Good morning, welcome to the Choice Properties Real Estate Investment Trust Q1 2023 earnings conference call. Today's call is being recorded. After the speaker's remarks, there will be a question and answer session. I would now like to hand the conference over to your first speaker today, Erin Johnston, Vice President of Finance. Please go ahead. Thank you. Good morning, and welcome to the Choice Properties Q1 2023 conference call. I'm joined here this morning by Rael Diamond, President and Chief Executive Officer, Mario Barrafato, Chief Financial Officer, and Ana Radic, Chief Operating Officer. Rael will start the call by providing a brief recap of our Q1 performance and cover the highlights of the quarter. Ana will cover our operating results, followed by Mario, who will conclude the call with a review of our financial results before we open the lines for Q&A. Before we begin today's call, I'd like to remind you that by discussing our financial and operating performance and in responding to your questions, we may make forward-looking statements, including statements regarding Choice Properties objectives, strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, intentions, outlook, and similar statements concerning anticipated future events, results, circumstances, performance, or exceptions that are not historical facts. These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from the conclusions in these forward-looking statements. Additional information on the material risks that can impact our financial results and estimates and the assumptions that were made in applying and making these statements can be found in the recently filed Q1 2023 financial statements and management discussion and analysis, which are available on our website and on SEDAR. With that, I will turn the call over to Rael. Thank you, Erin. Good morning, everyone. We're pleased with our strong start to 2023. Our strong performance is a testament to the quality of our portfolio, the health and resiliency of our tenants, the strength of our balance sheet, and the hard work of our team. In addition to our Q1 results, we released our 2022 Environmental, Social, and Governance report. We made significant progress in our ESG program in 2022 and are setting the stage for the next phase of our program with key advancements towards fighting climate change and advancing social equity, our two ESG pillars. Our ESG program play an important part of our strategy. We will continue to report on our progress as we execute on our key initiatives. Turning to our Q1 results, we remain at near full occupancy in our retail industrial portfolios, with occupancy at 97.7%. Our business delivered strong same asset NOI growth of 4.6%. Our team continued to execute on our strategic framework, in the quarter, we further strengthened our market-leading portfolio through capital recycling program and took steps to ensure we maintain our industry-leading balance sheet amidst ongoing market volatility. In the Q1, we completed CAD 268 million of transactions, including CAD 192 million of acquisitions and CAD 76 million of dispositions. In our retail portfolio, we acquired three stand-alone assets from Loblaw for CAD 99.1 million, which are discussed on our last quarter's conference call. We also acquired a Shoppers Drug Mart at Dollarama anchored retail asset adjacent to an existing Choice-owned No Frills in a strong and growing Durham region for CAD 17.9 million. We also successfully completed the disposition of an Ontario retail asset that was held for sale at the end of 2022 for CAD 23 million. We also added to our industrial portfolio through the acquisition of our development partner's 50% interest in two new generation industrial buildings at Horizon Business Park in Edmonton, Alberta, for CAD 32.1 million. The first building was completed in 2022. The second building, which has been pre-leased to a global transport and logistics company, is currently under construction and is near completion, with occupancy anticipated in the second half of 2023. Choice now owns 100% of the site, comprised of six buildings totaling approximately 1.4 million sq ft of GLA. Further adding to our mixed-use development pipeline, we acquired approximately a 1.7 acre parcel at Golden Mile for CAD 23 million in the quarter. This transaction unlocks approximately 2.1 million sq ft of additional density for the project and demonstrate the strength of our strategic re-relationship with Loblaw as the site was acquired through a Loblaw option to purchase. As we continue to focus on selling our remaining office assets, in the quarter, we worked with our JV partner on our two remaining Calgary office assets in a transaction that helps simplify our exit from the office asset class. We successfully sold our 50% ownership interest in one asset for CAD 48.4 million to our partner. We received our partner's 50% interest in the other current Calgary office asset and provided a vendor takeback mortgage with a face value of CAD 13.5 million. We now have two office buildings remaining in our portfolio. We're actively marketing the remaining property in Calgary and are under contract