Summit Industrial Income REIT

TSX:SMU.UN

Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen. Welcome to the Summit REIT Q1 2020 Results Conference Call. Please be advised that this call is being recorded. I would now like to turn the meeting over to Mr. Paul Dykeman, Chief Executive Officer. Please go ahead, Mr. Dykeman.

[Paul Malcolm Dykeman, CEO, President & Trustee]

Thank you, operator, and good morning, everyone. Before we begin, let me remind everyone that this conference call, we make statements containing forward-looking information. This forward-looking information is based on a number of assumptions, subject to a number of known and unknown risks and uncertainties that could cause the actual results to differ materially from those disclosed or implied. We direct you to our earnings release, MD&A and other security filings for additional information about these assumptions, risks and uncertainties. Joining me on the phone this morning is Ross Drake, our Chief Financial Officer. I'd like to start by thanking our tenants for their support through these difficult times. But most importantly, the management team and employees at Summit have done an outstanding job under this stressful time, working from home, our site supervisors working from their vehicles. It's this skill and experience of our people that will get us through this challenging time and will help us emerge even stronger than ever. Our objectives this morning are to review the first quarter results, discuss our initiatives and short-term programs to operate through the COVID-19 pandemic. Our objectives since early March are to ensure the health and safety of our team, our tenants and communities that we operate; to preserve capital and maintain our strong, conservative and flexible financial position; to mitigate risk to our business and our properties; and to generate the best operating results possible in this new environment, leveraging off the significant experience and knowledge of our team. Turning to Slide 4. Our record growth and operating performance in 2019 clearly demonstrated how we can build value in our key target markets. Our portfolio growth generated a 54% increase in revenues, driving strong and accretive increases in our net rental income and FFO. We're also pleased to see another solid year of same-property NOI growth with very strong increases in our key GTA, Montreal and Alberta markets. Additionally, with the internalization of our management team in May, our G&A expenses are now amongst the lowest ratios in our industry, a real advantage as we work through these current issues facing our business. With these results, our strong financial position, we entered 2020 in great shape. As you can see on Slide 5, our growth and record results in 2019 continued a very strong and consistent track record of generating value since our inception of -- in 2012. As we look forward, we are confident we will resume this pattern of annual growth as the current pandemic eases. Slide 6 details our solid and stable first quarter 2020 results, which included 1 month of operating under the coronavirus pandemic. Revenues rose just under 38%, the result of our portfolio growth over the last 12 months, increasing rents and near full occupancies. The increase in revenues generated a 40% increase in our NOI and a 38% rise in FFO. Same-property NOI remained strong at 5.3% compared to last year. FFO per unit was impacted by the large acquisitions during the quarter. We expect to see the accretive contribution from these new properties in the second quarter and going forward. And again, we continue to believe we're among the lowest G&A rates in the Canadian real estate business, and this is a significant strength as we work through this situation. As you can see, the percentage of G&A as a percentage of asset value is very low in the quarter. Following a strong portfolio growth in 2019, the first quarter of 2020 we were very active and we added a number of very solid and accretive properties to our portfolio, as shown on Slide 7. Overall, we acquired 9 properties totaling 747,000 square feet, all within the very strong GTA market, for a cost of approximately $176 million. The overall ingoing cap rate was approximately 4.4%, which also included the purchase of excess land on which we can build an additional 200,000 square feet in the future, generating enhanced yields. The new acquisitions will contribute to our revenue growing forward and add to our ability to generate operating synergies and economies of scales and further enhance our results over the long term. We're also pleased to recently announce the sale of our interest in DC2 data center in Richmond Hill, as you can see on Slide 8. With the closing of this transaction on May 11, we received payment of our outstanding mezzanine loan, including accrued interest, $5.5 million. These funds will enhance our liquidity position going forward. We also recorded and realized a $21 million gain or 15% -- $0.15 per unit on the sale. The proceeds of the realized gain will be received in stages over the next 18 months or so as construction on that project is completed. With this transaction, we only have 1 outstanding mezzanine loan of $22 million left. As we start the year-end call, we want to provide you with more color on our 3 target markets, starting with Ontario. You will notice that the COVID-19 pandemic began in March. We are fortunate to have a very high occupancy across the portfolio, mostly in very tight markets with low embedded average rents per square foot that are below market. Slide 10 shows why Ontario remains our key focus going forward. As of March 31, Ontario represented approximately 52.6% of our total GLA, same-property NOI rose a very strong 7.3% in the first quarter on top of a solid 5.5% in 2019. Our leasing programs are driving strong increases in cash flows. In the quarter, we generated a solid 99.6% retention ratio on renewals with a 22.2% average increase in rents over in-place rents and particularly 23.4% in the target GTA market. With the current embedded rents in Ontario at $6.68 or $6.40 per square foot in the GTA, we are confident we will still see further lifts as leases are renewed going forward. Slide 11 demonstrates that Montreal region continues to generate solid and stable performance. As of March 31, the portfolio represented [approximately] 18.5% of our total GLA. Our leasing programs also generated increased -- solid increases in cash flow with retention of 98.4%. In Quebec, portfolio generated a 5.4% increase in rents. Again, the current in-place rents are below market. We expect further rent increases in the future. Subsequent to quarter end, we did complete an additional renewal for 100,000 square foot tenant, one of the largest this year, for an additional 18-month term at a 22% increase in monthly rent. Slide 12 outlines our performance in Alberta through the first quarter. As you know, we completed a major acquisition of properties in both Calgary and Edmonton late last year. And Alberta now represents 28.7% of our total GLA at March 31. Same-property NOI rose a solid 4.4%. And this portfolio is currently today at 97% occupied, up from the 96% at March 31. And just to remind people, we were at 91% when we initially bought that portfolio. So we're both ahead of our pro forma and the ingoing yield of 5.5% is actually closer to 5.8% today. We remain confident that Alberta will continue to perform well through this pandemic due to strong fundamentals as detailed on Slide 13. The portfolio is predominantly made up of good quality Class A buildings, with the remaining 31% recorded as Class B. Importantly, there's a heavy weighting in base rent from a diversified group of creditworthy tenants, both international and national tenants. The majority in warehouse and distribution sectors, we believe, will benefit with trends towards e-commerce. You will see that oil and gas now only represents 5% of our total base rent in the portfolio. In the appendix, you will find more details on our Alberta portfolio including a top 20 tenant list by property type. I will now turn things over to Ross.

