PRO Real Estate Investment Trust

TSX:PRV.UN

Earnings Call Transcript

[Operator]

Good morning, and welcome to PROREIT's Fourth Quarter and Annual Results Conference Call for fiscal 2024. [Operator Instructions]. For your convenience, the results release along with fourth quarter and fiscal 2024 financial statements and management's discussion and analysis are available at proreit.com in the Investors section and on SEDAR+.

Before we start, I have been asked by PROREIT to read the following message regarding forward-looking statements and non-IFRS measures. PROREIT's remarks today may contain forward-looking statements about its current and future plans, expectations, intentions, results, levels of activity, performance, goals or achievements, or future events or developments.

Forward-looking statements are based on information currently available to management and on estimates and assumptions made based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause actual results, levels of activity, performance, achievements, future events or developments to differ materially from those expressed or implied by the forward-looking statements.

As a result, PROREIT cannot guarantee that any forward-looking statement will materialize, and you are cautioned not to place undue reliance on these forward-looking statements. For additional information on the assumptions and risks, please consult the cautionary statement regarding forward-looking statements contained in PROREIT's MD&A dated March 12, 2025, available at www.sedarplus.ca.

Forward-looking statements represent management's expectations as of March 12, 2025, and except as may be required by law, PROREIT has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The discussion today will include non-IFRS financial measures. These non-IFRS measures should be considered in addition to and not as a substitute for or in isolation from the REIT's IFRS results. For a description of these non-IFRS financial measures, please see the fourth quarter and fiscal 2024 earnings release and non-IFRS measures section in the MD&A for fiscal 2024 for additional information.

I will now turn the call over to Mr. Gordon Lawlor, President and Chief Executive Officer of PROREIT. Please go ahead.

[Gordon Lawlor, executive]

Thank you, Joanna. Good morning, everyone, and welcome to our fiscal 2024 earnings call. Joining me today is Alison Schafer, our CFO and Corporate Secretary; Zach Aaron, Vice President of Investments and Asset Management is also joining us for the Q&A period. I will begin with a high-level overview of fiscal 2024, before turning the call over to Alison for a more detailed discussion of our financial results.

In 2024, we navigated another year of macroeconomic turbulence and elevated interest rates despite some relief from the Bank of Canada. Against this backdrop, I'm pleased with our overall results. Once again, our performance highlights the resilience and strength of our industrial-focused portfolio, generating stable income across varying market conditions.

For the year, we remain focused on advancing our long-term goal of becoming a pure-play light industrial REIT in Canada's strong secondary markets, while maintaining a disciplined approach to balance sheet management. By year-end, industrial assets accounted for 81% of our base rent, up from 73% at the end of 2023. Our medium-term goal remains to increase industrial exposure to 90% of base rent.

Key driver of our performance is our strategic focus on light industrial properties. As of Q4 2024 for Canada, small bay vacancy was 2.9% and mid-bay vacancy stood at 3.6%, both below the national industrial vacancy rate of 4.5% according to JLL's Q4 2024 data.

Our presence in Canada's robust secondary market continues to be a differentiator with 52.6% of our base rent coming from the Atlantic provinces. Notably, Halifax, where we are a leading industrial landlord with a partner, Crestpoint, continues to outperform the national market. This week, a significant development in Halifax was the Government of Canada's award of an $8 billion contract to Irving Shipbuilding to commence construction of 3 new River-class destroyers for the Royal Canadian Navy. This is one of Canada's most ambitious shipbuilding projects since World War II, and Halifax is at the heart of it.

Over the next 15 years, this project will create over 5,000 jobs with more than half of them in Halifax. As a central hub for this initiative, the city will see the biggest benefits. That means steady employment, stronger local businesses and a massive boost to the region's economy over the long term. We've already capitalized on this momentum, selling a property in Halifax in February '25 to a key naval subcontractor at a very attractive price.

Turning to portfolio transactions. At year-end, we owned 115 investment properties totaling 6.1 million square feet of GLA compared to 123 properties at the end of 2023. Both periods included our 50% ownership interest in 42 properties. During the year, we sold 9 noncore properties for gross proceeds of $71.2 million, using the funds to reduce debt and pursue strategic opportunities. In September, we acquired 134,000 square foot industrial property adjacent to the Montreal Trudeau International Airport for $32.7 million. By year-end, only 4 office properties remain in our portfolio, reflecting our continued shift toward industrial assets.

