© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, thank you for standing by. Welcome to the First Capital Realty Q3 2018 Results Conference Call. [Operator Instructions]I would now like to turn the conference over to Alison. Please proceed with your presentation.
Thank you. Good afternoon, everyone. In discussing our financial and operating performance and in responding to your questions during today's conference call, we may make forward-looking statements. These statements are based on our current estimates and assumptions, many of which are beyond our control and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied in these forward-looking statements.A summary of these underlying assumptions, risks and uncertainties is contained in our various securities filings, including our MD&A for the year ended December 31, 2017, and our current AIF, which are available on SEDAR and on our website. These forward-looking statements are made as of today's date, and except as required by securities law, we undertake no obligation to publicly update or revise any such statements.During today's call, we will also be referencing certain financial measures that are non-IFRS. These do not have standardized meanings prescribed by IFRS and should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Management provides these measures as a complement to IFRS measures to aid in assessing the company's performance. These non-IFRS measures are further defined and discussed in our MD&A, which should be read in conjunction with this conference call.I'll now turn the call over to Adam.
Okay. Thank you very much, Alison. Good afternoon, everyone, and thank you for joining us today. With 3 quarters of the year now behind us, 2018 is shaping up to be another very strong year for First Capital. At 96.5%, we've now posted our highest occupancy level ever in our nearly 2-decade history. It's a wonderful milestone that's a result of a high-quality portfolio that only continues to get better, proactive asset management and investment in our properties and a very strong leasing team, who is supported by the collaboration of many other teams in the company. At the same time, our in-place rents continue to climb from new leasing of market rents as well as development properties coming online. Our average net rental rate increased by 3.4% year-over-year to $20.14 at the end of Q3, which is also at our highest level ever and continues to be well above all of our peers. So highest occupancy ever with our highest rents ever. Not all retail is created equally. All of our key operating metrics were very solid in Q3, but we know this isn't a quarter-to-quarter business. So I'll cover the balance of our metrics on a year-to-date basis, which, I think, is more relevant. Same-property NOI is up 3.1%, including lease termination fees, and a similar 3.0% excluding them. So far this year, we've completed 2 million square feet of renewals, which is nearly double the 1.1 million square feet we did through the first 9 months of 2017. The lease rates on that 2 million square feet of renewals increased by 8% when comparing the rent in the last year of the expiring term to the first year of the renewal term and 10.5% when compared to the average rent during the renewal term, which sets us up nicely for continued contractual rent growth. In July, we announced several new strategic investments together with a corresponding equity issue. We noted at the time, those new properties have an above-average growth profile, consistent with the high end of our existing portfolio, and that these transactions, combined with our equity issue, were immediately neutral to NAV. At quarter-end, which includes the impact of the equity issue, our NAV per share grew to $22.54, up 1.5% from Q2, and 3.2% year-to-date. So our operating metrics continued to be strong through the first 9 months of 2018. This has contributed to FFO per share growth of 7.2% so far, with our full year expectation unchanged in the mid-single-digit range after factoring in our expectation for Q4, which will be a bit of the opposite of Q1 and Q2. Last year, we had nonrecurring items in Q4 that we don't expect to comp against as well as short-term dilution and deleveraging from our recent equity issue until the proceeds are fully deployed. Now on to our properties. Largely owing to their high level of excitement, our new development properties often get the most focus on conference calls and investor meetings and the like, which is great, and I'll certainly touch on them. But our business is much deeper than these projects, and the ongoing strength in our operating metrics demonstrate the significant growth from our same-property portfolio. These assets represent the majority of our properties with stable and growing cash flow in the short term, a tremendous opportunity through redevelopment or repositioning in the future. In the meantime, we continue to work them day in and day out. As these properties and the urban neighborhoods in which they are located continue to mature, they too will garner more of the spotlight as they transition from our 22 million square foot density pipeline into active redevelopments. In many cases, removing tenant rights make way for a strategic repositioning. Our 2 former Target spaces are a good example. We've demonstrated before how successful the outcome was from