[Ross Drake, Chief Financial Officer]

Thanks, Paul. We believe the most important message today is that we entered the COVID-19 pandemic in a very strong financial position, as detailed on Slide 15. Total liquidity available at March 31 was approximately $200 million, including cash, available borrowing capacity and potential new financing on a portion of our unencumbered properties. Our new $300 million 3-year unsecured credit line also provides us with increased flexibility. And with over 47% of our total debt now incurring floating interest rates, we are capitalizing on the current low rate environment, saving an estimated 1% to 1.5% in cost over fixed-rate debt. Our balance sheet remains very strong, as shown on Slide 16. Our leverage ratio is very conservative and reflects a fair market value increase of $21 million on our data center properties recognized in the first quarter. Over the last year or 2, we have capitalized on low interest rates and extend the average term for the mortgage portfolio, with our average term to maturity rising to 5.8 years at March 31 from 5.7 years last year. As of March 31, we have approximately $46 million available on our credit lines. Slide 17 details our mortgage portfolio maturities by year, showing that we only have 2% of mortgages coming due through the remainder of 2020, which is monthly principal repayments on the existing mortgages, and only 10.6% in 2021. As a result, we believe we are not overly exposed to any credit risk. You will also notice that the average interest rate for our maturing mortgages is between 3.7% and 3.9%, representing a solid opportunity to generate significant savings on maturities going forward in the current low interest rate environment. As you know, we have a $350 million bridge loan coming due this November. We are evaluating 4 possible strategies to deal with this loan as outlined on Slide 18. Can extend it by 6 months out to mature in Q2 2021, replacing it with regular property mortgages or we can issue unsecured bonds or negotiate new unsecured term loans. We continue to monitor the debt markets. We do not expect any issues in repaying this bridge loan. On a positive note, interest rates are very favorable today, and we don't see any major uptick in the near term. On the leasing front, as outlined on Slide 19, we continue to make solid progress on our renewals. Fortunately, we only have a small number of leases remaining to renew this year, with the majority coming due in the fourth quarter. We are also seeing solid increases in rents on our renewals with an average 14.3% overall increase and a much higher 23.7% increase in our key GTA market. Importantly, we retained approximately 96% of tenants in the quarter despite this challenging environment. As you can see on Slide 20, we only have just over 3% of leases remaining to renew this year and only 9% in 2021. We believe with our low embedded rents that are below market, we can generate solid increases in cash flows as leases matures in the years ahead. I'll turn things back to Paul to wrap up.

[Paul Malcolm Dykeman, CEO, President & Trustee]

Thanks, Ross. We want to spend the balance of the call this morning reviewing the initiatives that we currently have in place to help us manage through the issues facing our tenant businesses resulting from the pandemic. As I mentioned earlier, our short-term objectives are to preserve capital, maintain a strong and flexible financial position, mitigate risk and generate the best possible operating results in this environment. Turning to Slide 22. Our acquisition program is essentially on hold, and all people are now working collecting monthly rents. We did complete 9 accretive property purchases in the first quarter, adding up 747,000 square feet. Our development program is also being deferred, again, to preserve capital. We continue to complete any plan -- planning and permitting necessary for future projects to ensure we are ready with shovels in the ground as we recover from the pandemic. We will carefully evaluate proceeding on any specific projects with long-term tenancies and full occupancy, which will generate strong returns for our unitholders. Importantly, if we do proceed with certain construction projects, they will be financed by construction loans and will not be a drain on our current liquidity position. From an operational perspective, on Slide 23, our people are mostly working from home. However, we do continue to have our regional staff drive around to help tenants out with their issues. And -- sorry. Yes. Clearly, our main task currently is to collect monthly rents, and we are proactively in discussion with all our tenants, listening to them, working with them to collect as high a level as possible. For April, we collected approximately 96% of our total rents. And up to May 12, we've collected 87% of May rents but we've also done rent deferral or lease extension deals with another 8% of our tenant base, effectively getting -- accounting for 95% of our rent collections. Another key strength is our tenant base, primarily large and creditworthy businesses that we are confident that will endure through the pandemic. As you can see on Slide 24, there are certain small pockets that are experiencing financial hardship. We are working with them to determine how best to help them through these challenging times. For example, entertainment, retail and restaurant businesses in the portfolio are experiencing tough times. These tenants currently only represent 1.2% of our total tenant base. Additionally, certain additional businesses that are part of a larger supply chains such as automotive are having short-term issues with automotive plants shut down. Longer term, we are not concerned about these businesses. Importantly, should we experience vacancies, the majority of our properties can be easily transitioned to space that continues to see strong demand, including e-commerce, logistics, warehouse and fulfillment centers. As in all real estate businesses, we are seeing a number of our tenants that are experiencing this financial hardship. As discussed on Page 25, we are in close contact with all these tenants and discussing their issues. Our first preferred strategy is to negotiate an extension to their lease, which is closer to current market rents. Some tenants are in need of some sort of rent deferral, and we are most likely to accept proposals from creditworthy companies with strong covenants that are willing to pay at least part of their monthly rent during these pandemic months. Other mostly much smaller tenants may need a full deferral. We're also closely monitoring the details of the recently announced federal government rent relief program and how it might apply to these certain tenants. Looking ahead, we are confident that we will weather the storm and emerge even stronger than ever. On -- the chart on Page 27 shows our key markets entered the pandemic in one of the strongest positions ever. Our target GTA and Montreal markets are at all-time low availability, resulting in very tight markets with essentially no new supplies. Rents in those portfolios are well below market. This market strength is a key benefit as we move through the current challenging environment. Turning to Slide 28, you will see that the industrial market has performed reasonably well through past economic crisis. Importantly, the industrial market, entered 2020 with historically low availability rate nationwide of 3%. And while the current crisis may be far worse than anything we've experienced in the past, we are confident the industrial market will remain strong and resilient. Our portfolio also possesses solid fundamentals that we believe will help ride out this challenge. As you can see on Slide 29, almost all our NOI is derived from quality Class A and Class B properties. Our diversified tenant base has a heavy weighting to businesses that are -- we are confident will remain solid and prosper over the long term, including warehouse and distribution. Most importantly, we continue to see high stable occupancy at 98.4% at the end of the first quarter, and we've actually increased that to 98.9% as of May 11. Looking ahead, we are confident we will continue to perform well over the short term, emerge even stronger as the pandemic eases and people are able to return to work. As detailed on Slide 31, with our strong fundamentals, including our low overheads, strong liquidity, well positioned and diversified portfolio, our very experienced team, we are confident we can work through the issues that are currently facing us. We're also confident with the solid fundamentals in the Canadian light industrial sector that we've detailed on page -- Slide 32. And looking ahead on Slide 33, we believe the industrial market will prosper and emerge from this pandemic due primarily to the growth in e-commerce and other factors that are emerging as Canadian business battle with this new environment. Longer term, we will return to our strong track record of growth by employing the same strategies that have generated such superior returns for our unitholders. In summary, we were pleased with our performance in the first quarter, but recognize that this pandemic will impact our businesses in the months ahead. We will keep you updated on our progress. Thank you for your time and attention this morning. And now we'll be pleased to answer any questions you may have. Operator?

[Operator]

[Operator Instructions] The first question is from Stephan Boire from Echelon Partners.

