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Good morning, ladies and gentlemen. Welcome to the Dream Office REIT Fourth Quarter 2017 Conference Call for Friday, February 23, 2018. During this call, management of Dream Office REIT may make statements containing forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many in which are beyond Dream Office REIT's control that could cause actual results to differ materially from those that are disclosed or implied by such forward-looking information. Additional information about these assumptions and risks and uncertainties is contained in Dream Office REIT's filings with securities regulators, including the latest annual information form and MD&A. These filings are also available on Dream Office REIT's website at www.dreamofficereit.ca. [Operator Instructions] Your host for today will be Mr. Michael Cooper, Chair and CEO of Dream Office REIT. Mr. Cooper, please go ahead.
Thank you, operator. Good morning, and welcome to Dream Office's Year-End Conference Call. Today, I'm here with our CFO, Rajeev Viswanathan.Yesterday, we announced that Jane Gavan will focus on leading Dream Global and I will lead Dream Office. Jane and I have been working very closely together for 20 years as of this April 30. And Global had a sensational year last year. It grew very profitably. It was up about 35% and has garnered much interest from European investors. With Dream Global getting larger by assets, people and profitability and operating in 4 countries, Jane will devote all of her time to running Global. Dream Office has changed dramatically since we announced our plans exactly 2 years ago. We continue to have some capital allocation decisions to make before we are on our steady state, but we are shifting our focus to managing our 30 long-term assets to maximize their long-term value. Over the last 2 years, Jane has managed the business plan, while I have worked with the team on our strategic plan. With Jane pursuing Global's success, I'm pleased to be able to oversee Dream Office.Over the last 2 years, we have undertaken a massive strategic plan intended to focus our business on our very best assets; reduced our overall capital, including lowering our debt ratio, reducing its outstanding. We have shrunk the company from 166 assets with an asset value of $7.2 billion to under 40 and just less than $3 billion at book value. We still have a few remaining assets that we want to sell, and we expect to own about 30 assets for the long term. 19 of these assets or 60% are in downtown Toronto, and another 2, or 10%, are on the center of Mississauga and North York. I want to sincerely thank Jane for her contribution as the CEO of Dream Office over the last 4 years. Now Toronto is undergoing a major change as it continues to have growth in excess of just about -- it continues to have population growth in excess of just about any large city in the developed world. Its significance in Canada is growing, and Canada's significance globally is also growing. The Toronto office market has performed better than just about any market in North America, and rents are also increasing more quickly than in many years. We believe that Toronto will continue to be an increasingly significant city, and the best real estate will also become increasingly valuable. That is why we have concentrated much of our investments here.Before I get ahead of myself, Rajeev, will you discuss the financial highlights? Then I'll follow up with a few comments, and then we would be happy to answer any of your questions.
Thanks, Michael, and good morning, everyone. Our NAV per unit increased by just over $1 quarter-over-quarter to about $23.50 a unit, driven by valuation uplifts in Toronto, partially offset by write-downs primarily in Saskatchewan and, to a lesser extent, Calgary. As Michael mentioned, Toronto is perhaps the best office market in Canada and arguably North America. Accordingly, our valuation uplifts for Toronto in the quarter reflect a compression to capitalization rates and an increase in our market run estimates, which are all supported by third-party appraisals for all of our Toronto assets at year-end. For the quarter and on a year-over-year basis, our FFO per unit was down. However, this was a result of our conscious effort to build a higher-quality company focused in downtown Toronto with an industry-leading balance sheet. We decided to repay low-rate debt with proceeds from higher-yielding asset sales, which caused the drag on our FFO per unit, partially offset through unit buybacks. We believe this trait maximizes unitholder value and it has been recognized in our unit price performance, which has returned 20% on a total return basis in each of the last 2 calendar years.In respect to capital allocation, we've been very active during and post quarter. Our disposition program continues with the properties identified as held for sale at year-end having now all closed and another $100 million in the active disposition pipeline. We also participated in the quarter in Dream Industrial REIT's equity offering back in November to retain our ownership interest and redeploy some of our cash. Lastly, we repurchased the