Good morning, ladies and gentlemen. Welcome to the Dream Office REIT Q4 2021 conference call for Friday, February 18th, 2022. During this call, management of Dream Office REIT may make statements containing forward-looking information within the meaning of applicable securities legislation. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Office REIT's control, that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. Additional information about these assumptions and risks and uncertainties is contained in Dream Office REIT's filings with securities regulators, including its latest annual information form and MD&A. These filings are also available on Dream Office REIT's website at www.dreamofficereit.ca. Later in the presentation, we will have a question-and-answer session. To queue up for a question, press star one on your telephone keypad. Your host for today will be Mr. Michael Cooper, Chair and CEO of Dream Office REIT. Mr. Cooper, please go ahead. Thank you, operator, and good morning to everyone. Today, I'm with Gord Wadley, the Chief Operating Officer, and Jay Jiang, the Chief Financial Officer. I'm just gonna make a few comments and turn it over to Gord and then Jay. When Jay's done, we'll be answering questions. Just as a point of view, you know, we own all these buildings that have been barely used for two years coming up on March thirteenth, and they're in tremendous shape. We continue to renew tenants. We're doing some new leasing, but we are losing some tenants. Some are downsizing and there's some bankruptcies, but overall to be at the level we're at, where there's been hardly any use of our buildings for such a long period of time is remarkable. With Omicron, it delayed the reopening once again. It's been very, very frustrating. I would say the surprise to me is how fast everything is opening right now. It looks like we're starting to see banks planning on opening in March, and the City of Toronto called people back for Tuesday. We're, you know, we're now going to start to get real information about what the future of office use is. I would say that we've seen a lot of information where there's going to be a heavy reliance on office use as part of winning company strategies, and we're quite confident. With all of the Dream groups developments in Toronto, including 212 King, I've really been shocked by how many large tenants are looking for new space. It's really surprising given all the new supply. Obviously, there continues to be a lot of demand for best-in-class space. I think that's actually a pretty interesting sign. Like, all the new buildings are gonna be full, and there's demand for more. We think that's very encouraging. We have and we will continue to make our buildings exceptional boutique office buildings. Throughout the two years of the pandemic, we made tremendous progress. I think that once the city opens up, people will be very surprised, happily surprised, with how much better their buildings are now, particularly on Bay Street and some of the other things we're doing. We're hoping that within the next month or so, we'll finalize the decarbonization program, which is gonna be a real first in the country in many ways. In addition to decarbonizing, we're expecting to have best-in-class connectivity. We're gonna have very healthy buildings, and we'll have ultra-low carbon emissions for existing buildings. We continue to make development progress on our developments. At 250 Dundas, we're advancing the site plan. It's already zoned. That's a building that'll have 150,000 sq ft of office and 350,000 sq ft of residential right at the corner. I mean, it's one building in from the corner of Dundas and University, which is an incredible location for the hospitals, governments, schools, cultural. We're very excited that that will be a successful building. 2200 Eglinton is progressing very well. We expect to be able to build 2,500 residential units in addition to the current office building. We also expect to be able to report progress on where we are over the next quarter or two. At 212 King is making its way through the zoning process. We're clearing up some issues, narrowing the issues with the city. We are asking for 1.1 million sq ft of office and residential for this superbly located project. It's a very big project, and it's a big deal for the city as well as for us. That one's taking a little bit of time, but that's totally predictable. What I would say is that these developments provide our future growth of our portfolio. What will be great about it is they will continue to increase the quality of our building from the very high level of the quality of our real estate from the already excellent quality that we have, and we'll be able to add at a reasonable price. We continue to be laser-focused on our exceptional Toronto portfolio. We continually improve it. While we're doing that, we're reducing shares outstanding, which means that every shareholder owns more of the business than they used to. With that, I'll hand it over to Gord. Well, thank you, Michael. I hope everyone's doing well, and I'm glad to have an opportunity