repositioning those spaces, both qualitatively and quantitatively. Our TransCanada shopping center in Calgary is another example. Our former food store was paying significantly below market rent, and notwithstanding, they vacated. Save-On quickly took the space, and we've upgraded the property with some capital and a new future pad. Now this is only a minor repositioning, but it increased the property value by 24%. While the real estate economics are very compelling, the repositioning has been a drag on same-property NOI in 2018 as Save-On doesn't commence rental payments until next year. These are the ebbs and flows that we need to balance. We'll have more opportunity to do something similar in 2 of our properties where Walmart will be vacating next year. Given the single-digit flat net rent, this represents a wonderful opportunity as we redevelop or repurpose their existing spaces, free up no-builds that have prevented additional density and accommodate new retailers to add to our merchandising mix, who have a strong desire to be at our properties, but where we've lacked available space to accommodate them given both properties are over 99% occupied.In total, in 2018 year-to-date, we have completed 2.6 million square feet of lease transactions, which is 33% higher than the 1.9 million square feet done during the first 9 months of 2017. New deals include PetSmart at Brampton Corners, Canadian Appliance at South Park, Kids & Co daycare at Royal Oak, [ Stale ] in Lanaudiere and Winners in both Semiahmoo and King High Line. Some notable new tenants in FCR's business include Jollibee, a very successful Filipino QSR retailer aiming to open 100 locations in Canada over the short term, as well as Miniso, a great concept from China with a Japanese flair whom FCR has now done 11 deals with on their entry into Canada. In our development properties, construction is now in full swing in our Wilderton property in Montréal and at Dundas and Aukland in Downtown Toronto. Both are significant mixed-used, transit-oriented properties that fit our portfolio exceptionally well. We're also preparing to commence construction over the next 12 months on 50 townhomes on our Rutherford Marketplace property, and following that, 420 residential units and 40,000 square feet of new retail at Yonge and Royal Orchard, both with Greenpark as our partner, although FCR will own 100% of the retail. We've also agreed to pursue the redevelopment of an under-intensified area of our Humbertown property in Toronto as Phase 1 of the redevelopment. Together with Tridel, we planned to develop a substantial residential tower with retail upgrade on 1.5 acres of the 9-acre property. Currently, there is only 8,400 square feet of built space in this area, which we plan to intensify by adding 30x the existing density, while leaving all of the 140,000 square foot main shopping center intact through this initial redevelopment phase.During Q3, we sold a 50% interest in our 200 Esplanade property in North Vancouver to Cressey, one of the most experienced and well-capitalized residential and mixed-use developers in Vancouver. Together, we plan to redevelop the property into a mixed-use residential and retail project. Another milestone was hit at our Mount Royal West project with Canadian Tire opening their first Downtown Calgary location last month. They will soon be followed by Urban Fare, who collectively anchored its 94,000 square foot urban development phase, which increases our position in this high-growth neighborhood to 385,000 square feet. In Toronto, most of our $50 million 102-108 Yorkville redevelopment, our tenants in it, including Versace, Brunello Cucinelli, Her Majesty’s Pleasure and Aburi Group, are all now in possession of their space and are preparing to open over the next few months. Over in Liberty Village, a few weeks ago, we were excited to host our analysts to a hardhat tour of our King High Line development, where many retail tenants, including a state-of-the-art 10,000 square-foot daycare, are getting ready to open next year as will the first residential tenants. We are now leased or in advanced negotiations with tenants for 95% of the 155,000 square feet of retail space. Feedback from CAPREIT, our residential partner, is that the retail amenities, including a Canadian Tire, Longos, Shoppers, Winners, the daycare I mentioned, and restaurants fully integrated into the property, has a direct impact on higher demand and higher residential rents. That's a big reason why we chose to be invested in the res and to keep it as rental. This project increases our position in Liberty Village to nearly 0.5 million square feet of mainly retail space, but with some office, plus over 500 residential units, representing over $500 million of investment at First Capital's share. Feedback from the tour is a deeper appreciation for the connectivity, public realm and overall community building this project represents as well as a better understanding of the functionality and flexibility of the urban space we are creating for today's and tomorrow's world. Transit enhancements, the inner workings of this truly mixed-use project and value creation were also highlighted. So that's it from me in terms of prepared remarks. I'll now pass it over to Kay. And Kay will review our quarter in more detail, after which we'd be happy to open up the lines for questions.