remainder of the allowable units under our NCIB program, purchasing 3.7 million units in the new year. Our balance sheet and liquidity position had never been stronger, with almost $500 million of available liquidity and $300 million of unencumbered assets, along with the reduction to our debt levels from over 50% back in 2016 to under 40% today. Over the next 2 years, we have very few mortgages coming due and about $290 million of unsecureds, which we are looking to repay. We continue to believe NAV per unit at this juncture is the most appropriate measure to evaluate the business as opposed to income metrics such as FFO or AFFO. In our press release, we have provided information regarding our existing and upcoming vacancies that will materially impact the numbers in 2018. We did also want to provide 2018 NOI guidance for each of our key markets, understanding that 2019 is a year that the business will start to stabilize. In Calgary and our 2 assets in the GTA, without factoring in some pruning of the assets we still own in Calgary, we expect NOI performance to be flat relative to 2017 for both markets. For Ottawa and Montréal, we expect NOI to be down about $4 million relative to 2017, driven by the upcoming Bell Canada vacancy at 700 De la Gauchetière, along with the impact from the roll-down on rents back in May 2017 from the National Bank deal, which we previously discussed. We are, however, confident in our ability to re-lease most of the remaining 100,000 square foot of exposure, given the positive market dynamics in Montréal.And in Toronto, our NOI performance will be slightly down, impacted by the 438 University vacancy, which has been addressed with the deal starting this December, mostly offset by the achievement of higher rental rates and occupancy. We are also targeting approximately $200 million of dispositions this year, including $100 million we are actively working on. Most of these dispositions will come from Saskatchewan, with a few in Calgary as well. And I will now turn it back over to Michael.
Thank you, Rajeev. We've been guiding our investors and analysts to focus on January 1, 2019, as that is when we believe we'll have our business positioned to where we want it to be. Although we're ahead of schedule on sales, we still have lots of work to do. The third quarter marked major progress aligning our portfolio. We have identified about another $250 million of assets that we still wanted to sell as of year-end. Since then, we've completed the sale of $50 million, and we worked through the balance over the remainder of the year. Although we are not yet done on our asset sales, we feel confident that we will complete them, and the outcome will not affect the value of our business significantly one way or another. When we announced our strategic plan, we had 113 million units outstanding with just under 50% debt. We now have 75 million units outstanding with just under 40% debt. How people use office buildings is going through vast changes, and there's a big difference in value based on how suitable a building is for today's tenants' needs. Our assets are much better now in that they are located in desirable locations, they have access to great transportation and tenants want to rent space in our buildings.Since the end of Q3, while we continue to focus on capital allocation, our major focus has shifted to how our management team will work together to provide more value to our tenants and our buildings. Gordon Wadley has been promoted to Senior Vice President in Commercial Properties, and he is overseeing our downtown Toronto portfolio. Andrew Reial, the Senior Vice President of Portfolio Management, is responsible for the value maximization of some of our most significant assets, like 700 DLG, Sussex Centre, 5001 Yonge and our Edmonton and Burnhamthorpe property, Calgary, and the assets that we continue to want to sell. We also have a very motivated team that is pursuing ways to retain and attract tenants through increasing our tenant experience. While these changes are individually slow to implement and difficult to measure the value, we do believe they will prove out to be very valuable. Our portfolio consists of assets that provide a full benefit of owning real estate. We are concentrating on high-growth markets with exceptional assets that can be improved, intensified and redeveloped to continue to grow our cash flow and our value over the long term. As we make more progress, we will outline some of our operational initiatives. The Toronto market is very strong. We are seeing average increases of over 15% on rent, on new leases and renewals. We have much of our 2018 Toronto renewal spoken for and have already committed more space than we have expiring in 2018, so we will see increasing occupancy. While our NOIs are increasing as new leases kick in, we think the increases of future yields will be more significant as the leases we are able to complete now commence. As a result, we expect to see growth in the properties in Toronto that are meaningful. We also will work on increasing occupancy in Sussex Centre and 700 DLG, which would move the needle for us. In Calgary, we have some great assets, but