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Nexus Industrial REIT
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Thank you for standing by. This is the conference operator. Welcome to Nexus REIT 2020 Q1 Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions]I would now like to turn the conference over to Mr. Kelly Hanczyk, Chief Executive Officer. Please go ahead, sir.
Thank you. I'd like to welcome everyone to the 2020 First Quarter Results Conference call for Nexus REIT. Joining me today is Robert Chiasson, Chief Financial Officer of the RIET. Before we begin, I'd like to caution with regard to forward-looking statements and non-GAAP measures. Certain statements made during this conference call may constitute forward-looking statements, which reflect the REIT's current expectations and projections about future results. Also during this call, we will be discussing non-GAAP measures. Please refer to our MD&A and the REIT's other securities filings, which can be found at sedar.com, for cautions regarding forward-looking information and for information about non-GAAP measures. So once again, the first quarter was another solid quarter for the REIT, so I'm not going to spend too much time going over the first quarter results and will let Rob go into more detail as our focus has moved on to the second quarter. Like I mentioned in the press release of last night, we have been very conservative since our inception, keeping our debt low and building the REIT with a focus on increasing our AFFO per unit. With the uncertainty surrounding the COVID-19 crisis, we believe we are well positioned to weather the storm. We've decided to delay our planned move to the TSX, which was scheduled to have occurred in April, to a later date once the market turbulence has subsided and we see greater benefit of the planned move. In April, we have collected approximately 84% of our rent, and May is tracking towards a similar result with approximately 80% received to date. And I noticed that a few more have been paid today, so that number should probably track to where we were in April. We are working with our tenants on a one-by-one basis, been helping where we can with deferrals for those whose business is truly affected by the shutdowns. We are in a decent cash position with $7 million combined in cash on hand and borrowing capacity under our credit facility and approximately $25 million in properties that are unencumbered and are in the process of being mortgaged to generate additional liquidity. In Richmond, BC, we are continuing the process of repurposing 1771 Savage Road, with drawing packages being finalized shortly for submission to the city of Richmond to accommodate the build-out for our 2 new leases that have been signed with delays in permitting expected due the city employees working at home. We may see a delay in completion, but are hopeful that the build-out will be complete and the leases will commence in 2020 towards the end of the year. In addition, we are currently working on the drawing package for a planned 70,000 square foot addition to the property.so that we'll be ready to prelease and break ground in 2021. On the acquisition front, 2020 was looking to be a milestone year for the REIT as we are in discussions with various groups on a number of industrial assets. However, in light of the current environment and the REIT's unit price, these discussions have been put on hold until things start to stabilize. I'll now hand it over to Rob Chiasson to discuss the REIT's financials.
Thanks, Kelly. Our portfolio continues to deliver consistent results, driven by stable occupancy and many long-term tenancies. We did have some tenant relocations and expiries in our old Montreal office portfolio, as discussed in last quarter's call. The early termination of a 60,000-square foot lease at our Richmond, BC, location in December, which we completed in order to move forward with value-add plans, reduced NOI by approximately $165,000 as compared to Q4 and reduced NOI by approximately $200,000 as compared to Q1 2019. Excluding the impact of this termination, same-store NOI quarter-on-quarter was up approximately $50,000 and same-store NOI quarter-over-quarter was down approximately $25,000. Our G&A was slightly higher than our expected 2020 run rate in the quarter with timing of equity-settled RSU plan expense, our AGM and annual SEDAR fees all hitting in the quarter. With quite a strong Q4 2019 and the higher G&A in the first quarter, combined with the $17.4 million acquisition completed with a purchase price satisfied 100% in units and no debt and no opportunity to leverage up and acquire in the quarter, led to our normalized AFFO payout ratio increasing from 77% for Q4 2019 to 81.3% for Q1 2020. Looking to the balance sheet. Our debt to total assets decreased from 49.1% at December 31, to 47.6% at March 31 due primarily to the equity-financed acquisition completed in the quarter. Bond yields are at historic lows with the 5-year bond yield at approximately 0.35% and 7- and 10-year bond yields at 0.4% and 0.5%, respectively. We are, however, beginning to see rate floors introduced and increases in lending spreads. 