[Stephan Boire, Analyst]

Well, you've already answered my question regarding rent collection for Alberta, so I thank you for the color on that. But on the development front, I know it's -- it could be a little early, but do you see any pressure on the development yields at the moment? Or do you expect any pressure once you reopen your development projects?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Well, and just to be clear, the ones that are in the ground, we have 2 down in Guelph with our partner, Cooper Construction, 1 of those buildings, we've got 76% pre-leased. The building was just finished as this pandemic. So we're just putting those tenants in there now. So 1 space left there to lease, the second 212,000 square foot building, we're actually in discussion with -- on a letter of intent on the entire building at rental rates that exceed our pro forma. So there's still lots of demand, particularly in the GTA. The other -- there's 2 developments that were in the planning process. We'll continue to get the point where we get building permits. There's 1 building we bought last year that we're going to do a 60,000 square foot expansion on. So all those that are in the planning process, we're going to complete those. In a couple of months from now, if we're comfortable, more likely, we'd like to have pre-leasing done, but we potentially could still do spec development because we haven't seen rental rates soften at all yet in Toronto.

[Operator]

The following question is from Chris Couprie of CIBC.

[Chris Couprie, Research Analyst]

Just maybe looking at the rent collection information. So the -- for May, 5% so far has not been collected. Has that -- is that all already being billed? In other words, are there -- is that 5% that was due at the beginning of the month and hasn't been collected? And if that's the case, just with respect to the 4% that was not collected in April, are all those tenants included in that 5%? Or is it a different batch?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Sure. And again, obviously, we're still only at May 10, and there's a lot of variables. So we're actually very pleased where we are because we -- with the announcement of the rent relief program, we thought that the number of tenants might use that as a reason to not pay. So it's been a little slower than April, but we're pretty much tracking the same. So in April, we were at the 96%. We did agree to about 1% of deferrals. So we accounted for 97%. So of the 3% that wasn't collected in April, as I mentioned on the call, about 1.2% of that is these entertainment tenants, about 13 of those, and then there's another 1.8%, mostly smaller tenants and mostly local tenants that are in that category. So when we jump forward, most of the deferrals that we're doing are with larger tenants, both in the international and national, in the automotive industries, distribution of retail. And actually, more than half of all the deferrals are on our Ontario portfolio. So we are getting down to that last 5%. And so the same 3% is in the 5%. So there's about 2% that we either will keep knocking on their doors and collect or they'll go into this bucket. And essentially, it's phases that we've gone through. So we've -- close to -- we'll probably have another 4 to 6 tenants to deal with that I would consider are the larger ones, whether it's a lease extension, a deferral or something. Once we do that, then I think the next phase we're going in, and it's probably, all told, 30 to maybe even 40 tenants, some of the really, really small ones that we picked up, where the work is going to be required. And -- but overall, it is in that 2% to 3% of our portfolio. And some of them, I really do think it's going to be difficult for them to recover and do well. But they might, but some of these entertainment tenants, whether it's a rock-climbing wall facility, we have an indoor soccer club, it's hard to see how those tenants are going to be able to come back to business. But they're all in that 15,000, 18,000 square foot. So they're fairly small. And a lot of these spaces can be reconverted back into industrial space. But this is where I do think the rent relief program might help out; if we can get 75% of 3-months rent on some of these smaller tenants, maybe that might be the thing that would help them survive. Maybe they might extend that program. I don't know. But basically, at the end of the day, where we see our issues are somewhere in this 1.2% to 3% range, mostly in these smaller tenants and when you look at our portfolio breakdown, mostly in this, what I would call, local category. And I think the total number in our entire portfolio across the country we allocated, 4% of our tenant base would be considered local.

[Chris Couprie, Research Analyst]

Got it. And then maybe just last one for me. Properties held for sale, it looks like you added another property in there this quarter. So at this point, have you completed a review of your entire portfolio and earmarked the ones that you want to sell? And just maybe in general, how is that process going? Have you had any expressions of interest on any of these 4 properties? And just any color on that?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Sure. And yes, we have picked up, and we've owned them for several years, the 2 B.C. properties from the original REIT that we took over. So those are 2. And then we've added 2 that are in Edmonton. One is a very small bay, has 32 tenants in it or something. It's more of a retail property. That's where we're having some of these rental collection issues as well. And then a small dysfunctional industrial building that's 30,000 or 40,000 square feet. We did have some offers, but right in the middle of all of what was happening, people either got cold feet, said they want to wait. So we still have a few people knocking on the doors, but this is not a time to be pushing to try to sell things. If something happens, it's good. In our vacancy, we now have a -- one building that's 58,000 square feet that we're -- it can be broken up into 2 or 3 tenants. But we're also doing it for lease or for sale. So that's not in our properties for sale at this point. But we'd look at that. And I mentioned last time, if we're able to sell the ones that we have listed for sale, there might be another $30 million to $50 million. But again, we would only do that if they're stabilized and we think we can get the kind of -- right kind of value. They're just not core long term.

[Operator]

The following question is from Brad Sturges of Industrial Alliance Securities.

[Bradley Sturges, Equity Research Analyst]

Just to follow on on the rent deferral question, and maybe looking at tenants that have already paid the rent, would there be any larger tenants at this point that have paid, but you're -- you have them essentially on a watch list or you'd be a little more concerned about from a credit perspective?

[Paul Malcolm Dykeman, CEO, President & Trustee]

No. No. So everyone that's on the deferral and paid, we're comfortable to do that. I mean, I'm sure you've heard this on other calls, other real estate, and that's why we still are dealing with some tenants. There's a few tenants, mostly a subsidiary of an American company, that have taken an interesting approach, which is they either randomly paid 25% or they randomly paid 50% saying, yes, we're going to do that for the next 3 months and then pay it back over time. So we kind of don't like that approach. So if there's legitimate interest in the business. And so we've sorted through a lot of those. These are difficult discussions. But for the most part, we're saying -- and again, we haven't really mentioned it -- other than these entertainment tenants at 1.2%, most of our other tenants, if they wanted to, could have operated in this. So some of them elected to slow down, the ones that I mentioned in the automotive. So if the Honda plant shuts, they've had to lay off people because they have no place to produce their -- for this just-in-time delivery. There is a new phrase out there now, it's called just-in-case delivery. So I think there's going to be an increase in inventory. But to your question, no, we're comfortable, all the deferrals that we've done are with what we believe are high-quality tenants that have been in businesses for 20, 30, 50 years. But we're still fighting with a few of these Americans, which is at the end of the day, again, we see this as a loan, and if you're [ going ] to borrow money from us and not pay your rent, then you should pay interest on it or you should open up your lease and there should be some benefit to us. So we're still -- we're getting down, like I said, we're down to probably the last 4 to 6 of those kind of tenants. But there's no one on those lists that we're concerned about at this point.

