SmartCentres Real Estate Investment Trust

Good afternoon and welcome to our first quarter 2023 results call. I'm Peter Slan, Chief Financial Officer, and I'm joined on today's call by Mitch Goldhar, Smart Center's Executive Chair and CEO, and by Rudy Gobin, our Executive Vice President of Portfolio Management and Investments. We will be We will begin today's call with some comments from Mitch. Rudy will then cover some operational items, and I will review our financial results. We will then be pleased to take your questions. Just before I turn the call over to Mitch, I would like to refer you specifically to the cautionary language about forward-looking information which can be found at the front of our MD&A materials. This also applies to comments that any of the speakers make this afternoon. Mitch, over to you.

Thanks, Peter. Good afternoon. Welcome everyone. We kicked off 2023 on a much higher note than we experienced just one year ago. Operational results continue to improve driven by Canada's best retailers, driving higher consumer traffic to our convenient open format centers. Occupancy improved to 98% from 97.2 in the prior year. Renewals are up 3.4%, NOI improving by 4.3%, and collections in excess of 99%. All in all, retailers who set the agenda and who make up our core retail base are investing in their physical platforms in the form of renovations, expansions, e-comm fulfillment integration, and new stores. Toronto and Montreal premium outlets are fully leased, with 12-month rolling sales now exceeding 2019 levels. Rudy will get into the operational details in a few minutes. On the land use permission front, so far this year, we achieved residential zoning approvals in three projects, which added yet another 3.4 million square feet to our future. Two are in Ontario and one is in Quebec. We continue to stay focused on getting valuable permissions, laying the groundwork for providing us with ready-made options for future growth. Recall that in 2022, we achieved over 6.1 million square feet of new mixed use permissions in urban locations with high demand for housing. So 2023 is off to a great start ahead of last year's pace. I will remind you that these proposed developments are on lands we already own, sit in the midst of highly populated communities in every major market across Canada. You can read the details of many of our developments planned in the portfolio in our MD&A. So I will not go through them all here except to say that Transit City 4 and 5 sold out condos at VMC 1,050 units will all be closed this year. The Millway purposely built rental building here at the VMC is near completion with occupancies already commencing. Art Walk Our new condo at BMC is sold out of the release unit and pre-construction mobilization will commence within 60 days. Mascouche, our purpose-built rental in the greater Montreal area is 76% leased and is expected to be leased out by October ahead of schedule. Our 240,000 square foot industrial initiative in Pickering is complete, and the first tenant for half the building has moved in. In Ottawa, our 402 unit seniors residence, which is under construction, has been delayed because of financial challenges of our partner, which are close to being resolved in December. root of that we have taken over the development and construction management contracts earthworks are now complete and construction will commence within two months on our townhouse development with our partners in vaughn northwest with respect to self-storage we opened our eighth In this quarter, 133,000 square foot Brampton facility on the surplus lands we own at Kings Point Plaza. Two others are under construction in the GTA, Whitby and Markham. We have commenced discussions with potential new partners and buyers of selected assets within the portfolio, which will assist in funding development debt reduction and diversification. While only a small part of the portfolio, we see this as an ongoing capital recycling program, which will not only strengthen our balance sheet, but de-risk future cash flow streams. Once again, you can see this current construction activity in our expanded disclosure in the MD&A, as well as a list of additional projects scheduled to commence construction in the next two years. And while we have delayed the start of a few projects owing to the current market conditions, our efforts in obtaining additional land use permissions, such as residential continues in the normal course. On the financial side, Peter will provide a full update in a minute, but let me emphasize a few of the more pertinent elements. Maintaining our conservative balance sheet remains a significant priority for us, along with maintaining a significant unencumbered pool of assets, which now stands at $8.7 billion. Our respectable debt level at 43.2% is important to us, along with maintaining significantly liquidity and the strong support from our partners and lenders, all firmly in place. We are committed to doing the right thing for the long term. Like decisions made in the past resulting in our strategic real estate, current occupancy levels, and our strong tenant mix and rent collected, so is the approach to decisions taken today to ensure a stable and sustainable growth tomorrow. Very recently, doing the right thing has been encapsulated in the term ESG, environmental, social, and governance, a concept that has been sweeping the corporate world. But for us, ESG is just a different way of describing what we have been doing all along. It is woven into the fabric of our organization and how we oversee our business, interact with our tenants, and engage our associates and communities. Of course, it also means careful consideration for the environment. Our three-year action plan in which we are developing and implementing our ESG strategy is posted on our website, and I invite you to assess our portfolio where you will see ESG principles applied throughout. On a final note, I would like to once again offer my thanks and appreciation to our exceptional team of associates for their commitment and dedication to delivering on this long-term vision of improving the lives of the communities we serve every day. And with that, I will pass the call over to Rudy.