it remains very difficult to lease space. And if we are successful enough to lease space, the rent isn't much. So we're not expecting any growth there. This year, we expect to make an application for the redevelopment of our 16-acre site at Edmonton and Burnhamthorpe. The right -- the light-rail transit will open in a couple of years, and this area will undergo a transformation. Each of Choice REIT, SmartCentres and RioCan also have sites being rezoned and redeveloped basically adjacent to us. The other application for rezoning we want to submit during 2018 is an application to redevelop 250 Dundas Street West. We will provide more details on these 2 assets once the filings are made and become public. We are also working on intensification upgrades at Adelaide Place, 357 Bay Street and 80 Richmond. Each of our 19 buildings in the Toronto core have the potential to be maximized and become the type of real estate that you see in the center of European cities and some major urban centers, where they're impossible to acquire and when they rarely are sold, their pricing is very high. We are working on creating value in our assets individually and working together so that we have one of the greatest portfolios of office buildings in this city. The balance of our portfolio, being 10% of the GTA and 30% primarily Montréal and Calgary, are excellent assets which provide some diversification. We believe that we can see asset value and cash flow growth in Montréal and the GTA, and it's still further away in Calgary.Two years ago, we announced our strategic plan and said that we'll be focused on acting like a private equity firm, with our primary metric asset value growth. We have made much progress. 2018 continues to be a transitional year as we complete some asset recycling, sell some space that was known to go vacant when we announced the plan, prepare for intensification and redevelopment, and, probably most importantly, adapt our approaching at the most -- at each assets for our tenants and our owners. All of our efforts over the last few years at being the best company we can have for 2019, and we think we're on schedule. We would be happy to answer any of your questions that you may have now.
[Operator Instructions] And our first question comes from Mark Rothschild from Canaccord.
Maybe on regard to the IFRS NAV. Mike, you made some comments about the strength in the Toronto office market. To what extent do you believe that the current values are reflective of the value that you see and that others would see in those assets? Or do you believe that the current IFRS NAV is somewhat backward-looking?
You know what, it's interesting you say that. We had that conversation with the board yesterday. We didn't believe the IFRS value in Calgary 1.5 years ago. And with a lot of determination, we've dealt with the auditors and we marked it down by half, and it turned out that those values are what everybody's values are today. So you what, this whole process of IFRS value, it is what it is. Clearly, we have -- we see more value over the long term than what the appraisers see.
But in the near term, do you believe that this really reflects the current value?
You know what, we've got a whole team that deals with the appraisers and auditors, and that's what they come up with. So I have my own private beliefs.
Okay, fine. And...
But, Mark, to be clear about it, we bought a lot of stock back. I think we bought a quantum of 113 million down to 75 million in the last 18 months. We've been buying as recently as last month at stock prices that are higher than here. We think our company gets better and better the more we concentrate on the core group of assets that reduce the shares outstanding. And whether the NAV today is what the appraisers say, we think there's a lot of value over the next number of years in this portfolio.
Mark, it's Rajeev. Let me just add...
Rajeev is going to defend his numbers now.
I just want to mention, we valued all our properties in Toronto using an income methodology, which is basically an office use. We've alluded to looking at developments for some of our Toronto assets, but none of that is reflected in our values today.
Okay, understood. And in regard to asset sales, I think you said you would like to sell $200 million of properties this year. Can you just talk about -- are you selling some -- I think you said you're selling some assets in Calgary. Is that something new? Or is that outward, there still were remaining assets you wanted to sell? And are all of the asset sales generally just going to be Saskatchewan and Alberta? I know you've talked also about these proceeds.
Yes, Saskatchewan -- primarily in Saskatchewan, so we have that non-core markets bucket in our MD&A. That's really where we're looking to get out of. And then I'd say a little bit of pruning in Calgary.
But those assets have been identified before.
There's nothing new there, Mark.
So this is not from the fixed assets in Calgary that you had intensified this quarter?
No.
No.
Okay. And then -- and as far as the use of proceeds?
Same as before.
Buy back stock?
Most likely pay down debt, buy back stock and, most importantly, put it to the buildings.