2020 debt maturities. We have approximately $38.1 million of debt maturing between April and December of 2020, of which approximately $6 million was refinanced in April for a 5-year term at 2.5% interest rate. We have approximately $5.5 million maturing in June on the South Shore Montreal industrial property. And we have $17.9 million maturing in July on the REIT's unenclosed retail center in Victoriaville, Québec, which is approximately halfway between Montreal and Québec City. At $17.9 million, this represents approximately 44% loan-to-value on the maturing mortgage. The property is well occupied and anchored by Canadian Tire, Dollarama, Metro and The Brick. We have another $5 million maturing in September on an Ontario industrial property and $3.6 million maturing in December on a BC industrial property. The debt markets remain open. There is caution when lenders are underwriting retail properties where tenants are not operating. Québec retail, excluding the Greater Montreal area, also excluding gyms and restaurants with outside entrances, was permitted to reopen on May 4. Looking at liquidity, as Kelly mentioned, we had approximately $5 million of cash on our balance sheet at March 31 and with $5 million of availability under our revolving credit facility. We also received mortgage and interest -- mortgage principal and interest deferrals from our key lenders for the months of April, May and June 2020. We received deferrals on approximately 42% of our debt by principal or approximately $500,000 a month of payments deferred, partially offsetting rental deferrals, which have provided -- been provided to tenants. Most municipalities are deferring property tax due dates, and the REIT has approximately $25 million of properties which are unencumbered and expects that these properties will be financed to generate an additional $14 million of liquidity. As Kelly mentioned, we collected 84% of our April rents and just over 80% of our May rents to date. The Canada Emergency Commercial Rent Assistance program, CECRA, which was announced by the federal government on April 24, has thrown a bit of a wrench in the works for May collections. However, we are still quite happy with an 80%-plus collection rate. When first announced on April 24, many details were outstanding. There were further details announced on April 29, however, final details were still outstanding. And there was an update provided yesterday, however, questions remain answered with respect to this program. It's intended to provide commercial rent reductions of 75% to small businesses, with small businesses being defined as those with less than $20 million of annual consolidated revenues and paying less than $50,000 gross per month. To be applicable to the months of April, May and June 2020, provincial and federal governments are to fund 50% of the rent reduction, with landlords expected to fund 25% of the rent reduction. Qualifying businesses must have a reduction in revenues of at least 70%, and with the update we saw yesterday, it seems like the previous qualification of having been temporarily closed and earning no revenues due to COVID-19 was removed. From what I can tell, that was the only change announced in yesterday's update. It seems that we will have to confirm or certify that tenants have, in fact, experienced 70% reductions in revenues for the months of April, May and June 2020. It's unclear when the REIT may be able to apply for this program because of that qualification period. It may be undeterminable what the impact on tenant revenues is until after June 2020. Details were to be finalized by mid-May. However, final details are still outstanding. It's unknown when details will be released, when landlords will be able to enroll and when funding under -- offered under the program would be made available to landlords. It's also unknown whether landlords would need to participate on a tenant-by-tenant, property-by-property, legal-entity-by-legal-entity or other basis. The program could be beneficial to the REIT for some situations and not beneficial to the REIT for others. As previously mentioned, we already collected 84% of our April rents, and this program is retroactive to April. Until further details are made available, it is unclear if Nexus will participate in the program, and if we do participate, to what extent.Now I'll turn it back over to Kelly.
Thanks, Rob. I'll now open up the call to anyone who has any questions.
[Operator Instructions] The first question comes from [ Paul Dillon ] of Burlington Capital Planners.
Yes. [ Paul Dillon ] here, Mr. Hanczyk. Okay, I understand the Q1 report, although I'm a little bit concerned because we have really only 1 month of the Q1 that was COVID, and that was March. But April, May and June will -- all 3 months will be affected by COVID. And so maybe I'm projecting too much, but is there going to be some more negativity as we go forward into the end of June?
Yes. It's hard to say. Businesses are opening up and starting to open up. As we said, in April, we collected about 84% with deferrals on the majority of the balance. And looks like May is tracking to be just about the same, 84%, 83%. So fairly strong considering our retail portfolio in Québec does have some smaller restaurants and things like that, that we're working with on a case-by-case basis. And yes, I mean, if this continues to linger and spikes up again and they shut down businesses, guys will come into trouble. And that's where we look at the government assistance program, and we make a case-by-case basis, if it ever becomes clear how this program is actually going to roll out.
Yes. Okay. What percent of the REIT is retail?
Roughly 25%.
Yes. 25% retail, about 50% industrial.
Yes. Okay. Now I see some of the larger REITs are cutting their distributions. H&R and BTB REIT have substantial distribution cuts. And -- but you have -- you're confident that you can -- you're not going to stand on your tiptoes to pay the distribution going forward?