to sell our last remaining Atlantic office building located in Dartmouth, Nova Scotia, with closing scheduled by the end of the Q2 of 2023. We also remain focused on continuing to deliver on a development pipeline. During the quarter, we completed several retail intensifications, including a Shoppers Drug Mart, a Dollarama, and two Bed Baths. Our two active residential projects continue to be on track to be completed in the second half of 2023. In our industrial pipeline, we're making progress at our Eastway development site with the installation of off-site services underway. At Choice Caledon Business Park, our teams continue to work through the planning process, our leasing teams are seeing significant tenant interest and are actively working through opportunities. Our 2023 residential deliveries remain on track. In addition to capital recycling, our teams were also proactive on financing in the quarter and continued to take steps to ensure we maintained ample liquidity, raising CAD 737 million in debt capital. It's important to acknowledge that the challenging macroeconomic backdrop is bringing with it some tenant bankruptcies, which have been relatively light for the last couple of years. Importantly, our exposure to at-risk tenants is very limited. This is not by accident. It is partly a function of us being very disciplined and executing on our capital recycling program. Ana will now discuss progress on backfilling these vacancies as well as our operational results. Ana? Thank you, Rael, good morning, everyone. Our portfolio continues to perform well. We are pleased with our operating performance for the quarter. Occupancy remains resilient at 97.7%. There is strong upward pressure on rents. During the quarter, we had approximately 850,000 sq ft of lease expiries. We renewed 682,000 sq ft at an average spread of 14.3%. We completed 84,000 sq ft of new leasing that commenced in the quarter. This resulted in negative absorption of 85,000 sq ft, which was primarily related to a vacancy in our Calgary industrial portfolio, which I will speak to shortly. Turning to our three asset classes, occupancy in our approximately 44 million sq ft necessity-based retail portfolio increased to 97.9%, with positive absorption occurring in almost all major markets, once again demonstrating the strength and quality of our tenants and assets. Demand for retail space remains high. While tenants are dealing with rising costs and labor challenges, they are not suspending their plans to grow or relocate stores, and we continue to see strong demand for our retail space. As I've mentioned on past calls, there is very little new supply being built. This is driving tenants to existing centers and adding upward pressure on market rents. We had 537,000 sq ft of retail expiries in the quarter and completed 477,000 sq ft of re-renewals, resulting in tenant retention of 88.7%. The renewals were completed at rents 6.4% above expiry. Excluding a 100,000 sq ft fixed-rate Walmart renewal, our leasing spread for the quarter was 7% above expiry. We also completed 55,000 sq ft of new leasing, resulting in positive absorption in the quarter. Over 60% of our new retail leasing consisted of discount retailers, quick service restaurants, and medical and personal service uses. These categories continue their strong appetite for brick-and-mortar space, particularly in our grocery anchored centers. We are also seeing strong demand for space at our power centers and have completed 25,000 sq ft of new deals with fashion and home decor retailers. Turning to Bed Bath & Beyond, Nordstrom, and David's Bridal for a moment. Of the four Bed Bath & Beyond locations in our portfolio, three have been assigned, pending court approval, to DKB Capital, operating Toys R Us, Rooms + Spaces, and Babies R Us. The remaining location, consisting of 21,000 sq ft at our share, has been disclaimed with turnover to us expected in May. We are, however, presently in negotiations with a replacement tenant for the full space. We have one Nordstrom location in our portfolio where they expect to remain until July 21st, 2023. We have interest from several retailers for the entire space. David's Bridal also announced bankruptcy in the U.S. last week. We have two locations in our portfolio totaling 7,700 sq ft at our share, as both of these spaces are held in JV arrangements, limiting the exposure to our business. The quality of our tenants and focus on necessity-based retailers continues to provide resiliency in our portfolio. Many retail tenants continue to move ahead with their plans to grow stores and relocate to superior sites. We are working to accommodate several such retailers by relocating and rightsizing existing tenants at our centers, thus enhancing our tenant mix and increasing the value of our sites. While industrial leasing activity moderated slightly in the Q1 of 2023, industrial demand remained strong. The national vacancy rate remains below 2% and net rental rates continue to rise. Given our low average in-place rent, we expect to continue to see strong rental rate growth across our industrial portfolio. We believe that well-located new generation