Okay. And then just lastly, you've increased your ownership in Dream Industrial. You've definitely transitioned Dream Office to have a significant exposure in downtown Toronto office. To what extent do you view this investment as a core long-term holding? Or is it more just opportunistic now because you believe Dream Industrial's units are undervalued?
I mentioned before that our tax base is really low because the Industrial REIT was spun out of Dream Office. We talk about this as well on the board, and there's quite a good conversation as to whether in the future, we should own more or less. But at this point, it's a 7.6 yield with a low payout ratio in an asset class that we think is very exciting. So I mean, we have no investment decisions to make now, but I think that we just like it for what it is.
Our next question comes from Sam Damiani from TD Securities.
Michael, just on your comments about the 2 applications you're going to be making for redevelopment. Maybe I misheard, but did you say Mississauga? Or was that the former...
No, no, no. There's the Burnhamthorpe and Edmonton, which is the 16-acre site that Aviva was a tenant of, and we're getting more advanced on our plans there. And that's a pretty exciting site as that whole area is changing. The one we're doing in downtown Toronto that we're totally focused on is 250 Dundas Street West, which is at Dundas and University.
All right. So that's the former Aviva. And in fact, I probably misheard. So both of these assets really don't have long-term leases -- obviously, the one has none -- -- that would prevent any near-term project, right?
I'm sorry, I don't understand the question. It's a little complicated. Aviva, we're going to continue to have some commercial space there. We are working on leases there. That only has to do with existing space, okay? But with 250 Dundas West, we're really looking at what's happening in the city and what we might be able to develop there. We think that is a great site for residential. And we want -- so we're looking at as much residential as we can put there.
Sam, at 250 Dundas -- sorry, I was just going to say, 250 Dundas, we have the ability to ask our tenants to leave with a year's notice as well.
Or are you asking whether we had a new tenant?
No, no. So that's helpful. I'm very much looking forward to learning more about those. So a lot of my questions have actually been asked. But just on the reinvestment of proceeds, and you talked about pay down debt, buy back some more stock, reinvesting in buildings. Nowhere was mentioned new acquisitions. I'm just wondering how you look at the market for new acquisitions today both in Toronto, which is obviously the key focus of the REIT right now, but wondering if you see any, potentially, markets that are undergoing distress right now that might be a good time, too, with the step-in.
No, I don't see anything in distress that has good intrinsic value. I think it's a pretty good market that way, so we're definitely not looking at that. We might look at acquiring buildings that are significant to our existing holdings that are strategic for us. Do you know what I mean?
Okay, yes.
I think the likelihood is any asset purchase we do -- we're not looking at anything right now, but if I guess, I would say, there's a high degree of likelihood any assets we buy, the property will be touching an existing property.
Right. Okay. And maybe just looking at 700 DLG, I just wonder if you could provide any more color on the prospect for backfilling that bit of vacancy that's coming back this quarter.
Andrew Reial just told me yesterday that he's had some recent success, so I think that we're feeling pretty good about it. I would say that Montréal is performing better as a city and an office market than it has in a long, long time, and I think it's quite investable now. So we think there's good upside on that building.
Our next question comes from Matt Kornack from National Bank Finance.
Just quickly turning back to 250 Dundas West, I assume that you wouldn't want to keep the legacy building there, it would be demolished and built up? And would it be a mixed-use project at the end of the day with some office exposure?
I would say that I wish I could say more than we're saying. There's a proposal -- there's a lot of things happening in how development is changing in Toronto, and a lot of it hasn't been resolved yet. Right now, the policy is that you have to maintain the commercial space that you have. In that case, it's a 130,000-square-foot building there, so that would have to be integrated into a new building. So we have to have at least 130,000 square feet of commercial, and the balance could be residential.
Okay. And I guess, you're probably alluding to the OMB changing out [ Regs ]. We haven't seen what the outcome is going to be of that, but has it changed your approach to what you're looking at from a development standpoint within Dream Office?
