BMO Real Estate Forum | Income Property Outlook

My name's Joe Nickerson. I'm a partner at Sidewalk Red. We're an innovative real estate company based in Dartmouth, Nova Scotia focused on reshaping neighborhoods.

What sets Sidewalk apart is that they focus on amenity-rich locations in urban neighborhoods, sustainability, and industry-leading design.

The Centennial Building is a building located in downtown Halifax, really centrally located close to the water, long history, one of Halifax's first high-rise buildings, really unique architectural features that have not been celebrated over time.

When we bought the building, it looked and felt the part of a 1970s building down to the core systems.

And we saw an opportunity to take a largely vacant office building and convert it into something new in the form of new loft-style housing and really give it a new, useful life over the next 60 years.

Before the team at Sidewalk started to do this retrofit, the building was using energy incredibly inefficiently. That translated over to its carbon footprint and also its utility costs, which were very high.

So part of the retrofit plan involved an extensive amount of pre-planning and modeling work at the onset to arrive at a place of increased efficiency and completely change the use of the building.

That may involve changing out heating and cooling systems, new insulation for the building, a variety of different things that allow us to arrive at this stage.

This past year, we provided an impact loan for sidewalk that allowed them to reduce carbon footprint on the Centennial Building and reduce their costs.

Centennial building project is a perfect candidate for renovation because it is an underperforming office asset, and it is sturdy concrete construction, and also small floor plates for easy residential conversion to efficient units, and it's in a great downtown urban neighborhood.

The loan was the first of its kind delivered through our unique partnership with Canada Infrastructure Bank.

The impact loan that we did for the team at Sidewalk Red for the centennial building was different because it measured the greenhouse gas reduction impact of the loan.

CIB is involved in the loan process as the provider of the actual funds, whereas BMO does the actual underwriting or the lending. And bringing BMO and CIB together, public and private capital together in one partnership, allows our borrowers to do more faster in terms of their environmental impact.

The BMO partnership with CIB is really about getting our commercial real estate borrowers who want to reduce the greenhouse gases emitted by their buildings, the cheapest financing available.

So, in this high interest rate environment, What really helped us and propelled us forward through this project was the substantial interest rate savings that we saw under the Retrofit program

For us, it was really appealing because it incentivized us to make changes and improvements to the building that had a sustainable impact and that reduced carbon emissions across the project, and really incentivized us in the right way to make the right type of improvements to this conversion.

We are going to end up with product here that we could never create in the new construction environment It's a different material palette. It's different time that this was constructed and this component or this this base of the existing building really allowed us to Differentiate our product from anything that we could do on new construction For us at sidewalk the effort was truly worth the return

Our team are really proud of the work that Sidewalk have done to decarbonize this building. After the retrofit is complete, the building's emissions will be 67% lower than it would have been otherwise.

Sidewalk have been able to achieve three fantastic impacts through their Centennial Building project. Firstly, they're creating living space in the vibrant downtown neighborhood of Halifax, where there was only largely vacant office before. Secondly, they're retaining the embodied carbon emissions in the building, meaning that they don't have to tear down a new one and build another in its place. And finally, they're using the project as an opportunity to decarbonize the day-to-day operations of the building.

Retrofit financing has to be economic. But when it's a closer call economically, the bank and the builder have to both lean in.

This isn't just about financing an update to a building for maximum return. It's about doing our part for the planet.

At sidewalk we're committed to being a more sustainable organization and it's critical for us that we have a financing partner that shares in those beliefs

>> Good morning to those of you  here with me in the provinces  today, good afternoon those of  you joining from the east, and  especially to those who  submitted questions I am for the commercial real estate team I hope you found it interesting and at the very least, a good way to kick off today's conversation about what some of our things are singing. This is a great example of how we can build a more sustainable future for all.

