Tryg A/S

CSE:TRYG

Good morning. My name is Ludy, and I will be your conference coordinator today. At this time, I would like to welcome everyone to the Minto Apartment REIT 2025 First Quarter Financial Results Conference Call. [Operator Instructions]



Before we begin, I want to remind listeners that certain statements about future events made on this conference call are forward-looking in nature. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially. Please refer to the cautionary statements and forward-looking information in the REIT's news release and MD&A dated May 6, 2025, for more information.



During the call, management will also reference certain non-IFRS financial measures. Although the REIT believes these measures provide useful supplemental information about its financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please see the REIT's MD&A for additional information regarding non-IFRS financial measures, including reconciliations to the nearest IFRS measures.



Thank you. Mr. Li, you may begin your conference.

Thank you, operator, and good morning. With me today are Eddie Fu, Chief Financial Officer; and Michelle Calloway, Senior Vice President of Property Operations.



Starting on Slide 3. On a same-property basis, we generated year-over-year growth of 2.1% in revenue, driven by a 3.7% growth in the unfurnished suite portfolio. This was partially offset by lower occupancy, decreased revenue for furnished suites and the temporary retail vacancy at Minto Yorkville, impacting our commercial revenue. Operating expenses also increased in part due to a cold winter. As a result, same-property NOI remained relatively flat compared to Q1 of last year. Normalized FFO and AFFO per unit decreased by 2.9% and 3.3%, respectively, reflecting lower NOI. We were also able to execute on a number of strategic objectives. Most notably, in January, we entered the Metro Vancouver market through the acquisition of a 50% managing ownership interest in Lonsdale Square property.



In addition, in January, we closed on the sale of Castleview, a noncore asset in Ottawa for net proceeds of $33.8 million. Since quarter end, we received proceeds of $19.4 million from the repayment of the Hyland CDL and executed an upward refinancing generating $9 million of incremental proceeds. We have remained very active with our NCIB program. In Q1 2025, we purchased $15.4 million of units under the NCIB at a weighted average price of $13.4 per unit, which represents a significant discount to book value. The NCIB currently remains an attractive use of our capital given the current discount to NAV and as a result, we have purchased an additional $8.4 million of units since quarter end.



In total, since we began buybacks in November 2024, we have purchased $28.2 million of units at a weighted average price of $13.29 per unit. Lastly, we are pleased to share that we have executed a long-term lease for the entire retail space at Minto Yorkville, comprising over 10,000 square feet. The lease term is 25 years and lease payments will begin in January 2026. The tenant is an experienced restaurant operator called Scott TC, a collaboration between the owners of both [ Terroni and Cumbridge ]. At our Yorkville property, they will offer a beautiful restaurant and premium grocery store aligned to the vision created at their first location at Yonge and Eglinton in Toronto. They will invest a significant amount of capital into the space, and it will be an excellent offering for our residents and the surrounding neighborhood.



I'll now turn it over to Eddie to review our first quarter financial and operating performance in greater detail. Eddie?

Thank you, Jon. Slide 4 provides some key details about our operating performance. Same property portfolio revenue was $37.7 million, reflecting a 2.1% increase compared to Q1 of last year. This growth was primarily driven by a 3.7% rise in unfurnished suite revenue, supported by a 5.3% increase in average monthly rent for the same property occupied unfurnished portfolio, which reached $2,021. However, this was partially offset by lower occupancy, reduced revenue from furnished suites and decreased commercial revenue due to the temporary retail vacancy at Minto Yorkville.



Colder winter weather and increased property operating costs led to flat same-property NOI of $23.2 million. Normalized FFO and AFFO per unit decreased by 2.9% and 3.3%, respectively, compared to Q1 last year. Normalized AFFO pay-out ratio was 66.4%, an increase of 410 basis points from Q1 last year.



I'll move now to Slide 5. This chart highlights the REIT's steady quarter-over-quarter growth in average monthly rent. Our realized gain on lease of 5.4% in Q1 was down from Q4 2024 as market rents have flattened and turnover remains lower for suites with tenants with city rents are well below current market rent.