Thanks Mitch, and good afternoon everyone. I'll just touch on a few of the things Mitch has said and give a little bit of an operational update. The first quarter continued to build on the momentum of last year with strong interest from many of our dominant retailers who shaped the open format shopping landscape. TJX, Canadian Tire Banners, pet stores, banks, dollar stores, liquor, QSR, full and ethnic grocers, were all very active picking up vacant space in our high-traffic Walmart-anchored centers. And given our proximity to residential being in the center of communities and their strong financial footing, a few new entrants were engaging us with their space needs, including discounters, experiential, entertainment, gaming, logistics, and a few light industrial users as well. Finding their preferred locations on our website and calling with competitive rent and covenants to match. It's interesting that for a lot of this latter group, they have figured out what our national retailer is always new. Location matters. High traffic matters. It matters who you co-locate with if you want your name and brand remembered. It matters that their customers enjoy the experience, access, and convenience of their weekly trip. We've heard it from so many retailers. Our real estate strategy is simple. Find a Walmart Anchored Center and get into it. The cross-shopping, high traffic, convenience, frequency of visits, and the value to our customers is clear, in their words. For smart centers, delivering on this vision and strategy have led us to the results we have seen before and continue to see this quarter, which speaks to themselves. With a sector-leading 98% occupancy, over 99% collections, 4.3% same property NOI growth, even planning new build retail, and not just in urban centers, but in places like Carlton, Cambridge, Alliston, Chilliwack. Renewal spreads on over 3 million square feet of leasing at 4.3% ex-anchors. So while the pandemic gave retailers good reason to pause and rethink their strategy, their path is now clearer than ever. They stay close to their customers, offer great value, make it convenient in proximity and access. and co-locate with the best in the country so that customers have one place to do all of their shopping for their daily needs. Even with this strong recovery there's no doubt that the market will see a small handful of retailers struggling to adapt, mostly in the enclosed mall space which is not our space. Bed Bath & Beyond is one such example but for us that was only two locations in our 35 million square foot portfolio and both locations have already been taken without any rental interruption. The strength at the top keeps getting stronger. Walmart, Canadian Tire, Winner's HomeSense, Grocers, Dollarama are reinvesting heavily in their store network and simultaneously growing their footprint. And as a reminder, virtually all of the Smart Centre's locations across the country includes a full grocery, accessible at-grade parking, and a tenant mix that satisfies the weekly living needs of its community. With that said, here are a few other operational highlights. In addition to the larger dominant retailers, a number of smaller size tenants are wanting space across the country for personal care, beauty supplies, spas, hair salons, daycares. When combined with entertainment, such as indoor golf, gaming, and racquet sport facilities, We're developing well-rounded centers, most of which, as you know, are in the planning, pre-construction, or construction phases of becoming city centers, utilizing our excess lands for residential and other mixed uses, as Mitch mentioned earlier. Development of our millway apartments is on track in the first phase of units in the north tower being brought to market, and 50% of those leased. That being said, there's lots more to go and leaving just over 350 units on stream to come over the balance of the year in the East Podium and West Tower. Our first pre-lease industrial new build tenant took occupancy just after the quarter in our Pickering project and given to the modern design, location and current discussions, we're expecting the balance of the space to be leased shortly. Our premium outlets in Toronto and Montreal continue to exceed our expectations and dominate their markets. Tenant sales in Toronto are well over 1,000 per square foot and have exceeded all prior years. 2023 EBITDA is trending to exceed the 2022 levels by over 10%. With traffic continuing to grow, plan your trips accordingly to take advantage of the great luxury brands such as Prada, Kate Spade, Gucci, Hugo Boss, Santiago, Versace and Ferragamo, to name a few, and all at affordable outlet prices. All in all, even with the few economic challenges facing us all, 2023 is shaping up to be a step up over the prior year in nearly every metric, delivering NOI growth, leading occupancy levels, stronger tenant covenants, all while executing on our mixed-use development strategy for the long term. Thanks, and now I'll turn it over to Peter.