Thank you, Adam. Good afternoon, everyone, and thank you for joining us today. As Adam mentioned, we are very pleased with the results we achieved in the first 9 months of the year and in the third quarter. I would now like to take you through the Q3 results in more detail.On Slide 6 of our conference call deck, we show the factors driving the growth in FFO for the quarter and the year-to-date period. Our Q3 FFO increased by $2.8 million or 3.8% in dollar terms versus the same prior year period. This increase was due to 2 key factors: growth in same-property NOI of $2.4 million, driven primarily by rent escalations and higher occupancy levels; and growth in NOI from new acquisitions, exceeding the NOI loss as a result of disposition activity. As expected, our Q3 FFO of $0.30 per share remain consistent with the prior year period, primarily due to the temporary dilution and deleveraging impact of the July equity offering as the proceeds have not yet been fully invested. We would expect our Q4 FFO per share to also be relatively consistent with the prior year, given the deleveraging impact of the offering and given we are comping against $1 million in other gains last year as well as $1.4 million in prior year tax recoveries that we do not expect to repeat in Q4 of this year. On our Q2 call, we talked about our FFO growth being heavily weighted to the first half of the year, due to some shifts in timing and the recognition of lease termination fees and other gains versus the prior year period. We continue to expect our growth in FFO per share for the full year to be comfortably in line with our prior expectations of mid-single-digit growth. Moving to Slide 7. Our Q3 same-property NOI increased by a strong 3.6%, excluding the $1 million in lease termination fees recognized in Q3 of last year and the minimal amount recognized in Q3 of this year. This growth was primarily driven by higher same-property rental rates due to rent escalations and by increased occupancy levels. On Slide 8, our Q3 total portfolio lease renewal lift was 8.7% on 643,000 square feet of renewals when comparing the rental rate in the last year of the expiring term to the first year of the renewal term. For the quarter, the lease renewal lift was 11.7% when comparing the rental rate in the last year of the expiring term to the average rental rate in the renewal term. We present this additional metric as it is more common today that our renewals include escalations over the renewal term than it was in the past. This metric captures those escalations and conveys a more relevant picture, especially considering the average renewal term is less than 5 years. Moving to Slide 9. Our average net rental rate grew a healthy 3.4% or $0.66 over the third quarter of 2017 to a record high of $20.14 per square foot, primarily due to rent escalations, development completions and renewal lifts. The first 9 months of 2018 have been a big year for development completions with 197,000 square feet of new GLA being transferred from development to income-producing properties. This included 61,000 square feet in our Mount Royal West project in Calgary in Q2 and 15,000 square feet in our 102-108 Yorkville project during Q3, both of which Adam mentioned. We also completed new space in our King High Line, Yorkville Village, One Bloor, Brampton Corners, 3080 Yonge and Brewery District project, amongst others. On Slide 10, our total portfolio occupancy rate increased by 120 basis points since Q3 of last year to an all-time high of 96.5%, due to significant leasing activity over the last 12 months. Slide 11 highlights our 6 largest developments that accounted for the majority of the $55 million in development and redevelopment spend in the quarter, bringing our year-to-date spend to $165 million. As of September 30, we had identified approximately 22.3 million square feet of additional density within our portfolio, including 2.6 million square feet of commercial density, which is primarily retail, and 19.7 million square feet of residential density. This represents a substantial opportunity relative to the size of our existing portfolio, which is 24 million square feet. Approximately 2.9 million of the 22.3 million square feet of incremental density is included in the fair value of investment properties on our balance sheet. This 2.9 million square feet includes approximately 400,000 square feet that is under active development and is valued as part of our development projects and 2.5 million square feet of incremental density, which is included in our IFRS values at approximately $151 million. The remaining 19.4 million square feet of density is not included in our IFRS values, primarily due to lease encumbrances, which will free up over time. As we continue to close on our recently announced acquisitions, we expect our pipeline to grow by approximately 800,000 square feet. As substantially all of our portfolio is located in urban markets where significant land-use intensification continues to occur, we expect our future incremental density will continue to grow over time, providing us with future opportunity to realize value from this density.Slide 12 shows the factors driving the growth in FFO during the quarter and the year-to-date period. This slide also highlights our year-to-date FFO payout ratio, which improved to 69.9% from 74.9% over the same prior year period. Slide 13 touches on