to connect with you all today. Despite the impacts to the reopening efforts caused by various public health shutdowns related to Omicron, the team navigated through the headwinds, and we saw some real positive momentum in a variety of key aspects of our business. Q4 2021 represented the first quarter of positive absorption since the pandemic began. We referenced on our last call that we felt optimistic we would close the year higher quarter over quarter on committed occupancy, and we did that by about 150 basis points from 88.5% to close to 90%. We executed on a number of large deals, both new and renewal. What also helped is that we've seen some material improvements to occupancy, tours, and deal velocity in Western Canada. Just for reference for everyone, at the beginning of 2021, our current and committed occupancy was under 70% for Western Canada. Through our leasing efforts, we were able to bring that up to approximately 78.6% specific to our non-core markets. Regardless of Omicron, and despite what you read in the news and various social media hot takes, it was a very active year of leasing for Toronto and specifically Dream Office, with both direct and sublet space being absorbed market-wide. We did approximately 550,000 sq ft of deals in 2021, but of equal importance, our rents held up very well across the board. Net rents have continued to be strong and in line with our business plan at pre-pandemic levels. We've also seen steady growth in NER performance and achieved net rents for deals being completed versus budget. On average, we're almost 5% over budget portfolio-wide on an NER basis and seen a positive spread of approximately 10% for net rents in our core portfolio, with rents now averaging over CAD 35 a foot. For some additional context, we completed approximately 80 deals across the portfolio. We did one transaction over 80,000 sq ft, and we did three deals over 30,000 sq ft. These key indicators to us support our optimism that deals of scale are getting done and companies are making major commitments to their office accommodations. You couple this with the reality that our rates have been very resilient to our guidance. It's a testament to the quality and location of the buildings we own. It's also a testament to the efforts of our operating team and ultimately staying true to our asset and capital strategy, which I'll touch on a little bit more shortly. Like most of our peers, we worked through supply challenges and construction delays, and we've managed well and are poised to complete our final touches on the Bay Street collection early this year. We've completed 357 and on pace to complete 366 Bay on time and on budget. The feedback from tenants and brokers alike on these projects has been tremendous. We really look forward to showing you the completed product, and hopefully we'll get a chance to walk you through in person very soon. The optimism on our Bay Street offering is further supported by the 12 deals that we did specific to that project, with some strong rents over CAD 40 on average. I want everyone to keep in mind that we're replacing rents on Bay Street in the low 20s and high teens on new space. These are a new class of boutique assets that don't compete with large towers. They're low rise, they're walkable, they build small private floor plates, all new base building systems, and showcase a level of luxury finishes that are very unique to our market. Our current pipeline, we're actively negotiating and trading paper on 29 deals over 250,000 sq ft, which we hope to complete no later than Q2. There's a lot of press and focus around shadow vacancy in the state of the sublease market in Toronto. This has not been an issue or something we're seeing in the REIT. Currently in our portfolio, there's only about 100,000 sq ft of sublet space available, totaling less than 2% of our portfolio nationally. Collections continue to be very strong for our team at just over 98% for the year, with our average WALT in the portfolio at just over five years. Leasing and operating metrics aside, we made tremendous strides in the back half of 2021 pertaining to our ESG, operating, and sustainability strategy. We mentioned on our last call that we're working hard to secure a viable GRESB rating. We're pleased to report that in Q4, we had among the highest first-year GRESB score historically in Canada at 91. We also had the country's top Sustainalytics score. Basically, Sustainalytics is a rating, a global rating. It's a Morningstar company that rates the sustainability of listed companies based on their environmental, social, and corporate governance performance and applies a risk rating. In this regard, we're ranked in the top 10% globally. In addition, we are recognized by Green Lease Leaders as platinum for our standard office lease. We were a lead signatory to UNPRI and also committed to Net Zero Asset Managers, which stem from COP26 and represents the largest organization of asset managers globally committing to net zero targets by 2050, or in our case, better. When we made our commitments and set our position among these global leaders