InterRent Real Estate Investment Trust

TSX:IIP.UN

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, ladies and gentlemen, and welcome to InterRent REIT Third Quarter Earnings Conference Call and Webcast. [Operator Instructions]

I would now like to turn the conference over to Renee Wei. Please go ahead.

[Renee Wei, executive]

Good morning, everyone. Thank you for joining InterRent REIT's Q3 2024 earnings call. My name is Renee Wei, Director of Investor Relations and Sustainability. You can find a presentation to accompany today's call on the Investor section of our website under Events and Presentations. We're pleased to have Brad Cutsey, President and CEO; Curt Millar, CFO; and Dave Nevins, COO on the line today. As usual, the team will present some prepared remarks, and then we'll open it up to questions.

Before we begin, I want to remind listeners that certain statements about future events made on this conference call are forward-looking in nature. Any such information is subject to risk, uncertainties and assumptions that could cause actual results to differ materially. For more information, please refer to the cautionary statements on forward-looking information in the REIT's news release and MD&A dated November 4, 2024.

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

Brad, over to you.

[Bradley Cutsey, executive]

Thanks, Renee, and thank you, everyone, for joining us today. We've had a great quarter with strong year-over-year increases in our key operating numbers, translating into solid top line growth. By leveraging our strong operating platform, we've successfully converted that growth into meaningful bottom line gains.

Over the busy summer leasing season, the rental market conditions remain very tight as shown by our occupancy rate increasing by 120 basis points year-over-year and 20 basis points quarter-over-quarter, reaching 96.4% in September. We signed 1,279 new leases during the quarter, basically matching our Q3 2023 number, which was the highest Q3 in our history. This increase in occupancy rates is accompanied by steady growth in rental rates.

Average monthly rent for our total portfolio reached $1,687 in September, showing a year-over-year growth of 7% and same-property AMR growth of 5.6%. This growth has moderated compared to last year and remained above our 10-year average of 5.5%. We've seen strong occupancy rate gains and AMR growth across all our regional markets, particularly in Montreal, where we saw same-property occupancy improve by 300 basis points to reach 96.3% by achieving an AMR growth of 6.4%, demonstrating strong demand for our centrally located high-quality communities. Dave will share more regional details later in the call.

Moving to the next slide. Same-property revenue increased by 7.9% during Q3. We are proud to have achieved a same-property proportionate NOI margin of 68.2%, which is close to our historical all-time high. This marks an improvement of 40 basis points year-over-year. We achieved this by focusing on what we can control, resulting in lower property operating costs and utility costs as a percentage of revenue. Proportionate NOI for the same portfolio increased by 8.7% to reach $41.5 million.

As highlighted on the right-hand side of the slide, strong AMR growth combined with the interest rate tailwind on our debt stack has translated into substantial FFO and AFFO growth, driven by a 6.4% year-over-year reduction in financing costs. We focused on strategically using the proceeds from our capital recycling efforts and refinancing activities, which effectively reduced our outstanding mortgage balances and kept our variable-rate debt exposure at below 1%. With the weighted average interest rate at 3.3% compared to 3.48% last year, we were able to bring our financing costs down by 210 basis points to 22.7% of our revenue during the quarter.

In Q3, we achieved a 9.7% increase in FFO, reaching $23.4 million and an 8.9% increase in FFO per unit, now standing at $0.159. We delivered $20.9 million in AFFO or $0.142 per unit, an increase of 10.3% and 9.2%, respectively. Our solid financial position has continued to strengthen. Year-over-year, our debt-to-gross book value ratio decreased by 10 basis points to 38.5% as of September 30.

As of the end of Q3, our credit facility of $225 million remain undrawn, and we had $193.4 million in unencumbered properties and approximately $295 million in available liquidity. Our strong balance sheet and financial flexibilities have enabled us to support both internal and external opportunities that will set us up for sustainable long-term growth. One such opportunity has materialized with our acquisition of a New-Build Community in Montreal, which we'll discuss more in detail later.

As we continue to carefully evaluate future opportunities, I want to reiterate our commitment to disciplined capital allocation. Our ongoing disposition program will allow us to recycle capital effectively. We have a strong track record of upholding the integrity of our balance sheet and it remains a top priority going forward.

Now, I'll let Dave take it from here for a look at some of our operating highlights.

[Dave Nevins, executive]

Thanks, Brad. First off, I'd like to congratulate all of our team members for their hard work during a very busy summer leasing season. We continue to capture embedded rental upside with a healthy trailing 12-month turnover rate of 23.8%. Move-ins kept in pace with move-outs during the quarter. We executed 1,279 new leases during the 3 months, just below our all-time Q3 record of 1,293 new leases set last year. And we were able to consistently achieve additional gains on those leases on top of already high outgoing rental rates, ending the period with a strong occupancy rate of 96.4%.

Average gain on lease during the quarter was 11.4%, which translated into incremental annualized revenue gain of approximately $3 million or 1.2%. While we see the same headlines as everyone else on market rent growth slowing down, our own market rent performance held up well in most of our regions, showing consistent and positive growth both year-over-year and quarter-over-quarter for total portfolio. We've seen notable strength in Ottawa and Montreal and our communities in the GTHA are providing the most resilient and some of the aggregated data that has been reported.

Going forward, we're keeping a close eye on market demand. We're expecting a more moderate pace of rental growth in certain markets, especially where there's a lot of new supply recently delivered and rents may have peaked. Our mark-to-market gap has come in slightly to approximately 27% and the time line for unlocking this embedded growth could be extended. However, we take comfort in the embedded value that we have, which provides a solid foundation for stable long-term rental growth.

Occupancy and average monthly rent growth has been strong across the board. Same-property occupancy was at 96.4% in September, showing improvements of 120 basis points year-over-year and 20 basis points sequentially. Occupancy rates remained steady in the national capital region at a high of 97.2% and improved in all other regional markets. Activity was particularly strong in Montreal, where we saw strong leasing activity pushing occupancy rates up by 290 basis points year-over-year to 96.3% in the region.

There has been a lot of investor interest in student demand in Montreal after recent federal and provincial policy changes. From year-over-year international student enrollment data and what we have seen on the ground, the impact hasn't been as significant as many have anticipated. We continue to see that colleges of lesser-known institutions are feeling the pressure, while the major universities are capturing a bigger share of total student enrollments. This trend is also emerging in other regions. Our communities with the highest student concentrations are strategically located near established universities, which are more insulated from these fluctuations.