>> Casting the U. S. economy as well as Canadian and U. S. housing and commercial real estate markets. We're going to lead you through a discussion covering topics and questions that were submitted by many of you in monitoring discussion is Jeanette McDonald. In the greater Toronto area to our conversation today I'm really pleased to introduce and what is happening in the respect in which they operate. First, we have Bill Hennessy, managing director, the leading commercial brokerage, New Brunswick and Labrador with 20+ years of experience in the business community he is well known for his transparent and client focused approach. A family owned business that develops manages and owns through Western Canada. Over a decade, Matt has been involved with every aspect of growth in the industrial real estate market which I hope you will share some of your views and insight on today. Last but lot --not least, we have Henry. The real estate firm industrial buildings and apartment complexes. Over the last decade, Henry has led strategic acquisition and management in a broad range of properties. 's approach with a focus on long-term evaluation. What I find interesting about this group today is that nine of our panelists focus on the major Canadian markets, I'm not sure what that says about the real estate economics at the moment but maybe some of that will be a part of the conversation today, I do know that we have been a part of the deep and broad panel. Thank you again, we appreciate you joining us and with that I'm going to hand it over to Sal to kick us off with his economic outlook.

>> Thanks, Brad. Let me kick things off with a macro backdrop to the outlook for income properties and at least to say that the backdrop is improving and getting better. You can see from the chart in front of you, we came close to a down term it looks like it could have tipped over but since then, we have been on a forward course. The reason we came close to stalling if not slipping into recession. Many people, many homeowners just paying more for their mortgages. The mortgages reset at much higher rates when the mortgage was initially undertaken. It really put the bite on discretionary spending power and is even cutting to some necessities. So, that has been the main drag on our economy but the rest of the world as well has faced a pretty similar interest rate shock, that has not been great for Canadian exports. Now, you will notice that chart through the economy has been moving forward, not at a strong rate but positive growth, we are growing at about a 1% growth. It is where they're going to settle down for much of this year, they will pick up especially true this year. We are getting some good support. We will notice in the same chart really hasn't slowed much at all. And the exports we are not running nearly the deficit, we are still running a moderate sized budget, that is giving our economy a bit of a boost as well and most importantly, interest rates are falling and will continue to fall well into next year. That will give them a bit of a lift closer to about 2% by next year on the back of those lower interest rates. There is one wildcard and that is what happens to our population. Next slide, please. A lot of uncertainty here about what will happen to the population growth. We have been growing at the fastest, one point 2 million new Canadians in the past year, we believe it has given our economy a bit of a boost out. Long-term when you go through history, you don't see a lot of correlation between population growth and economic growth but it is hard to believe that with the population growing 3% that has not at least given our economy a bit of a boost. For the most part, if you have 3% more people, they probably will want 3% more stuff, that at least puts a floor to some extent under demand even supports supply to some extent. The government does have plans, it is detailed some, we will detail more plans in coming weeks, those plans are to cut back on temporary immigration on Canada. Foreign workers, international students to the point where we could see an actual debt outflow for a couple of years of a couple of my --migrants to this country. You can see on the chart there, it is pretty strong, close to half 1 million. That will provide some solid support to our population growth probably keep us at the top of the G7 growth charts for population. But it does mean a slower rate probably down to about 1% from the current rate of 3%. Next slide, please. That slower population growth will go to some extent delaying pressure on our jobless rate. Our unemployment rate has gone up almost a couple of percentage points from a couple of years ago, not on the back of widespread layoffs. There has been relatively few layoffs in CAS economy. Because the population has been growing so fast, the labor force has been growing fast, almost double at the rate of job creation in this country. That is why the jobless rate has gone up to now 6. 