Moving to Slide 6. We signed 418 new leases in the first quarter, generating realized gain on lease of 5.4%, down from 11.2% in the previous quarter, as I highlighted a moment ago. We generated solid increases of 9.9% in Toronto, 8.3% in Ottawa and 5% in Montreal. Our Calgary continues to experience competitive pressure from new supply that came online in 2024. As indicated in the lower table, the embedded gain-to-lease potential at the end of Q1 remained strong at 11.2% or $15.4 million.



Moving to Slide 7. The same-property portfolio annualized turnover was 16% in the first quarter, consistent with Q1 of last year. Overall, closing occupancy for the portfolio increased sequentially by 30 basis points to 96.1% from Q4 2024 as the REIT's strategic leasing initiatives effectively drove occupancy in the portfolio in recent months.



Calgary had higher annualized turnover than other geographies as Alberta is a non-rent control market. Our efforts to drive leasing, coupled with the absorption of excess supply in the market resulted in closing occupancy of 95.6%, a sequential increase of 250 basis points from Q4 2024. Annualized turnover for Ottawa was 15%, which was consistent with last year, while closing occupancy of 96.4% was in line with Q4 2024.



In Toronto, annualized turnover was 16%, consistent with last year. Closing occupancy remained stable from Q4 2024 at 95%. The Toronto market experienced a large increase in supply in 2024, which has continued into this year. This has resulted in higher vacancy and the flattening of market rent as that supply is absorbed. We expect supply-demand dynamics to improve in this market once the elevated condo and purpose-built rental supply, which we expect to occur in the next 2 years. In Montreal, turnover was 10%, while demand was strong, leading to a 70-basis point increase in closing occupancy from Q4 2024 to 97.2%.



On Slide 8, we provide an update on our commercial and furnish suite portfolio. Revenue from commercial leases decreased by 39.8% from Q1 last year due to temporary vacancy at Minto Yorkville. As mentioned, we have executed a 25-year lease for this space and anticipate lease payments to begin in January 2026 with gross annual rents of approximately $800,000.



With respect to the furnish suite portfolio, revenue decreased by 21% from Q1 last year due to lower average number of occupied suites, coupled with a decrease in average monthly rent for furnished suites. Since Q1 2024, we've converted 21 furnished suites to the unfurnished portfolios, including 10 at Minto's office. We expect to continue reducing the number of furnished suites subject to the local market conditions for unfurnished suites in both downtown Ottawa and Toronto.



Turning to the operating expense breakdown on Slide 9. Same-property portfolio operating expenses increased by 6.4% over Q1 2024, primarily due to increases in property operating and natural gas costs. Same property operating costs increased primarily due to annual salary adjustments and higher cleaning costs. Property taxes rose due to increase in rates and utility costs were up primarily due to an increase in natural gas expenses that were attributable to a colder winter, coupled with higher rates across the portfolio.



Moving to positioning on Slide 10. We repositioned 12 suites in the first quarter, generating an ROI of 9.3%. Over the past 4 quarters, we repositioned 53 suites and generated an average ROI of 9.2%. We expect to reposition 35 to 70 suites this year.



On Slide 11, we highlight our key debt statistics on a proportionate share basis. Our maturity schedule remains well-balanced. As of March 31, 2025, the weighted average term to maturity on our term debt was 5.2 years with a weighted average effective interest rate of 3.54%. At the end of Q1, 99% of our total debt was fixed rate. Total liquidity at quarter end was approximately $194 million.



I'll now turn it back over to Jon.

On Slide 12, we provide the current status of our development pipeline. The intensifications at Richgrove and Leslie York Mills continue to progress with stabilization of the project expected in Q3 2026 and Q3 2027, respectively. Stabilization dates for both have been conservatively adjusted to accommodate a longer lease-up period, considering the current competitive leasing environment in Toronto.



We continue to maintain a disciplined approach to evaluating purchase options on the CDL property. In February, we allowed the purchase option on the Hyland to lapse and in April, we received repayments of $19.4 million related to senior. Stabilization of 88 Beachwood in Ottawa is expected by the end of 2025 and University of Victoria is expected to be stabilized in 2027.



I'll conclude with our business outlook. There are a number of factors that have introduced some near-term uncertainty into our industry. Having said that, we believe that the long-term fundamentals supporting Canadian urban rental housing demand remain intact. There is an acute housing shortage in Canada. This is coupled with the relative affordability of renting versus owning that makes it highly attractive to millions of Canadians. Given the current persistent market uncertainty, some Canadians have paused large purchases such as real estate and most of these Canadians will continue to rent.