Well, when I look at it, we've worked hard to get our payout ratio down to a reasonable level for scenarios like this. So you are conservative with your debt so that you can put debt on instances like this, and we roll in with about 80% payout ratio, which gives us, quite frankly, a much better position to start with than someone who has 100% or 100%-plus payout ratio. So for now, barring any major collapse of tenants, which we've not seen yet, we continue to maintain our distribution. And it's our goal to continue to maintain our distribution. But things could change in the future, depending on how tenants do. If a major tenant goes under, it would be something we'd have to address going forward. But for now, with the rent levels that we have and where we stand with our liquidity and our current payout ratio, we're comfortable in continuing on with the distribution.
The next question comes from Brad Sturges from IA Securities.
In terms of the rent that hasn't been collected to date, how much of that have you granted in terms of deferral? What would be the breakdown between what's been deferred so far and what's still left to collect or hasn't been granted in terms of deferral?
So I would say the majority of the balance has been subject to a deferral. There are one or 2 tenants where we're still in negotiations and/or discussions. However, the vast majority, I would say, 15% of the remaining 16% roughly would be subject to deferral.
Okay. And I would imagine maybe the last little bit is just waiting to see what the rent relief program kind of shakes out as, perhaps?
Yes. That's part of it. We have had some tenants that have said, "You know what? We're just not paying you the rent." And we've dealt with that accordingly. We've tried to work with our tenants and offered solutions. Not every tenant has been as cooperative in that exercise. So we do have 1 or 2, smaller in the grand scheme of things, tenancies where that is the case. But where we could work with tenants, we have. In some cases, we have some industrial tenants that are relatively financially secure. However, they're impacted by COVID-19, and we've been able to pass-through mortgage payment deferrals. So to the extent that we have a mortgage on that property where we've got a deferral on the mortgage, we've been able to offer those industrial tenants pass-through of that cash flow savings. But for the most part, we've worked out deferral arrangements. The problem being, we've worked very diligently through April to collect rents and to work out agreements, and then on April 24, after all that work was done and agreements were reached, the federal government came out and announced their program, which was to reduce rents by 75%. So that undid a bit of the work we did and made it more difficult to get documents finalized and signed and whatnot, but it hasn't had a significant impact on our May collections, not -- certainly not as significant as we feared when the government program was first released absent any details.
And when you're doing -- coming together with these deferral agreements, how long -- like, how are you structuring it in terms of the length of the deferral and potential payback period? Is there -- are you amending leases at all? Or is it just like a pure deferral?
It varies tenant by tenant. There have been some discussions about, "Okay, we'll defer 3 months, we'll add 3 months to your lease. We'll then amortize the deferral over the remainder in the lease." There's been other situations where it's we'll defer 3 months, and we expect payment by December 2020. It's really case by case, and it all depends on the situation of the tenant, what business they're in. I mean we're trying to work with tenants as best we can while still managing the REIT's balance sheet and not taking our tenants' difficulties entirely on our own balance sheet. It does vary, though. It varies widely, I would say, tenants to tenant.
And maybe, Rob, just to go back to your comments on the mortgage markets and some of the maturities coming up, just maybe I missed it, but what were your interest rate expectations right now in the current environment for the upcoming maturities? And just remind me what the unencumbered asset pool looks like at the moment.
Yes. So we've got some lenders on the line, so either I should be very aggressive or actually be careful, I'm not sure. But we've got $25 million roughly of unencumbered properties, and we're actually working right now to put about $14 million of mortgages on those properties that we expect to actually close, give or take, before the end of the month. That's basically all of our unencumbered properties. While we have a fairly low loan-to-value, most of our properties are subject to some debt. And then in terms of rates, again, it varies property by property. We recently did a mortgage refinancing where we were at the 2.5% rate. We've seen some increases in what I would call spreads or at least bank's cost of funds, with perhaps some liquidity premiums being built in. And we've seen or heard of some rate floors. So for example, the roughly $18 million mortgage that we have coming up in July on our retail property in Victoriaville, it could be a wide somewhere between 3% and 4%, I would think. It depends who we end up going forward with on that property. It is the retail property. It's unenclosed, which certainly helps us, and it has good anchor tenants, which helps us. But it also does have a number of tenants that have been experiencing financial difficulties through COVID-19 and where we have offered deferral payments, and that makes it challenging for the lenders to underwrite the property at full values. So we may not have an extreme amount of flexibility on that particular mortgage due to the timing. And we may see -- I'm not sure exactly where the rates are going to end up, but I would guess somewhere between 3.25% and 3.75%, if I had to put a number to it.