5%. Historically, that is not a high level but it is certainly much higher than where we were a couple of years ago. Until population growth slows, we think the jobless rate will probably top out just about 7% by early next year before we start to see the population growing slow, the economy strengthen a little bit and we start to pull off from those highs. The one good thing that comes out of a rising unemployment rate is it doesn't relieve some of the pressure. We are seeing wage growth in our labor market. That is one race inflation in Canada has pulled back quite dramatically. We saw big declines early on because of lower commodity prices, much more smoother running global supply chains, but it's really helped out but we needed that final solution and that was a loser label market. That is what they were aiming for it is actually fallen below no one . 6% inflation, a lot of that is on the back of lower gas. We know that can rivers really quickly, you look at some of the core underlying measures of inflation, we are not below 2% yet we are still running just above 2% and if anything, the risk is not that inflation will settle above the 2% target next slide, please. The Bank of Canada has already cut interest rates, 75 basis points and because of that very week CPI report that we saw this week, we now believe it will actually step up the pace to a 50 basis point. We know the Federal Reserve uncharacteristically started its easing cycle with a three-point move while the Bank of Canada now is all set we believe to wrap up its basis points to 50 basis points. We do see them shifting back to the series, probably right through the summer of next year. By next summer we should see basis points. Down about 2 1/2% for the policy rate, that would be half of where we peeked in this cycle, not quite as low as before the pandemic rates were being held, artificially low most of the financial crisis period, we probably won't get there but we will see rates much lower than they are today, we will also see longer-term interest rates move down. are race cuts, we could see very easily another 50, 60 basis points of decline. Over the course of the next six months, next slide, please. Not to the point that we are seeing an up sale and across the country but at least stabilization. The down term is pretty well over , we are seeing existing wall sells pretty well flatten out in most regions now. At least this is the first sign of a recovery in home sales. Same issue with home prices. Nationwide we did the prices pull back about 14% from their peaks but clear signs of stabilization more recently. When we talk about the housing market, we are largely talking about two markets. There is a very affordable markets across most of the country , Canada, Quebec, a lot of the population is moving to to take advantage of relatively inexpensive housing. Those regions are very little and in some cities Halifax, Calgary, home prices are setting new highs, it is really British Columbia. When we talk about lack of affordability in the housing market, those are the two housing markets we are talking about. Even beyond the greater Toronto greater Vancouver regions, that is where we saw most of the correction in house prices. To some extent houses are still softening a little bit but we do anticipate the market now on the road to recovery, a very gradual one. We are not expecting a V-shaped recovery and sales or prices by any stretch of the imagination over the next year for Canada. Next slide, please. The main reason for that is still the lack of affordability, the percentage of household income required to cover your mortgage payments is still pretty high in both of the provinces and not just in greater Toronto in greater Vancouver, we have seen a lot of improvement because mortgage rates are well off their highs from last fall. Those prices are lower. We will need to see improvement before we see the markets recover. We do expect the rates continue to trend down and we expect house prices even though they will rise, rise less than family incomes allowing and comes to catch up to the higher evaluations. The new mortgage reveal --rules for insured mortgages will also help people get into the market especially first-time buyers with a lower down payment and also, the lower monthly mortgage cost-effectively about 10% or so instead of 25 years, so that will help to improve affordability as well, it will contribute to the housing market recovery. The next and final slide, just to wrap up, CAS economy is on the road to recovery , very slowly. It should pick up and strengthen through next year and get back to more normal rates of growth of 2% on the back of further aggressive rate cutting by the Bank of Canada right through the summer of next year, the lower interest rates and mortgage rules will provide some support to the housing market. However, lack of affordability and so much more of a slower population growth will limit the gains in the housing markets, the rate cuts will also go a long ways to supporting income properties . But also the retail segment, that area has been undermined by consumers and then pulling back on a wide range of spending. We will see spending power as interest rate, with that I will hand the mic back to Jeanette.