As I just mentioned, in February of 2025, subsequent to year-end, we sold a 50% owned property in Halifax for $5.4 million, our share, with net proceeds to repay a related mortgage and for general business and working capital purposes. In February '25, we also entered into a binding agreement to sell one fully owned retail property in BC for $1.1 million. That property actually closed yesterday.

Additionally, in March 2025, we sold a fully owned retail property in Nova Scotia for $5.9 million with net proceeds used to repay a related mortgage and for general business and working capital purposes. Despite owning 8 fewer properties than at year-end 2023, I'm pleased to report that we were able to maintain stable net operating income for both Q4 2024 and the full fiscal year. Our strong leasing momentum driven by rent lifts on renewals and new leases as well as contracted rent escalations contributed to a 7.7% growth in same-store property NOI for the full fiscal year, a significant improvement over 1.7% in 2023.

Looking ahead, we anticipate future upside supported by robust leasing activity. For example, 90.9% of our GLA maturing in 2024, or about 675,000 square feet, was renewed at an overall rental spread of 39.1%, including 50.5% for industrial properties. To date, 47% of our GLA maturing in '25 or approximately 430,000 square feet has already been renewed at an overall rental spread of 32%, and 45% of our GLA maturing in 2026, or another 425,000 square feet, has already been renewed at an overall rental spread of 38%.

With these strong incremental spreads, combined with our contracted rent escalations, we expect mid- to high single-digit NOI growth in both 2025 and '26. At year-end, our portfolio occupancy rate, including committed occupancies based and excluding a 50% owned property sold after year-end stood at 97.8% compared to 97.2% at the end of the third quarter of 2025 -- 2024, sorry, and 98.3% a year ago.

While our retail and office assets saw high occupancy rates year-over-year, the slight decrease in industrial occupancy in the fourth quarter of 2024 was due to transitional vacancies, most of which have since been re-leased. We have secured leases starting in April and May of 2025 for a total of 68,000 square feet of industrial space that was vacant for 2024. For 2025 lease expiries, we signed a 128,000 square foot industrial lease with a new international tenant for 15 years with rent increase exceeding 30%. We renewed 2 industrial leases with 2 single credit quality tenants totaling 137,000 square feet for terms ranging for 5 and 7 years, achieving rent increases of 20% and 40%.

We secured a 21,000 square foot industrial lease with a national tenant on a 10-year term, locking in 120% rent increase. With a neighboring tenant absorbing the remaining 8,000 square feet, we replaced 29,000 square feet of previous vacancy. This week, we also secured a lease for our 39,000 square foot industrial vacancy in Woodstock, Ontario, with a significant rent increase compared to the recent tenant. That lease is not included in our year-end committed occupancy.

Looking at 2026 expiry, we renewed 155,000 square feet industrial lease for 3 years with a 40% rent increase. In February of '25, we renewed 4 industrial leases totaling 325,000 square feet, each for 5 years with a 45% rent increase. On a pro forma basis, incorporating secured and renewed leases for 2025 and '26, our weighted average lease term extends to 4.5 years. For our top 10 tenants, pro forma weighted average lease term increased to 6.2 years.

With that, I'll now turn the call over to Alison for a deeper dive into our financial results. Alison, over to you.

[Alison Schafer, executive]

Thank you, Gordie, and good morning, everyone. We are pleased with our full year and fourth quarter results. In Q4 2024, property revenue amounted to $24.9 million compared to $25.6 million in the same quarter last year. The change was primarily due to the net decrease in the number of properties in our portfolio, partially offset by contractual rent increases and higher rental rates.

Net operating income, or NOI, for Q4 was $14.7 million, stable compared to $14.9 million last year due to these same factors. Same-property NOI reached $13.9 million in Q4, up 3.9% year-over-year, largely as a result of contractual rent escalations and higher rental rates, predominantly for our industrial assets. For the full year, same-property NOI reached $54.8 million, up 7.7% year-over-year, as Gordie mentioned earlier. Excluding the impact of a temporary 102,000 square foot industrial vacancy fully leased in 2024, a onetime revenue adjustment and a 50% co-owned vacant industrial property, same-property NOI was up 5.4% in the year.