In Toronto, we expect that the majority of planned supply deliveries will occur by 2026 with fewer new starts expected to follow. This slowdown in development activity is anticipated to lead to more balanced supply and demand conditions in the Toronto rental housing market over the medium-term. We have taken multiple steps to strengthen the REIT, including improving our balance sheet, increasing cash flow and high-grading the portfolio, which is helping us navigate this near-term uncertainty and position us for long-term success.



That concludes our prepared remarks. Operator, please open the line for questions.

[Operator Instructions] Your first question comes from the line of Golden [Indiscernible] with TD Securities.

Hey, Golden, it's Jon. It's really hard to hear you. You're very choppy. I don't know if it's your line or our line

How about now?

Yes.

All right. Yes, last quarter, you talked a bit -- you talked about leveraging more incentives to help increase lead traffic. I guess heading into the spring leasing season, how are you thinking about the use of incentives? And I guess, particularly across your Toronto and Calgary markets, which are working through some more of that elevated supply levels?

Yes, that's right. And so, I think maybe I'll just back up and talk a little bit about kind of some of the approach to leasing changes and strategies that we've been employing since the beginning of the year. So, as you mentioned, we have been employing more promotion. But since the beginning of the year, we have been occupancy, and we have made some pricing adjustments as well as promotion changes and a little bit more use of promotion across the portfolio. And we think that's relatively consistent with the market. And we have been seeing some success, and this is evident from our ending occupancy being higher than our average occupancy. And we're seeing that continue to tick a little bit higher through April and May.



And also, traffic and tours and unique leads that we measure are trending higher in April and May, and we're working hard to convert those leads and applications into leases. And we're hoping for a little bit of an increase in occupancy from here to Q2, but time will tell. And however, it is coming at the cost of a little bit of growth. And as we've offered reduced rates and more promotion, the growth that we've been realizing is slowing down as you're seeing in our numbers. And it has been a little bit more acute in Toronto and in Calgary. I think as expected. And I think in Toronto, unfortunately, that's probably going to last for the next couple of years. I think by the end of 2026 is when we'll see most of that supply hopefully be delivered and then start stabilizing.



And in Calgary, it's a little bit shorter, I think. I think maybe the end of this year, beginning of 2026, we'll see that slow down a little bit. But we've been trying to be pretty transparent with what we're seeing on the ground. I think we mentioned this, as you said, kind of last quarter. And it's not a massive step change, but we did start slower in 2025 than we had originally anticipated in even our internal forecast. So, we're -- I'd say we're tracking a little bit behind where we thought we would be kind of at the end of November when we did the budget, but not materially. We think we're in a decent spot to catch up. And I think some of the things that we're seeing right now are slightly encouraging.

And your next question comes from the line of Brad Sturges with Raymond James.

I appreciate the commentary there on leasing. Maybe just expanding to other parts of the portfolio, just Montreal and Ottawa. Just curious what you're seeing there. I noticed at least with Montreal that the leasing spread on churn was a little bit lower than maybe some of the other markets. So curious to get your thoughts on those 2 markets.

Yes. I think contrary to some of the weakness we're seeing in Toronto and Calgary, I think Montreal has been pretty strong. I think we do expect that leasing spreads, we hope they start expanding a little bit, especially as we get to that July time frame and pretty positive leads and traffic data points that we're seeing in Montreal as well. And Ottawa has been pretty stable. I'd say there's been a good kind of tug of war between supply and demand there. And I think our portfolio stacks up pretty well to the new condos that kind of come up and some of the new purpose-built rentals as were much larger spaces or units and we're kind of cheaper on a per foot basis and even on an incremental -- sorry, a total dollar amount as well. So those 2 markets are pretty stable. It seems to be at least our portfolio is. And so, we're cautiously optimistic we'll see a little bit of occupancy uptick in those markets, too.

Within your furnished suite segment, obviously, the number of units keep coming down as you convert to unfurnished. But just curious, the macroeconomic environment or some of the threat around tariffs, is that having sort of an impact on demand in the spring and summer?