>> Thank you, Sal, I really appreciate your insights and updates, I'm really excited with the panel that we have we have interesting from your insights on our panel, we have somebody from Montreal and Calgary, the three regions that you listed off. So, let's get into the Roundtable to answer some of the questions that have been asked. The first question is going to go to Bill, Henry, and Matt. We will start in Munson with Bill. What opportunities do you see?

>> Good day, everyone. Thank you for stealing 90% of my content, I really appreciate it. Yesterday of course we got the news of the inflation and now everybody is talking about 50, why that excites me is that there is a number of projects that will now be in Canada, solely because rates have gotten where the math doesn't work. Being in commercial real estate brokerage we will also see a significant number . A story here, just a quick comment on Atlantic Canada, we have had a population growth since 2017. That compares to the national average of 8. 5%. If you look at opportunities again, the multifamily or population growth, and I am actively in the family opportunities. Thank you.

>> Thanks, Bill. What do you see, what excites you about the teacher real estate investment and what opportunities do you see?

>> Thank you for the intro. I think is everyone is already mentioned, the first time since 2021 that there has been some level of stability and the general consensus in the marketplace about where rates are going to go, I think everyone is on the same page about it should be coming down slowly. As investors , given the stability of the market we can now make better informed decisions and long-term decisions. There is a stability component that is particularly in Canada going to be a lot of opportunities when it comes to converting buildings and with multi-rise buildings with the programs that incentivize owners to make them more energy-efficient, there is going to be a lot of opportunity to upgrade properties over the next five, 10 years. I think Canada is probably one of the most advanced and offering these incentives.

>> Thank you. Matt, over to you. What excites you and what opportunities do you see?

>> Thanks, also thanks for posting me on this program, I appreciate it. I think like everybody, interest rates are the big factor but I think more broadly from our position Alberta-based and the industrial landlord, macro trends feel like they are in our favor. It certainly becoming a factor in our market. E-commerce also driving a lot of industrial demand. Data centers haven't been prevalent in this part of the world but I expect that is another trend that could be coming our way I think ultimately in Western Canada we have what the world needs right now which is resources, we have food and energy and the rule of law those are things that will be increasingly in demand I feel very lucky to be in this part of the world right now with this kind of runway.

>> Thank you, Matt.

>> I'm going to go back over to you with the question, are we about to see a boom in distinct income property pricing as inflation costs make it more expensive to finance and build new commercial properties?

>> I think that has been one of destabilizing factors for value of existing income properties over the last few years that most developers have been pens down, it is very difficult to pencil any kind of residential in most major markets in Canada. There are certain markets out West where land costs are significantly lower. I think that it will still be another few years until developers can really pencil the performers in. I think rates would need to come down by at least a couple hundred basis points. And the only development that we really seen, for example, in Toronto it has been developing a lot of under existing sites with an old thing on site that they have been able to rezone with the city and for them, their cost on land is a zero and you have major retail companies, they have been exploring developing thousands of units on their site but for traditional developers that need to acquire the land, even in Montreal where it been 120 or $150, it has been very difficult to do. That is impacted, I wouldn't say that the values have increased but it has stabilized the value even as rates went up on existing properties. The government will continue to rollout new programs to develop and obviously over the next year or two we will see the rates going down.

>> Matt, how are incentives provided by the government affecting the real estate market? Are they impacting investment trends?

>> I like picking on the guy from Alberta is a little ironic on this but I can give you my perspective from where it sets which is particular to the industrial asset class so, I think our company is now one of the largest owners of rooftop solar rays in Canada, we are probably up there with IKEA. There are two different markets of play, it is having a big effect but not as you might expect. On the micro, let's say the consumer level and in this case by consumer I mean sort of commercial industrial tenants, really it is driven by the market and the only way that the market can win for green energy sources is by being cheaper certainly putting a price on carbon like that is helpful because it makes that polluting energy source more expensive and therefore the green energy source, less expensive. In it of itself, some of the programs the government is offering actually haven't done that much. From our perspective, we are putting on the roofs of our buildings which range from megawatt, they will generate somewhere between 11 and 13% return. Three subsidies. When you add subsidies and, maybe it moves up to 16 percent yield. I feel like what is more beneficial on the micro level is just having clear good policy. Alberta in particular has a very well structured and very clear energy policy, you can't be back into the grid and be credited for it, you can't overproduce but certainly you back into the grid. Other market when we try to do solar in D. C. for instance, you are limited It has to do with the power companies being owned by the government so they don't want competitors in the space but, on a micro level I would say the ESD incentives are not actually doing not much. It is really about the market solutions. On a macro level, I'm sorry to be specific to Alberta, I think it is having an enormous effects. Alberta has something called the tier program which is technology innovation answer basically any polluter that tons of carbon a year is forced to pay a price of $65 a ton so it walks up with the federal program for their pollution. What that has done is create some huge demand and incentives for companies to Chase to provide greater power sources. With that, we have some exciting things like the carbon capture and storage technology which Alberta was instrumental in building the trunk line. Air products have invested 1. 6 billion in a new hydrogen plant which converts natural gas into hydrogen and takes the CO2 output of that into a new pipeline for 1. 2 billion and that carbon is injected by Carsten and one of the cool outcomes of that is companies like Tao which are now using hydrogen to do their latest expansion which is called path to zero to produce plastics that are carbon neutral, that is an 11. 6 billion dollar investment that is not talked about so, through Alberta's carbon program, that is over 14 and billion dollars of investment in the Edmonton region alone, that a substantial and I think it probably deserves a little bit more acknowledgment then it gets in the press.