Well, throughout the Dream family, we have a lot of development activity in the city of Toronto, and we're quite active. What I would say is there's a fair amount of land that is already zoned. The price of that is unbelievable, like it has gone straight up since the spring. So what I'm getting at is zoned land is probably more valuable than it's ever been before. As far as the OMB, we don't know how that's going to turn out because that would have to be a new application that it doesn't apply to. So we'll see. I think that 250 Dundas West is at a pretty good place. Generally, the issue is there are some new policies that are going through committees as to how core buildings in the core can be developed, and we need to see how those turn out. It is a very difficult time to predict what the outcome will be.
And more generally, I guess, do you have zoning in place for any of your other existing buildings to intensify them? Or is that sort of new in the process, and you'll deal with it as the market changes and the new entity that approves these type of projects comes in?
Yes. We've got the 2 buildings that we're trying to get the first applications in this year. Just by the way, growth in the other provinces, there's nothing like an OMB, and there never has been. So you generally have to deal with the cities to find something that is attractive to them and attractive as a developer. We're used to doing that, so we'll see what happens here. There might be a bit of a rocky transition. But ultimately, there's a lot of people coming in Toronto. They need homes, they need office space, and I don't see it as big as a hurdle as other people do. I just think we got to focus on what we want to do and make sure it's something that the city values.
Fair enough. Quick question, it's not overly material to you guys, but on 425 Bloor East, the fact that it's a ground lease on that site, would that impede you from sort of redeveloping that? There's been a lot of high-rise residential in that area as well.
There has been a lot of high-rise residential, and it's been incredibly valuable as we have recently bid on some and lost in other businesses. But I would say that the lease is, at this stage, is a complete impediment to development.
Okay, fair enough. Just maybe, Rajeev, on 2019, or at least 2018 sort of blending into 2019, it sounds like that is going to be a good year for organic growth as some of these vacancies that are transitory are leased. But can you give me a sense as to how that sort of transition -- I assume you get some straight-line rent -- won't impact cash NOI, but FFO would be impacted positively, I think, at some point during 2018 on that front and then positively on the cash basis into 2019?
Yes, I think that's a safe assumption. I think you'll see with some asset sales, depending on what we do with the proceeds, yes, 2018 will be sort of, let's call it, quarter-over-quarter flattish. Although, next quarter -- sorry, for Q1, we got a $5 million termination fee coming in. So if you want to model that, that's fine. But, yes, 2019 is really when you're going to -- I will call it that inflection point starts to come through.
Okay, makes sense. And then one last question, on strategy. If you've and when you've dealt with the leasing at the property on Gauchetière, you only have one asset in Montréal, is that something that you'd potentially sell? Montréal cap rates have also come down fairly significantly. So wondering if that -- I mean, it's one of your core assets, but would it be potentially a sale property at some point in the future?
That's a really good question. I mean, Montréal -- well, again, we discussed this thoroughly yesterday, words like, if Montréal is doing so well now, do we think it's going to continue doing well, in which case, we should definitely keep it for the long term. Or do we think it's sort of, it's good now, but it may not be soon, and we're still going to work on it. But Montréal is doing very, very well. We only have one asset. It's 1 million square feet, so it's a significant asset that can fund itself on the G&A and stuff like that. So we don't think there's an issue about scale.
I guess, a tag-on question. You've locked National Bank in for 10 years, so that's good, but they've announced they're building a new headquarters not far from that site, which I think is good for Montréal generally. But how do you view the building that's attached to you in that context?
Thanks, Matt. Where do you work?
Nondisclosure.
Look, that was a surprise to us and the way 600 DLG and 700 DLG work is we actually share the below-grade. There's a lot of operational things between the 2 buildings. I think the area of town is good. I think those buildings are exceptional. That's been a bit of a shock. And we're not really -- we don't know yet if that's positive or negative or whatever, but we're going to be looking at it. So you're talking about pretty recent events, and there's still not a lot of clarity, so we'll be watching that closely.
Fair enough.
But I don't know, I don't think we have a view as to whether that makes our building more or less valuable in the short and long term.
And we'll be there presumably until construction finishes, and construction takes a while so it's not a near-term issue.