Yes. I think we have made a decision a while ago to wind down that business as there really have been some structural changes on the demand side of things that we think were permanently changing. And some of those were look, the film industry really did not snap back the way we thought it would after COVID and after the actors and writers strikes. So that's been a bit of a -- we think a sort of structural change. And President Trump didn't help things when he said that film production outside of the U.S. would be tariff by 100%. So, like I don't know if that's kind of bluster or that's going to happen. But at the same time, it's not helpful. And so that's one thing. I think corporate travel has been reduced quite significantly. So, we're seeing less of that. We're seeing -- with the interest rate environment being as it is, people are kind of buying fewer houses, renovating less. And so that business from those people who need a short-term rental stay because they're renovating their house or because they're moving and the sale and the purchase didn't line up perfectly, that business is pretty -- has dried up quite a bit, too. So, as we saw this coming about a year ago, I guess, we made the decision to start winding it down permanently, and that we were on track to do it.



I think the one thing that we're dealing with now is that the overall Toronto and Ottawa kind of rental markets aren't as robust. And so, we're -- we've slowed it down because we didn't think it made sense to convert something from furnished to unfurnished just to have it sit vacant. And so, we're kind of keeping option value a little bit to maybe increase yields if we get that demand. But we are going to wind it down. It's probably going to take a little bit longer than what we thought. And so -- but we'll do it in a measured way, and we'll do it in a way that we think kind of can maximize our returns. But we are expecting in 2025, a reduction in that business, just to kind of answer your first question.

What would be I guess, just maybe kind of think about it from a modeling perspective, how should we think about that wind-down cadence? Should we take the 2024 sort of pace? Or would it be a little bit more accelerated going forward?

Well, I think from an operational perspective, we're hopeful we can get somewhere between 5 and 10 per month-ish going forward, kind of depending on demand. And so, in the next 18 to 24 months is when we were -- we could be exited from the business. Again, it's subject to market conditions, Brad. We're trying to be nimble here. But I think that the overall strategy is to wind it down.

And your next question comes from the line of Jimmy Shan with RBC Capital Markets.

The occupancy uptick that you're seeing going into early May, can you be a little bit more precise in terms of where does that sit today?

Well, I mean, I don't want to be too precise, Jimmy, but we're seeing a small increase across most of our geographies. Some are a little bit more than others, but it's not -- it won't be measured in hundreds of basis points, I don't think. I think it will be measured in smaller increments than that. But we're optimistic we're going to increase it a little bit.

And then on Lonsdale, I think when you bought it, you've underwritten a low 4-cap if I'm not mistaken. How is it performing against that today?

I think it's performing relatively stably. I think it's performing in line with the rest of the market. It's going to be an interesting next few months, Jimmy, because it opened May 1, and so, we're starting to see that those 12-month leases turn over. And we're going to have to chunk through some of that in terms of kind of how do those rents falling off compared to where market is, and there may be some ups and downs as it relates to that. We are seeing promotion use in the Vancouver market broadly, although we have a very excellent location. So, it's still early days. But the market, I'd say, is worse today slightly than it was when we were kind of looking at underwriting it even 8 months ago or a year ago.

And if I'm not mistaken, the FFO impact right now is fairly neutral, right, in the quarter? And do you expect at some point, it will turn positive at some point, I imagine this year?

I mean, that's the hope depending on kind of how the rest of this year and next year play out from an NOI perspective for that asset in particular compared to our underwriting, yes.

And your next question comes from the line of Matt Kornack with National Bank Financial.

Just a few quick follow-ups. In terms of the furnished suites, I think the in-place rent is about $5,700 a month, and you have, I think, 52% occupancy there. How should we think of what a long-term rent on that? I mean, Yorkville, presumably, you're getting pretty high rents even if you're getting someone in there for a one year lease. But how should we think of kind of that equation in terms of where rents go relative to occupancy? I think occupancy goes up, rents go down.

I think as you think about our furnished suite business, that rent is probably a decent estimation of what we're going to get in the future. But I think the average stays is going to decrease because we're winding down the business. So, from a yield and revenue perspective, I think from a rate perspective, it's probably going to around where it has been. But I think it's just going to -- the whole pie is going to start shrinking, have fewer suites and fewer stays.