in ESG, we also publicly made some of the industry's most aggressive commitments to being leaders in GHG reductions and decarbonization of our assets. As part of our net zero goals, Dream Office is committing to net zero Scope one and two and select Scope three GHG emissions by 2035. We believe sincerely that real estate can be developed and managed to make positive impacts and make our communities more fair. Real estate is responsible for about 40% of global greenhouse gas emissions, and our team sincerely believes and are working tirelessly toward reducing the growth of carbon emissions from our properties and reduce our overall emissions dramatically. It's never been more urgent to act to support a sustainable and climate-resilient future. This initiative isn't something new for our team, and we've been working hard to be leaders in environmental stewardship for years. In that vein, we've always had a high confidence that there'd be accretive financing opportunities on the horizon. True to this expectation, we recently announced in Q4 that CIB is partnering with our team to significantly and rapidly decarbonize at least 19 of our assets under management. We'll do so over the next five years. We'll use the low-interest, long-term facility to finance baseline, incremental, accelerated, and net new capital projects. These projects are projected to include chiller retrofits, installation of heat pumps, solar power, heat recovery ventilation systems, and numerous LED upgrades. The beneficial financing terms and rates help us afford the additional capital expenditure in such a short period of time. As part of the initiative, we'll be creating approximately 1,500 jobs during the life of the program in all phases of the project cycle. DREAM has already begun the process of decarbonizing and modernizing each building already. We estimate in the first year of the program, we'll reduce our carbon footprint equivalent to removing over 600 cars from the road, mitigating 350 homes energy use, or planting the equivalent of 46,000 trees annually. The aggregate scope of work for all these projects, although great for the assets and our clients, is also a major catalyst for us to roll out an additional new program, very important to our team and important to the community. Our social procurement initiative we announced late last year ensures we open our tendering process to include underrepresented, diverse, and equity-seeking groups by mandating contract awards and in our operating goals to support those in our community who may not typically have an opportunity or exposure to work at an institutional scale for large projects. For us, it's not only the right thing to do, but there's real value as increased pool of proponents mitigates our supply chain risk, increases competitive pricing, and creates new business opportunities. Most importantly, it creates new business opportunities for groups who may not have had exposure to this scale of work in the past. The metrics we've identified create real impact in and around the communities we build and manage. The targets focus on how much money, which we would be spending anyways, is directed directly to capable and qualified companies that are often overlooked by large corporations. Additional targets ensure that we diversify our project teams at every level. Our initiatives establish the REIT as a clear leader in this area with deep and meaningful goals. As a result, it'll help us create a more diverse and resilient supply chain for all our projects, and equally give meaningful, merit-based, and fair opportunities to those in the community we serve. We spent the better part of the last two years taking our incredible, well-located assets in downtown Toronto and transforming them into a new standard of boutique luxury. This commitment to decarbonization and community stewardship takes our offering even further to ensure we'll exceed the highest levels of sustainability and responsible operating standards our clients and our stakeholders have come to expect and covet. Thank you, and I'll turn it over to Jay. Thank you, Gord. Good morning. For the second year in a row, our operational results have been significantly influenced by COVID variants and multiple rounds of lockdowns in Ontario. Notwithstanding that our buildings and parking garages have remained mostly empty for two years, we feel our operational and financial performance have shown a lot of resiliency during the course of the pandemic. On the quarter, our FFO per unit of CAD 0.40 was flat year over year, and we were CAD 0.02 higher for the year. In general terms, we lost CAD 0.05 per unit from lower occupancy, one-time lease termination income, and other items, and we gained CAD 0.05 through income pickup of 2 completed redevelopment projects, accretion from NCIB, and higher income from our Dream Industrial investment. Our net asset value per unit ended the year at CAD 31.49, up 2% from last quarter and 10% year-over-year. To categorize the composition of annual gains, 4% is from the increase in value of our Dream Industrial REIT holdings, 3% from the fair