[Bradley Sturges, Equity Research Analyst]

Okay. In terms of just the general market and looking at property valuations, you do you expect much of a change from a cap rate or a price per foot basis in the short term, given what's happening with the pandemic, or not really?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Not really. So I mean, what's -- the issue is just the selling market is dead right now. So people like us are saying, we're just going to put pens down and pause for a little bit. And sellers are going, well, this is probably not a -- so like I said, I don't want to sell in this market and then -- and we're not buying in this market. So there's just not a lot of transactions to even gauge that. But when you look at the fundamentals, and that's why I'm very comfortable with our GT and Montreal portfolios, in particular, I can't see replacement costs going down. You'd have to have a very long and deep recession to create the type of vacancy that would disrupt the supply and demand chain. So again, what I haven't talked about is we have a lot of, particularly in the GTA, incoming calls for space requirements. I've seen 1 even in the southwest of Toronto with over 1 million square foot requirements, somewhere only 6 months, they're overflow. Some of the logistics players are overwhelmed right now. But there's other uses like the 1 we're negotiating with Guelph now for that new 212,000 square foot space. So with the demand that's still there, I can't see what's going to cause the replacement cost number. So I don't see the price per square foot unless you got into a distressed situation, which again, I don't think with these low interest rates, you're going to see a lot of distressed sellers. So I -- right now, I'm not anticipating or expecting both short-term change in cap rates or even long term. But again, it's hard to guess that what's going to happen a year from now.

[Bradley Sturges, Equity Research Analyst]

And my last question, just on the data center investment in Montreal, what would be the update there? And could you see a similar return profile for that investment?

[Paul Malcolm Dykeman, CEO, President & Trustee]

We'd love to. Again, we really -- this Data Center 2 ended up getting leased to the same tenant in Data Center 1, which is a phenomenal tenant, would love for them at some point to say they need to expand into Montreal. The issue with the 1 in Montreal is it's 9 stories. It's really -- we resisted the temptation to try to lease that out bit by bit. We think the trend of where data centers are going are these wholesale large players and kind of that's what we're doing. So in the meantime, we're getting paid to wait. So we're being patient. But -- so there's lots of people knocking on the door to door. I think from this pandemic, everything I've read, data center REITs in the U.S. are seeing upticks and I wouldn't be surprised. Something will happen there. But yes, if you can get a similar type of tenant, this would be the prospects. But it's a hit or miss type of thing. So for now, it's just a loan earning a good interest rate, but potentially, there's the upside. And that's the design we did with these mezzanine loans is that we didn't want to completely walk away, because we saw the opportunity, but we took some of our risk off the table. But we still have this participation feature that allows us to get some of that upside.

[Operator]

The following question is from Himanshu Gupta of Scotiabank.

[Himanshu Gupta, Analyst]

On Alberta portfolio, occupancy is up to 97% now. So it looks like you're doing a good job there. What drove that occupancy upside? And do you think your portfolio is outperforming the market? And also, do you have any near-term lease expiries in the next 6 to 9 months?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Okay. Yes. So a couple of lease deals that we did, and I might even briefly mention them, they're just -- 1 started on May 8. It was 51,000 square feet at a 10-year deal. And the reason we were able to get that lease, the previous owner was really stuck with thinking the rents were going to be $6 or $6.25. And we started that lease at $5, and it steps to $5.25, $5.50 over the 10 years. So that one is with a tire distributor company. We did a new 6-year deal in Edmonton on a cross-dock facility. Rents are starting close to 16% and growing. Again, that tenant is in another one of the portfolio. So we did another short-term tenant when we first went in on the 44,000, that one's coming up, that tenant may or may not stay. So what we do in a situation where this -- where the market is a little bit weaker, we've gotten very good at trying to fill holes and keep occupancy as high as you can. So there is one -- there's a few more expiries, but a little over 200,000 square feet in Alberta between now and the end of the year. Some of the -- 2 of the tenants we're talking to are absolutely showing signs that they want to renew. There's 1 larger 1 that most likely will not, but we're already talking to a potential tenant to go in there. So yes, we're -- it's a different strategy, have to be very proactive there. And when it comes to outperforming the market, absolutely, we are. So I think the numbers in the market are kind of in that 91%, 92% range. So we're definitely outperforming the market. But you have to be very quick, reactive and you might have to take a little bit less on rental rate or be flexible on your term. So we're doing some short-term 1 year deals, whatever it takes to kind of keep the occupancy up. But it's not a dead market, like there is lease deals getting done.I know there's a lot of concern about our position in Alberta. That's why we try to add a lot more information on the kinds of properties, high-quality A building. But particularly if you look at the top 20 tenants, very diversified international, national tenants. All of those kind of tenants are not going to go bankrupt, and a lot of them are in businesses that are likely to continue to perform. In the top 20 tenants in Alberta, 3 of them are oil and gas companies, 2 of those are public companies. So it's easy to see how they're doing. We still haven't seen what the -- what and if the federal government is going to do to help the oil and gas industry. But clearly, Alberta is where we'd be concerned. But we're doing a fantastic job of keeping the buildings filled. And you just have to be flexible in what you do. And I think I didn't mention the number, but we bought this at a 5.5% yield today, that yield has grown to about 5.8%. So we've given ourselves a little bit of a buffer. But some of these smaller tenants that I'm talking about, that 1.2% to 3%, a lot of them are in Alberta. So we fully expect to see our vacancy number go up in Alberta, but by 2% to 4% or something like that.

[Himanshu Gupta, Analyst]

That's very helpful. And then on new acquisitions, around $176 million in GTA at 4.4% cap rate. Is that going-in cap rate? Or you had assumed some pickup from rent growth on near-term lease expiries? And then I assume the upside from excess land for expansion should be over and above.

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes. So the 4.4% cap includes the full value of the land. So the Maple Leaf Foods cold storage building, which obviously, they're doing extremely well, can be expanded by 100,000 square feet, 70,000 cold storage and 30,000 square foot freezer storage. Kubota, they're doing a build-to-suit. They moved out. So they're there for another year, so we're going to do a 60,000 square foot expansion. And a 3-wall expansion is very cost effective. So the same thing with Maple Leaf Foods. So you don't have -- you already have the land, you're not having to pay the development charges because you -- that's already built into that. So a couple of them had some steps in the rent. I was just -- Ross, I don't have it in front of me, that 1 page on our -- it's in here somewhere. I think we showed 1 of the properties has like a 32% built-in rental escalations over the term. The Maple Leaf Foods gets an average 2% increase per year. So the yield will definitely move up. And once we do some of these expansions, this whole -- that whole acquisition package will move comfortably above 5%.

[Himanshu Gupta, Analyst]

Okay. And then just switching gears, on the debt financing with respect to $350 million credit facility, what is the current interest rate there? And it looks like you're exploring unsecured bond issuance as well. Are you working with credit rating agencies for a potential credit rating as well?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes. So the -- how much the world has changed in 8 weeks. So I'm cursing myself for having some discussions back 8 weeks ago, "I've never seen it as good as it's been in 30 years of -- in the business," to what's unfolded. The current interest rate, and I think Ross might have mentioned it in the script...

[Ross Drake, Chief Financial Officer]

2.26% is the current interest rate [indiscernible].