Net cash flows provided from operating activities was $11.7 million in Q4, up 23%, largely due to the timing of cash receipts and the settlement of payables. FFO reached $6.8 million for Q4, an $800,000 decrease year-over-year. This was mainly due to higher debt settlement costs from property sales and a slight increase in vacancy, partially offset by contractual rent increases and higher leasing spreads despite owning 8 fewer properties compared to last year. Our basic AFFO payout ratio was 96.1% for Q4 2024 compared to 89.8% in 2023, primarily due to an increase in stabilized leasing costs, partially offset by a property acquisition in Q3 2024, general increases in contractual base rent and higher rental rates despite owning 8 fewer properties in our portfolio.

Since the start of the year, we continued to manage our balance sheet prudently. We efficiently recycled capital and increased our holdings in quality industrial properties. At year-end, our total debt, including current and noncurrent portions, totaled $498.6 million, a $16.7 million reduction from last year. Debt to gross book value remained on target at approximately 50%, in line with year-end 2023. We also reduced our adjusted debt to annualized adjusted EBITDA ratio to 9.2x at year-end, down from 9.6x a year ago, and we will continue to prioritize further leverage.

The weighted average interest rate on mortgage debt was 3.9% as of December 31, 2024, compared to 3.88% at year-end 2023 and 3.39% at year-end 2021. Despite a higher interest rate environment over the last few years, we have effectively managed our interest rate exposure, limiting the increase in weighted average interest rate to just 51 basis points over this period. At year-end, the weighted average cap rate for the portfolio was approximately 6.7%, up from 6.2% a year ago. Finally, we maintained our distributions of $0.0375 per unit for each month of 2024.

Of note, we received this week a commitment for approximately $12 million in incremental financing with respect to an Ontario industrial property from our current lender at market rates. The financing is expected to be funded in the coming weeks and will mature in September 2026, which is consistent with the original financing.

Gordie, back to you for closing comments.

[Gordon Lawlor, executive]

Thank you, Alison. To summarize, 2024 was a year of strong execution. We continued to advance our strategic transition towards a pure-play light industrial REIT while executing on a disciplined capital recycling strategy. Our leasing performance remains a key strength with robust rent spreads and long-term commitments from quality tenants. The demand for light industrial properties in secondary markets remains solid, reinforcing our confidence in our portfolio's positioning. Looking ahead, we continue to prioritize sustainable growth and sound capital allocation in order to create long-term value for all of our stakeholders.

With that, I'd like to thank our team for their dedication, our trustees and our unitholders for their continued support.

Joanna, we're now happy to take questions.

[Operator]

[Operator Instructions] The first question comes from Kyle Stanley at Desjardins.

[Kyle Stanley, analyst]

You made really solid progress, obviously, on your 2025 and '26 lease maturities. So I just have 2 questions relating to that progress so far. First, how much of the leasing that you've completed has occurred in the last month or 2 when we've had this tariff threat overhang? I think, obviously, you mentioned the Woodstock lease that you signed post quarter. So clearly, that's happened very recently. But I would just love to hear how those discussions are going today with this threat?

[Gordon Lawlor, executive]

I'll turn it over to Zach to answer that. He and the Compass team does all the work. So I'll let him talk to it.

[Zachary Aaron, executive]

Yes, sure. Thanks, Gordie. Kyle, in terms of the 2026 leasing deals, some of those were probably -- pretty much all the big ones were kind of started on at the end of Q4 and completed in early Q1 this year. And these were tenants who had long-term contracts and business in place and were comfortable doing early extensions now. So not really in the peak of times. In Woodstock, as noted, we signed a short-term deal for the 39,000 square feet for a tenant who is aware of obviously of the tariff concerns, but for their specific business, they're not exporting or importing anything from the United States, and they're just a Canadian supplier. So they didn't think that this would cause too much harm to them, so they were comfortable to do the deal in the meantime.

Other than that, we continue to speak with tenants every day, specifically on renewals across our portfolio, which is predominantly small bay. And obviously, some tenants note some hesitation. But at the end of the day, in terms of staying in place and renewals, those conversations are continuing at status quo, I would say, so far in 2025.

[Kyle Stanley, analyst]

Okay. The second part of my question, I mean, you kind of hit on it a little bit, but just with regards to the progress in 2026, I mean, that seems very encouraging. Would you say it's normal to have this much of your leasing done this early? And what is causing maybe the desire to complete these early renewals if this isn't maybe as normal?