We remain focused on managing controllable costs during the quarter. Our revenue growth continued to outpace expense growth, leading to a 40 basis point year-over-year expansion in same-property NOI margin at 68.2%, just below our historical record high, which was achieved in 2019. Overall, same-property operating expense for the quarter increased by 6.3%, partially driven by timing of certain cost item allocations.

Year-to-date, operating expenses showed a more consistent 3.6% increase. Higher marketing expenses also contributed to higher property operating costs as we invested in digital marketing to support our brand recognition and strengthen our position in a more competitive marketplace.

Property tax increased by 7.8% on a per suite basis, primarily due to the impact of dispositions in the portfolio, which had lower property taxes on a per suite basis compared to our more urban portfolio. Looking ahead, we anticipate property taxes increase in 2025 to be in the 5% range. Utility costs held steady at $3.1 million for the quarter, unchanged from the same period last year. On a per suite basis, utility costs increased by 5.7%, which was due to an 8% increase in average rates and a 2% increase in usage.

Our energy efficiency initiatives continue to lower our gas costs, with gas usage down by 7% year-over-year. Our hydro submetering program has helped reduce our electricity costs by recapturing 39.3% of the cost for total savings of $0.7 million for the quarter.

Taking a closer look at CapEx, we've kept maintenance CapEx for repositioned suites at below $1,000 per suite on an annualized basis, in line with previous years. We continue to prioritize value-enhancing investments, which is where we allocate the majority of our spending. We're proud of how well we've maintained all of our suites. This has allowed us the flexibility to adjust and dial back our CapEx spending as needed. As you can see on the right-hand side of the slide, we've been diligent in managing our spending, and so far this year, we've been able to lower our per suite CapEx.

And now I'll turn it over to Curt to provide an update on our balance sheet.

[Curt Millar, executive]

Thanks, Dave. As we do every quarter, we reviewed our internal cap rates and property values with our acquisitions team and our external appraisers. Near the quarter end and into Q4, we are starting to see more deals transact, which is providing more certainty around cap rate movements. Based on these transactions, industry reports available at the time of quarter end and our external appraisers' review, we have adjusted cap rates in 4 of our regional markets.

Due to the adjustments in the GTHA, NCR, Montreal and other Ontario markets, average cap rates for total investment properties increased by 9 basis points quarter-over-quarter, bringing the weighted average cap rate for the entire portfolio to 4.34%. This adjustment has offset our strong operational performance, resulting in a fair value loss of $93.5 million on a proportionate basis. We continue to monitor the transactions market closely as the decrease in interest rates seems to have resulted in an increase in market activity, which will provide more support for future cap rate adjustments.

InterRent continues to be in a healthy financial position. We've strategically used proceeds from our capital recycling efforts and financing activities to lower our mortgage balances and keep our variable rate exposure to less than 1% throughout the entire quarter. These activities have led to $0.9 million reduction in financing costs compared to the same quarter last year, allowing our strong performance to translate into significant FFO gains.

Following the quarter, we drew on our credit facilities, increasing our total variable rate exposure to 2.3%. These funds were used for our Montreal acquisition, while more permanent MLI select financing is being processed by CMHC. As Brad mentioned earlier, we continue to be in a position of financial strength and flexibility. Our dispositions program will guide our capital recycling, and we'll continue to be disciplined in our capital allocation decisions.

Moving on to Slide 17. Our long-standing efforts to advance sustainability initiatives continue to bear fruit. In October, InterRent was awarded a 3 Green Star designation for the 2024 GRESB Real Estate Assessment. We achieved a score of 81, an impressive 21% improvement from the previous year. This is our fourth straight year of improving our GRESB score since we started in 2021.

We also announced earlier in October that our entire Montreal portfolio has achieved certification under the BOMA Best Sustainable Buildings Program. This milestone builds on our earlier achievement with the certification of our portfolios in Ontario and British Columbia under the Canadian Certified Rental Buildings Program that we did last year and earlier this year. With these efforts, we're proud to say that 100% of our multifamily communities now have building certification coverage.

Last but not least, we're all very proud to share that this past September, we raised another record-breaking $1.8 million at the Mike McCann Charity Golf Tournament. Thanks to the support of our many amazing partners, all the proceeds from the event go straight to supporting the charities in our communities, making a real difference in many people's lives. To date, this event has raised nearly $10 million. We can't thank our partners enough for their support, and we're just getting started. Next year will be our 25th anniversary. So mark your calendars for September 25, 2025. We can't wait to celebrate with you.

On that note, I'll turn it over to Brad to discuss our recent strategic acquisition and provide any closing remarks.

[Bradley Cutsey, executive]

Thanks, Curt. As communicated during the Q2 call, we've been exploring some attractive opportunities, and I'm excited to share that one of them has materialized this quarter. We've deployed some proceeds from our successful capital recycling program to expand our Montreal portfolio with a newly built centrally located community. This transaction was closed subsequent to the quarter in mid-October. This acquisition is a 50% joint venture with a trusted partner, and we're very happy to be able to seize the rare opportunity to acquire this high-quality asset at a discount to replacement cost in a prime irreplaceable location in downtown Montreal.

We've already begun the leasing process as we work towards reaching stabilized yield. The community features 248 residential suites and approximately 70,000 square feet of commercial space that is currently in the process of being leased to a financial institution and an established national retail brand. The building was newly constructed in 2023 with rich amenities, which will allow us to leverage our leasing and operating platforms to maximize value during the 5-year exemption from the rent fixation process.

We're also proud of the energy efficiency performance and accessibility standards within this community, which is also anticipated to help us obtain preferred financing through CMHC's MLI Select Program. So far this year, we have generated net proceeds of $93.3 million from our dispositions after closing costs and discharge [ amounts ]. This has provided short-term funding for the acquisition, along with the temporary use of the credit facility while we wait for long-term financing to be finalized in the months to come.

We're making steady progress with our development pipeline. Construction is now underway on our second office conversion project in downtown Ottawa. In September, it was confirmed that LeBreton Flats will soon be home to a new arena with NHL Ottawa Senators. This is great news, and we look forward to the upcoming development of infrastructure, transportation and retail that will transform this downtown Ottawa area. These developments will add significant value to a number of our communities that are in close proximity to the site. The recent immigration plan has weighed on sentiment lately, with projections indicating that Canada's population will experience a slight decline over the next 2 years before growth resumes in 2027.