I'm just thinking if you take a furnished suite and convert it to a long-term rental, I mean, like your occupancy would go up on a long-term basis, but you're maybe not going to get the same 12-month rent relative to what you're getting on a short-term basis.

We've underwritten that whole conversion is pretty neutral as we -- because I think we get about -- I think there's about a 30% premium furnished over unfurnished. And as we convert, we get higher occupancy to your point. And anyway, to cut through it all, we anticipate it to be pretty neutral as we convert these things.

And then just as we think about incentive usage, when you present your rents in your MD&A, is that net of the impact of the incentives? Or just what is the accounting mechanism for incentives? Because if we took your occupancy this quarter times the number of occupied suites and rents, I think even with that, the revenue came in a little light. And we're wondering if it was maybe incentive usage or if those rents are net of that already?

Hey, Matt, it's Eddie here. So, in the MD&A and the revenue numbers that we disclosed, those would be net of the impact of promotions we do for accounting promotions given, we would smooth out over the lease term.

And then for instance, for your AMR that you report, is that a gross figure?

AMR report would be gross.

And then can you give us a sense as to like on average across the portfolio, what would be the in-place incentives? I don't know if that's a possible figure to give because you don't have incentives on everything, but --

I don't know about in place, but it's approximately, on average, about a month per year with that number being slightly higher in Toronto.

And then lastly, just in terms of the -- I think you're at a historic wide spread between the expected gain to lease or the potential gain to lease versus what you achieved. And I think that's largely the nature of turnover skewing, as you mentioned, to leases that were more recently signed, people who have had a big mark-to-market potential are staying in their suites. But can you quantify that at all and whether you think it gets worse or better? And then as market rents inflect, presumably some of the negative drawdown will go away. Just kind of trying to think of the cadence and timing of how that flows through the market.

Yes. I mean, look, it's something that we've been trying to figure out too. So, we don't have any specific numbers to give you. But as you just said, as rents start to come down, obviously, that gap will narrow, I guess, between the leases or the gain to lease and the embedded rents. We suspect it's going to continue to be around where it is for the next little while. I don't see necessarily on the horizon, but that's how we're thinking about it, Matt.

But I guess if you -- if I think about it more broadly, you turned what, 20% of your portfolio at probably above market rents. So, like once those 20% left 1 year, assuming market rents inflect, that's really the downside potential. Everything else potentially has upside potential as people leave. I don't know if that's the right way of looking at it.

I don't know. I have to think about that, Matt. I don't want to react.

And your next question comes from the line of Kyle Stanley with Desjardins.

Just a quick one on the elimination of the consumer carbon tax. Can you just remind us of what you see the impact of that being for your results in the year forward into 2026?

Kyle, it's Eddie here. I guess for context, our 2024 carbon tax was approximately $1.1 million. Given the announcement was effective for April of this year, we obviously would have had some expense in Q1 embedded in our numbers, but there will be savings for the balance of the year, given obviously, with the winter and being front-loaded around approximately half of what we had in 2024 would have already been baked into the Q1 numbers. So, the remaining would be the savings that we would see in the balance of the year.

That makes sense to me. And then maybe just going back, Jon, the question earlier just on kind of Montreal and Ottawa and the leasing spread maybe being a bit lower, I mean, particularly in Montreal. And you mentioned hoping to see a bit more of a rebound in the July month. I'm just wondering, today, you mentioned demand has been pretty solid, but maybe what's keeping that leasing spread a bit more subdued and what maybe gives you the hope that you see that expand a bit into the summer? Is it just the focus was preserving occupancy, you did that and now you expect to benefit? Or just curious on your thoughts there.

Yes. I think it's a little bit of all of that, Kyle. Part of it is really just the leases that turned over that we saw. And what we're seeing at the beginning of the Q is just indicating that it's ticking up a little bit again. So, I'm not sure. It's all early indications, but it's positive relative to Q1.

And your next question comes from the line of Sairam Srinivas with Cormark Securities.

A quick question for me on refinancing. I know you guys have done some refinancing of the year now. Looking ahead, do you see more financing opportunity across the portfolio?

Eddie, maybe just go through our lease -- our upcoming maturities for 2025 and 2026 and the quantum's, please.