Thank you, Rudy. The financial results for the first quarter reflect continued solid performance in our core retail business, with a strong contribution from our mixed-use development portfolio through the initial closings at the Transit City 4 condominium project. For the three months ended March 31, 2023, FFO per fully diluted unit was 54 cents, an increase of 6% from the comparable quarter last year. These results include $3.8 million, or two cents per unit, of profits from the closing of 194 condominium suites at Transit City 4. Higher rental income was partially offset by higher interest expense. While G&A expenses were also higher this quarter, we note that a majority of the increase was due to a one-time write-off of some capitalized costs related to a discontinued development project. we expect G&A costs to revert to their historic trend line in future quarters. Net rental income for the quarter increased by $4.1 million, or 3.4%, from the same quarter last year. Including our equity-accounted investments, however, net rental income increased by $5.5 million, or 4.4%, largely due to continued strong performance at our Montreal and Toronto premium outlet centres. Same property NOI, including equity-accounted investments, increased by $5.3 million, or 4.3%, compared to the same period in 2022. Leasing activity remained strong during the quarter, which is expected to drive continued modest growth in NOI over the balance of the year. Our occupancy level, including committed leases, was 98% at the end of Q1, unchanged from the prior quarter, but up 80 basis points from a year earlier. In terms of distributions, we have maintained our annual cash distribution level of $1.85 per unit throughout the COVID-19 period, and we are proud to be one of the very few Canadian REITs that has never cut its distributions. The payout ratio to AFFO for the three months ended March 31, 2023 was 93%, an improvement from 96.1% for the same period a year earlier. Total assets. including our proportionate share of equity-accounted investments, were $12.1 billion at the end of Q1, unchanged from the prior quarter. During the quarter, IFRS fair value adjustments in our investment property portfolio, including equity-accounted investments, resulted in modest net gains of approximately $35.4 million, principally reflecting additional leasing activity. We did not make any portfolio-wide changes in our capitalization rate assumptions this quarter, although we did use modestly higher cap rates on a small number of select properties. During the quarter, we closed on the sale of the first 194 condominium units in our Transit City 4 development for gross proceeds at the REIT's 25% share of $24.8 million and net profit of $4.1 million. The remaining 832 units at Transit City 4 and Transit City 5 are expected to close over the balance of the year, as Mitch mentioned earlier. Adjusted debt to adjusted EBITDA stood at 10 times in Q1, representing a modest improvement from 10.3 times at the end of 2022, as a result of both growth in EBITDA and the repayment of approximately $20.8 million of debt during the quarter. Our debt to aggregate asset ratio was 43.2% at the end of the quarter, an improvement of 40 basis points from the prior quarter. We expect to continue to repay debt over the coming quarters, particularly with the profits from the forthcoming condominium closings. As we disclosed previously, during the quarter we completed the sale of approximately 6.4 acres of land at the Vaughan Metropolitan Center for gross proceeds of $95.6 million. or $58.4 million at the REIT's share. The land parcel was comprised of 4.3 acres in VMC West, where the REIT has a two-thirds ownership, and 2.1 acres in the eastern part of VMC, where the REIT's interest is 50%. While this makes the accounting a little complicated, we recorded a modest net gain of approximately $3.7 million between the two parcels. However, this amount is not included in FFO. The proceeds from the sale were used to reduce indebtedness. Our unencumbered asset pool stood at $8.7 billion at the end of Q1, up from $8.4 billion at year end. Our unsecured debt of $4.1 billion was unchanged from the prior quarter and represented 79% of our total debt of $5.2 billion. From a liquidity perspective, During the quarter, we extended the term on both our principal syndicated operating line, as well as one of our bilateral facilities. We are very comfortable with our current liquidity position, with more than $675 million of undrawn liquidity as at March 31, 2023, including our share of equity account investments, but excluding any accordion features. The weighted average term to maturity of our debt, including debt on equity account investments, is 3.9 years with a weighted average interest rate of 3.89%, an increase of three basis points from the prior quarter. We remain comfortable with our conservatively structured debt ladder, where the most significant aggregate maturities are in 2025 and 2027. We are actively engaged in evaluating refinancing alternatives for our $200 million Series I debenture that matures later this month. Approximately 83% of our debt is at fixed interest rates, which has been a significant benefit to us as rates have been rising in recent quarters. Finally, I want to touch briefly on our mixed-use development projects that are underway. Last quarter, we added some new disclosure in our MD&A, focusing on these development projects, those that are currently under construction. Of the 11 projects that we highlighted in Q4, one was completed during Q1, which Mitch touched on earlier. It's our self-storage facility at Kings Point Plaza in Brampton. So there are now 10 projects that were under construction as of March 31. The REIT's share of the total capital cost of these projects is approximately $533 million, with the estimated cost to complete standing at a relatively modest $217 million. We expect all of them to be completed by the third quarter of 2024. we will continue to update this disclosure each quarter to reflect the ongoing progress with these new projects. As the year progresses, we expect to see more of these projects reach completion and come off the list, while additional projects will be added as construction commences. Note that as projects come off the list, they are also reclassified from properties under development to income-producing properties, with the exception, of course, of condos and townhomes, which move out of residential inventory upon closing. Upon completion, each of these projects is expected to drive continued FFO growth, as well as allow us to recycle capital into other opportunities in our development pipeline and facilitate prudent management of our capital and liquidity needs. And with that, we would be pleased to take your questions. So, operator, can we have the first question on the line, please?