Looking ahead, we may not see the significant market rent growth of recent years, but we're confident in what we have to offer. The quality of our communities, the care we put into our spaces, and the experience and dedication of our team will allow us to compete in any market. We believe steady top line growth is achievable over the next couple of years, albeit at a more moderate pace than previously guided.

In this evolving market environment, we're cognizant of the importance of being prudent in our capital allocation decisions. Our recent acquisition of Montreal is an excellent example of our strategic approach. We capitalized on a unique opportunity to acquire at a discount to replacement cost in an irreplaceable location within a city we're very optimistic about. We believe this approach will help us navigate the market in line with the long-term objectives of growing NAV and position us for sustainable growth.

With that, let's open it up for Q&A.

[Operator]

[Operator Instructions] Your first question is from Kyle Stanley from Desjardins.

[Kyle Stanley, analyst]

Just going back to some of your commentary, you did mention with the immigration policy changes, you do expect moderating rent growth in the next little bit. As we think about where your leasing spreads trend over the next 12 to 24 months, what are you thinking there? And what does that imply for maybe your revenue growth outlook?

[Bradley Cutsey, executive]

I'm sure you could imagine we thought we'd get this question. I'm sure it's going to come up a bit. This is like unknown territory, right? The immigration changes being a pretty whipsaw announcement. It was a whipsaw kind of with the increase in the targets and then a whipsaw in that direction to decrease. So there's no question there's been a significant shift in the immigration policies.

If all goes planned, the policy shift will result in negative population growth, a scenario that we haven't experienced since the population record started back in World War II. So there's a lot of unknowns. The broader impact of this is going to create a level of unpredictability that many of us are going to have to navigate thoughtfully through. But I guess I'll try to answer it in 2 ways.

There's a lot of unknowns. Will the government meet these ambitious targets? Can the targets be met on schedule? What happens if there's a change in government? Even what's impacting the labor market, the capacity to build housing supplies, right? So all of a sudden trades are decreased. And then there's also the whole 640,000 household formation of the unwinding -- of the potential unwinding of that, that the PDO office talks about in their report. And that's essentially just a doubling up, tripling up, quadrupling up impact. So how that all impacts the overall rental demand is yet to be seen. And those are kind of the things that we don't know. We're going to have to work our way through it. And I think time will only tell.

But the things that we do know and the things that we're betting on here at InterRent is that we have a great operating platform, right? So we've been investing in our technology and our people, where they continue to deliver outperformance. We believe that the resiliency of this platform will be demonstrated throughout time through -- as we work through the different quarters and whatnot, as far as we see the impacts of what this negative population growth might mean. And I think we're going to all appreciate, we've never experienced as a country negative population growth. So it's not only going to be multifamily. There's going to be a lot of industries impacted. And it's going to go back to -- we really don't know if the government will remain committed to it. And we don't know what pace that this change will happen.

So thank goodness for InterRent that we've been continuing to invest in the platform through technology and through our people. I take a lot of comfort that there's going to be a lot of haves and have-nots within the industry, not -- a rising tide floats all boats, but it's not necessarily goes the other way. Last but not least, I really think we've got to focus in on and the communities has got to focus in on the quality of our portfolio and how well located it is and how well located it is to existing economic ecosystems. I think that's going to really serve us quite well going forward.

I think also, too, the amount of money we spend on our portfolio has been quite defensive on a relative basis. I think we're really well positioned. As you know, we've always talked about we'd like to see a bigger portion of our portfolio being non-repositioned because that's where a lot of the value-add initiatives come. But in a defensive time like we might be heading into -- and again, I just don't know what pace. We might continue at the robust pace that we've been at. But if that is not the case, the majority of our portfolio is being repositioned, so there's not a lot of CapEx dollars going forward.

I would say last but not least, is that we have different levers to pull if we want to get more defensive. Up to now, we've always focused on maximizing our rents. We can shift and we can take more of an occupancy type with all of these -- especially, if it's markets where we are experiencing some softness due to supply being delivered, not the same level of historical rental demand, we can always choose to increase our occupancy targets.

So I know that's not going to answer you specifically, and it probably won't satisfy the majority of you on the call. But guys, we really don't know much more than that. So I mean, we can kind of keep answering around it, but we're going to kind of go back to what we do know, and it's really going to be about the haves and have-nots and having a really strong operating platform to be able to deliver and rely on that track record. And there's a couple of levers we can pull if the markets do get a little softer.

[Kyle Stanley, analyst]

Okay. No, Fair enough. I appreciate the uncertainty and the difficulty in forecasting, so thank you for that. Maybe just looking at the Montreal acquisition, you provided some disclosure there. Would you be able to comment on where maybe in-place occupancy is today? And you highlighted the fact that newbuild, it does have the 5-year rent control holiday. What kind of upside do you see in the rents? Was there maybe concessions or lower rents used to get initial lease-up done? Just trying to think about maybe yield expansion opportunities as we look ahead.

[Bradley Cutsey, executive]

So first off, we think it's a great add-on to an existing best-in-class quality portfolio and really extremely well located. As you know, Kyle, we have a really concentrated portfolio in Montreal. And the likely thing about our portfolio, there's not a lot of communities with 100-plus suites and all of our communities are in and around that level, meaning they're very well amenitized. It's a 3-minute walk from the UQAM. It's also a 4-minute walk from the CHUM Super Hospital. It's a 5-minute walk from the metro. So I can't say enough how well located this is.

As far as where the lease-up -- there is lease-up potential. We do have a partner in it. So I've got to be mindful of what I disclose. But this is a strategic acquisition for us. And we've always said in the past on things that are strategic acquisitions, the yield expansion, we're really looking kind of between 50 to 75 basis points of the going in. There's no difference in on this.

I think where the attractive level of financing -- and Kurt can speak more to that. But given the MOI and the accessibility of this community, we're forecasting some pretty attractive financing on this. So from a levered IRR perspective, it's certainly significantly higher than our overall threshold. So we are pretty excited about it.

There were -- like typical most lease-ups in developments, there were incentives given of a month. We've underwritten that. So for us, we kind of look out to a 2.5 to 3-year period where we kind of think we can stabilize that yield. And I think -- we think we can be north of 5 on that front. And I think just given the amenities and given our level of our ability to deliver on programming, I think we feel pretty comfortable that we'll be able to do it.