our other gains, losses and expenses, which are included in FFO. We recognized a Q3 2018 other loss of $600,000 versus a Q3 2017 other gain of $400,000. This was primarily due to lower net gains on marketable securities in the current year period. Slide 14 summarizes our ACFO metric. On a year-to-date basis, ACFO increased by $15 million or 8.4% versus the prior year period, while our ACFO payout ratio improved to 81.3% from 89.4%. Slide 15 summarizes our year-to-date financing activities. During the first 9 months of the year, we completed $176 million of new mortgages with 10- to 12-year terms at a very attractive average effective interest rate of 3.8%. This was much lower than the effective interest rate on the debt we repaid, which included $96 million of mortgages at 5.4%, $55 million of convertible debentures at 5.3% and $50 million of unsecured debentures at 5.7%. As previously discussed, we completed a $200 million equity offering in July. We continue to see attractive pricing for new long-term debt with maturities of 10 to 12 years and expect to continue to pursue these types of long-term financing opportunities.Slide 16 summarizes the size of our operating credit facility, our unencumbered asset pool as well as our key financial ratios. 71% or $7.3 billion of our total assets are unencumbered, which gives us significant financing flexibility. Our net debt-to-EBITDA ratio and our debt-to-asset ratios both improved in the first 9 months of the year as a result of significant disposition activity in Q1, increased EBITDA driven by higher NOI and the impact of the July equity offering. Slide 17 shows our term debt ladder. As a result of our year-to-date refinancing activities, our weighted average interest rate declined to 4.3% at the end of the quarter. Our weighted average term to maturity is now 5.1 years, and we continue to have future opportunity for interest rate roll-down in our near-term maturities. Overall, we are very pleased with the quarter and our year-to-date results, and we'd be happy to answer any questions you have. Operator, can you please open the call for questions?
[Operator Instructions] The first question is from Sam Damiani. Unfortunately, hearing no response, I will proceed with the second questioner. Question is from Dean Wilkinson.
Adam, more of a conceptual question. You've pointed out that making acquisitions in this environment, not that a lot of assets have traded, tend not to sort of drive any accretion near term, maybe even intermediate term, but how do you balance the view between growth and asset quality, knowing that to own and have the stuff that is coveted, that people are willing to pay up for, may necessarily not mean as much growth in the near term? And how do you balance that and how do you look at that and the opportunities that sit there?
Well, look, I think that's an excellent question because one of my biggest challenges, if not the biggest challenge, as CEO is to balance delivering respectable, consistent FFO growth in the short term while we make appropriate investments to drive and enhance that growth in the future. And if you look at the last few years, our FFO growth has been very good on an absolute basis and on a relative basis. But the reality is it would have been even better if we invested less over that period, but that's where the balance starts to come in and that's the case over the next couple of years. We expect decent FFO growth, but it would be higher if we didn't invest. But we're running a long-term business here. And the investments that we've made, including the recent ones that we just made, we are firm believers and I am a firm believer that those will contribute to more growth in 2 years, in 3 years, in 5 years and beyond. And so it's a huge challenge, probably the biggest. But it's easy to drive short-term growth, we just stop investing. But that's not in the best long-term interest of maximizing value over that period. And so the trick -- given we're a public vehicle and other things, the trick is getting that balance right. And I wish we had a wonderful Excel model that told us exactly the right amount to invest and at the right yields and in the right locations and properties, but we don't and that's our job as an executive team and, ultimately, as a board to oversee.
Well, that's great. I mean, it's a bit of a leading question. But I guess, being a public vehicle kind of hamstrings you in terms of having the freedom of a longer-term view.
Yes. Look, I don't know if I'd describe it as hamstring, but it introduces some important things that you have to be aware of and keep in mind when you make those decisions. And in a different structure, then those things are a little bit different or the emphasis on some of them could be a little bit different.
The next question is from Pammi Bir.
Can you -- Adam, can you maybe just expand on the Walmart vacancies that you mentioned that are expected for next year, which properties they relate to, and then maybe if there's some comments you can provide on re-leasing prospects or some of the redevelopment plans that you cited?
Yes, absolutely. And I'd say, in addition to Kay and Alison, we've got Jordie Robins here and Jodi Shpigel and Carmine Francella, all executives, prepared to take remarks. But the 2 Walmarts, Carmine is very close to them and the situation and so I'm going to ask him to respond to you, Pammi.
