend of the two was the mid-six. So they're both very similar.

Okay, very similar. And then on the Ajax Industrial Property, you mentioned about, I think, over 1 million square feet of future intensification potential as well. Is that something you look to pursue in the near term, or is it more like a medium to long-term initiative there?

Yeah, look, I think when you just – I don't mean by transformation to look at the Google Earth image of the property, but I think what you will see when you do look at it, you'll see we acquired essentially 126 acres. And there's only, I'll call it a 1.1 million square foot building on it. And you'll see on the east side of the site, there's a vacant piece of land that we could intensify immediately. Then if you go south of that land, there's another 600,000 feet, which the tenant is currently using for, I believe, trailer washing. So I just think there's lots of potential and we'll just have to assess where demand is. And the good thing is we haven't allocated any excess value to, you know, this excess potential density.

Got it. Okay.

Thank you. I'll say the last thing just on the theme of, you know, just on the theme of our industrial outdoor storage. If you just think about, you know, a lot of people classify, you know, industrial outdoor storage where the building represents, call it 20% of the land coverage. And I think, you know, Ajax almost fits in that category given the low south coverage. on the property as a whole.

Okay. Fair enough. Thank you. And then in terms of the acquisition pipeline from Loblaw, I mean, obviously you had the Branton side and the Ajax one. So are you done in the near term? I mean, how's the pipeline looking there?

Hi there, Manju. There's not a lot left. Ajax would be the most significant one this year. We also did Worthington earlier in the year. And then when we look ahead to what Loblaw has left, plus what we've been looking at, there's a couple of small retail acquisitions, but not a lot in the pipeline this year, if anything.

Okay. And Erin, on these, just on the financing of these acquisitions, you know, post-quarter, $300 million acquisitions, will that be mostly on debt, or you could use some class B units as well?

We've put those all on our line.

All on the line. Okay. Okay. And I guess $100 million disposition planned as well under that good party finance. Those acquisitions.

Yes.

Okay. Okay.

There'll probably be more. I'm just going to say there'll be probably more dispositions if you think about the whole year when rail was quoting $100 million. We'll probably see that in Q2, and then there'll be a bit more in the third, fourth quarter. But we'll still be a net acquirer for the year.

Okay. Awesome. Last question from me, when is the cost of debt financing today, you know, secured or insecure? And has anything changed in response to, you know, the uncertainty which we have seen recently?

Yeah, so if we think about the cost of 10-year debt, it's probably around, you know, 5.2. Spreads have definitely widened, as you would have seen, since we went to market in January. And if we think about, if you take, say, a 10-year mortgage versus a 10-year unsecured, I think we're seeing spreads. Secured market hasn't widened as much, and I think there's probably a 40 to 50 basis point spread between choices on secured rate and secured rate.

Okay, awesome. Thank you. Thank you, and I'll send it back.

And as a reminder, if you would like to ask a question, please press star 1 on your telephone keypad. We'll go next to Gaurav Mathur at Green Street Advisors.

Thank you, and good morning, everyone. Just staying on acquisitions for a minute, we've been noticing more industrial portfolios hit the market. Just wondering if that's something that would interest you opportunistically and in the near term going forward.

Yeah, look, I think, Gaurav, thanks for your question. We underwrite everything we see on the market, and if we think it represents good value, and a good long-term asset, and certainly something we will be interested in. But as I said earlier, there's nothing right now that we're actively pursuing on the acquisition side.

Thank you for that, Raoul. And just my last question, I want to switch gears here to the condominium market. Now, last quarter on Golden Mile, you did indicate that condominium construction is not feasible. Could you provide some more color on what you're seeing currently in the condominium market and if that would affect any of your other projects in the zoning pipeline?

One of the reasons we pause on Golden Mile is more on an infrastructure cost base, not necessarily the market. And we're working with the city to try and resolve on that. In terms of the overall general condo market, we don't have a lot of exposure to that. Our portfolio is rental. As it plays out over the next 12, 18 months, it's very hard to predict what that level of absorption will be.

But, Gaurab, the active development science that we're trying to advance, there's no exposure to condo. We're not reliant on condo to get those started.

Okay. Thank you very much. I'll turn it back to the operator.

Thank you. And that concludes the question and answer session. I'll now turn the call back over to Rayelle Diamond for questions. Closing remarks.

Thank you, Audra. As I mentioned at the outset of the call, we are really in an enviable position. This quarter marks another example of our ability to consistently generate strong and stable growth. Our team remains focused on executing on our plan in 2025. Thank you for your interest, your investment in choice, and for joining us this morning. Our AGM will follow this morning at 11, and we look forward to you joining us there.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.