And then the last point I would make is I think there's a really small window right now for being able to buy at discount to replacement cost, and we just found ourselves in a position where it just really fitted really well in as a bolt-on to our existing portfolio. So we jumped at the opportunity.

[Kyle Stanley, analyst]

Okay. No, I think that makes sense. Just because you mentioned it there, Curt, I'm not sure if you're able to provide your expectations for where the MLI Select rate might come in?

[Curt Millar, executive]

I mean, at this point, I expect it will be probably around the 350 to 370 range given when we're planning on financing it. I mean, could it be 375 or 380? It could be. It's hard to predict right now. We're still seeing crazy volatility in the market.

So the good thing is with MLI Select, and we expect this will get into Level 2. We're hoping to have this funded before year-end. It could drift into early January, but we're pushing hard to try and get it this year. So we expect that the financing on it will be somewhere in between that $75 million and $80 million.

[Operator]

Your next question is from Mark Rothschild from Canaccord.

[Mark Rothschild, analyst]

So the spread between in-place and market really hasn't changed that much, but rental rates clearly have moderated somewhat and you're still getting good rent growth. Do you feel that it really is close -- remaining close to 30% based on the current market rates?

[Bradley Cutsey, executive]

Yes. I mean, I think we quoted 27. So we're quite confident in that, and we're achieving that as of today. And I think the numbers show it. I think coming in does show there's been some, call it, stabilization in some of the nodes in which we operate; hence, why the market has gone from 30 to 27. And we don't know what the future brings, meaning, hey, depending on how this population growth impacts, there could still be some softness in areas where further deliveries get -- new supply gets delivered. That might come in. But that said, to your point, I think what your making -- margins still remains at pretty elevated and a healthy mark-to-market gap. So market rents really have to come by a lot in order for that cushion to evaporate.

[Mark Rothschild, analyst]

Okay. Great. Maybe just one more. You made a comment in regards to the acquisition in Montreal. You mentioned a couple of times buying below replacement cost, and you said you believe there will be a very short window that you'll be able to buy below replacement cost. Maybe you could talk a little bit more about what gives you the confidence that it's going to be only a short window and that the values will be at or above replacement cost?

[Bradley Cutsey, executive]

I just -- why -- I think if you're starting today, it's going to be -- a developer starting off today will [indiscernible] performance. So I think depending on location specific, it's going to be really hard to pencil out new starts. And on that front, starts have been coming down, right? So I think as some of the condo developers/multipurpose developers work through their portfolios, there's just going to be less of these opportunities to actually convert and be in a position to sell, right?

Like a lot of these buildings were started 3, 4 years ago. And the reason why you're able to buy at the [ completion ] cost is because they were started on land prices 3 to 4 years ago. Construction costs were a lot lower from a financing, from a soft cost perspective and even from the actual hard cost perspective. So that will just slowly play out as some of this gets absorbed and transfers hands from the developers to the more permanent owner.

And last but not least, I think as construction financing comes in, you might -- for developers who have a mix of projects to undergo, they might not find themselves in a position where they have to be -- optimize, let's call it, their portfolio.

[Operator]

Your next question is from Mario Saric from Scotiabank.

[Mario Saric, analyst]

You may hate me for it, but I'm just going to come back to the immigration commentary, and I'm not expecting specific numbers. But just like essentially what you're saying, Brad, that the prior kind of top line growth of 5% to 7% that you're thinking that could be lower now, but you just don't know how much lower it's going to be. Is that a fair comment?

[Bradley Cutsey, executive]

Yes, I think that's a fair comment.

[Mario Saric, analyst]

Okay. In terms of the quarter specifically, Montreal occupancy fell 100 basis points versus Q2, but at the same time, as you mentioned, saw the highest sequential average rent growth at 3.2%. I'm just wondering if you can kind of explain the seemingly opposing data points there.

[Bradley Cutsey, executive]

I think there's been a lot of discussion around students' in Montreal. It does have a lot of let downs when it comes to the students. So we did see a little slower of an August this year than we would have. But in the same token, we also saw demand coming from other sources that would justify the rent levels in which we work.

So unfortunately, as we all know, we don't have the same visibility in August, what's coming at us until August, because this really is a 30-day demand window and that's what it was. And so, yes, we saw a little bit of an increase in occupancy. But I think the team did a really good job of trying to balance that off with the rent growth that we posted, where we were able to get it in the other segments within. But you just don't have the same level of demand in other segments that you normally would from the students on it. So that could smooth out a little, Mario, as the time goes.

[Mario Saric, analyst]

So is it -- like is it a function of the units that went vacant were lower rent units? Or is it a function of using quarter end rents versus the average throughout the quarter as well in terms of explaining the discrepancy?

[Bradley Cutsey, executive]

No, I think it's -- I think -- we have 2 regions, right? We've got the urban and then we've got Cote Saint-Luc. And there was some pretty strong performance without getting into too many specifics coming out of the Cote Saint-Luc properties.

[Mario Saric, analyst]

Okay. I just have 2 more. On the OpEx, the 6.3%, you kind of highlighted some onetime items in Q3 and you pointed to the year-to-date being 3.6% as perhaps being a more normal run rate that's consistent with what was discussed on the Q2 call. Is that still a fair comment as you look out in '25, notwithstanding property taxes is expected to grow up 5%? Is that 3% to 4% total OpEx growth a reasonable number to think of in '25?

[Curt Millar, executive]

Yes. I think we had some onetime credits in Q3 last year that just made the year-over-year look a little off. Also, it's kind of an odd situation with Slayte leasing up and with the conversion we did in Montreal with that commercial space to resi. So your same-store actually isn't 100% same-store because we had filled out our units or units coming online on Slayte. So when you further factor in, it was about $115,000 Q3 last year that was a credit to the expense. And then when you factor in the difference in units in the suite, we end up being at about -- or a lot closer percentage for op cost. We end up at about 4.8% on a per suite basis Q3 over Q3. So at the higher end of what we expected of 4% to 5% for this year, but still in the range.

For next year, initially, I would say, yes, I think that 3% to 4% would make sense. But the big question now on the immigration side is going to be how this maybe impacts some of the workforce. When you think about maintenance, when you think about cleaning, when you think about some of those roles, you could see some impact, you could see some pressure on wages there. So I think I would probably be looking at 4% to 5% for 2025 versus 3% to 4% at this point given those. And I think we'll see as the year plays out how that tracks.