value increase of our income properties, 2% increase from retained positive free cash flow, and 1% from the reduced unit count from using our normal course issuer bid. Including our CAD 1 per unit of distribution, that would imply a 13% total return. Our stock price performance for the year was 24%. For 2022, we will once again share our internal model, assuming a normalized state that is exclusive of any potential acquisitions, dispositions, any unannounced major capital initiatives. We also wanna highlight that the usual COVID caveat that budgeting for office buildings remains challenging when we still do not know when our economy will reopen, how it will reopen, and how prospective and existing tenants will behave. Just prior to the most recent Omicron variant, we were seeing good leasing velocity and weekly increases in parking revenue in October and November. While it is unfortunate that the latest shutdown has delayed our recovery by approximately three months, we are optimistic that those positive indicators will resurface again when we achieve a sustained normalized state. We will see our forecast as a balancing act between optimism and the time it takes to progress to normalization. For our internal forecasts, we were projecting diluted FFO per unit of CAD 1.60, or an increase of approximately 3% from 2021. We expect to see low single-digit same-property NOI pick up across our portfolio with weighted average occupancy relatively flat versus 2021. This means that we expect some leasing expiries in Q1 to be filled up in the mid- to latter half of the year. We think Downtown Toronto will end the year in the low 90% on a committed basis, and our other markets will be north of 80% committed. We are anticipating our average debt to gross book value for the year to be in the low 40s, with ample liquidity to execute on all identified capital projects and any new opportunities that may arise. Pre-COVID, our debt to EBITDA target was 8x, which we achieved, and we hope to reapproach that target when the pandemic is over. Liquidity is currently in very good shape. We've successfully refinanced CAD 500 million of debt this year at a weighted average rate of about 2.28%. Interest rates have since increased at the beginning of the year, but currently we only have CAD 60 million of expiries to refinance in 2022. We are not forecasting or relying on any dispositions as a source of liquidity. However, we will continue to remain opportunistic to reasonable offers on non-core assets. Our Dream Industrial REIT stake is over CAD 430 million at fair value based on today's trading price or almost a third of our market cap. We have been fortunate to benefit from strong industrial fundamentals and significant increases in the rents and value over the course of the pandemic while we await office tenants to return to work. We think industrial REITs will continue to benefit from the same factors that have contributed to their outperformance over the past two years, so we are content to continue to maintain a meaningful ownership of DIR for investment purposes. In terms of capital projects, we have completed 357 Bay and 1900 Sherwood over the past two years on time and on budget. In 2021, we will have two smaller redevelopment projects. 366 Bay was moved into development in the first quarter. We are looking at a complete modernization of this property with new energy-efficient mechanicals, washrooms, common areas, and LEED Gold certification. We are also looking at a similar project for 67 Richmond, which is another small 50,000 sq ft building for later this year. We think both of those buildings will be very desirable for high-end tenants who may be interested in occupying an entire building on Bay Street, which coincides with the completion of our Bay Street capital program in the nine other buildings and also the alleyway by mid-year. We will continue to progress on pre-development work at 212 King and 2200 Eglinton. At our current trading price of just over CAD 25, if we assume fair value on our Dream Industrial holdings and assets in other markets at book value, our downtown Toronto portfolio of 3.5 million sq ft is trading at an implied price per sq ft of approximately CAD 500. We have been consistent in our message that the intrinsic value of Dream Office is higher, and we will be more valuable over the long term. We have maximized our unit repurchases under the normal course issuer bid program in 2021 and expect to do so again in 2022, as we believe this is easily the best use of our capital today. We are optimistic that on the other side of the pandemic, our well-located and modernized office portfolio will return to very high occupancies at high rents. We will have fewer units outstanding than the start of the pandemic and enhance the value of many of our assets. We think this will translate to a great upside on both FFO and NAV per unit for the foreseeable future. I'll turn it back to Michael. Thanks, Jay. Thanks, Gord. At this point, we'd be happy to answer any questions. Thank you. We will now begin the question-and-answer session. If you have a question, please