Yeah, absolutely. So again, if any participants would like to ask a question, please press star 1 and we will get your name. So again, star 1 to ask a question and star 2 to actually withdraw your question. So we'll just wait a few moments if there is any questions that will queue up. Once we have no questions, again, it is star 1 to queue up and star 2 to withdraw your question.

Okay, so we did get some questions that they queue up, so we'll just get a few moments just to get their names.

We have three questions in the queue right now. Fourth question that queued up. Okay, shouldn't be too long, we're just retrieving their names now. But again, while we're waiting, if anyone on the line has a question, just please press star one.

Okay, so our First question is going to be from Taoli from National Bank Financial. We're just unmuting his line, shouldn't be too long. Hello. Hello.

Hello. Hi, sorry about that. Tao Woolley from National Bank Financial. Your line is now unmuted. Go ahead.

Hello, Tao. Are you on the line? Can you hear me? Yes.

Oh, okay.

Well, go ahead.

Sorry, it's Sam Damiani with TD Coward. Good afternoon. And I didn't think I changed my name. So congratulations on the good same property print. I was wondering what your thoughts were for the balance of 2023 on same property, just looking at the Q1 sort of contribution. Looks like it got a lot from occupancy gains and possibly from the outlet centers. And so as the year progresses, how do you think that year-over-year comparison is going to play out?