[Mario Saric, analyst]

Okay. That makes a lot of sense. And it's my last one, just -- so despite the $93 million fair value write-down, which I appreciate the color on, the drivers behind it -- I think your IFRS NAV is still around $17, give or take. Unit price is at $11. That equates to a 30% to 35% trading discount to NAV. Implied cap rate north of 5%. So how do you think about buying back units at an implied cap rate north of 5% versus buying new construction at a discount to replacement cost about a similar kind of stabilized cap rate 2 to 3 years out? And do you think that like this acquisition can generate that mid-single-digit same-store NOI growth structurally consistent with your existing portfolio?

[Bradley Cutsey, executive]

Yes. I mean, we can sit here and have a healthy discussion on this for the rest of the afternoon. But I would definitely say with where the rates are, with where our unit price is today, buybacks are looking extremely attractive in that context, right? So all else equal, I think buybacks are looking really attractive right now relative to other allocation decisions. Other allocation decisions are also made, though, at this point in time. And you've got to look at what some of those other projects or capital allocation opportunities will bring over a period of time, right, over 3 to 5 or 7. But please don't misconstrue this as not looking or being active on buybacks at this level.

So I think it's just a fine balance scenario. A lot of it is going to continue to depend on our disposition program. And I think it caused a little bit of confusion in the last quarter when I talked about us being a net buyer. And I think the context maybe came out that people thought or extracting from that comment that we're going to be significant buyers. And I think I made it from the time forward that I had visibility on things like 170 Rene-Levesque. But when you put it in the context of what we disposed, and that is how we have to look at this, is our capital is constrained to our disposition program and maybe a little bit of additional leverage where we can take on attractive financing through ACLPs and MLI Select.

So really, the way we will continue to look at our capital, we'll remain thoughtful and we'll remain within the confines of that disposition program, but buybacks will definitely be a part of those capital allocations.

[Mario Saric, analyst]

Got it. So like the buyback activity is somewhat predicated on disposing as opposed to increasing leverage on the margin to buy back units here. Is that a fair comment?

[Bradley Cutsey, executive]

Did he say...

[Curt Millar, executive]

Disposing the properties versus leverage to go [indiscernible]...

[Bradley Cutsey, executive]

Yes. Yes.

[Mario Saric, analyst]

Okay. So yes, contingent upon asset dispositions.

[Dave Nevins, executive]

And like Brad said, Mario, it's the overall timing that's up in air, right? Like working on an acquisition can take months and months. A disposition can be the same. So we have visibility into these a little more than the market. So you may see some activity, but it will be paired with that kind of transaction and not as a stand-alone.

[Operator]

Your next question is from Sairam Srinivas from Cormark Securities.

[Sairam Srinivas, analyst]

Brad, going back to your comment on the rent growth ahead, as we look at the vacancy numbers right now, I guess it's somewhat coming close to your stabilized 96% occupancy levels. When we combine that with the comment on rent growth being not as much as what we've seen so far, what's your comment on the broader organic growth outlook over the next 12 months? Do you think that kind of leads the growth to more of a mid-single-digit levels?

[Bradley Cutsey, executive]

Yes. I mean -- sorry, are you talking portfolio-wide or -- I heard Vancouver. That's why I just paused for a second. I'm just looking at Curt and Dave.

[Curt Millar, executive]

Was it portfolio-wide or Vancouver specifically you're asking about...

[Sairam Srinivas, analyst]

Portfolio-wide.

[Bradley Cutsey, executive]

Yes. I mean it's coming back to that original comment, right? Like I'm not really going to put myself or the team out there. We've never seen population decrease in Canada. So I don't think it would be responsible for us to comment on it. What I will say is really well-located portfolio that we've spent a lot of CapEx dollars on, and we've got the majority of the portfolio repositioned. We've proven time and time again that we can perform above industry averages. And I think we will continue to outperform.

And when I mean that -- I mean, it's a very fragmented business. I'm not taking comment at our competitors. I think they're great and they're professional managers. This industry still has a lot of room to go, and I think a rising tide will float a lot of boats. And I think the ones that have invested in their operating platform will show you what those investments -- I think those investments will pay off on a relative basis.

But as far as calling the absolute level of rent growth, I just really can't go there because we're going to experience this together. This is going to be fun. I'm sure we're going to have these conversations over the next 8 quarters. And at some point in between now and those 8 quarters, we're going to get comfort that where we think -- how big the directional is. But I can tell you this, I'm quite confident in our team under Dave's leadership that we're going to perform the best we can perform and outperform on a relative basis. I know that doesn't give you guys what you want to hear, but I really don't know how we can answer it any differently.

[Sairam Srinivas, analyst]

That's fine, Brad. And maybe just going into -- a segue into the repositioning. I know now it's about 15% of the portfolio out there. When you look at historical opportunities and returns that you're seeing on repositioning versus what's there ahead, how do you compare and contrast that? Do they look equally attractive to invest capital there? Or maybe do you see that kind of tapering down? Can you give us some color on that?

[Curt Millar, executive]

Yes, I think -- look, we still like the repositioning opportunities. We haven't said that we're going to focus just on new builds or anything like that. For us, it's about looking at everything that's available to us in the market, whether it's a new build that's strategic and a bolt-on to our portfolio, whether it's a repositioning opportunity where we see great upside and we can use our track record of delivering on that. And like we said on the capital recycling comment earlier, whether that's into the NCIB, we look at all of these all the time.

We don't just sort of pick a path and stay on it blindly. We're constantly looking at all of them and trying to figure out, given the long-term horizon, which is difficult, right? Like you're taking -- we mentioned earlier, you're taking months to negotiate a deal. The market can change a little bit. So we're going to keep doing what we think is the best investments for the long term of the company. And it will be dependent on what gets presented to us in the market. We're kind of agnostic. We're just looking for the best returns and the best NAV creation for our unitholders.

[Bradley Cutsey, executive]

But if there's no strategic bolt-on close to existing portfolio where there's a lot of operating synergies, then we have a lot of comfort that we can drive yields to where the implied cap rate is right now. And said different, those existing, all else equal, better be really attractive, because one thing we do know and we know well, is our own communities and what they can generate. And that's really attractive, right?

The other thing I would point out that might play out -- and it's not all doom and gloom scenario with this population as turnover might start to increase. Now what that means is for people haven't spent money on their portfolios, that might not be great because it might mean they've got increased capital expenditures to come to be able to maintain in a rent environment that might be more stable. But there could be some opportunities with the higher turnover, right? This could create more movement.