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes, 2.26%. So between this and what's on our line, roughly another $250 million. So we have $600 million that we're paying interest at a very, very low rate. We're not that concerned right now. Normally, having this much floating-rate debt would be a scary thing for us and we wouldn't want it, we'd want to lock it in. But given the current environment, we don't see interest rates going up. So we're getting a short-term benefit that will help offset some -- potentially some of the vacancy issues on these smaller tenants that we might have on the balance of the year. But yes -- no, we are comfortable. And I think I signaled it last in February that we felt we would be in a position to get a BBB low rating. We still think that's possible and achievable. But it's a terrible time to be in the market for a new entrant. I mean the good news is we're seeing lots of deals, some from more seasoned, higher-rated companies, but also lower-rated companies. So it really comes down -- could we do it? Most likely we could. Do we want to do it, will be a question of all-in cost? And so when we explore this, and I think none of it's going to start until after Q2 results and into the fall, and we get a little bit more normalcy, I think is the time to explore it. But at the time, the decision will be, we like the flexibility of moving our portfolio more into the unsecured environment. But we're not going to do it if the cost -- incremental cost over traditional mortgages is too high. So we'll make that evaluation. And back 8 weeks ago, the costs -- or the all-in interest rate on a BBB low bond for us would have been pretty much exactly the same as mortgages. So clearly, it's widened right now, because we've heard mortgage debt, the spreads are higher, but the underlying bonds are down. So the all-in cost is roughly in the same spot as it was before. But for the unsecured bonds, the spreads would be much wider. So we'll see and we'll monitor those markets. But -- and then as a fallback, if we really want to -- that's why we talked about doing a term unsecured piece with potentially looking and talking to banks if their pricing is a little bit better than the actual bond market. So we've got lots of flexibility. And as Ross mentioned, there is an extension option in there. It's with 2 large institutions that we have great relationships with. So we can extend it out a little bit longer. But -- so earning -- since we're paying a low interest rate, we're not unhappy to be waiting a little bit longer to deal with this.

[Himanshu Gupta, Analyst]

Got it. And maybe just last question. On the tenant disclosure, appreciate the new disclosure on Slide 40. So national tenants are 30%, international tenants, 55%. So in general, do you know how well capitalized are your international tenants? And if their revenues have been significantly impacted as a result of this crisis? And do you track their rent coverage or other debt metrics?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Like the part of this exercise that -- we felt we understood and knew our tenants quite well before. But I'll tell you now, we know a lot more information. So as part of the rent deferral discussion, we're asking for financial information. We're getting details. Some of them are, underlyingly, they're public companies. Some of them are not. They're still private companies, even though they're international, but 1 of our tenants is a subsidiary of a Hong Kong-based company, the majority of our international tenants are Canadian subsidiaries of U.S. people. It's a broad diversified tenant base. So if -- industrial over the long-term really ties in well to GDP. So if we're going to have a bad recession with negative GT, all of our tenants are going to be impacted, except the -- some of the distributors of food and things like that. So we're watching them. Like I said, we're not overly concerned about anything that's going on right now. It's just when is this pandemic and people starting to get back to work, clearly, I think the U.S. is going to be more aggressive for that. So in terms of the parent companies, I think they're going to come back to operating quicker than potentially some of the Canadian ones. And so yes, we're happy with that. Like I said, as it turned out, where the people that didn't pay are in these local tenants and the smaller type uses. And again, when we were designing this portfolio 7 years ago, the smaller local tenants is not what we were targeting. So we picked up a couple of a multi-tenant buildings in a portfolio deal last year in Ottawa. So there's some tenants in there that are having the same struggle. And then in Alberta, we picked up most of the additional smaller tenants. So right now, our portfolio in Montreal doesn't have a small tenant. So that portfolio is probably the most stable. And in Toronto where we've done most of the deferrals, we're very comfortable with the companies that are there, like they've been in business for 30 to 50 years. They're just saying, listen, I'm either going to have to go to the bank or try to do things, its credit is very tight. So if we can help them out. But we always want them to pay something. So whether it's 25%, 50%, 1 tenant just said, I only need help with May, and I'll pay it back in July. So the bulk of the deferrals, and it should go down in the month of June from where it was in May and then down even further in July, if things do start to open up, the majority of that deferred rent will get paid back in the first half of 2021.

[Operator]

The following question is from Mike Markidis of Desjardins.

[Michael Markidis, Real Estate Analyst]

I have a couple of housekeeping items here. First one is just on the deal that you did to sell DC2 and the fair value gain on the mezz loan. How is that going to trickle through interest income going forward? I mean I know it's noncash. Well, actually, sorry. I mean, you'll receive cash, but I'm just wondering how that interest gets -- going to get to...

[Paul Malcolm Dykeman, CEO, President & Trustee]

Well, whatever interest was accrued on the mezz loan. So what we were able to do with our partner here is effectively sell this property before the development is complete. So we had it built up to a power shell. And so -- actually, which is the cheapest part of doing the data center, the more expensive part is now to retrofit it to become a tier -- I'm trying to remember now -- Tier 4 data center, the same as 1 -- as DC1. So the ultimate purchaser and owner of this is taking over that work. So what we've done is we've got our entire mezz loan and the accrued interest paid to date. So that $5.5 million in accrued interest is now back in our bank account. So the additional money that we're going to get, starting in probably January of next year through to the end of the summer, it could get stretched out if construction is delayed, that will just come in as cash when we get it. So there's no interest on it because we don't have -- at this point, we don't have a loan on that project anymore. So it's just -- it's a profit calculation. You look at your costs, and we've taken a reserve if there's some cost overrun. So that $21 million potentially has a little bit of upside there, but we've tried to be conservative in what we think we're going to get.

[Michael Markidis, Real Estate Analyst]

Okay. So to say it simply, you've already recognized the gain fair value and therefore there will be no interest income pickup going forward as it accrues?

[Ross Drake, Chief Financial Officer]

Correct, yes.

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes.

[Michael Markidis, Real Estate Analyst]

Got it. Okay. That's great. Okay. So just with respect to the market for financing, I appreciate your comments with respect to the potential unsecured issuance and how you'd kind of wait and take a wait and see approach. Hearing that getting refinancing for existing loans is not an issue today, but what's the market like for new requirements? I mean, if you had to go out there and get $350 million of mortgage financing today, what's that market like?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Ross, do you want to answer that one? I mean we haven't had too many discussions, but...

[Ross Drake, Chief Financial Officer]

We've had discussions with some lenders just because we've got to start looking -- we have the potential to add some financing on some unencumbered assets and that. The markets are open and that. And I've received some discussions about -- from some others, they have 10-year money, I've received an offer on a property at reasonable interest rates and reasonable loan-to-value and that. So it's there. There's a few that are cautious today, but there's still a market there and, I believe, the availability to get financing. I don't -- I'm not concerned at this time. I don't see any issue.

[Paul Malcolm Dykeman, CEO, President & Trustee]

So -- and Mike, the one thing that took me about a month to figure out, I was looking at this loan as it's secured by $555 million of assets in Alberta. And I was asking the same question you are, which is how hard is going to be put mortgages on those $555 million, and then Ross finally goes, "We do have $630 million of unencumbered assets." The majority of those are in the GTA. So the pool of assets that we can put financing on is actually closer to $1.2 billion. So we can pick and choose. And a lot of those would be Ontario assets, high-quality, with the kind of tenants that would be very, very financeable. So if there were some lenders that may say, I don't really want exposure to additional mortgages on Alberta, we don't have to do that. So we could just shift the unencumbered pool to the Alberta assets that are currently securing that $350 million loan.