[Zachary Aaron, executive]

Yes, I would definitely say it's probably not normal looking back at our history in terms of how we've done our leasing. In this specific case, we had 2 large tenants, one that's in 4 individual single-tenant buildings and one that's in one building in Ontario, both reached out to us directly first, actually. It wasn't us engaging them where they reached out and basically said, due to ongoing contracts and business that they have, they wanted to engage us to basically lock up their space and secure term to not have to worry about that in 2026. So it's a conversation we're always open to if it makes sense. And for these specific deals, they made a lot of sense, and that's kind of evidenced by the terms we got and the meaningful leasing spreads we were happy to lock into place now.

[Gordon Lawlor, executive]

And just to add to that, as Zach said, included in there, though, there's some Sobeys renewals. And I think that was almost instigated by us with the reach out to them pretty close to them on some of our Atlantic Canadian properties, who said, you're up next year, hey, like do you want to work on this now? And there was interest in that for sure. So it was a little bit of both for sure.

[Kyle Stanley, analyst]

Okay. Okay. That's very helpful. Just the last one for me. Just on the capital recycling outlook for 2025. Obviously, you've been active thus far. Just curious if you have a target set for the year.

[Gordon Lawlor, executive]

We've got some assets circled. We're thinking $30 million to $60 million perhaps. You may see some of that stuff come to market nationally in the next month or 2. That said, if we don't get the prices that we're looking for them, they won't be transacted and we'll keep them. So as we've done in the past number of years with this calling, there's no fire sales. There's no sales of things that don't make sense to us. But it's just part of the plan to transition to the 90% industrial. So we'll see how that goes. That will depend on the markets. That will depend on the tweets from down South and all the other things that go on. But yes, that's $30 million to $60 million range would be probably what we have circled right now.

[Operator]

The next question comes from Brad Sturges at Raymond James.

[Bradley Sturges, analyst]

I guess maybe just starting on the leasing side of things and congrats on getting a lot of your transitional vacancies addressed. Just how are you thinking about occupancy this year, given what you've done today on the leasing side and what you're expecting to do for your upcoming expiries?

[Gordon Lawlor, executive]

Yes. So as we look right now, we've got half of a 50,000 square feet industrial building in Halifax that may affect us in Q1 or Q2. So that's 25,000 square feet. We got a larger renewal midyear, but they've reached out for an extension. So I think they'll be into 2026. So where we sit here today, we don't see a lot of movement on the occupancy. We will be, just on that, give and take, probably where we are around today, high 97s, low 98s, I would say, other than surprises that may come up.

[Bradley Sturges, analyst]

Okay. And so when we put together the mark-to-market on the rents and occupancy in that 97%, 98% range, where do you think that puts you in terms of same-property NOI growth?

[Gordon Lawlor, executive]

Yes. So that's a 50 million dollar question. I mean, when we look at our 5-year model, it's very robust, and we're just looking at marking it to market rates, so we would like to see or achieve 5% or better in same-store growth in 2025 and '26.

[Bradley Sturges, analyst]

Okay. And last question just on the debt financing that you're working on. Is that rate locked right now? Or how should we think about the market rate at the moment?

[Gordon Lawlor, executive]

Yes. I mean it's in the 5-ish range. It's just a top-up to a larger piece of the debt coming due. So I think we got a quote of -- on the commitment letter, it was like $483 million or something, Zach, was it?

[Zachary Aaron, executive]

Yes, it was $150 million over the bank...

[Gordon Lawlor, executive]

Yes. So that penciled out to $483 million as of that date. So we hope to close that in the next couple of weeks.

[Bradley Sturges, analyst]

So by the end of the quarter, I guess, at this point?

[Gordon Lawlor, executive]

Yes, hopefully. Subject to lenders.

[Operator]

The next question comes from Sam Damiani at TD Cowen.

[Sam Damiani, analyst]

Just want to say, hearty congratulations on the leasing that you've obtained at quarter end and into Q1. Just wanted to maybe talk about tariffs again, that's obviously an overhang for the sector to a degree. To what extent are you seeing differences in that sort of cloud over leasing discussions geographically across your portfolio? And I guess on that point, what's your expectation for potential bad debt expense in 2025 versus 2024?

[Gordon Lawlor, executive]

So I'll start at a high level. I'll give a specific example and then probably not answer the last question. At a high level, I mean, we sat down as a team. So first, let's talk Trump tariffs first. So goods in Canada going South. And we have some more. So when we look at it, we have, okay, we own a Canada Goose facility in Winnipeg. So do they sell those coats in Canada or they ship them to the U.S.? We don't know, but it's 95,000 square feet.