distribution space will continue to command a premium, with rents in older generation buildings in secondary locations likely moderating sooner. Occupancy in our industrial portfolio is 98.3%. While remaining close to full occupancy, this marks a slight decline of 60 basis points in the quarter due primarily to a tenant vacating 67,000 sq ft in Calgary. We had budgeted the space to come back and anticipate releasing the space at rents 40%-50% higher than the previous tenant's rent. We had 311,000 sq ft of industrial leases expire in the quarter, of which we renewed 204,000 sq ft of space at rents 44.3% above expiry. In Ontario, 54,000 sq ft of expiries were renewed at rents 143% above the expiring rent. We have significant embedded rental rate growth in our industrial portfolio, and with our current average in-place industrial rent at approximately CAD 8.50 per sq ft, we continue to see leasing opportunities at rents well above current in-place rents. We also continue to experience positive leasing momentum across our entire portfolio and anticipate we will continue to achieve strong rental rate growth on renewals and new deals as compared to expiring rents. I'll now pass the call over to Mario to discuss our financial performance. Thank you, Ana. Good morning, everyone. We're pleased with our financial performance in the Q1. Our business is well-positioned to continue to deliver on our financial goals. Our reported FFO for the Q1 was CAD 176.9 million or CAD 24.04 per unit. Apart from non-recurring G&A expenses of approximately CAD 1 million, it was a clean quarter with no significant or unusual one-time items. On a per unit diluted basis, our Q1 FFO was CAD 24.04, an increase of approximately 1% from Q1 of 2022. The strong same asset NOI and higher interest income was offset by higher borrowing costs and higher G&A expenses driven by inflation and a competitive talent market. In addition, FFO in the quarter was also impacted by cash flow dilution from the Allied transaction of last March. As a reminder, the foregone NOI from the sale of our office properties was only partially offset by distribution and interest income. Occupancy remains strong at 97.7% and contributed to our strong same asset results. Same asset cash NOI increased by CAD 10.4 million or 4.6% compared to the Q1 of 2022. Retail increased by CAD 6.1 million or 3.4% compared to the same quarter last year. The increase was primarily driven by improved occupancy, contractual rent steps, and higher capital recoveries. For the remainder of 2023, we expect retail same asset cash NOI to trend back to our target range of 2% as we start to lap the impact of higher occupancy, rental rates, and interest on capital recoveries in the second half of the year. Our industrial portfolio increased by approximately CAD 3.2 million or 8.8%. This increase was driven by improved occupancy and a significant increase in rental rates for both renewals and new leases completed. A mixed-use residential and other increased by approximately CAD 1.1 million or 14.3%. This increase was driven by improved residential occupancy and other ancillary revenue. Turning to our balance sheet, our IFRS NAV increased by 1.1% to CAD 13.51 per unit, an increase of CAD 107 million over the last quarter. Our NAV growth was driven by CAD 92 million of fair value gains on investment properties, which was partially offset by a downward fair value adjustment on our investment in Allied Properties units of CAD 14 million, where we're required under IFRS to mark-to-market this investment to its trading price as of March 31st. Q1 fair value gains on investment properties were mostly property-specific and primarily driven by industrial leasing, retail cash flow growth, and transaction activity. Turning to our financing activities, our teams remain focused on de-risking the balance sheet and leveraging the various sources of funding available to us, and we did just that in the Q1. During the quarter, we completed CAD 737 million of financing, including the issuance of our CAD 550 million 10-year unsecured Series S debentures at a rate of 5.4% and CAD 187 million of secured mortgage financing at a weighted average rate of 5.1% and a term of 13 years. Included in our secured financing was CAD 76 million of 20-year mortgages at an average rate of 5.1%, demonstrating our ability to access cost-effective capital across the yield curve while continuing to de-risk the balance sheet. Proceeds from the financing were used to repay CAD 375 million of unsecured debentures that matured in the quarter and to repay a portion of the balance drawn in our credit facility. We entered the quarter in solid financial position with strong debt metrics and ample liquidity. Our debt-to-EBITDA ratio was 7.5 x. We have over CAD 1.4 billion available on our credit facility. This is supported by approximately CAD 12.5 billion of unencumbered properties. With our significant financing activity in the Q1 and the continued strong demand we're seeing from lenders, we are well-positioned to fund our remaining maturities and capital requirements in 2023. Looking ahead, our business is strong. We're on track to deliver