press star, then one on your touchtone phone. If you wish to be removed from the queue, please press the pound sign or the hash key. There will be a delay before the first question is announced, and if you're using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star, then one on your touchtone phone. Our first question online comes from Mr. Scott Fromson from CIBC. Thanks. Hello, gentlemen. Good morning, and congratulations on a good quarter. Just wondering if you can give an update on the sort of broader project at the Golden Mile and how you guys are fitting in with it. Sure. The Golden Mile is actually an incredible area. There's about 100 acres of land there. There's about six or seven owners of land on the north side, although right at Victoria Park, there is one on the south that's all included in a new zoning that allows residential. We expect that some of them have made deals. It's all coming together, but there'll probably be about 20,000 units approved. And that's gonna be a pretty large area in Scarborough, which has a lot of large areas. It's gonna be one of the first of major scale redevelopment. Our site, we're getting very close with the city. We're working very closely with them, plus the other landowners, as there's a lot of things we're trying to do, not just on our site, but with the others, to create a wonderful community. I expect by the end of the year, we'll have our zoning, and we'll be in good shape in 2023. I mean, that's a CAD 1.5 billion project, and it's fantastic that we have a lot of experience doing large communities, large scale developments, and we've done it in Toronto and across other places. We're excited to get going on that one. Thanks, Michael. Maybe a quick one for Gord. Just on 250 Dundas, you do have a tenant in there that's fairly sizable. Have you made arrangements for them to move to potentially another space within the portfolio? Yeah. Good question, Scott. We've been dealing with them fairly regularly. We have to keep in mind that the group that's in there is a component of the province, and their mandate is public health. As we kind of get through the public health crisis, we think we'll get a little bit more clarity around that vacate. We're actively working with the group and in good communication, and the province has always been a really good partner of ours. What's the ideal timing on that project to get shovels in the ground? Yeah. Ideally, the end of 2023, early 2024 at the latest is our ideal time. That's great. Thanks. That's helpful. I'll turn it over. Thank you. Thanks, Scott. Thank you. Our next question online comes from Mr. Mike Markidis from Desjardins. Please go ahead. Mr. Mike, I like that. Good morning, everybody. I was hoping you could just give us a little bit more color on the deep retrofit program. I think you said 19 buildings over five years. Perhaps you could just give us a sense of the capital spend, number one. Second of all, how you're thinking about the economic return on that capital, just in the context of the favorable financing rate. Hi, Mike, it's Jay. I'll start on just the quantification of the capital, and then Gord will jump into the details of the retrofit program. I think the good part about this program is a lot of the work that we're doing is already incorporated into what we started on Bay Street. For example, we're doing redevelopment in two of the buildings, 366 Bay and 67 Richmond. A big component will be incorporated. Those projects will probably be between CAD 10 million-CAD 12 million. We have CAD 10 million probably left to spend on Bay Street. Even before COVID, we've been incorporating a lot of the work into it as well. In terms of the returns, it's similar to our analysis on Bay Street. We have some room right now on the additional rents. The tenants are getting a better building. A big component can be amortized into the additional rents because it's common areas, washrooms, elevators. The tenants do think it's a great return for what they're paying. We're getting a pretty good return on that as well. One thing I do wanna caveat is we're finalizing this very first decarbonization loan with Canada Infrastructure Bank. It's not done yet, but we had good news this week. We're just finalizing everything. This involves having consultants to agree to all the work that we're doing in advance. They have to take a look and be satisfied of the work that we've done when we're completed. But there is sensitivity, Mike, around the financials. I think Canada Infrastructure Bank will want everybody to know the details as soon as we're finished because they would like to do more of these. Overall, keep in mind that as we decarbonize the building, there's a significant reduction in energy costs. We've got savings to the tenants, and to the extent that we have savings, we're allowed to charge them. In addition to that, we're getting a superior building, which will benchmark us against better buildings for operating costs. We'll be able to recover a bunch, and we're also hoping that this will also help validate higher rents. There's all kinds of contributors, but