And the other thing, and I touched on it a little, I'm not sure how many people picked up on it, but there is the impact of the doubling, tripling, quadrupling up that has definitely happened. It's more anecdotal. There's not as much written. Yes, the PDO office has put out their number of 640,000 on that. But that unwinding could backfill a little too. But like I said, a lot of unknowns and how this plays out is yet to be seen. Now the professionally managed portfolios with a great operating team who spent money on the portfolios tend to -- will stand to do well on a relative basis. And I think that's where we get a lot of hope.

Now we've built up a level of expertise to do the value adds. And that's kind of the question where you're going. We feel quite confident. If opportunities continue and our cost of capital right-sizes and we are successful on our disposition program, back to Curt's point, we'll look at everything on a relative basis as we allocate that capital and we'll look out 5 years and we'll go with what provides us the best return. But with the price where it is right now, it's a pretty attractive opportunity.

[Operator]

Your next question is from Jonathan Kelcher from TD Cowen.

[Jonathan Kelcher, analyst]

First question, just on the slowdown in your gain to lease this quarter. It was lowest that we've seen in a while. Was that a function of which leases turned as much as anything? And would you expect that to sort of bounce around as we go forward?

[Curt Millar, executive]

Yes, you already right with that description. As you've seen, it's not so much a pullback in the market rents or we feel on the market rent side. It's more just we've seen more of a trend to turnover on people that have moved in more recently. So in other words, the tenure is extending out a little bit. So that can change quarter-to-quarter. But at the end of the day, when you look at how much market rents have moved over the last few years, it makes sense that the mark-to-market gap stays. It makes sense that if you locked into a rent 4 or 5 years ago, you're probably going to stay a little longer. You can still acquire it through time because life events happen, people move.

However, the timing of when you're going to [Technical Difficulty] get it out a little bit. And you're seeing that play out through the gain on lease. And I think one of the things to keep in mind is if you go back over time and over the 14 years I've been here, we've outperformed consistently on rent growth quarter after quarter after quarter. And over time, that becomes more challenging to do as you get closer -- as your AMR grows compared to the marketplace, that gets harder and harder and that differential gets bigger and bigger. So it's more of a matter of timing of when we can get to it. It's not a matter of it has disappeared.

[Bradley Cutsey, executive]

I think the other thing to keep in mind, too, Jonathan, is we do have the luxury because we do tend to operate at a lower occupancy target. We do have the luxury if, and it's a big if -- if things start to soften because demand comes in, we do have the luxury of leasing up to a higher target.

[Jonathan Kelcher, analyst]

Right. And driving revenue that way. So that goes to my second question, which is -- and I guess Mario started on it, but if your target had been sort of 5% to 7% revenue growth and your -- that's going to slow -- and you're talking OpEx of 4% to 5%, how should we think about -- if we put that all together, how should we think about margins for next year, sort of flat to slightly up or flat to slightly down? Or how should we think about that?

[Bradley Cutsey, executive]

Yes. I think you got to run through where your assumptions are on the top line, because it's all going to come off the top line. So I'm going to let you guys -- you guys are smarter than us. So we'll let you guys pick where you guys think your top line is. You can bet your bottom dollar that we are continuing to find ways to drive efficiencies within our operating costs. And I remain really hopeful in some areas where we can do that, but they still take a little bit of tech spend. So they're not going to be as obvious through. We've already seen some reduction in some areas on headcount because of investment in technology.

But I do share Curt's concern that the labor pool is going to get a lot tighter in time. It's not going to happen tomorrow, but in time it's going to get a lot tighter and there could be some wage pressures. So we've guided in the past to 3% to 5%. I think from a modeling perspective, you might want to be close to the 5%. But it won't come even through the year. So it probably may take time for it to have an impact. So maybe it's the second half.

So I'm not trying to be cheeky. It's just -- listen, we're all going to be dealing with this together through, right? But you can bet your bottom dollar that we'll be battening down the hatches for sure when it comes to the operating costs. So I'd be hopeful that we can maintain the margins or a slight slippage. But it really then depends on, Jonathan, what you assume for top line growth.

[Jonathan Kelcher, analyst]

Yes, for sure. And then lastly, just your non-stabilized portfolio is obviously decreasing. What do you expect for CapEx spend next year on the non-stablized...

[Bradley Cutsey, executive]

Well, all else equal, right, and continuing on the same kind of path where we are right now, we continue to see it come in. I think it's been actually coming in, and I think we're continuing to watch it come in as the non-repositioning becomes less and less. And that is the good news.

[Operator]

Your next question is from Michael Markidis from BMO Capital Markets.

[Michael Markidis, analyst]

Brad, I promise I won't try and gouge you into giving me some NOI outlook or margin outlook for 2025, but I do have a couple of questions. First off, just on Richmond and Churchill, I know you guys are making progress, demolition is complete. Does this change in immigration policy make you just want to put that on the shelf for the time being? Or is there still an expectation that you might actually get in the ground in the foreseeable future?

[Bradley Cutsey, executive]

Well, Richmond, Churchill is such an iconic location. We truly -- and this is not us talking up your own book, but we really do believe it's a generational site, while the demand forecast does cause some pause to see where things are going to go. The one side -- we do know there is some supply in Ottawa elevated in 2024, and there will continue to be some in 2025 and 2026. At this point, there's only, I believe, one project set to be delivered into 2027, and that would be the time in which we would be delivering.

The other comment I would make about Richmond, Churchill, Ottawa doesn't have really a condo market and while in Vancouver and Toronto, we do have a condo market. And it has played a variable in some of those condos that have not been sold kind of converting to compete in the shadow supply with rental. Ottawa doesn't have that same level. And the only reason why I mention this is the Richmond, Churchill site would be geared towards empty nesters. It's going to be in the area of Westville and it's a market in which we think is pretty underserved. It's only up until the last little bit. But as somebody with equity and as an empty nester, you didn't really have an opportunity to kind of sell your place and then go into renting. It's only of late. And with where Richmond and Churchill is located, we feel pretty good about it.

So we're still cautiously looking at that and still with a leaning towards going. But as we get the pricing back and we believe we're actually -- right now with the trade at least in Ottawa, there's an opportunity to really kind of sharpen and get to a point where we think we can develop to an IRR and to a yield on cost that even where we are today makes sense. Now we will closely watch how things unfold and we reserve the right -- that could change. But as we stand today, we're leaning towards continuing to go with that.