on our 2023 outlook. With that, Rael, Ana, Erin, and I would be glad to answer your questions. At this time, if you would like to ask a question, please press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press star one. Your first question is from the line of Mark Rothschild with Canaccord. Your line is open. Thanks. Good morning, everyone. Maybe just focusing on the retail sector where you had good same-store NOI growth, and I heard Mario talk about it moderating. There have been some bankruptcies, but not too many, and yet you say demand is strong. Maybe you could just talk a little more what type of tenants and how are rental rates trending? Hi, Mark. Rental rates are quite strong. I think that they're trending up relative to our in-place rents and, relative, you know, to the past few years. We're seeing demand across a variety of sectors. As I said in the call, discount retailers are looking to grow. We're seeing also strong demand with respect to the pet sector. Tenants, like Canadian Tire, for example, consumer goods, they're also a growing tenant, and they have several banners that have an appetite for more space. Smaller retailers, QSR as well. Also I think there's been a rebound in the fashion sector, and we're seeing that in our power centers and also based on sort of the consumer spending data that we're seeing. Okay, great. Thanks. Rael, in the past couple of quarters, you've definitely spoken about taking a little bit of pause or being slower on new residential developments, with the costs involved. We clearly have a shortage of affordable housing, and it's hard to build affordable housing, but the demand is obviously there. Do you anticipate at any point in next year maybe being more aggressive on starting new projects? Look, Mark, thanks for the question. I think one of the benefits of Choice is that we can develop across each of our asset classes, and we're very active on the retail and industrial at the moment. On the res, we're completing two developments. We have one truly affordable housing project at Granville Grove now, where Choice is a 50% interest. We're finalizing our plans, and we hope to be in a position to launch over the next 12 months. You know, I think it's gonna be very market dependent, where financing rates are, where we feel construction pricing is. Right now we're feeling pretty confident that we could be in a position to launch over the next 12 months. Okay, great. Thanks so much. I'll turn it back. Your next question is from the line of Lorne Kalmar with Desjardins. Your line is open. Thank you. Good morning. You know, you spoke a little bit about tenants you're, or where you're seeing strength in tenants. Are there any areas where you guys are a little bit concerned? Hi. I mean, not really. Again, you know, the tenants that we were concerned about have proven, you know, to have faltered. You know, the demand to backfill that space is strong. You know, our portfolio is, you know, primarily leased to necessity-based retailers and grocery anchored and, you know, that we're seeing a lot of demand and resiliency in that segment. Okay. Recently, Loblaw announced they were looking to add some stores and relocate some stores. I was wondering if you could maybe give us some color on sort of how you expect that to affect Choice and whether or not you'll get to participate? Yeah, thanks for the question. Look, I know you saw our Investor Day, hopefully for other participants on the call, you managed to see our Investor Day. As we demonstrated, we work very closely with Loblaw's real estate team to help them look for new opportunities, based on their target areas for growth. If you think back for the last two years, we have, you know, from a Choice point of view, we obviously benefited from new investment opportunities. We've been building new Shoppers Drug Mart developments. I believe over the last two years, we've built 25% of their new stores. On the industrial side, we found them a site for their new DC at Choice Eastway. We do expect to get a significant amount of the new opportunities from Loblaw, and I think that is one of our competitive advantages, just that strategic relationship with a major tenant. Okay, that's great. Maybe one last quick one from me. On the Choice Industrial Centre, how is leasing going over there? It looks like it hasn't really changed much in the last little bit. Just wondering how you expect that to progress. Look, it's progressing well. Ana and her team are working actively, with some prospective tenants, and we hope to have something to report shortly. Great. I'll turn it back. Thank you. Your next question is from the line of Himanshu Gupta with Scotiabank. Your line is open. Thank you and good morning. Just from the Calgary industrial portfolio, some negative absorption in the quarter. Do you see any shift in the strength of overall leasing market, or was it just isolated to this property? Yeah, you know, as Ana said in her calls, Ana will speak to the sentiment on industrial in a moment, but it was really property specific. It's not a sentiment change at all. No, not at all. Sorry. I, yeah, you know, the space is, you know, in