[Michael Markidis, Real Estate Analyst]

Got it. Got it. Okay. And there's a 1.3x test on your revolver...

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes. So that's like 3 -- yes, like $390 million is what's required on the line of credit today.

[Michael Markidis, Real Estate Analyst]

Okay. Perfect. The 4 properties held for sale, do you happen to have offhand what the NOI contribution from those assets were in the first quarter?

[Ross Drake, Chief Financial Officer]

I can get back to you on that, Mike. I don't have it right off the top of my head.

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes. I mean, they're fairly small. One of them -- yes, one of them was 80% occupied and the second one in Edmonton was empty. So it wouldn't be large. And then the 2 in DC are fairly small assets between the 2 of them.

[Michael Markidis, Real Estate Analyst]

Okay. I'll wait for Ross' detail there. And then just last one for me. Have you entered into any meaningful discussions with respect to abatements or lease amendments with anyone at this juncture outside of deferrals?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes. So again, our preference, if we can. So in the 8% that we're calling deferred, actually 3% of that is actually lease extension. So it will come in the form of free rent. So -- and we've done 3 of those, 1 in Alberta, 1 in Quebec, and 1 in Ontario. So where we think the rents are below market, we could bump them up in Ontario and somewhere like Alberta. And these are tenants that are saying our business will do better if we get a total month of free rent. And we don't know how quickly it's going to come back, so we prefer to kick that can down the road. So we were able to extend the leases in those 3 cases from -- of the 8%, 3% were deferrals. And there's still a couple of tenants that we're talking about and we're trying to figure out which is the better way to go. So if I'm a tenant, I prefer to, if I can, extend my lease because I don't want to have this additional rent or additional loan outstanding in the short term.

[Michael Markidis, Real Estate Analyst]

Okay. And just on those...

[Ross Drake, Chief Financial Officer]

But no abatement, sorry...

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes. So we're not talking about abatement. So the only time, and again, I think this is where we're still -- and there's a lot of unknowns around this rent relief program, whether you have a mortgage or not a mortgage. So we're still trying to get all the details out. But we're really now into this next phase that we've dealt with, what I would call the larger tenants that we happened to -- $50,000 a month rent and higher. Those tenants were down to 3 or 4 that we have to talk to. But it's that -- really that large group of smaller tenants now that we're going to start to grind down into. And so when we look at rent abatements, I think it would come in the form of our 25% contribution on selected tenants if we're getting the rent. And again, the way I would look at that is if we think that the tenant is going to have trouble paying rent at all, getting 75% of the rent for 3 months while we figure out what to do with their space and can we re-lease it is probably the way to go. But as of today, we have not granted $0.01 of abatement. And the only time we will do that is if we think we would use this rent relief program.

[Michael Markidis, Real Estate Analyst]

Got it. So that 3%, you basically said, okay, we'll just give you free rent for the next 3 months, and then we'll tack on another 3 months or whatever the term is to the end of your [ lease ].

[Paul Malcolm Dykeman, CEO, President & Trustee]

Well, no. No, we're not saying that. No. So the way the rent relief program works is they pay 25%, the government gives you a forgivable loan of 50%. So you actually take a write-off of 25% of their rent for those 3 months.

[Michael Markidis, Real Estate Analyst]

No, I get that. I was just talking about the 3% you said you extended leases for?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Those. You went back to that one. Yes. So those ones, yes. Yes. So we extended 3 or 4 years on the things with steps in the rent. The 1 in -- sorry, the 1 in Alberta, we think that tenant probably is already a little bit above market. So you're just locking in a lease for a longer period of time, with the CPI, 2% increases in the rent or something like that for a few more years. So we think that's a good case. So I like that style, and what we're trying to do is break it up so that the bucket of what would be in deferred rent wouldn't be -- just continue to grow and grow. So it's not a big number overall anyway once you add up all the deferred rents that we've given for April, May and likely have to do for June or July. The only unknown here is -- we'll take it month-by-month -- is what is June going to look like? What is July, what is August? Like we just don't know, right? But most of our tenants have been able to operate all along. So hopefully, with loosening up, it will just make it easier for them to do that.

[Operator]

The following question is from Troy MacLean of BMO Capital Markets.

[Troy Raymond MacLean, Analyst]

I'm just kind of curious, do you have a target for what percentage of the portfolio you want to lease to e-commerce tenants in the next 3 to 5 years? Like how do you look at that?

[Paul Malcolm Dykeman, CEO, President & Trustee]

So we don't. We just go, we're opportunistic. So whichever tenant is going to pay the highest rent. What I do think, Troy, it's going to -- when we get back to the acquisition, we clearly had a strategy of dealing with larger single-tenant buildings. But after this kind of exercise, really focusing on the industries that they're in will be another more important criteria in underwriting real estate. So first and foremost, we'll still probably be opportunistic and make sure that the building that we're buying is physically good, it's located well. And it's always adaptable to e-commerce. And I think we've thrown out a target. I think when you -- a lot of it is distribution. A lot of the warehouse, they're kind of doing light manufacturing assembly now. But we put an assessment of like 83% of our portfolio has some ability to be a fulfillment center or e-commerce. So there's just some that are a little bit heavier manufacturing and that sort of thing. But I really do -- this was a real eye-opener in terms of the small-bay stuff. I'm picturing how hard our life would be in -- if we were still Summit, one with 3,000 tenants, because that's where more of the discussions are happening. So I think it's more understanding industry. So we don't have a target per se, but I do think the underlying industries that they're in and the credit quality of tenants, obviously, going forward, is just going to be more valuable than it has been in the past. But we start with good real estate and good locations. Clearly, the smaller multi-bay stuff, one of them, which is for sale in Edmonton, if we could sell those over time, that would make sense for us as well, just continue to purify the portfolio to the larger tenants. But I do think we're -- I made the phrase, it's this just-in-case. But we're definitely hearing lots of early discussion, whether it's pharmaceutical distribution companies saying -- making proposals to the government to start to create warehousing facilities for those, whether it's PPEs or other critical goods and services that you require during panic times. And so I think there's going to be more e-commerce, people shopping online, which we're seeing incoming calls from those type of tenants already. But I do think there's also a second phase, and there's -- CBRE has done some studies in the U.S., and down there, it could be like hundreds of millions of square feet, additional space required to meet some of those demands. So if that trickles down into Canada, there's definitely going to be a requirement for -- whether it's just pure storage of goods and materials or even some increased manufacturing of these types of products or goods. And even like pharmaceuticals, I think the ones that were outside just the normal one, like there was a big strain. So I think there's going to be a whole review of supply chain and how much this just-in-time thing can backfire when supply chains are interrupted. So it's going to be interesting.

[Troy Raymond MacLean, Analyst]

You've talked in the past about having development JVs and doing more value add. You mentioned that's on hold. But do you think after what's happening right now, it's harder to -- it's easier or harder to get a partner than it was before?