Okay. And what's the current rate on the expiring mortgage?
The expiring mortgage, I think, is around 4%.
Your next question comes from [ Michael Adelson ], a private investor.
No, no. Sorry, that was a mistake. I don't have a question. Thank you.
Our next question comes from Kyle Stanley from Desjardins.
So I just wanted to get an idea of how your discussions with the tenants have been going so far. Have there been many requests for maintenance? Or -- and just given the REIT's exposure to some smaller private tenants, just wondering, I guess, without explicitly meaning anyone, if there's any areas in the portfolio that would keep you up at night?
So I guess discussion started out pretty much being 100% deferral. There was no talk of abatement. We weren't offering abatement. We'd reached agreements with the vast majority of our tenants. And then the federal government program that was introduced, as I said, through a bit of a wrench works because it introduced a 75% -- effectively a 75% rent abatement for tenants, and so that shifted tenant expectations a little bit. There may be some situations where we think that, that program is beneficial to our tenants and to us in helping to see our tenants through the other end of this and collecting 50% to 75% of the rents at lease. Kelly, do you want to...
Yes. I think at the end of the day, there's tenants where we thought we would get some pushback, but we get the rent checks on time on the first of the month, which is very interesting. If anything, it's the small retail guys in Québec. It's gyms, we do have a few gyms, there's a daycare that's been closed, things like that. And then from the West side, even at Richmond, we had 3 operating tenants that -- 1 is a pool that actually put a significant amount of money into the pool of their own cash and then had planned the grand opening and this hit them, so we'll definitely work together with those 3 tenants. And then from our Alberta portfolio, with exposure to oil and gas, the majority of our guys there have a very strong covenant, so whether it's a strong U.S. parent covenant and things like that. So overall, I think we're fairly strong. There is 1 or 2 that possibly are showing weakness that we have our eye on, and that's one that if you say, what keeps you up at night? I would look at that. But for the most part, they're very strong covenants that have a solid financial base behind them.
Okay. Great. That's good color. And then I guess just going back to the sports mall in Richmond. I'm just wondering how much of phase 1 has transitioned to the tenants paying rent versus still receiving that income support from the vendor?
So there's 4 that are actually paying rents, and then the income support from the vendor, within hindsight, the vendor is well capitalized. So we get that rent check, no problem. So in hindsight, if it was all turned over, we'd probably be looking at rent subsidies for the entire thing. So it's actually turned out to be a bit of a blessing on our side from the delay.
Okay. That's kind of what I thought, and good to hear that the vendor is well capitalized as well. So I guess just sticking with kind of the sports mall theme, so just in light of COVID and the impacts that can have on those types of facilities, just what are your thoughts on that kind of asset class going forward?
Well, we are in the middle of doing this one, so my thoughts are still pretty good. Coming out of this, it cannot last forever, and people do send their children to sports and these type of things. So we've got the 2 signed leases for the new building, and the tenants are excited. Actually, one is film production, which, once we come out of this, there is a definite need for film production space in North America in its entirety right now. So once they're able to begin production, I think that's going to go be going gangbusters. So that's one. The other one is with Skate Canada, who, again, look at coming out of this where they're going to have a significant demand on the learn-to-skate program. So they're very excited and the timing towards the end of the year, probably now, and that's hoping that the permits can get through the city and whatnot that, that goes through. So -- and then on the addition, we wouldn't -- we're only looking at doing drawings right now to put ourselves in the position to pre lease, which we've had a number of technically, I guess you'd call them not LOIs, but certainly demand that the building would be full with 2 or 3 large major tenants in the 70,000 square feet. So we wouldn't go forward with any kind of construction until we had the pre-leasing complete. And so from my perspective, coming out of COVID, whether it's the fall or in full year or early next year, I think the tenants will be in a good position to be kept.
Okay. Great. That's perfect. And then just my last question, just going back, I guess, to the debt financing. So -- and this is based on some commentary I've heard out of some of your competitors. Just wondering, are you seeing lenders really be a little bit more selective on the underwriting with regards to asset class and geography at this point? Yes, I guess, let's leave it at that.