strong demand. It's generic, you know, distribution space, so we anticipate being able to backfill it fairly quickly. You know, it was just a question of, you know, one tenant needing more space and needing to relocate in order to achieve that as we didn't have space in the building. Then there were a couple of small tenants. Nothing really indicative of a sentiment change by any means. Himanshu, it's hard to go up when you're at almost a 100% occupancy. You can only go down slightly. It's a small change. Yeah. Sure. Yeah. No, that's fair enough. Any other space you're expecting to come back on industrial side this year? Actually, no, nothing material. We're very ahead of our renewals and, you know, have strong demand across the main segments of our industrial portfolio. Sure. Sure. Thank you. You know, just sticking to the leasing activity, and you did mention about the, you know, the tenant bankruptcies on the retail portfolio. Based on your experience, do you expect more retail bankruptcies, you know, as macro slows down or macro concerns continue to be there? I mean, what's your sense for the rest of the year? Like, we've looked at the portfolio, and we don't, you know, think there are any ones that will impact us materially. Like when we look at, you know, the general retail, you know, climate in Canada, you know, a lot of retailers sort of worked through store performance and culled their portfolio during COVID. Generally, you know, those that remain, I think, are fairly healthy. Again, with our necessity-based portfolio, you know, those are performing particularly well. Okay. That's fair enough. Maybe, you know, just shifting gears here, Rael, you run a mezzanine loan book as well. Anything you are seeing or hearing there? I mean, we keep on hearing about tight availability of debt in the overall market. Are you hearing anything from the developers, regarding the availability of debt in the market? Yeah, look, our mezzanine loan book is around CAD 400 million, of which, CAD 200 million is a VTB. We've been very selective on who we've loaned money to. They have to be strong partners, well capitalized. I would say the biggest change, Himanshu, is that we obviously are earning more interest income as rates have risen. Then on a few of the sales, we've given, you know, well-secured VTBs, and that's just to help, help with the financing. I would say we're more focused on relationship lending, so I wouldn't say we're as active as others. For us, it's just a great example. Our mezzanine program is a great example of us capitalizing on our strong balance sheet to give us opportunities. Fair enough. Yeah. Thank you. Just a last question on the acquisition activity. Two retail assets you bought in Calgary. Any sense of cap rates on that? The cap rates, they start with a 6%. They start with a 6%. Okay. Maybe my next question is, you bought a couple in Toronto as well. What was the cap rate spread between Toronto and Calgary? Would it be like 50 basis point more or less? Give me a second. Let me just see if I have some. You know, we generally don't disclose cap rates, but it is around, it's around 50 basis point delta. Awesome. Thank you. Thank you so much. I'll turn it back. Your next question is from the line of Pammi Bir with RBC Capital Markets. Your line is open. Thanks. Good morning. Just maybe touching base on the Calgary office transactions. Can you maybe just walk us through the background, you know, perhaps behind the decision to swap? I know you touched on it briefly in some of your prepared remarks. Maybe any color on pricing, you know, either on a cap rate range basis, if that's relevant on these trades or maybe how it compared to your IFRS values. Thanks, Pammi, for the question. Look, we've had this partnership with the group since 2012, they're a very good partner. You know, they're a longer-term holder of office than we were, Calgary Place was the better quality asset of the two. They knew that we were interested in selling and so we just thought it was a very fair transaction where we traded at appraised value. We really focused on the net equity number. The transactions happened slightly above our IFRS book value. It doesn't really trade on a cap rate basis, the cap rates are, you know, very high single digits. If you were to look on a cap rate basis, it really trades on a price per foot basis. You know, we are in the process of listing Altus Centre and, you know, we think we can transact on the asset, which helps us strategically to exit office. Okay. I'm assuming these have been written down over the years. I think as you mentioned, they were bought in 2012 and they've been written down a fair amount. Is that fair to say? Yes. Significant write-downs from the purchase price. Yeah. Yeah. Yeah. Okay. Then just what can you share in terms of the actual occupancy, or the leased space in the buildings and what was the remaining lease terms if you have that? Yeah, they are around 60%-70% occupied. I think Altus was around 70%, and Calgary Place was a bit higher. The lease term is around three years in Altus. I don't have Calgary Place handy. Great. No, that's helpful. Just coming back