Pammi, it's Carmine. As referenced by Adam, we'll be getting 2 Walmart boxes back, and they're situated at our Cedarbrae and Fairview mall properties. Although this will result in some short-term cash flow interruption, we expect to generate significant upside, similar to what we've experienced with our Target experience. And as demand has been strong from tenants, we have been getting calls from Jim's Entertainment -- Home Improvements and specialty boxes. And at Fairview, we also have the ability to unlock some development controls on a very key piece of the property with high exposure, which we'll now be able to build a free-stand pad.
And just on those 2 locations, are they relocating? Or are they just moving -- shutting down in those markets?
I don't think it's for us to comment on tenant strategies. We're just focusing our efforts on creating value and improving the tenant mix.
Yes. What we know right now is they're leaving. And in the case of Fairview, it's safe to say, Carmine, we have more inbound interest from uses we view as complementary to the merchandising mix than we have available space. And at Cedarbrae, it's a little more complicated because I think that stands true, but there may be a broader opportunity in terms of the density that frees up and what we may do there.
So would it -- it's fair to say that downtime on those 2 properties -- are these maturities, are they towards the end of next year and then more of a 2020 type event in terms of you getting them back up?
Yes, they're second half and then 1 at the beginning of Q3 and 1 at the beginning of Q4. That's when the rent would stop.
Okay. Maybe just switching gears on One Bloor East. I think the rents, if I'm not mistaken, started in Q2, but was there much contribution in NOI in Q3? And can you maybe just provide an update on the lease-up of the remaining space there?
Okay. Why don't we start with the lease-up part, Jordie?
Pammi, it's Jordie. So Nordstrom Rack opened in Q2 and have been performing incredibly well. I think, by virtue of that, it's earned -- or spawned additional interest. McEwan is going to open their 18,000 square-foot premises in the latter half of Q4 or potentially even Q1. Starbucks is now open. We have a binding lease with a new to market, exciting tenant for all of the Yonge Street premises, about 4,300 square feet. And we'll likely be making an announcement with respect to that tenant and some additional tenants who are going to sign as well in the coming months. I would say, with respect to the Bloor Street space, it's been harder than we thought to find the right tenant. I would say that having -- or having said that, we're currently in negotiations with a tenant to take all the space and we expect that [indiscernible] event shortly as well.
Yes. We think -- the Bloor Street site is taking longer than we would have thought when we invested, but that's also a result of us being quite sticky on finding the right tenant at the right rent. So the reality is we're going to do a longer-term deal there, and so it's important to get that first part right. And given the other leasing that we've done, what's also very clear is that our cost is well below market value. On your first part of your question, I'm not -- based on what I think the question is, the only contribution -- we closed on the property in May, and it was only Nordstrom at that time that was in occupancy and would have been in IPP. Is that right, Kay?
That's correct. And since that time, McEwan's has taken occupancy and Starbucks as well. So the combination would be cash NOI as well as straight line rent.
Cash NOI is only coming from Nordstrom at this point.
Okay. So it's fair to say, I guess, this stabilization of the property or getting it close to full occupancy, cash NOI is more of a perhaps late 2019 time line?
Probably too early to say, but yes, that's not an unreasonable estimate.
Okay. Last one from me. There was a jump in the fee income in the quarter, I think to $4 million. Any color you can provide there on what drove that? And what do you sort of see as the normalized run rate?
So the fee income in the quarter, part of that relates to our investment in Main & Main Urban Realty, and that really depends on the timing of property completions or property sales. So it can move up and down from quarter-to-quarter. It doesn't have a stable trend.
Okay. But $4 million would be -- would not be normal. Is that fair to say?
That is correct.
I mean, it's lumpy. So normally it will never happen again. Absolutely, not. It certainly will happen again. And in some cases, it will be higher than that number. But in terms of it being a regular, reliable quarterly number, it's lumpy. So...
[Operator Instructions] The next question is from Michael Smith.
Your operating results were strong once again. They have been for some time. I mean, it belies the current negative narrative on retail. I wondered if you could just give us some color on the leasing market, market-by-market or submarket-by-submarket? Just give us a little color what it's like, what the demand is, who are -- who is expanding, who's contracting within your portfolio?