Certainly, in the past, we haven't had any -- when we talk to geography, we haven't had any debt coming up in Western Canada, which I imagine is what you're referring to. We just refinanced about $70 million worth of debt in September, which was primarily Western Canada, and we were able to refinance on very good terms. So we're not -- we don't have anything maturing in Western Canada. So in terms of geography, I'm not sure or acutely aware of any changes in underwriting there. Certainly, on the retail side, there are changes in underwriting that we've seen where if a tenant is not operating and/or they're party to a deferral program, many lenders are cautious about lending on that property and/or they will adjust their underwriting in such a way that the NOI from that particular tenancy is not included in the underwriting, which poses a challenge to getting loan to values. I think retail is certainly an area where lenders are being cautious, and in particular in closed malls is an area where retailers are being cautious. The May 4 reopening in Québec, for example, that's available to retailers that have their own separate entrance. So if you're in and enclosed mall and you don't have an exterior -- a separate exterior entrance, the impact of COVID continues a little longer. So certainly, we're seeing on the retail side some more careful underwriting, we'll call it, from the lenders.
The next question comes from Frank Mayer from Vision Capital.
I would like to explore a little bit further the mall where you need to refinance $17.9 million, especially in light of what you just said about retail and open retailers as opposed to closed retailers. What are the terms on the $17.9 million that's maturing?
So that's roughly -- on the maturing debt, it's -- I believe it was an original 5-year mortgage. We acquired that property in 2017 and assumed debt on it, and I believe around 4%. However, I'm not sure if it was an original 5-year or 7-year term off the top. As I say, we...
No. That's fine. So the question then is, what percent of the mall is right -- is open right now?
So right now, all but 3 tenants are open and operating. We have a gym, an Econofitness I think, that is not allowed to operate yet under Québec law. We have a couple of food vendors that are open for takeout only and/or for reduced hours, including SHAKER, which is a chain of restaurant bars in Montreal that we -- just opened up not so very well renovated, so they're doing take out only right now. So aside from perhaps 3 tenants, the rest of the retailers there have reopened.
So it sounds like these are smaller tenants as opposed to the larger tenants.
Correct, yes. So we have a Canadian tire, a Metro and a Dollarama that have been in location and operating throughout this, being our larger tenants. And we have...
So do you see any problem getting the full $17.9 million?
Yes. I mean we may not get to the full $17.9 million, but we do have liquidity to bridge a gap if needed. Likely, the existing lender would be best able to renew at the same levels. However, we are having -- given the debt markets, we are having discussions with 2 or 3 lenders on this particular property, and we're confident that we can refinance it in a way that will get us through. If we have to take a lower loan-to-value on it, we do have liquidity elsewhere to offset.
Okay. So my next question would be, what would you do with the $14 million you're going to put on the $25 million unencumbered properties? So what would purpose of that be?
So that's liquidity. That's basically to build the balance sheet. That's in case we don't get full loan-to-value that we're looking for on the retail property that comes up in July. And that's just -- in this market -- I went through 2008, 2009, where debt markets dried up. And so as soon as we entered this, I took a look to see where I could put mortgages on, and we started to. It's just...
And what rate do you think you can get on the $14 million?
So this is going to be in the mid-2s.
So the question then becomes, I mean, you'll be paying, what, $300,000, $400,000 a year of interest on that?
Yes. I think that interest expense is well spent as it gives us some flexibility and some balance sheet strength.
I understand that, but what does it do in terms of your payout ratio?
Yes. So it will increase our payout ratio due to the interest expense. If we come through COVID-19, I mean, there's a lot of moving parts, but if we get full financing on our retail property that's coming mature, then we can redeploy that $14 million into an acquisition, and that was always our plan. We acquired a property in February for $17.4 million and financed that 100% through the issuance of units. And when we ran our accretion models, that had the impact of driving up our payout ratio by about 1%, let's say, because there was no debt on the property. As we were modeling and planning, we had always planned to put debt on that property and use the proceeds as equity for additional property acquisitions. And so if we need it, we've got it. And if we don't need it, we'll redeploy it in an asset acquisition.
Got it. Now in terms of the -- is there going to be any shortfall in Vancouver at the Richmond property because of COVID? I mean are the tenants going to stop paying rent because of the restrictions?
Well, we're in the process of discussing that with them now. So they paid April, and we're looking at that site being possible government assistance program. So we're trying to -- it's a wait and see, but we're working through with the tenants. 3 of them out of 4 -- so 3 of them are the ones that are seeing their facilities closed. I believe, if I'm not mistaken, that 2 of them are allowed to open May 22, and possibly even the pool on May 22. So they should start to generate income, and then we can look at -- they're -- all 3 of them are fairly long-term leases, on subsidizing them through a deferral or having them enroll for those months in the government program.