[Curt Millar, executive]

And like Brad mentioned, due to the timing of that -- you're thinking into 2027, you're getting to the end of current government announcements on immigration targets and sort of resuming normal immigration also, right? So timing could work well depending on how it all plays out. There's a lot in the air right now.

[Michael Markidis, analyst]

No, that's a great point, Curt. I know we're halfway through a quarter here and I know that your move-outs are lower in Q4 and in Q1. But has there been any noticeable shift in terms of turnover rate in Q4 or move-outs at all at this juncture versus where you would have been last year?

[Dave Nevins, executive]

No, not significantly. No.

[Michael Markidis, analyst]

Okay. And then I just wanted to sort of hone in on -- you mentioned, a potential if, and I know it's a big if to potentially shift to a higher occupancy target if conditions warrant. And I'm not suggesting that we are necessarily going back to a pandemic, but that would be a pretty stark contrast to what you guys would have done back in late 2020 and through a good part of 2021. So I'm just curious as to what the strategic thinking in -- is that -- again, I know a lot of balls in the air, but just what would it take for you to sort of move off of that strategy that you would have done in the past?

[Bradley Cutsey, executive]

Yes. As you know -- I'm glad you asked it, Mike, because it's a great question. You're right. Back in COVID, we made a conscious effort not to buy occupancy and we held the rates. I think between, call it, Q2 to Q4, we actually saw minimal. I think on average we saw 40 basis point drops in our listing rates between that time frame. And we took on, call it, an extra 400 basis points of vacancy. It hurt, but we were all of the mindset that -- we had an idea where supply was and that it was demand driven, right? So meaning all of a sudden, the government completely shut down the rental demand pool. Everybody is locked in and not moving. We saw that as a temporary blip of a year. Now granted, it lasted 2 years. We didn't see that. We got that wrong.

We do know that the current immigration target levels. Population is going the other way for 2 years -- I'll grant it -- albeit small, but nevertheless it is. Now keep in mind, over that same 5-year period of when these targets are, we're kind of back to the overall average. So it smoothes out. But there are pockets where maybe new supply is coming on. And if we are in an area where new supply is getting delivered at the same time that we notice listings or needs are really coming in, we're going to take the opportunity to say, okay, maybe we will move off our rents a little. And that this could be in this -- a scenario for 1, 2 years, right?

Versus before, we really -- when we went into it, thought it was going to be one leasing cycle. It ended up being 2.5. And almost impacted us 3 cycles with Montreal given when things opened back up. So I think the difference is now you've got a little bit of different demand/supply fundamentals, where previously the government was still talking about 500,000 permanent residents, right? So it's a little bit of a different outlook.

[Curt Millar, executive]

And Mike, I think it's an important point that Brad makes, too, just in regards to the overall long term, if you look at sort of how many people have moved in, in the last few years and even if you take 0 for the next 2 or negative on an average basis over many years. And the reason I say that and the big if that we caveat that with is one of the things is household formation. A lot of people are quoting numbers that are old anecdotally, and I think everyone intuitively knows that the number of people per household has gone up over the last 2 or 3 years.

And the question will be, as you pull back on immigration, how much of that deferred household formation sort of goes back and trends back to a norm and offsets the bit of the vacuum, if you will, created by the lack of immigration by people moving out where they doubled, tripled, quadrupled are or staying at home [ a lot ]. And I think that's where it will be interesting to see -- what we'll be watching closely is how that plays out versus immigration. And depending on how that plays out, then those adjustments will come to play.

[Michael Markidis, analyst]

Okay. No, that makes sense. And I guess just, Brad, to summarize what you're saying, I guess, the difference today from where you sit would be the demand drought, if you want to call it that, could be more protracted than what you initially thought back in 2020, and the supply picture is worse than it would have been back in 2020. Is that fair?

[Bradley Cutsey, executive]

That's -- yes, 100%.

[Operator]

Your next question is from Brad Sturges from Raymond James.

[Bradley Sturges, analyst]

I'll keep it quick. Just a couple of quick ones for me. Just to go back to potential transaction activity going forward, you talked about tying dispositions to acquisitions. Is there more capital rotation you would expect heading into next year within the portfolio in terms of rebalancing? Or are you taking a little bit more of a cautious approach given maybe some of the visibility challenges in the market right now from a revenue perspective and more pinned down at the moment?

[Bradley Cutsey, executive]

No, I think it just goes back to [indiscernible]. And maybe last call I didn't do enough of a good job. Maybe the answer was too stark. It's really world-wide. We kind of have our parameters where we're comfortable with the leverage. And it really will come to where the opportunities are on the dispositions. If we can dispose of some assets that no longer meet our overall corporate thresholds and we can dispose of those and recycle them into accretive initiatives like buybacks or external growth opportunities which we think over time affords us a higher return than what we're disposing of, we'll do that.

But it's going to be constrained to a big part to the success of the disposition program. And then at some point on that, there's only so much you do want to dispose of as well, right? But right now, we've said -- in the last call, we thought we could do $50 million. The number probably could be a little higher. But we rather set the expectations that we feel comfortable, that, within the time frame that we mentioned on the last call, $50 million was realistic.

We previously said something, I think, just shy of $100 million. And we've done them on IFRS to greater. So we'll continue to work that. There's not a shortage of opportunities in the marketplace. More institutions are involved. There was a larger number of -- the deal size grew per se depending on which market. Some markets saw a significant increase in transaction volume. But that deal size did grow would suggest that the institution has kind of come back.

I think there's -- the one good news right now in our space is the fact that fundamentals are so red hot and everybody is worried about the macro take, the macro outside of, yes, the immigration policy. But from a fund flows perspective, hence, cap rates and interest rates, that's turning in our favor. And I think as you talk to different private industry participants, there's a real level of comfort that interest rates have likely stabilized.

Now yes, it would still remain volatile given the economy between the Fed and what Bank of Canada is doing and whatnot. But I think there is a consensus that rates will probably stabilize. And it's allowing institutions to at least start underwriting and transact. And that's good news for all of our portfolios, right? Like I can tell you, you cannot buy in the marketplace right now, new or vintage, at the implied cap rate that our stock is currently implying. So that would lead -- I believe that our stock has to reflect, right, if it's going to meet on the pricing.