Okay. Thank you very much for the question, Michael. Look, the bottom line is not all retail is created equal and the gap between good retail and bad retail is certainly the widest I've seen in my career. And the reason that our results are consistently coming in well ahead of the perception of retail in not only the capital markets, but the broader markets, in general, is the result of the fact that we own and operate in a very specific subsector of retail. And the fundamentals have been actually very good and go against what the broader narrative is. But we're not going to -- there's no point in us trying to go beyond that because it's out of our control, so we'll buckle down. And we believe in our strategy and the assets and the direction and the value creation and that we're focused on execution of that. So in terms of the last part of your question relating to -- there are no markets that we're going to be able to point to and say these are working better than most. It really has been broad-based. I mean, some quarters, you can see Calgary, like, with a big spike and, in other quarters, Montréal and Toronto. So we -- there's no trend geographically in our portfolio that we can speak to. But in terms of where the demand is coming from and who's expanding, I think, Carmine, you can shed some light on that.
Michael, I think in the previous call, I used the word robust and I do so again today. We see a lot of active tenants out there and the most active categories are fitness, drugstores, dollar stores, sitdown restaurants, specialty and organic food stores, coffee shops, off-price fashion and, let's say, numerous quick service retailers. But this demand is what's driving our occupancy and our ability to increase rents. And a lot of them are looking for properties in urban markets, which aligns itself well with our portfolio.
And just for the record, we are full believers as well, that not all retail is created equal. Can you give us some color on development costs, trades, material? I mean, there is a lot of chatter these days about shortage of trades, costs, what have you. You've got a good-sized development program, maybe just give us some color on how that's all going.
Yes. I mean, certainly there is cost pressure. There's probably more work out there than the availability of qualified trades. And so we've changed the composition of our construction group over the last 2 or 3 years. And so that's been helpful. So we have cost estimators in-house who have direct relationships with trades. That's been helpful -- and also in estimating cost. We would have a stronger capability today than even a couple of years ago. And we're doing the things that you want to do to attract the talent and the sub-trades that you want, which is steady work, reliable payment and things that would be -- just make you a good client, which is also helpful. And then lastly, for some of the big complicated projects, especially where there's a residential component, one of the several reasons why partnerships make sense for us in lot of cases is risk management with respect to the execution of the construction. And so you'll get us partnered with Tridel in Humbertown and Greenpark in Vaughan and Cressey in Vancouver, these are entities that are doing a massive amount of regular development and have in-house -- in many cases, in-house sub-trades that are beneficial for any projects that they're working on. So definitely cost pressures. I mean, there's a lot of construction in Toronto, specifically Vancouver as well, more and more in Montréal. These are the markets we've been the most active in, and so certainly it's something that is a challenge. And these are some of the things that we've been doing to mitigate those challenges.
And just lastly, are you planning anything with the Hazelton Hotel and the entrance to Yorkville Village? And I know it's early stages. You're not going to unveil anything, but are you thinking about rejigging that whole entrance? Or...
Yes. You're right. It is early, but we were pretty clear. And look, the reality is if you stand across the road and take a look at it, it's pretty obvious that's not the highest and best use for private property. The hotel has done exceptionally well. It's just had its strongest September ever, it's strongest third quarter ever. We tell our partners it's because of our partnership. But that's not the case, obviously. So the fundamentals are really strong. It's a 77-room hotel. The infrastructure in the hotel can accommodate more rooms than exist today. The market is there today for more rooms. One option is to expand the hotel. But it's really too early. Clearly, what it is -- what's obvious is that there is an opportunity to enhance the hotel and our mall by looking at both properties under a common ownership view, and that's what we're doing right now. So we are doing to work on it. I don't know where it will lead right now. We're not far enough advanced to be speaking about anything publicly. But we think there's a great opportunity there. And what that is, we will discuss when we've fine-tuned it ourselves.
The next question is from Sam Damiani.
I apologize if some of these questions have been answered. Just jumping back and forth between a couple calls. First off, just on Avenue and Lawrence. I wonder if you could just update us on your plans for that assembly. And it looks like you've got the full corner now under ownership.
Well, we're glad to hear your voice, based on how the call started. Thanks for the questions, Sam. Yes, Avenue and Lawrence, I guess, it depends on how you define the assembly. So we're certainly at a stage now and were even 1 or 2 properties ago, where it is a viable redevelopment in the future. And so we'll continue to look at adjacent properties that improve the economics or the efficiency of a redevelopment. We still would classify it as medium term. And so I don't know what else we can tell you at this stage other than we're seeing -- we've seen a couple of land comps like the site -- the Fortress site down the road at Brookdale and Avenue Road, which traded. The reports are that it traded at $300 of buildable foot, but there were some construction costs that were incurred that really you should adjust for. And so when you do that, you're still roughly north of $200 of buildable foot, but we think that's a very good comp for a number of our properties, especially the Avenue and Lawrence assembly. But at this stage, we would still be in the preplanning stage.