we're not in a position to reveal the return on equity. Gord? Yeah. With that, don't talk about the return on equity. We'll give a quick overview on the scope and, you know, we put it into five kind of buckets, Mike. We're promoting conservation. We're finding building operational efficiencies. We upgrade for efficiency. We select low carbon fuel sources. We install renewable power generation, photovoltaics, wind power, things like that, solar. We procure high quality offset for whatever remaining footprints we need to get to our GHG reduction targets. We really break it down again into five kind of micro subcategories. We do a lot of mechanical and electrical upgrades, HVAC efficiency, fuel switching, BAS connectivity, EMS. We do a lot of envelope work we're actively working on right now we started we do facades, roofs, windowing. Transportation, we get a lot of credit for EV chargers and bike infrastructure. If you haven't been to 30 Adelaide lately, we've got a partnership with Tesla and a number of EV chargers. Renewable energy is a big component of our reduction strategy around rooftop solar. Aesthetics, common area improvements. You know, people forget when you use a faucet or a toilet, you know, are those low flow? What are the outputs on that? You know, sinks, even at operating standards, what materials we're using. The paper towels, is it electricity? Things like that. We've been doing this for the better part of two years, and now it's game time, and we're putting all our efforts together, and we're gonna start unwinding the strategy this year. We're really excited. Okay. That sounds great. Thank you for that. Could you just remind me, is this long-term capital? Like, what's the term of the facility? Or is that not yet revealed? It will be long term. Yeah. The bulk of Okay. The bulk of the work though, Mike, we're targeting to get completed within the next five years. Is it fair to say it'll be the longest term debt we have? Yeah. Yeah. Okay. That's helpful. Thanks very much. Okay. I'll ask one more before I turn it back and give everybody else a chance. Just wondering, we learned earlier this week, I think it was, that you got a new—well, I guess not new—a renewed 10% shareholder. And I was just curious if you were able to comment if you've had any dialogue with this party, and if you are able to comment on whether they're a happy, quiet shareholder, or if there's gonna be more of an activist bent to their involvement. Thank you. You know, we've had a lot of significant shareholders. Sandpiper, now Artis, is the only one that's gone over 10%. All of the significant shareholders have acquired the stock because they like what it, what the company owns, and I think that's the case here. I don't expect any activism, but who knows? We do value all of our shareholders. We're happy to have Artis as a shareholder. We were happy to have Sandpiper as a shareholder. We don't discriminate against any shareholders. I appreciate the call. Thanks. I'll turn it back. Thank you. Our next question online comes from Mr. Mark Rothschild from Canaccord. Thanks. Good morning, everyone. In Jay's comments, you mentioned the implied value of the downtown Toronto office, and I think, I'm not sure it was Michael or Gord, someone spoke about that you're open to selling non-core assets in other markets. Can we talk about if there's a market to sell those assets at the IFRS value now, and if it's something that you're likely to do over the next year and in regards to your thoughts about, you know, maybe surfacing the value and getting people to recognize the value in downtown Toronto office? Sure. As I said, we don't rely on the disposition, so it's not in our forecast. I think the activity has picked up a little bit. I understand our team has been trading paper with, they're mainly domestic local buyers, for assets in Saskatoon, and there was some interest in Calgary. I don't know the reason behind some of those deals, but I think maybe oil prices have increased. People are interested in the assets, especially that we've managed them in a way that, occupancies are higher. They have positive free cash flow. We said last year that one of our goals was to get the occupancies high so we could get financing for these assets. They weren't gonna hurt our business. We were able to do that with some of the assets that are secured against our line. We're quite patient. I think the carrying value or IFRS value of all of these assets are fair. If we do transact, they should be approximate of those values. Yeah. I mean, I think the numbers is, it's about 82% of our value is in downtown Toronto. We've got Sussex and 2200 Eglinton, which are in the GTA, and they're both great assets that are long-term assets. Outside of that, we've got two buildings in downtown Saskatoon, and we're doing pretty well with Saskatoon Square. In Regina, we've redone the building there. It's got long-term leases, and that's a great building to hold or sell. In Calgary, we have the Kensington property. It's a very small property, it'd be a great development site. I think it's actually quite well-leased. Barclay