Hi, Sam. It's Rudy. We see a continuation of what we are starting in Q1. Last year, as you know, was rebuilding 2021 into 2022. So it's building from Q1 to Q1. So we do see a trend of this continuing. We are at 98%. So again, the churn was going to make that difference. But the interest is so good from that number of retailers that I mentioned. we are getting a good uptick, as you saw, in the renewals as well. So, new leasing for vacant space and renewal uplifts, we should be able to keep this momentum going.

So, would you be comfortable putting out sort of a range, sort of, I wouldn't say official guidance, but sort of best guesses as to how the same property will play out for the year?

Well, I'd say it this way. I would say from an overall perspective, I wouldn't want to pick a number or range because, as you know, every little tenant matters, every little one. We were fortunate about the Bed Bath and Beyond that we did not have a big exposure to those 60 stores. We had two. But I'm going to say generally what we are seeing in Q1, we expect to continue throughout the rest of the year.

Okay. Okay, that's helpful. Thanks, Rudy. And maybe just on the development side, as you mentioned, Peter, there was one project that came out because it was completed. 10 left. As you look forward, what kinds of projects do you see added to active construction and how are you looking at residential condo versus rental in the current environment?

Yeah, as mentioned, at the moment we're going measured step by step. We really have only one new construction start that we're absolutely committed to starting, and that's Art Walk, which is in the Smart VMC here. It's a condo that's sold out, all the released units are sold out. It has a rental building and a small boutique office component. We're going to take the first step of construction on that. We had our second deposit in January. They all came through. There was no rescissions or defaults. So that's one. We are looking closely at some of the others, but at the moment, that's the only new residential start that we are committed to starting this year.

Okay, and how about, I guess, for other asset classes, either self-storage or industrial, arguably a little shorter build time, a little less risk, if you will?

Yeah, I mean, we do have, as Rudy has said, we're cautiously optimistic about about some new retail starts, net new, on existing sites. You know, most of these sites, as you would, I guess, know, Sam, are zoned. So in terms of getting started, it's usually pretty straightforward. So we're cautiously optimistic. I mean, we could probably see a couple of retail starts. And self-storage, we have two. currently under construction right now. And, you know, it's possible that there'll be, you know, up to two, you know, probably won't get a third started this year, but I can definitely see two more starts this year. Yeah, don't see an industrial start this year, but next year could be. We just finished the pickering, so there may be some further construction on the on the completion of the interiors of the half of the industrial building that we've built out in Pickering. It's negligible. And there'll be some capital improvements and some renovations. Next year and the year after, depending on fundamentals, we have a number of things cooking, which we'll get into maybe later in the year. that might result in some commencements next year, as well as that retail program that I was referring to will most certainly start to manifest in all its potential next year, not being food stores and others that we've mentioned here without getting into too many specifics. There's quite a few new retail initiatives, pre-leased initiatives, strong tenants going on.

Okay, great. Last one for me just quickly. I just didn't catch what you said, Mitch, in your opening remarks. Millway, was it 50% leased already? I just want to make sure I heard what you said correctly.

No. Sam, at the moment, all we're leasing is the podiums because they're the ones that are basically, you know, some of them are now occupiable. So off the top of my head, I think we have, yeah, what's that, Peter?

I have the stats.

Yeah, Peter will give you the exact stats.

Yeah, Sam, there's 89 units between the two podiums that are currently available, and 42 of them have leases signed. So that's 47% of those that are available. But obviously, the big nut is the tower, and We don't expect occupancies there to commence until sometime in the summer.

Okay. Okay. Very good. Thanks so much.

All right. Thank you. Sorry about that. That was a question from Sam. I mean, anyway, a little technical glitch there. All right. Our next question here. All right. Our next question, I believe, will be from Tal Woolley from National Bank Financial. Tal, your line should be unmuted.

Yep. Hello.

Perfect, go ahead.

Hey, Phil.