Could I ask what your cost is on the assembly so far?
Can we disclose that today?
I mean, I don't have the exact number handy, but let us get back to you on it, Sam.
Okay. Just looking over to Edmonton, with the Brewery District, how is the leasing going on that development?
Sam, it's Carmine Francella. As disclosed on some of the previous calls, we've finalized some significant deals at Brewery with Loblaws, Shoppers, MEC, GoodLife, Winners and TD. This mix is drawing strong traffic to the center. We have about 34,000 square feet of FCR share remaining to lease, and we're in active negotiations for the majority of the space.
So would you expect that leased up within the next 6 months or so?
We're certainly trying.
What sort of uses are you talking to?
Without getting too specific, we're talking to a service retailer, who wants about 8,000 square feet. We're talking to a liquor store and we're talking to several restaurants.
Great. And just lastly, maybe you've covered this, but what is your outlook sort of next year and beyond for the same-property NOI growth, given that you've enjoyed a tailwind with occupancy growth over the last few years that's kind of behind you now?
Yes. I mean, look, I think we're going to reserve answering that till the normal time when we've done it historically, which is on our next call, right. What I would tell you is that the fundamentals that have been coming through have been pretty consistent, and we don't see -- we're encouraged with what we're seeing in the business. So we're expecting continued same-property NOI growth, continued growth through development completions. And our intent, we'd be more specific on that on our next call, which is when we've typically talk to about the following fiscal year.
The next question is from Pammi Bir.
Sorry, just 1 follow-up for me. In terms of the credit facilities, you are running with perhaps higher levels than you have relative to maybe 2 to 3 years ago. Just curious if there's a plan to term out some of those draws on the unsecured op lines.
So just so we're clear, Pammi. You're talking the main operating facility or the sum of all? Because you're right, we're carrying a higher amount, but that's because we've got partners on some of our development projects who have -- who we've accommodated by putting facilities in place on those specific projects. So just so we're clear -- or are you referring to the aggregate? Because if you're referring to the aggregate, that's why, on the credit facility, I don't think that's the case.
Yes. I'm just looking at the unsecured, not the secured construction lines or the secured facilities. Just the unsecured op facilities, the non-revolver and the revolver, call it, roughly about $400 million. Or is the intent then just to keep that sort of running at that level?
Yes. So Pammi, in the past when we did unsecured debenture offerings we were typically doing $150 million or less at one time. Recently, we've gone to $300 million in an offering all at the same time. And when we view that, we want to have sufficient outstanding floating rate debt that we can pay down. So that's one of the factors, along with the one that Adam mentioned in terms of partner's desire for construction financing.
So I guess, partly contingent on maybe better pricing in the unsecured debt markets?
Yes. We would expect that the aberration we're seeing in the market right now, which is as much as an 80 basis point spread differential between unsecured and secured 10-year mortgages and unsecured debentures is an aberration, and that will not go on forever, and that market will become more attractive over time. And we will certainly be looking to access the market in the future when it is more attractive and the unsecured debt does remain our primary and preferred source of debt financing. And Pammi, I'd just like to go back to your other question on the $4 million of fee and other income, I don't know if you've stated that is a $4 million increase. I believe it's $4 million total, and I think you're picking up the financial statement number, and I just would remind you, for FFO, we moved to proportionate. So that $4 million on a proportionate basis would be less than that coming through. And Main & Main is one factor in it, but obviously, we collect other fee income as well.
Thank you. There are no further questions registered at this time. I will now like to return the meeting back over to Mr. Adam Paul. Please proceed.
Okay. Thank you very much. Hopefully, Pammi you're still out there and you caught the end of that. In any event, thank you, everyone, for your time this afternoon and for your continued interest in First Capital. Have a great afternoon. Bye-bye.
Thank you. Ladies and gentlemen, that does conclude today's conference call. We thank you for your participation and ask that you now disconnect your lines.