to the roughly CAD 90 million of fair value gains that you did book in the quarter, what was the breakdown there between the property types? Hey, Pammi. It was kind of fairly spread out. I mean, like it was really small, spread out across between developments, industrial and retail and there was no macro theme. They're all property specific. For retail, it was just another quarter burning off at low rental rates and having a higher rental rate kick in. For industrial, would've been a handful of properties where we just adjusted market rents and based on leasing we're seeing, and then on development, just the advancement of certain properties, really nothing. Yeah, pretty much nothing really eventful in valuations. Thanks, Mario. Last one for me, just to, you know, again, coming back to the comments around the same property NOI growth and sort of sticking with the guidance for the year, I think, 2%-3%. Is that primarily driven by the moderation in retail, or are you anticipating perhaps industrial to, you know, come down from, I think it was the close to 9% in the quarter as well? Actually, it's simpler than that. It's just math, Pammi. We had a great second half of last year, so when you just compare year-over-year, you have higher growth. As you kick into the second half, the base is higher. No, retail will still be strong. Industrial is still gonna be very strong. The dollar value doesn't change. We still have growth, but just when you compare it to the prior, the prior year, the gap narrows a bit. Yeah. Pammi, I just wanted to come back to your previous question. Mario, it's worth adding that, you know, compared to last year, we still when we look at our valuations, you know, we took a write-down on our retail portfolio last year. Retail compared to last year would still be down. It's really, as Mario said, property specific, and it's primarily most of the gains over the last year, I'm not saying this quarter specific, happened in development and industrial. Yeah, that's a good point, Rael. We took the big write-down in Q2 of last year. We've kept retail pretty much where it's at and just as a, as, you know, as months burn off. Everything else we've done is really primarily industrial and development. Thanks very much, guys. I'll turn it back. Thank you. Your next question is from the line of Tal Woolley with National Bank Financial. Your line is open. Hi. Good morning. Just wanted to start off on the management changes at Loblaw and Weston. I don't expect that there would be any read-through to Choice, but can you just talk a little bit about what, if any, impact you think, you know, that has on strategy for, you know, the group of companies going forward? Yeah, look, there is no impact to Choice. As we've said before, we have a strong relationship with Loblaw, and their strategy remains the same. Okay. They’ve also announced, I think they've got, you know, slightly under CAD 2 billion of excess real estate they may look to put on the market over the next couple of years. Do you have a sense of what, of that volume, like what would the amount that is sort of suitable for Choice to pursue? Yeah, look, if you recall our strategic alliance agreement with Loblaw is anything that they sell, we get the right of first offer. Of the CAD 2 billion, we are looking at approximately half of it, and it will happen over the next several years. You know, our teams work very closely with Loblaw. So what we are not interested in purchasing, they will sell to third parties. Got it. I think you're officially past the one-year mark on the deal you struck with Allied last year, I think the first lockup expires, I think in a few months on your stake in Allied. Has there been any shift in your thinking around that holding? Look, we, the first lockup expires, as you said, in about three months' time. We haven't changed our thinking. You know, we will sell it when we believe it makes sense to. You know, Allied, in our minds is still the best office REIT in the country, as they execute on the sale of their data center, we think it will alleviate some of the pressures on their stock. Got it. Then just lastly, I guess this question is probably more for Mario. You know, like when you've raised a lot of, you know, debt capital this quarter. What's your sort of thinking around, you know, you have a huge unencumbered asset pool, you know, in terms of using unsecured versus secured financing and, you know, you guys are also one of the few names on the street right now that are still kind of trading at a premium to NAV. Like, theoretically, you could even consider, you know, looking at some equity here if you wanted to try and delever and do some stuff. I'm just curious how, you know, you sort of thought about your financing mix, given where rates are and where your stock price is right now. Oh, hey, Tal. Yes, we have a lot of options available to us, and that's kind of by design. Right now the plan is, you know, the unsecured debt market is our primary source, and so we go to that. Basically, you know, we're comfortable with the leverages right now, and we're able to fund our developments, you know, based on debt and while