>> That is a pretty great answer so, very, very good, very insightful. Hopefully everybody can hear me, I understand my video is having a bit of technical difficulties. My next question goes back over to Bill. Bill, commercial properties that are predominantly in office have faced declining appetite for financing. From an investor perspective, what is your view on office as an asset class. >> Your muted --you are muted.

>> Sorry, it's on muted now? Okay, my apologies. What I was saying is that the office asset class has been one of the most debated and argued for the last number of years. Whenever I look at it I tend to start with the data and try to get some view as to what is really happening there. If we look at the east end of the country, 13, 14%, those vacancy rates are actually lower now in 2024 than they were in 2023. The amount of sublease inventories going down, the numbers are trending in the right direction. The next thought I go to is what's happening inside the office hours. Encouraging staff to be in the office, that doesn't give you much opportunity to contract your space. Buying office assets and indeed a couple that are aggressively buying office asset do it to the current low pricing. The purpose office assets. Those assets traded less than 50% of what the vendor originally purchased them for in 2018. So there is some great value in the office segment. The buyers looking at it that way, they will truly look like rock stars. There is a quote that goes, be fearful when others are greedy and greedy when others are fearful all and I think that is kind of the sentiment I would express. I am more in the latter camp of being greedy right now while others are fearful.

>> Thanks, Bill. Matt, can you comment on trends that you were seeing in the industrial market on the leasing front and with respect to –

>> Yeah, sure. I think the big trends that are similar probably across every market, industrial landlord and developers seen automation and transition of the workforce are really tied together. So, let's say increasingly the inside of warehouses production spaces or whatever are more automated. That is with or glyphs or fully automated. The transition of the workforce then is he coming less labor and more white-collar so as an example when I started 15 years ago when I started to go into some of the oilfield shops which is sort of the oilfield suburb south of Edmonton, you see guys and their welders using welding and that type of thing. You go to an oil filled shop now and you see three or four machines. Early what they're doing is running the computer behind it to make sure there is no faults and it is producing things correctly. I think whatever Strader you are in, the automation and transition of the work force to being a little bit more of a computer programmer and less of an actual welder or pipefitter or whatever is an increasing trend. Something else we are seeing a lot of is that the equipment

inside the building is becoming worth a lot more than the building itself. It is an example of Amazon which will put really advanced rocking systems in many of their multi-sword buildings but even locally there are group, a big manufactured cooling units. The equipment that they produce is worth more than the buildings that they house it in. The little potato company which is another great success story which produces bags of little potatoes, they wash and sort and inventory the equipment in the area is extremely valuable and worth more, that is kind of an interesting trend speak to market, like everywhere, everybody expects everything like yesterday, that is no different people are giving us less time to actually construct and get things done. It's tough with municipalities and entitlements and I am saying that as a Westerner, I think I probably couldn't operate in some of the Eastern markets like Toronto that way. Total occupancy cost is starting to matter more than basic rent, following through in the earlier trends, when we think about those things, things like being energy-efficient less so for the green aspect of it, I think that is becoming increasingly important as so much volatility and the input for users, those are media trends that we are seeing and then if you looked a little bit in the sky, I think some things that we should be watching really closely, obviously A. I. will continue to accelerate the previous trends and I'm not really sure what that means for the demand of space if companies can become more efficient. Also we are really interested in self driving. What does that look like for distribution centers when electronic duty logs no longer affect shipping distances for various providers. Anyway those are some trends in the industrial market that I think are pushing things across probably nationally but also locally.