is in downtown Calgary, and then I think the only other building we have is in Kansas City. We're open-minded. None of those buildings are viewed by us as super core. If we see the right deal, we would act on it or keep it, just depending on the economics. Okay, great. Maybe just one more question. You know, Dream Office has bought back units over the past few years, and Dream Industrial has done extremely well. Well, the unit price might be off slightly, just of late, but is there a maximum amount that you would be comfortable with Dream Industrial representing of the market cap or of Dream Office, or is that not a number that really matters? Actually never thought about it. I would say that if Dream Industrial goes up and represents more of our company, we like that. We certainly don't want it to go down, so it represents less. We're just totally focused on the value. What I would say is since we created Dream Industrial REIT, there's been lots of talk about, well, you're an office REIT, we have this, and we've always said, "Hey, it's an investment." I'm pretty pleased that we've owned it as long as we have. We bought more occasionally. We sold one million shares once. Dream Industrial has been a very valuable moderating investment through COVID. It's worked out very well. Once again, if there was a reason to do something differently, it's an investment, then we'd be open to it. Okay, great. Thanks so much. Thank you. Our next question online comes from Sairam Srinivas from Cormark Securities. Thank you, operator, and good morning, everybody. My first question is around Bay Street and the law firms who are one of the biggest employers out there. As these firms compete with other firms in terms of getting their employees, and a big part of that competition has been additional work from home, has that been a part of leasing discussions in the downtown, and has that impacted leasing in any way? You were breaking up a little bit, but was your question if there's been a trend towards work from home around law firms? Yes. Yeah. I think almost universally across during the pandemic, a lot of companies were looking at their accommodation plans. We're starting to hear and we're starting to see people coming back to the office. We're starting to hear some hybrid models, but no one's dramatically reducing their footprint, especially along Bay Street. For us on Bay Street, our floor plates are really small. We don't compete with the big law firms. Actually, a good component of our tenancies on Bay Street are small boutique law firms that we've either just recently renewed or we're in active discussions with to maybe take a little bit more space or extend their lease. We're quite immune in our portfolio to the big downtown core law firm exposure. I mean, what I'd say about this is not everything is about work from home. I think what the law firms are seeing is that their associates are getting offered New York rates to work for New York firms and sit in Toronto. They're really struggling to keep people, and they're always been very focused on cost. I think they're very busy. They can't hire people. You know, they've got their own decision to deal with. I think we're seeing banks trying to rationalize space and, you know, reduce their space. That's not as much a work from home, although work from home may help them reduce their costs. The thing to keep in mind is if the companies that are growing are absorbing space. What I find amazing is, despite all the talk, most of those are technology companies. They're looking for 400,000 sq ft or 600,000 sq ft. If there wasn't work from home, it might be a little bit more. I don't. We don't know. All we know is that when people talk to us about sort of old era businesses, using less space, a lot of it is just to reduce costs. We're seeing new era businesses growing leaps and bounds and needing basically like. That's what I was saying earlier. There's all these new buildings coming. They're mostly full, and we're seeing all these new tenants that are saying, "We need 500,000 sq ft." It's really. You just take a look at who needs the space, and you can see that it's not old companies, it's new companies. That actually makes a lot of sense, Michael. I mean, considering these new constructions also will come in with a significantly higher rent. The delta rent should kind of be in your favor. Just looking at Q4, I think there are about five buildings in the downtown portfolio with like sub-70% occupancy, which I think is a great opportunity for the redev path. Historically, can you give some color in terms of what's been a challenge with these properties, and how do you see them contributing towards this broader 70% commitment goal for 2022? It's 90% commitment. Sorry. Yeah. You were breaking up a little bit at the end, but you were talking about vacancy pockets in some of our buildings. I think what's interesting is we intentionally put a line in the press release. We're holding back some space, I think around 40,000 sq ft as we reposition. Some of those buildings are on Bay Street. So that when we do get the work