keeping the leverage neutral. Right now we don't need a lot of extra capital right now, so we'll just refinance what we have coming due. We'll use the sources that are available. Right now I think we're getting reasonable pricing relative to others. Right now we'll stay that course. Okay, that's great. Thanks very much. Your next question is from the line of Sam Damiani with TD Securities. Your line is open. Thanks. Good morning, everyone. Most of my questions have been asked, so I'll just ask Mario, you talked about de-risking and the improvement on the balance sheet metrics over the last year or two. Do you see any further need for improvement in this regard, just given the market that we're in and the economy that we're in? Yeah. Not right now, Sam. I mean, we, you know, we like the level we're at. We're comfortable, we think right now with, you know, with what we have, as far as, you know, our spending. It's very manageable right now. The real thing for us is just keeping liquidity and keeping optionality in our debt ladder. where we had the chance to go 10-year and beyond, again, it was just to de-risk. You just don't know what's gonna happen, so we're in a position that whatever the market brings us, we're able to react. Okay, perfect. Maybe just a last one to follow on one of Tal's questions, I think, is just on that CAD 1.8 billion that Loblaw talked about selling in terms of real estate. Can you talk about their progress on selling any to third parties and how that's going? Yeah. I know they're in the process of selling a small portfolio to a third party, and I believe it's gone well. You know, I think they should comment on it. Yeah. Okay, perfect. Thank you very much. Your next question is from the line of Gaurav Mathur with iA Capital Markets. Your line is open. Thank you, good morning, everyone. A couple of quick questions at my end. You know, firstly, when you're looking at the liquidity profile and your acquisitions this quarter, it does seem that you're in a position of strength to take advantage of market dislocations. I'm just wondering if there's any asset class or geography which does stand out over the others? Look, we are focused on the three asset classes being grocery anchored or necessity-based retail, industrial, then residential. We hope, we're hopeful that opportunities come our way, but we haven't seen many opportunities that meet our quality criteria that are distressed right now. Okay, great. Just lastly, with the 2023 guidance and the distribution increase, is there an AFFO payout ratio range which you're currently targeting? Yes. I mean, right now, you know, our plans have us using our capital spend at 85%-90% payout ratio. We're comfortable at that level. I think the last couple of years have just shown that, you know, our NOI has been really resilient. Through the pandemic and through various cycles, we've been strong. Overall, we're pleased with that payout ratio. Okay, great. Thank you for the color. I'll turn it back to the operator. Your next question is from the line of Dean Wilkinson with CIBC. Your line is open. Thanks. Morning, everyone. Mario, probably for you, just quick debt question. Obviously, access to credit is really not a problem, despite maybe what some of the headlines are saying. It looks like the pricing on the unsecured and the mortgages is not quite converging, but getting close. What's your thought on the remaining CAD 1 billion of mortgages, and could you see that coming into the unsecured market? Just generally, what's the sense you're getting from mortgage lenders in terms of pricing and availability of credit right now? Okay. Hey, Dean. We went out and we tapped the mortgage market, you know, last quarter. The market is strong, and obviously they have their own criteria. They're in favor of certain asset classes, in favor of strong balance sheets. There's a sweet spot. The only thing that I think we hear is the cost of funds moves. There may be higher costs, you know, as we go, but right now they're still, you know, very favorably priced compared to bonds. I think the gap is narrowing a bit. On the bond side, I mean, the support and the demand that we saw in our last deal was very, very strong. I think our pricing, you know, I think the last deal came in tighter than the original guidance. There's still. They are getting, I think the gap's getting narrower, but we need them all. I think having the benefit of a Loblaw lease really makes it attractive to lenders in this environment. We think I think we're gonna get good pricing in all debt markets. Perfect. Thanks. There are no further questions at this time. I will now turn the call back over to Rael Diamond. Thank you, Brent. To summarize, we're very pleased with our Q1 performance. As we look ahead, our business is strong. As Mario said, we are well positioned to execute on our strategic framework and deliver on our 2023 plan. Our annual general meeting will follow this morning at 11:00 A.M. We look forward to seeing you there. Thank you for your interest, your investment in Choice, and for joining us this morning. Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now disconnect.