[Paul Malcolm Dykeman, CEO, President & Trustee]

I think in some cases, it might be easier because I think capital is going to be a little bit more selective in terms of what they do and what potential risks they might be able to -- able or willing to take. So I think in some markets, maybe Montreal, there might be more of an opportunity to go in with partners there. We're -- like I say, we're very flexible. We're very happy with our relationship with Cooper, they'll probably help us out with some of our existing development sites along with the stuff that they're doing. They're in the planning stages, since the first 2 buildings are going so well, the planning stages for another 2, which is about another 400,000 square feet. So yes, no, I think development is not going to show much of a pause. I really do think, particularly in Ontario and GTA and even in Montreal, availability was getting very, very tight. So I was surprised that we hadn't seen more development. But right now, that's just not the time. But I think once the world is back moving a little bit freer, I think it won't take long to start to want to ramp that up again.

[Troy Raymond MacLean, Analyst]

On the 2021 lease renewals, last year, you early renewed tenants, that was -- seemed to be a priority. As you look at leasing at the end of the year and in 2021, would you want to hold off on doing leasing because you want to -- because maybe you wouldn't get the rent lift that you would have gotten 6 weeks ago? How do you think about that? Is it -- do you want to lock that up or you maximize the rent?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Well, I think -- and there will be different strategies for different markets. I would go 24 months in Alberta and anything I can try to lock up, I would lock up sooner than later. Toronto is where you look on it on a case-by-case basis. And I'd be lying if I didn't say, I'd be happy to take if we're going from $5.50, it's going to $7.50 or $8, okay, we'll take $7.50 today just to get that one done. Really want to see more visibility to the extent of our -- this 2% and how it turns out. And if we see some stability there, there's probably a few places where we'd draw the line in the sand. I mean, we didn't comment on our leasing a couple of these last renewals. It would be a good example of that, Troy. So that one was coming due in October, November, he was moving from $5.50 and I think we started him at $7.25 going to $8. Maybe we would have said, oh, let's try to push that guy to an $8 rent or whatever. So potentially, you're giving up a little bit, but that's 45,000 -- still a 45% increase. Montreal, we just did an 18-month renewal because that tenant is going to need more space. We bumped that one up 22%. So there's -- it really goes down to a case-by-case basis. And one opportunity that doesn't show up on our lease expiry, which I wanted to mention, we have a 10-year lease in the GTA, a 250,000 square foot tenant's paying $5.20, and that rent resets to market in November. So we'll see, but that at least would be a mid-$7. So again, it's a little early to tell. I'm probably feeling like I want to be a little bit conservative and try to lock up more risk than not right now, but that may change in a couple of months. But this has been a hard time, going through that. So right now, it's really about risk mitigation. And when we switch to offense again, maybe we'll think differently in 2 or 3 months from now.

[Troy Raymond MacLean, Analyst]

And then just on acquisitions, what would you have to see to kind of get back on the acquisition front? Obviously, the lockdown would probably have to be over, but do you want to make sure we're not heading into a deeper recession? Do you want to get confirmation on pricing? What are you looking for to kind of get back on all sense?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Well, where we are -- we've got ample liquidity to handle any short-term issues in the portfolio. But we don't have expansive amounts of liquidity to do a large acquisition program. If we did do any kind of growth, I think it's what you talked about first, would be expansions and developments because we know the yields on those are going to be higher than what we potentially -- possibly get in the acquisition market. But it really goes to starting to look at our unit price and at what point would you be willing to and consider raising equity? So our last equity raise was at $12.90 last year. So I don't even know we're at $10 today. So we're still a little ways away from that. So it's -- we're not going to be aggressive until there's a lot more stability in the pricing of equity as well.

[Troy Raymond MacLean, Analyst]

And then just finally, on the Montreal portfolio, what would you expect to be the mark-to-market potential on that portfolio? Where are in-place rents versus market right now, do you think?

[Paul Malcolm Dykeman, CEO, President & Trustee]

That's always the question I never want to answer, because I always answer by saying we don't know until you deal with that one tenant, what do you need? What amount of TI are you going to do? But at $6.58, we're -- rents there are a little behind where they are in GTA, but you can get $8 and $9 rents on new developments there. So it's not as wide as what it is in Toronto, but like I said, you can do deals, $7.50 to $8 50 in Montreal. So there's some [ nice room ], but then you have to look at our portfolio in each space, and some of it's not $8 space, but it still has a decent amount of upside there. So I'm not going to throw a percentage out that gives you the answer.

[Operator]

The following question is from Matt Kornack of NBF.

[Matt Kornack, Analyst]

Just a quick follow-up on Montreal. For the same-property NOI growth in Q1, it was a little lower, and it looked like occupancy was fairly stable at almost full. Was there anything in particular that would have driven that figure?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Ross is going to answer that question because I asked him that one yesterday.

[Ross Drake, Chief Financial Officer]

Yes. So there's 2 onetime nonrecurring nonrecoverable expenses that hit the quarter and that. So given the size of the portfolio, it impacted it. If you back those out, you're back to just under 2% same-property NOI growth in the quarter. So it's just a onetime item, some nonrecoverable landlord cost repairs and that. So it -- on a smaller portfolio, it hits it a lot harder than a [ larger ] portfolio.

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes. I mean, the contractual rental bumps in Montreal are like 1.8% on average. Obviously, that's not going to be every year exactly the same number. And the rollover profile has been lighter than the other markets that we're in. So there's not as much of moving the rents from where they are to market. But it's very, very stable. I mean, as you saw in the collections, we -- and it surprised me a little bit. We got 100% of April in without even having to ask and we're very high on May as well. So again, that portfolio, I don't think has a single small tenant or local tenants. So that's turned out to be a very nice place to have some safety in our portfolio.

[Matt Kornack, Analyst]

And you mentioned that, technically, March was the beginning of COVID, but you didn't take any allowances for doubtful accounts in Q1. Would you ever?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes, we did, actually. Good accounting question. I think it was like $250,000. There's a couple of tenants that were on some repayment plans and we had a very solid quarter, but we didn't want to have any kind of accumulating effect of that. So we went through with a very fine-toothed comb on our AR and took a $250,000 -- right. Yes. So -- yes, so everything else, we're very comfortable with. And we're going to keep looking at that on a month-to-month basis, because I think for this tenant base of this 2% to 3% as we work our way through there, anything that we're not collecting or we can't use the government program, we'll probably be making allowances as we go through for that as well.

[Matt Kornack, Analyst]

Okay. And then I know you guys have historically been very nimble with regards to re-leasing space, but presumably, you'd expect to see a little bit of an increase in transitory vacancy this year as some of this stuff works its way through the system?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes, and I -- Like I said, I think it's all in this category of these small, local -- and I'm not going to -- I know they're probably listening, our leasing people. They take pride in making things work out better than I think. From Ross and our standpoint, the way we're thinking about it, our issue is around this 2% to 3%. But even if you forecast at 2% or 3% vacancy from now to the end of the year, our overall yearly results are still fine for us. But I know our team is going to outperform. So it's just -- it's going to be can we get this tenant out? Can we put a month-to-month tenant in there like a FedEx, that's a better quality tenant? Can we use the rent relief program? So I'm hoping we're going to be pleasantly surprised as we work through there. But yes, if our occupancy today is 99%, can I see it at some point dipping down to 96%, 97% this year? Probably, like more probably 97%, lose a couple of percent. But hopefully, that won't happen, but it's possible.