You go down the list, there's local logistics guys. They could be hauling North and Southeast and West. There's some auto related in Woodstock, Ontario, as well that we have some exposure to auto there. We have a couple of single-tenant parts distributors, notably Moncton and Saint John. We would view those as local parts distributors versus shipping to the States. So I think we added up, say, 15%, 700,000 or 800,000 square feet of exposure maybe to going to the U.S.

When we break that down and think about the weighted average lease term on that stuff, we don't feel very exposed other than it's somebody closing up shop and a bankruptcy. So based on lease maturities, we don't feel a lot exposed there. But I'll give a good example of what the tone is in the market. So this Woodstock, 39,000, unfortunately, we were talking about for 1.5 years. I think it's some of the best spaces we have, 28 or 30-foot clear, great building. We've had 2 or 3 logistics deals on it, and then the deal goes away when the logistics group doesn't get the contract.

Then we entered into an RFP with a major foreign auto manufacturer. And before the tweak weekend, I call it, we came back and we had secured a 5-year lease on the entire space with renewal options. That was a Thursday. We were doing some high 5 around the office and the tweak weekend happened and Monday, everything was stalled. So we leased the space to somebody else that wanted the space on a short-term deal, because we don't want to wait for them. So that's the thing. It's just the uncertainty around it to make decisions and pull long-term triggers. I don't think anybody that we're talking to think they're going bankrupt next week. But clearly, it's concerning. So that's the thing.

As far as bad debt expense, we haven't had too much of that. We will see a bit of it in -- well, we don't usually do bad debt expense. We just offset it against our NOI if we haven't collected the rent. So it goes against our NOI line. But the only thing we've seen, like I said, this 25,000 square feet logistics group. And there's already discussions with the neighbor and somebody else to potentially take that space. So maybe it will be down for a couple of months. So definitely, the uncertainty is there. We talk about it all the time. Everybody watches their phones and all those things, but it's just the general just unease around it all, I think, is what we see with our tenants. But that said, we're 98% occupied and signing leases.

[Sam Damiani, analyst]

Yes. So far so good. That's really great color. And I guess just last one for me. Just on the big leases that you did announce last night, was there much, if any, incentives or TIs required to get those across the finish line?

[Zachary Aaron, executive]

No, not really overall. In terms of the 4 building single tenant portfolio I mentioned with 1 tenant, we're giving a $1 per square foot TI there. On the 5-year extension, that meaningfully increases. So nothing really significant there. On the other tenant in Ontario, the 155,000 square feet extension, there's no TI there. And then on the Sobeys ones we've been discussing, there's no TIs in those as well. So, so far, really minimal incentives provided.

[Operator]

Your next question comes from Matt Kornack at National Bank Financial.

[Matt Kornack, analyst]

Just quickly on the larger leases that are turning over in 2025. Are those seamless, or will there be a period of downtime between the existing and new tenants?

[Zachary Aaron, executive]

On which deal specifically?

[Matt Kornack, analyst]

Thinking the Ottawa one in particular, like that's a '25, right?

[Gordon Lawlor, executive]

Well that -- they came in February 1, there was 0 downtime.

[Zachary Aaron, executive]

Yes.

[Gordon Lawlor, executive]

So that -- if we're talking about TIs, because now that the tenant is in the space, I'm sure everybody can Google who the tenant is. Defense contractor tied to the Halifax military builds actually, but that's a 15-year deal. The TI in that was $23, but it was over for 15 years and no downtime. So that was a bit structured that way, if you will, Matt.

[Matt Kornack, analyst]

And you mentioned the Halifax expansion and the building of the new destroyers. I mean that's a huge economic benefit to that market. Do you expect to see any of that directly within your portfolio? Or is it more tangential in terms of kind of just broader economic performance of the market?

[Gordon Lawlor, executive]

I'd say there's lots of folks in the Burnside Industrial Park tied to that contract in some way. We don't have anything to deal specifically. We haven't rented 4 million square feet to Irving or anything like that. But I think it's, I call it, tangential. When we step back, 20 years ago, when I was much younger, there was 300,000 people in Halifax.

In the last 20 years, we've had a lot of ship contracts, whether they were frigates, coast guard cutters, all of those things, which has increased definitely in the last 10 years. And now when we see this another 15 years, it really solidifies Halifax and all the pieces that are tied to that Atlantic Canada. I mean, Moncton probably will be affected by this positively as well. And we have 128,000 square foot tenant in Ottawa that we didn't realize until a little while ago that's tied to that contract as well. So I think it could affect all of Eastern Canada positively.