Hey, there we go. So you had mentioned some, you were looking at maybe adding some new food locations. Is this grocery or food service that you're talking about? Grocery.

I mean, food. Food as well, but grocery.

Okay. Does Walmart not have an exclusive covenant at most of your properties?

Yeah, so, some of them i don't want to a very very specific thing we may can talk about later but i mean some do some don't um and different circumstances are you know what they do or they don't don't necessarily mean that uh that those you know don't happen but um but some some do some doubt and some sites are You know, we have sites across from our sites, you know, sites that are across from the larger Walmart anchor sites too. So, you know, it depends on which market we're talking about. But suffice to say, I'm not referring to properties that we need to go and get, you know, a restrictive covenant, you know, amended or released property. So, and just keep in mind, we do have lots of, there are lots of Loblaws and Sobeys and other food stores currently operating on Walmart States, along with Costco's, by the way, which I didn't mention are also some of, you know, included in some of what I was referring to.

Okay. And then I think you mentioned on the senior side, you're dialing back, you know, one joint venture. I believe that's the selection one in Quebec. Okay. Are you looking for a new partner in Ontario, too, on the senior side?

So I just want to correct you. I know why you said Quebec. It's actually in Ottawa, but yeah, Group Selection are out of Quebec in all the litigation, and most of their properties are in Quebec. That's true. Correct. So, I mean, we were always and are still in touch with all seniors' operators, and And so, um, uh, you know, we, we, we had a number of Rivera's on the go. Um, we've, uh, we've, those are still, you know, the relationship with Rivera is still very strong and very good. Um, but we slowed down that program. Um, and, uh, and we were in touch with others and, uh, yeah, I wouldn't be surprised if we have some information to share somewhere up the road about, you know, some seniors' homes with some other than Rivera.

Okay. And is there a particular reason those things are going slower? It's just, I mean, for one, I could imagine that just, you know, generally speaking, the whole seniors' industry kind of slowed down during COVID period. Or is there anything specific sort of around the relationship you're trying to build?

No, it's really construction prices. I mean, the construction, you know, the construction prices of the simplest building have gone up. We'll get into, if you want to, whether they're coming down or not. But seniors, I mean, you know, is probably on the spectrum of, you know, complex construction and exposure to price increases is probably on the outskirts. So it really is really just around waiting for prices to come down a bit.

Okay. And then just on the balance sheet, I think you're making reference to that, you know, your sort of average term to maturity was around, you know, the three-year range. With the shape of the curve and how you're thinking about interest rates, like what's, what's sort of the goal as you do more refinancing going forward? Do you look to try and lengthen term here or keep it roughly where it is?

I'll let Peter can answer, but you know, that could be, I could ask you, I mean, um, I guess, uh, you know, you can read, uh, what the, uh, what the, uh, big brains are thinking when you look at, you know, the, the spreads and the, and the embedded, um, rates for the various terms. But, you know, I don't know. Everybody's got their own opinion. I personally think, you know, there's a lot of motivation to try to push them down a little bit. I think, you know, we're never going to see or we're not going to see those rates where we were before for a long time or ever for the foreseeable future. But I think, yeah, we're just getting our mind around sort of the mid-range in terms of term for now. I don't know right now if you ask me do we want to lock in for the long term at these rates, long term meaning 10 plus years. We're not super excited about rates and locking into them for 10 years, but everyone's got their opinion and we're really only dealing at the moment with the one with one maturity.

Tal, I think you said the weighted average remaining term is about three years. It's actually closer to four. It's 3.9. I just want to make sure you understand that it's a little longer than that.

Okay. No, that's it for me. Thanks very much.

Thanks, Al. Thanks. Thank you. And sorry for the confusion that we had, just a little technical glitch. All right, our next question. is going to be from Gaurav Mathur from IA Capital Markets. Please go ahead, Gaurav.

Thank you, and good afternoon, everyone. Just sticking to the balance sheet for the moment, with the upcoming $200 million maturity, Peter, would it be possible for you to discuss where pricing currently stands and whether it would be possible to replace a debenture with another one?