Yes. And National Bank's building is actually quite full, so it's really not -- look, like our lease is 10 years, we'll put that aside. National Bank's got a fully leased building that's not in competition with us, so they've got, I mean, pick a number, 5 years or something before they move out. So we're not sure in the short term it has a big effect, but we'll be watching closely, and I think there's opportunities there, too.
Our next question comes from Mario Saric of Scotiabank.
Just maybe one detailed question and then a couple of higher-level questions. So just on the detailed and kind of focusing on 2019, kind of in accordance with your discussion on the call. In terms of the lease expiries that have been renewed, the 1/3 of the expiries that have been done, what's been the mark-to-market on those leases to date?
Mario, it's Rajeev here. I don't have it handy, but let me give you sort of color, okay? Most of it has been done in Toronto. And as Michael said, we're seeing 15%, 18% in some cases. Like it's -- we're seeing material uplift in our rental rates relative to expiring.
Okay. And I guess there's some that's also have been done in Calgary, so would it be fair to say that, that offsets Toronto?
Correct.
Okay. And then on the [ 303,000 ] square feet that are expiring in Calgary in 2019, how much of that would be related to assets that you plan on selling in '18?
Not -- I'm just looking at the sheet here for a minute. Not a ton. Yes, but most of that is probably, I think, in -- I don't have it handy, but that's probably in IBM, which is an asset that we want to keep.
Got it. Understood. So then just maybe shifting to higher level and coming back to Toronto. Michael, to your point, I think there's been some surveys out there that have noted Toronto as a top 5 global market, never mind North America, in terms of vacancy rates over the next 3 to 4 years. Valuations are high. You're 61% concentrated in Toronto. How do you think -- clearly, you're positive on that concentration. How do you think about what may go wrong in the city? So when you're looking at the outlook, which is positive, what are the things that you're worried about, whether it's valuation or projected casual growth?
So your question is, how good is our imagination about dealing with risk to Toronto, and I would say incredibly good. How do I put this? It's been incredibly sad over the last week watching the U.S. news with these kids and what happened in the Florida school. And I think that probably the best thing in Toronto is there is a sense of safety, and there's some basic things that are incredibly valuable that aren't available in a lot of parts of the world. So I think that's actually the greatest thing we have going for ourselves. I would say the worst thing is -- I don't give a s*** -- our politicians are terrible. And there is no doubt in my mind that over the biggest threat to Toronto is that everybody is totally gouging at the trough and trying to eat up Toronto for government. You'll see in our soon-to-be released letter for Dream Unlimited, I think we're paying well in excess of 20% of our revenue in various levels of tax and levies across that whole company. If anything goes wrong, I don't know how much money is left to absorb it. So I think we have real political risk here in terms of the number of people who are paying taxes are too small. So I think there's huge risk there. I think there's a lot of global risk that could affect Canada, and Toronto would suffer from it. Anything that would mean the capital disappears is a real risk. I think there is risk around, is the premium cost of being in Toronto worth it compared to a Nashville or other things. So I think there are those kind of risks. But having said all of that, I think it is way more likely that Canada represents an incredibly safe and valuable place to put money in good quality assets, and that will rule the day. That's my first opinion. But what do you think?
Well, I've seen a lot of statistics that support your opinion, so I appreciate the color. On the capital disappearing, if anything, we've seen the opposite when it comes to Toronto in the last little while. Can you talk about whether you've seen any incremental shift in terms of foreign appetite, foreign institutional appetite for Toronto office outlets?
That's a great question. And what I would say is, it is accelerating at a rate I've never seen, and it's coming from everywhere. And last week, Choice REIT made an announcement, and that's basically the Weston family saying they want more real estate. I think you're seeing huge interest in high net worth in Canada and elsewhere. There's been a tremendous amount of money made in the bunch of businesses, and people are recycling that into real estate. People from all over the world are doing that, and they're interested in Canada. Our pension funds are huge. Other pension funds are interested. There is not enough real estate for the amount of capital that's looking forward.