>> Thank you very much, Matt. Henry, as you know, commercial mortgage bag security issuance has been extremely active in the U. S. and with bail in bond prices coming in recently, issuing activity here in Canada early in 2025. What are your thoughts on CMBS and under what circumstances would you consider CMBS structures for your financing requirements?

>> Obviously it hasn't really been available to investors for the last five or so years and wears it's very much using in the U. S. and Canada I think it's a lot to do with taxation but that type of financing hasn't been available. I think just going back to the overachieved points which as investors for us to make the right decisions, we need stability and CMBS , that kind of financing only makes sense when you're looking at a 10 to 15 year horizon and you are sure that the real estate is going to perform over those 10 years so, I think with a lot of industrial asset with the really creditworthy tenants with retail tenants, with AAA national covenants the Walmarts and the cost goes of the world, as long as they are long and in populations of more than 30 to sense. It's surprising to me that we haven't been more actively using CMBS because the market as a whole has been known as a stable real estate market even with all of the turmoil the U. S. went through and what the world has gone through over the last few years, Canada has pretty much been a benchmark of stability across the world. I think since 2021 it is not a Canada specific issue, it is a worldwide issue as far as where the values would go but, as long as we continue trending in that stable interest rate environment with the right real estate, CMBS makes a lot of sense in Canada.

>> Thank you, Henry. Bill, what impact have migration and immigration had on both residential and commercial real estate in the Atlantic region?

>> Well, we kind of alluded to population growth, we have had a 10 point 6% increase in the population, it is made up of a 68% immigration. Canadians moving to our side of the land and 32% migration which is in essence, people from Ontario moving east, I looked at the numbers again recently and the migration part is in essence almost shut off now. Nova Scotia actually had a negative migration number, and this was the only one that showed a positive, having said that there is no doubt that the immigration piece keeps moving. From a very simplistic point of view, what happens when a bunch of people move in your neighborhood, first and foremost they need to find a place to live. The city where I live here in Moncton, we have had an apartment deficit , and in 2023 we have record that building requirements has been reported. The majority of those are multifamily projects. We have an acceleration on the supply side, demand side it continues to be fairly robust. If the mouth I've done on it, if we were to shut down immigration which is not going to happen, but the deficit the gap that is there right now if we were to shut down immigration it would take four solid years of record construction that we have been experiencing before we can actually get back to zero. The population has had a big impact here. From a people point of view quite candidly, I sat on the board of the Chamber of Commerce here for many years. Accompanies our growing and expanding and they could not find people. Immigration and migration population growth, those positions are allowing those companies to continue prospering. It is one of the best benefits we've had. Some of the other comments I would make is that you are going to get that spike in retail and we are getting growth in retail. The good news and the bad news , since 2019 the value of single-family homes have gone up 105% so effectively the value of houses have doubled which is great if you're sitting at home calculating your personal net worth and getting all excited about that that's kind of the good news of the equation but once here you get this thing in the mail called poverty tax and then you are quickly reminded that the amount of your home has gone up and you are paying accordingly for the pleasure of owning that. 's overall the commercial success we have had in the last five years, I would suggest it's primarily been driven by population growth.

>> Thanks, Bill. Henry, we are back over to another office question. Can you comment on what you are seeing in office space in terms of volume and quality of the deals and do you foresee office conversions is being a viable option to address the lack of housing and office supply?

>> I think it has been nearly impossible to assess any office steal except for one with a very secure government tenant with an abnormally long waltz. Even with the prospect of the great tenant and a five or seven year waltz , a lot of these buildings, what happens is that they may look great on paper but when you go visit the property the offices are completely empty and I don't think any investor can assume that they will get filled up over the next few years. There is a general consensus that remote work is going to make a significant portion of the company plan for the next 10 years. So, I think that with office conversions, with the video the beginning of the call today, it is really important , you had Canada infrastructure bank that was involved in that conversion and I am not sure what conversions are possible about some kind of development financing that is government subsidizes and some kind of program that gives an incentive. In Calgary, there was a program a few years ago at the beginning of COVID and that program got filled I think it was in the span of six or eight months and we looked at the program and we couldn't get any access to funds. It goes to show that there is obviously a will on the part of developers and there is a way to do it with the right property without the government programs it makes it economically viable to do it. As rates come down hopefully these performances will make more sense. I know that places like Bill in Moncton, the city Council and the economic development had their the first week linked in and we are very receptive to the development plans and it seems like the red tape is a lot less excessive and as much as that in one way preserves the value of real estate that already exist today red tape in markets led will prevent these from coming online fast enough to get all of these buildings as they should be. Hopefully with time a lot of the buildings will be converted. >> What types of properties are currently providing the best returns in this climate? Are you seeing any out of a normal money flow going in to certain asset classes?