So for 2025, we have a few maturities, some of which we have disclosed as part of our subsequent events disclosure, which you will see in MD&A. We have in total $101 million coming due this year. We have successfully closed on approximately $50 million of that during the month of April with the remaining $60 million in the Q3 time frame. In terms of just context on rates, for the refinancing that happened in April, one of them relates to a mortgage in the approximately $23 million range. Our exit rate was at 3.54% on an effective basis, and we were able to refinance that with CMHC at 4.08%.



The remaining 18% that we had refinanced in the month of April was a straight renewal relating to a property in Toronto. The exit rate was much lower at that 1.65%. This one was done on a conventional basis given the activity at the property. So, our new rate is at 4.6%. And then for the Q3 financing, we're still currently underwriting that one. Our exit rates would be at 315 and our new rate will depend. But for context on today's C&D and CC rates, 5-year money would be around 3.5%, 10-year money would be around 4, 10%. So just give you some [indiscernible]. And then looking ahead in 2026, we have around $73 million of financing that would be in sort of the Q2 time frame and those exit rates are in the low 3s.

That's great color. And maybe on these mortgages are coming up, do you see any potential to actually finance it over there and probably unlock some more capital?

Yes, for the remaining refinancing for 2025 and 2026, we have upward refinancing opportunities on all of them. It's something that we'll evaluate. We'll look at the term, we'll look at the coupon, we'll look at our debt maturity ladder and also assess where and how we can reallocate that capital if we do upward refi. But to answer your question, there is upward financing opportunities on the radiant ones.

And your next question comes from the line of Mike Markidis with BMO Capital Markets.

Bear with me, I have a couple of technical granular things here. But just first off, following up on the carbon tax question Kyle asked. Can you just remind me in Quebec, does that fall off as well? Or should we be assuming that that stays?

For us, we see our savings in Ontario and Alberta. And Longville, which is obviously in D.C. technically has a carbon tax, but our use of utility here is slightly different. And let me just -- I'll check this Montreal, but I don't think that will happen.

And then just on the performance metrics you're showing in your MD&A. I guess, North Vancouver being equity accounted, but presumably your occupancy, I know it's small right now, but your occupancy and your AMR would be inclusive at your proportionate interest?

So, in our leasing metrics, there are metrics where we've included Vancouver, and we've ensured that we've highlighted one of those.

We can follow up offline. That's fine. I guess just last one for me. I apologize if the question has already been asked, but just wondering how you guys are thinking about continued dispositions at this juncture. And if you've seen any change in market for demand for legacy assets?

Yes. No, our approach hasn't really changed from the last time or last quarter. We're not marketing anything actively. And our portfolio remains quite attractive. And so, we are continuing to receive inbounds, but we were being very opportunistic about pursuing any of them. But what we're seeing in the broader market is there are quite a few listings out there. But I think kind of some of the buyer pools have -- at least what we're seeing has slowed down a little bit as there's just a lot of uncertainty in the overall market and in the multifamily market in particular. And so, we've seen -- time will tell to see if a lot of these listings that are out there actually get to the finish line.

And then just on your comment, just being opportunistic when you think about it, is it meaning you got to hit your IFRS value? Is it more dependent on what your potential uses of capital would be? Just trying to think of how you're thinking about that.

I think it's both of those things. I mean, the reality for us is that because it's a lot of capital to deploy at once if we were to sell even one asset, right? And so, it's got to be very accretive for us to do it. And right now, because we don't have any debt to pay down, unless we have an acquisition that we can perfectly match -- sell at a lower cap rate, buy at a higher cap rate, that would work. But it's really risky from an execution risk perspective to line up for us. And if we miss those targets because of financing or drags on or whatever, it would be really difficult for us to bridge that.



And you might say, well, I just need to sell an asset and buy back stock? Well, unfortunately, we can't buy back a lot of stock at once under our NCIB. As you know, we can only buy about $300,000 per day. So, if we got a $40 million cash injection from an asset sale, it would take a long time to deploy that capital in any manner. So, I think it would be kind of dilutive if we wanted to do that. So, when you put all that together, unless we got an extremely attractive offer that we just couldn't say no to, I think it would be -- at least in this market right now, it's difficult to find sort of an asset that we want for the pricing that we want on the acquisition side. So, the likelihood is lower for us to sell an asset.