Does the vendor still -- do I understand you correctly that if there is a shortfall, the vendor has to step in?
He is not to step in on. Those are leases that are in place and separate from the vendor obligation.
So what is the vendor obligation on, remind me?
The space that still needs to be built. So there's 1, 2 bays that -- of the 1, 2 -- the 4 bays that we're waiting on permit approval. And then once they get built out, they get turned over to the tenant, and that tenant leases becomes in full effect and they start are paying. So the vendor's rent obligation continues, and he pays every month. It has no arrears.
How many square feet are involved in that, the vendor support?
I want to -- no, it's not 100 -- off my head, I can't remember exactly. I'd have to get back to you.
[Operator Instructions] The next question comes from Terry Fisher from CIBC.
I have three questions, but before I get to them, it gives me a great deal of confidence to know that Frank Mayer takes such an interest in your REIT. I used to work with Frank. He's the sort of -- what should I call them, the longtime, like, grand old [Foreign Language], Greece, of the real estate business in Canada.
Yes, and a big supporter. So it's good to have him.
Anyway. So my three questions. The first one is you're dealing right now with sort of the present situation and trying to help tenants get through it, and you guys get through it yourself, and see what the world looks like on the other side of the virus. But I'm wondering, if it's not too early to be looking ahead, whether or not in retail or office, there is not some concern about certain properties that perhaps you need to either flip for new tenants or possibly reconfigure or reposition the type of building that's there to make it more attractive for kinds of businesses that are still going to be out there versus the ones that may be questionable about whether they come through the other side of this.
Yes. The majority of our retail are nonenclosed malls, so -- and they're fairly well tenanted with, like we said, the SAQ, shoppers, Metros, things along those lines, so it is the smaller guys that we're looking at. And it's an interesting question, too. When I look at what do we look at going forward, from an acquisition standpoint, we really look at industrial properties from here. So growing our 50% industrial and continue to grow that. We were working on, quite frankly, I think probably $100 million to $300 million of acquisitions on the industrial front that we were, hopefully, going to execute on this year, which has been pushed back, but that's -- our intention is to move more into the industrial side of things. And we, probably as we move along, look to divest of some retail properties along the way. Now that wouldn't be on a fire sale basis or anything, but there are still buyers. There's guys active in the market that are well capitalized. So I think there's still opportunities there, and we'll just see us evolve as we go along probably out of those spaces a little bit and more, again, heavily into the industrial side.
Yes. Well, that actually anticipates my second question. We've talked before about industrial, but I know that these days, it's a preferred space and there's a lot of competition for those kinds of properties. You might address that, but the other part of that question is how much of the industrial space that you have now or even the space that you're looking to acquire would be exposed to the oil and gas business out west?
So the -- all of the stuff that we were looking to acquire was 0 exposure. So it was Ontario based, and those are through long-term relationships that we've built up over the years. So very well tenanted, nonoil and gas Ontario-based industrial real estate.
And then the Saskatchewan properties?
The new Saskatchewan properties that we just bought actually are well tenanted, and it's a U.S. multinational that owns it, and has absolutely 0 problem in our -- actually, we've been talking with them about possible expansion and things like that, so -- and an early renewal. So that's turned out to be a very good deal for us. We have another Saskatchewan property that we are -- that we own that has some vacancy, and we're looking at one of the tenants, who is nonoil and gas, possibly expanding into that space as well. So the Saskatchewan has been fairly decent for us.
Okay. Final question. What's the -- and I see you have a new director, congratulations on that. What's the attitude of the Board towards maintaining the DRIP with this degree of dilution? Is it the attitude that this is such a temporary thing, stock down at about $1.42 or so and therefore, let's keep the DRIP going? Or like, what's the Board discussion around that?
Yes. It's a good question. We just had it yesterday, that discussion, and we talked about it. So it is something that we're looking at. And if it continues down to this level, we probably will reduce or eliminate the DRIP in the short term. We haven't made a final decision, and we'll see how it goes. But originally, we looked at our participation in some -- keeping cash on hand. But that was without knowing how much rent we were going to get for April and May. And now it seems to have leveled off where we seem to be in a better position, and now we'll think a good hard look at it.
This concludes the question-and-answer session. I would now like to turn the conference back over to Mr. Kelly Hanczyk for closing remarks.
I wanted to thank everyone for taking the time to call in, in these hard times. Look forward to our next results call. Everyone stays safe. Enjoy the long weekend with your families.
Thank you. This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.