>> I think any properties that are paying the rent are good opportunities. Where we are from there is a cyclical nature obviously to Alberta, we are used to, we know the things that go up can also come down. I think that our success and a lot of my dads success has been to do the opposite of what everyone else is doing so some of the best deals we do are those that are done when everyone is looking the other way and I think with interest rate run ups there is really a posse of capital of a lot of institutional funds and for whatever reason had to rebalance their portfolios. We are sellers and I think that is created a lot of opportunities for folks like ourselves and folks like Henry. I think these types of markets are exciting ones for us to plan another thing I think I would add right now is that all properties aren't considered equal. Thinking about risk-adjusted returns will become increasingly important I think there are high-yield deals that are available to a lot of private investors right now that weren't available. It's just being thoughtful about that and how reliable it is and how replaceable it is if that tenant fails so lots of words to say I think there is a lot of great opportunities, you have to proceed carefully with institutional market, it is certainly more of a buyers market than it was previously.

>> Thank you, Matt. And Bill, can you comment on the residential --and whether it inhibits the ability to respond to a shortage of housing?

>> I think the first thing we should do is settle criminology. If I look at rental regulation, what it means in the street speak is rent caps. I will give you a case study. There is an election in Canada going on right now we are going to go to the polls here on the 21st. Five days from now we have a conservative government in power and we currently do not have any rent caps in place. The Liberal party have come out very loudly and vocally said that they will introduce a 3% rent caps the other significant party we have, the green said that they will do a 2. 5% rent caps and conservatives have said they are going to maintain status quo. The other part of the backdrop here is that we have a housing crisis and the only true way through a housing crisis is to increase the supply. I listened to a podcast recently, if you are curious about this topic I would encourage you to listen to the podcast. The premise of it was that rent control has been tried in the U. S. in many markets across the map as early as the 40s , again in of that there was an amount of data that got produced, each of these experience that were studied the empirical data was handed over to a bunch of economists and basically ask for their commentary . Rent control does not work in a normal housing environment and rent control is horrible social policy in an environment where you have a housing crisis which is where we are today. So you have to ask yourself what is it that makes it so attractive politically? The short version is rent cap is very easy to understand for my retail point of view it's very easy to communicate and it gives a perception of benefit if you go back and look at the empirical data the cost outweighed the benefits. When I look at it from a government point of view, I would suggest to you if they really want to give tenants a break which is kind of what we are talking about, I would offer that they look at the amount of property tax that has been collected where tenants live. I will give you an example of our city year, if you live in Moncton and you live in a two bedroom apartment in a building that is less than five years rent. $515 so you have, many tenants in the city are paying over There is a perception that landlords are the ones that pay property tax, we all know that is in fact not accurate. Tenants pay property tax. Landlords collected but ultimately the tenants pay the property tax. I would suggest if the government really wanted to help tenants out, they would take a look at the property tax system that is in place, try to offer less of a burden to tenants when he realized that property tax, if you live in a house, you'd be paying significantly less. Looking at calculation was, the percentage studied across North America . The long-winded answer about rent regulation is that it limits the amount of supply into the market which is inherently inflationary living in existing properties so I don't really see a whole lot in the idea .

>> Thank you, Bill and thank you again for joining us. We hope that you enjoyed today's session and I want to thank you again for taking the time out of your busy day to spend time with us. As a reminder, today's call was recorded and is available for playback. You will receive details on how to access that in an email. That concludes our call today. Thank you, and take care.