[Matt Kornack, analyst]

Fair enough. And then just last one for me. On the CapEx side, this quarter was a little elevated after having dropped for the last 2. I don't know if there was anything specific within those numbers, but just -- and maybe it's just a catch-up for the year because it's a trailing number.

[Gordon Lawlor, executive]

Yes. No, it's just catch-up. You don't do too many rooms in the winter. So usually, that's kind of getting paid for that stuff, the work that was done in July, August, September, that type of thing. So usually, we have some bigger numbers clean up towards the end of the year.

[Operator]

The next question comes from Sumayya Syed at CIBC Capital Markets.

[Sumayya Hussain, analyst]

Firstly, on the rent steps, can you remind us what is the average in place you have for escalators? And also, what are you getting on the recent leasing that you've done?

[Zachary Aaron, executive]

Yes. So on average, we're between 2% and 3%. I would say 3% is really the norm in most of our markets, especially on small bay. And then maybe on some larger spaces on longer-term deals, that will be 2% or 2.5%, but 3% is pretty much the norm these days in our portfolio.

[Sumayya Hussain, analyst]

Okay. And then you guys don't have much exposure to the large bay new supply, but can you just share what you are observing for absorption trends for the newer big stuff that has hit the market?

[Gordon Lawlor, executive]

Yes. So I mean, you see, and we communicated quite often. I mean, I don't think we'd be defined as having one large bay asset in our portfolio. So we're small and mid-bay assets. We've given the quotes on how that occupancy has held up. I mean, the build is all large bay. So whether it's GTA, which we're not players, but we follow it all. Millions of square feet there built that way. Montreal off the island, there's 1.5 million square feet of fancy shiny things that are off the island that still haven't been absorbed. Halifax, 3 nice shiny buildings built on the Halifax side, I think 30-foot clear buildings, but they're looking for larger tenants. Maybe some of the shipbuilding might pick up some of that, but it's on -- that side is basically most of a retail park. So it's just a little different from transshipment and trucking and things like that.

So everybody is saying the same thing. The build is large bay, and that's what's slowly getting absorbed. I think especially if we talk tariffs and things like that and increased costs, besides -- I don't think we'll get to the point where industrial is going to be overbuilt. So that large bay is eventually going to be absorbed. And then we'll see where it goes with all of this. But I don't think industrial in Canada is overbuilt. And I think the stuff that has been built recently will lease up in the next year or 2. And I think you probably will see reduced -- well, we have seen reduced development since then. So I think that will clean itself up in the next 12 to 18 months.

[Sumayya Hussain, analyst]

Okay. And then lastly, I just had a small question on the modeling. Would there be more debt settlement costs to flow in? What should we assume for that?

[Gordon Lawlor, executive]

Alison, debt settlement costs. It just depends on...

[Alison Schafer, executive]

It all depends on how much we close during the year. But in terms of modeling, I'd probably do a little bit less this year, because we're only circling $30 million to $50 million.

[Gordon Lawlor, executive]

Yes. And the stuff that we have circled has some mortgages coming due. So that's probably an accurate statement, but yes.

[Alison Schafer, executive]

Yes. So maybe half of what we recorded this year.

[Operator]

[Operator Instructions] Next question from Sam Damiani at TD Cowen.

[Sam Damiani, analyst]

Sorry, this was asked already, but on the Compass revenue and expenses, that was a little bit light this quarter. Just wondering how you see 2025 playing out in terms of contribution from Compass versus 2024?

[Gordon Lawlor, executive]

I think what were we, a couple of million for the year for '24?

[Alison Schafer, executive]

Yes. So we were about $2 million for 2024. We anticipate...

[Gordon Lawlor, executive]

Yes, give or take the same for '25.

[Alison Schafer, executive]

Yes.

[Gordon Lawlor, executive]

They're replacing some of the third-party business that they lose. They have some opportunity to manage some multi-res, which doesn't conflict with us at all. So they're working on some deals that way. Just looking -- as we've sold some assets, they have some room to manage other assets as well. So there's a bit of quid pro quo there, but I think it'd be largely in line with this year.

[Alison Schafer, executive]

Yes.

[Operator]

Thank you. We have no further questions. Ladies and gentlemen, this does conclude your conference call for today. We thank you for participating, and we ask that you please disconnect your lines.