So as I mentioned, Gaurav, we're looking at multiple options for refinancing, including debentures, including looking at drawing our lines and so forth. As for current pricing, I mean, you work for an investment dealer. Your insight on this is probably at least as good as ours. And you heard Mitch's views on the various tenors.

Yep. Okay. Okay. Can't blame you for trying. And just lastly, on the ASFO payout ratio, Is there a range that you're targeting to be within, you know, for 2023?

So for 2023, you're not going to see all that much difference over the course of the year. We've actually just finished our budgeting exercise, and we do expect it to decline over the coming years.

Okay, great. Thank you for the call. I'll turn it back to the operator.

Perfect, thank you. That was your last question? Okay, thank you, Gaurav. All right, our next question will be from Lorne Kamar from Desjardins Capital Markets. Please go ahead, Lorne.

Thanks. Good afternoon, everyone. A couple of quick ones from me. You mentioned capital recycling. I was wondering if you could maybe give sort of a quantum as to how much you kind of expect to do over the balance of the year.

Well, we don't know what we'd like and what we do. I mean, you know, we're happy with our portfolio. We'd like to improve our debt metrics, so we're highly motivated. So it's really just going to be a question of market conditions. We've got very desirable assets, both, you know, IPP and surplus lands and zone surplus lands. So, you know, if we had our druthers, we'd probably – be talking in terms of, you know, two to 400 million. Um, but, um, you know, that's just provided that, you know, they're, they're, uh, fair pricing, you know, I can share enough.

And I mean, maybe just sticking with this or, or, you know, have buyers started to come back? Obviously there's a bit of a lull, but things seem to be hopefully stabilized. And it's just wondering what you're seeing in terms of appetite.

I mean, obviously, there's not a lot of data points over the last six, maybe even 12 months, but we do feel it. We get inquiries. We've been getting inquiries over the last month and a bit. On the land side, zoned land in good markets, both the players in those markets, the private developers and some institutional players, types are interested in specific properties. So that side of it, we feel interest. Okay, great.

And then just a quick one maybe for Peter. Would it be fair to kind of extrapolate the FFO contribution from the transit city sales in 1Q through the balance of the year? Is that kind of a fair way to look at it?

Yeah, although it's not going to be equally spread out over the course of the balance of the year. It's going to be front-end loaded to Q2 and Q3. It'll be a small number at the end of the year. Perfect, perfect.

And then just lastly, on the Pickering industrial development, obviously industrial is hot, hot, hot. What are expectations for getting the rest of that leased up?

We have a lot of interest. It's all what you're hearing. At least it's been true for us in Pickering. on the vacancies. We have a number of things under negotiation right now. But until it's done, it's not done. So it's hard to say. We really hope in the next month or so we'll have an executed agreement. And then in terms of rent commencement, we still have to pour the floor. And a few other things that we did so as to accommodate any possible tenant. So really rent commencement maybe by the end of the year. And what would sort of be the range of net rents you're looking at? We are, we're, depending on what kind of work you want us to do, we're sort of quoting $15 to $16 net with some reasonable, you know, meaning, you know, kind of, you know, inflationary type increases on a, Ideally, a 10-year term. Okay, great. Thank you so much.

All righty, perfect. Thank you.

All right, so we'll just, again, if there's any participants who'd like to ask a question, it is star one. If you'd like to withdraw your question, it is star two. But as of now, there is no questions in the queue. Okay.

We'll just wait maybe another few seconds here if there's any last questions that queue up. All right.

Yeah, and it seems like there is no questions in the queue at this time.

Okay. Well, thank you for participating in our Q1 analyst call. Please reach out to any of us for further questions. Have a good day.

Bye, all. Thank you, ladies and gentlemen. This concludes the Smart Center's REITs Q1 2023 conference call. Thank you for your participation, and have a nice day.