And then just, I guess, I know you guys have passed on this a while back, but is Grifton Bank still a potential acquisition opportunity for you, still sit on the parent books?

I'd say in the longer-term, maybe. But right now, no.

No, I was asking the question more just in terms of you got that great potential on a disposition and maybe you could match it with that. That was all I was getting at, I guess.

It's possible, but that won't be high cap rate.

[Operator Instructions] Your next question comes from the line of Mario Saric with Scotiabank.

Maybe sticking to the capital allocation theme. And Jonathan, I appreciate that it's difficult to sell chunky assets to buy back your stock on your NCIB. But are the tax characteristics of the assets that you would consider potentially selling if you've got a good offer such that you'd be able to redeploy most of the net proceeds from the assets into something like an SIB, for example, where it's a bit chunkier?

The tax situation for every asset, I guess, would be different. I think the leverage situation is also different, which would change the net proceeds. We've thought about an SIB. But like given our size, given our liquidity, that's a lot of rate damage for us to sustain to just do something like that. I think just speaking freely and casually, like if it were only up to me, and it's not. But it was only up to me, instead of doing NCIB, I'd just assume we do something else more strategic than that. I just don't think chipping around the edges on an NCIB given our size and liquidity right now is a high likelihood event.

And then when you guys internally, when you think about leverage, do you guys focus a bit more on debt to gross book value or the debt to EBITDA in terms of capital allocation?

Yes. We look at everything. I think we skew more towards debt to GBV only because that's the metric on which we can borrow, right? Like we can borrow based on that metric for CMHC and for conventional. So, while debt-to-EBITDA is interesting, and we want that to be as low as possible, I think the driving factor would probably be debt-to-GBV and debt service coverage. So, in that kind of mid-40s, like we're very comfortable in the mid-40s, and we're comfortably under that right now.

Last one for me, just on the operational side. Jon, you were transparent in saying same-store revenue in '25 may come down from the low to mid-single-digit range from 5% last quarter. Is the low to mid-single-digit range still applicable? Or do you see potentially it coming down kind of even further than that?

No, I think low to mid for revenue for 2025 is still kind of in the zone of reasonableness. I think a lot of the stuff that we've talked about -- 2025 unfortunately, for us is a little tougher because tough comps based on last year, I'd say. I'd say the supply that we're working through in Toronto and Calgary, we've got Minto Yorkville furnished suites that we just talked about. You got Minto Yorkville commercial space that is vacant. So, we've got these, what I'll call 2025 headwinds that we hope will be gone in 2026 for the most part. And maybe there's a few more tailwinds in terms of you've got the Minto Yorkville commercial space starting to pay. You've got carbon tax. So, you've got -- we're hoping to get back to some normalcy in 2026, and we're cautiously optimistic about 2026. But I think 2025 is going to be a little bit of a challenging year compared to prior ones.

And then just on the new supply, when you look at your major markets, there's clearly a decent amount of it in Toronto and Calgary. But when we look at '26 versus '25, in terms of the pace of supply growth, is it fair to say that within all your markets, you expect supply growth to decelerate in '26 relative to '25 and perhaps meaningfully so in Calgary and Toronto?

I think in Toronto, we're seeing at least the estimates that we're seeing, 2026 deliveries are pretty similar to 2025. Whether or not they all get delivered, I guess, is one question as there's probably more downside to that number, i.e., it will be fewer deliveries than what is anticipated just because things just don't get finished. But 2025 and 2026, at least in Toronto, the numbers that we're seeing combined condo and purpose-built rental supply, pretty similar. You start to see a drop off in '27 and beyond. And again, like those numbers, there's probably downside to those numbers even on top of what we're seeing.



And then in Calgary, it happens a little bit faster. I think 2026 -- the numbers that I saw most recently, the 2026 numbers are lower than 2025 in Calgary. So that drove -- that informs our previous comments about working through the Calgary supply in 2025 for the most part.

And as it stands now, Montreal and Ottawa in '26, you're pretty comfortable with the level of expected supply there?

Yes, nothing overly concerning that we're seeing today in those 2 markets.

And I'm showing no further questions at this time. I would like to turn it back to Mr. Li for closing remarks.

Thank you very much, operator, and thanks, everyone, for your time, and we look forward to speaking with you again in the summertime. Take care.

Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.