Okay. And then just maybe, now that you mentioned kind of Choice and just dovetailing on some of the previous discussion with respect to your investment in Dream Industrial, a couple years back, you made the decision to follow the specialization route in terms of the various platforms that Dream operates in. Since then, we've seen -- more recently, several of your peers, but primarily the retail REITs, where, arguably, specialization is slowly turning into diversification in order to maximize underlying plan value. So from a Dream perspective, how do you think about the shift towards diversification and, perhaps, maybe a bit away from specialization when it comes to Dream Office?
I think I got it wrong. I thought people wanted the specialized businesses. That really started when we decided we wanted to invest in Germany, and we felt it wasn't right to sort of force that on investors who never made that decision. But it clearly hasn't been something that people care about very much. Although I think in most of the world, people really do like specialized vehicles. But my take on what's happening is, since the global financial crisis, real estate in Canada has become much more innovative than it literally ever was before. And what you're seeing is anybody who owns real estate starts from the real estate and says, what's the best use of that real estate, and how do I make the most money and provide the most value. And they pursue that, which means that a retail REIT that has a big parking lot can put up a seniors' home and it has nothing to do with retail, but that's how you take care of the best real estate. So I think what we're really seeing is the real estate is driving the use, not somebody's philosophy.
And our next question comes from Mike Markidis from Desjardins.
Okay, I apologize to everybody that not one name has been said consistent with how you like to pronounce it.
I've been called a lot worse, Michael, so it's okay. Quick question from me. Just on Aviva, I think you -- sorry, I don't want to call it Aviva anymore...
We're changing that, too. We call it the Edmonton and Burnhamthorpe.
Burnhamthorpe and Edmonton, yes, $41 million is your carrying value, so I think that's around $2.5 million an acre. Could you give us a sense of what type of incremental density you think is achievable at that site?
It's massive. So that site has something like 322,000 square feet of commercial space on it. It probably would be in the range between 2 million and 3 million square feet of potential density. We've got to retain some of the commercial, and we're happy to contain -- retain some of the commercial. So the real issue is how do we put together a development there that's appealing to the city that, through public space and uses that is desirable for us to build.
Okay. And Rajeev, just a technical question on how you value that asset then. So you file your application, let's say, and a period of time goes by and you're successful and you get zoned for 2 million to 3 million square feet. How does that translate through into how that asset is marked from an IFRS perspective?
Yes. So you're right about how it's valued today, about $2.5 million an acre, that's about right. Let me talk about, like for example, at 250 Dundas, okay? So if we were to get the approvals for density, density trades at X dollars per buildable foot. So at that point in time, we'll change the valuation according to that. So each of these are going to be sort of case by case, but the rules require you to look at highest and best use. And again, we haven't reflected some of that in some of our values because we haven't been able to figure out yet exactly what the highest and best use is, although we suspect we know what it's going to be.
Going to Aviva specifically, or as we like to call it, Burnhamthorpe and Edmonton, the $41 million is consistent with what we think the market value would be on sale. And through a development process, it would be more valuable. And I think at that point, we would value it for what its zoning would be then.
Okay, no, that's helpful. And then last question from me. Just to your -- with the $200 million of sales that you are targeting this year and the NCIB expired, is the SIB something that might be on the table again this year? Or is that something you wouldn't want to be down that path?
It's a nice path.
It's a nice path? Okay.
It's a nice path, yes. We'd do anything. I mean, like I don't think there -- whether we do it or not, I'm not sure at this time. It would depend on the situation. But I think we would look at our balance sheet, what level of debt we're comfortable with, what the opportunity is. And if that's paying down debt or putting it into buildings, I think Mark was asking, buying another property or buying back stock, we'd look at it all. I mean, I think we have to.
And our next question comes from Sam Damiani from TD Securities.
Just a quick follow-up on the balance sheet...
Sorry, Sam Damiani.
That's very well done. The unsecureds total around $290 million maturing over the next couple of years or so. You've fully provisioned that between you've got unencumbered assets, the credit facility and the assets securing that. I mean, you don't need to do anything more to put the REIT in a position to repay those debentures, is that correct?
Correct.
We have no further questions at this time. I would like to turn the call back over to management team for final remarks.
I'd like to thank everybody for their continued interest in the company. We appreciate it. And we look forward to sharing our first quarter numbers with you. Thank you.
Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.