So I know that's a long-winded answer, Brad, but we're -- to shorten the answer, we're going to be extremely disciplined, right? And there are still things for us to be able to do to work within the confines of that $100 million that we dispose of. If we are successful in disposing now the $50 million, we'll work within that. And we'll allocate as we see appropriate, and that being buybacks, that could be external and that could be continuing to develop out maybe on Richmond, Churchill and maybe -- and continuing to grow with [Technical Difficulty].

[Bradley Sturges, analyst]

Okay. And maybe just to summarize that, then the -- if you do execute, it would be more of a leverage neutral strategy, I guess, when you're...

[Bradley Cutsey, executive]

We did say we'd bring up leverage a little. We just said it on the last call and this call. There is attractive ACLP and the MOI financing. So we would be willing to take that up into the low 40s, Brad, because it is attractive where it takes the cost of capital.

[Operator]

Your next question is from Gaurav Mathur from Green Street.

[Gaurav Mathur, analyst]

I'll keep it very quick. And just, Brad, just on your last comment there, you're comfortable with leverage going up slightly. But is there a scenario under the current capital allocation plan where leverage starts to come in?

[Curt Millar, executive]

Sorry. Did you say where leverage starts to come in, meaning leverage decreases?

[Gaurav Mathur, analyst]

Yes.

[Bradley Cutsey, executive]

Yes. If we dispose -- continue to dispose, we don't see any external opportunities in which we can allocate our capital, we'll pay down leverage. But our variable rate is less than 1, and where our share price is currently is a pretty attractive opportunity setting us for the pace right now.

[Operator]

Your next question is from Matt Kornack from National Bank Financial.

[Matt Kornack, analyst]

Just quickly, on the population side and the impacts that we're seeing, obviously, we're kind of undoing the excesses of temporary or nonpermanent residents. We're still seeing pretty good growth in permanent residents in the country. We know the student side of it. But on the kind of temporary foreign worker side, do you know if you have many of those in your existing portfolio? Obviously, we've seen unemployment increases. Some of those came into the country as well. So not maybe necessarily a huge economic impact if some of them depart if they didn't have jobs. But just wanted to get a sense as to the impact that maybe the temporary foreign workers would have in your portfolio.

[Bradley Cutsey, executive]

Yes, we -- I mean, we don't disclose it, Matt, but there's another way you can skin that cat, right? I think depending where they sit on their status of temporary workers, they're going to be -- we're getting bad feedback. But they're going to sit in different abilities on affordability of rent. And depending where you are, it's going to probably have a larger -- dictate a larger exposure to the temporary residents or not. I think across the board, everybody will have exposure to the temporary residents. It will take a wait and kind of see approach to what that actually means. You know what I mean? That's a hard one, Matt, to kind of give you a full type of disclosure on.

[Matt Kornack, analyst]

Yes. No, that's fair enough. And then I guess on the student side with regards to kind of buying occupancy, is that an area that you're more willing to buy occupancy just because you know that they're going to be there for maybe 3 years maximum. And again, they would have been probably some of the turnover that you're experiencing. That's shorter duration as well, so lower mark-to-market. So is that maybe some of what's driving the lower turnover spread that we're seeing right now?

[Bradley Cutsey, executive]

Yes. There's no question there's definitely skin the cat, and one of those ways is obviously you're going to accept buying occupancy when there's less left unturned, meaning if there's current residents or current places where you think you can get at that suite faster again, those make a lot of sense as you prioritize. But a lot of it is going to come back to -- it's a demand and supply type thing. Like the market has been tight enough up to the last little bit because of the demand outstripping the supply that we know of or that's been fortunate. The tide keeps rising.

Now that the tide is no longer necessarily rising, how many boats are out there, right? Meaning, where there is supply on a locale close to a community and it's a significant community that's delivering significant amount of units, that's going to impact you. So you might look at that and say it's worth buying a little bit of occupancy here because the competing supply that's going to come on could really hurt until that gets absorbed. And if you think it's going to take a 2-year lease up, it might be worthwhile that, hey, the fundamentals in that zone are going to be a little softer for 2 years there. You might be willing to say, "Hey, okay, yes, if we put them in, they might stay here for 5," but 2 of those years would have been soft anyways.

So really now we're looking at trapping that equity. Once the market returns to greater than equilibrium, then we might be trapping only 3 years of that lower rent, if that makes sense to you. It really is going to be coupled with where the new supply has been delivered, and that is very, very location specific.

[Matt Kornack, analyst]

Okay. It makes sense. A very quick last one. This recent acquisition in Montreal, you're clearly not straying from your strategy. You're locating near University of Montreal, Super Hospital and UQAM, still going after kind of higher propensity to turn individuals. Like I guess you still see regardless of the immigration environment over the next little while that that's where you want to be in terms of tenant exposure?

[Bradley Cutsey, executive]

Well, it's real estate, right? So we love that dirt. We'll bet on the operating platform all day long. Sure, it's more operating intensive when you have higher return. But we will always bet on the team to be able to deliver the ultimate kind of experience. And we're going after renters by choice.

So -- and with the market having the Super Hospital right there and the University of Montreal, as you know, Matt, there's -- the University of Montreal is -- given where the province has headed with the whole language and studying within French, they've been able to get tuition at local cost. We think we could see a little bit. We're not banking on it, but we think we could see a little bit of an influx of foreign students that are French speaking and that community could benefit greatly from that. But that alone -- the hospital is literally right behind it. And those make great employment bases for our community. So it's sticking with the strategy.

This demand population -- pretty safe to say, like I said, there's a lot of unknowns. But Canada can't exist on negative population growth for a significant period of time, right? So -- and the one thing I would say about Montreal, Montreal kind of went through its elevated supply. It got -- its elevated supply was previous, a couple -- was 2021 when it peaked -- 2021, 2022. And that supply that's getting delivered now is slowly coming in. So from a supply aspect, we feel really comfortable. And then we also feel really comfortable from an affordability standpoint with the Montreal market. So we're pretty happy with it.

[Matt Kornack, analyst]

And the government hasn't necessarily been the greatest at meeting its own targets on immigration and population growth anyway. So we'll see.

[Curt Millar, executive]

Your words, not ours, Matt.

[Bradley Cutsey, executive]

Yes, no comment.

[Dave Nevins, executive]

But we appreciate you saying them.

[Operator]

There are no further questions at this time. Please proceed.

[Bradley Cutsey, executive]

Yes. Thanks, everyone, for taking the time for the Q&A. And if there's any further questions, please reach out to Renee, Curt and myself. Thank you.

[Operator]

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.