[Operator]

The following question is from Matt Logan of RBC Capital Markets.

[Matt Logan, Analyst]

Just following up on some of the market rent questions. I'm wondering if you could provide any commentary on where you see in-place rents versus market rents in your other Ontario bucket?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Other Ontario. Yes, it's a bit of a mixed bucket. Because in there, you've got a property up in Barrie. We've got 1 down in London. We've got the small-bay stuff in Ottawa. For the most part, we're not looking at -- when I look at that, I would say we're kind of at market. And when we break down -- when we broke down the total, the in-place market rents -- or in-place rents on that other Ontario is slightly higher than our GTA anyway. So it's probably like $6.75. So I wouldn't say that there's significant upside in that rent. So saying that's around market is probably a reasonable assumption.

[Matt Logan, Analyst]

And you broke out the in-place rents by market in your slide deck. Could you just tell us the in-place rents for the overall portfolio?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Sorry. We've got 3 in-place rents, right? Is that what you're talking about?

[Matt Logan, Analyst]

Just the aggregate for the entire portfolio, if you blend it out? I'm sure we could do the math.

[Paul Malcolm Dykeman, CEO, President & Trustee]

Ross, have you done that math?

[Ross Drake, Chief Financial Officer]

Yes. It's $7.31.

[Matt Logan, Analyst]

$7.31. And maybe just changing gears here. On the leasing front, you guys had a really productive 2019 and early part of 2020. When we look at the lease renewals that are set to come online in the balance of this year, can you give us the incremental rent that is associated with those leases?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Incremental rent. So roughly ballpark, like 600,000 square feet, you're trying to say what is the in-place rent, or...?

[Matt Logan, Analyst]

Just what the difference is. And so if we have rent of $7.30 and they roll up to $8, what's the rent contribution that's going to come in over the next 6 months, 9 months?

[Paul Malcolm Dykeman, CEO, President & Trustee]

Sorry, I'm still not understanding the question. The rental bumps or the...?

[Matt Logan, Analyst]

I'm trying to quantify the rental bumps in dollars for the balance of the year that are yet to come online from the renewals.

[Paul Malcolm Dykeman, CEO, President & Trustee]

For the stuff that we haven't done or the stuff that we've done?

[Matt Logan, Analyst]

For the stuff that you've already done.

[Paul Malcolm Dykeman, CEO, President & Trustee]

Okay. Because I thought you were going to -- what's going to happen on the 600,000 square feet, and I'm going like -- I think it's good, but we haven't done it yet, so.

[Matt Logan, Analyst]

No, no. I think, you've already done.

[Ross Drake, Chief Financial Officer]

Yes, I think it's spread pretty evenly throughout the year. So it's -- the actual dollar amount. I can get back to you with the...

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes, I think that's one that Ross is going to have to go away and do some calculations. Again, because we've had...

[Ross Drake, Chief Financial Officer]

It spread fairly evenly.

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes. And then like I said there is a big 1, that 250,000 square feet, that doesn't start until November. So it's going to have minimal impact on 2020. But obviously, that will be probably another $0.5 million contribution of that 1 lease alone for 2021. So yes, so Ross can go through -- it's a bit more of a detailed question that...

[Ross Drake, Chief Financial Officer]

Yes, I'll get back to you on that, Matt.

[Matt Logan, Analyst]

That would be great there, Ross. And maybe just changing gears. In terms of your contractual rent increases, are you guys still passing those along this year? Or are those taking any sort of a pause?

[Paul Malcolm Dykeman, CEO, President & Trustee]

No, no, that's our standard protocol and our standard lease, and it's negotiable. So we try to get on an average between 2% and 3%. As much as we get 2%s and 3%s, some of them roll off. But I think the overall, we're still around that 1.7%, 1.8% on an entire portfolio. So tenants like that gradual increase, and it's a way to ease them into higher rent rates. So that program hasn't changed. And again, some of the things that weren't -- didn't seem important during the first 7 years that became really important, the vast majority of our tenants pay electronically. And that's why this early in the month, we already know who's paid and who hasn't paid. So we've got a very efficient payment system. So it's -- now it's -- now we know why we were doing it for the last 7 years.

[Matt Logan, Analyst]

And last question for me before I turn it back. Just on some of your committed leasing. Can you remind us of the GLA that's set to come online in the balance of this year?

[Paul Malcolm Dykeman, CEO, President & Trustee]

The new leasing? The renewals or new leasing?

[Matt Logan, Analyst]

The new leasing.

[Ross Drake, Chief Financial Officer]

It's a little over 1 million square feet. Are you talking renewals or vacancies?

[Matt Logan, Analyst]

New leasing set to come online in the balance of the year. The committed space.

[Paul Malcolm Dykeman, CEO, President & Trustee]

Yes. And again, we never like to -- because we also know that there's some that are going to burn off and probably do that. So I'd mention about 100,000 square feet in Alberta that -- it's where the occupancy went at quarter end. It's up a little bit today. There's still another 1 that starts -- 35,000 square feet starts June 1. We know there's a 44,000 square foot tenant in Q2 that's probably not going to renew. We just did a 6-month short-term deal there. So we're not seeing -- there's nothing that we know today that's telling us that occupancy is going to change dramatically. So until we work through this 2% to 3%, if some extra vacancies created from that. But when we just look at the leasing that we have done to get us to around 99% and stuff that's falling off, we didn't mention a piece of good news, which is Humberline, is our only Ontario. It's been vacant for 2 years because we're trying to build these loading dock doors. We finally got the building permit. We were putting the doors in when the construction stopped. The good news there is we had a deal with a tenant at $5.25 and that -- because we couldn't deliver the space in time, that deal is now null and void and the new tenants that we're talking to are around $8, so -- on that. So we could lease that. That space, hopefully, will get leased in the second half of this year as well. So like I said, until we work through this 2% to 3% of issues of tenants paying, we don't know how that's going to impact the vacancy. But just looking at the leasing that we've done and what we expect on the lease expiries, we don't see dramatic changes in the occupancy from that exercise.

[Operator]

There are no further questions registered at this time. I'll turn the meeting back over to Mr. Dykeman.

[Paul Malcolm Dykeman, CEO, President & Trustee]

Thank you, operator, and thanks, everyone, for your time and interest this morning. Later this morning, we will be holding our 2019 Unitholders Meeting at 10:30 Eastern Time. It will be a virtual meeting. Details of how to access the meeting are available on our press release issued in mid-April and available on our website and SEDAR. Again, thank you this morning for joining us. And if you have any follow-up questions, give us a call. Thank you very much, and goodbye.

[Operator]

Thank you. The conference has now ended. Please disconnect your lines at this time. We thank you for your participation.