done, we can attract high-end tenants, and there'll be some high-end restaurant offerings coming in. Then the other vacancies that we're looking at leasing up right now, I think a lot of it has been delayed a little bit with the Omicron variant. Touring activity, everything else is normalizing. If we see the same indicators that we saw in October, November, I think we're quite optimistic that we'll see some good velocity in the spring. I mean, I just wanna point out to everybody the condominiums in Toronto, and not as good locations as our buildings are selling for CAD 1,500 a sq ft today, brand-new ones. We're talking about having an implied value of CAD 500 a sq ft for office. I think we're quite confident that we're gonna have lots of leasing, but I also think we're quite confident that downtown Toronto is gonna continue to thrive. The types of properties we have are literally trading at land value. Thanks for that color, Jay and Michael. My last question before I turn it back is on occupancy, in terms of understanding the increase in commitment of occupancy. Jay, when you say 90% increase in commitment by December, what's the timing difference between commitment and when those leases actually start paying up? Typically, it's about four to six months when we get our commitment. We'll get a commitment, we'll have a firm deal. There's always usually typically a four to six month fixturing period to get the space ready. We start cash flowing on the unit, typically after that. Can you also mention how often it usually takes from the time you meet a tenant or start talking to a renewal until the deal's done? Yeah. The deal cycle of a deal can take anywhere from, you know, 60 to 120 days on average, just from the start. You know, you have to negotiate the lease. You have to go through a scope of work. There's a lot of variables that you have to consider that go into doing the deal, even in the hottest markets. We bake in some timing. Yeah. from commitments to when it starts to cash flow. Perfect. That's actually great color, Gord. Thank you, gentlemen, and congrats on a great quarter. I'll turn it back. Thank you very much. Thanks. Thank you. Our next question online comes from Jenny Ma from BMO Capital Markets. Hi, good morning. I want you to focus over to your debt stack. It looks like the floating rate debt's crept up to almost one quarter. I know it's fluctuated throughout the years. Given the expectation of rates going up, how are you thinking about that piece of the debt stack? Hi, Jenny. It's Jay. Good question. We've been tracking the interest rates closely. I think on average, cost of debt would have been probably 75 basis points higher versus just a couple of months ago. We've monitored it. Our credit facility is variable. We're currently about 75% fixed, 25% variable. We don't really have a lot of covenants. We have many ways of getting liquidity if needed, so we're quite comfortable, and we run a lot of sensitivities. Say the other variable components of debt are actually on the land. It's 250 Dundas, 2200 Eglinton. It gives us more flexibility in terms of timing of construction. We have the opportunity of layering on construction debt without taking on large tenant leases. Right now, 75, 25, we're comfortable with. We'll monitor it. When we get the other, the green facility, that will be fixed, so that will reduce the weighting down a little bit. Okay. To sum up, you're fairly comfortable, but probably won't be going any higher than that 75-25 you mentioned. Yeah. We even looked at potentially fixing it over the course of the last month or so. What was happening is the banks are baking in quite a few raises. Right now, just on economics, it makes more sense to keep it variable, but we are watching that ratio. Right. Okay, great. I also want to dig into the parking revenue trend a bit. I don't think the numbers are spread out in the report. What would you say is the utilization right now, and what's the gap to full potential? And then also second part of my question is has there been any changes in the parking rates that you guys are charging? Okay. Just conceptually, full parking is about 10% of NOI and 5% are contractuals assigned to leases. 5% are transient, which is just gate revenue. I would say utilization, it's been a bit of a roller coaster. October, it was looking pretty good. It was probably over 50%, 60%, 70%. Then it trended down, well, close to zero by December. Then now we're coming up. For example, in our garages right now, we have three floors. We're pretty well occupied on P2. If you wanna take that as a simple ratio, that's probably two-thirds. There's a fixed component on operating costs for these garages. But I would say that, optimistically, we're hoping that the garages will be pretty full by the time summer rolls around. In terms of the rates, my personal feelings are that the rates will probably be higher once things stabilize because there will be more demand for parking. I don't know how many people are gonna be comfortable with taking public transportation. Currently, as long as there is availability in the garages, we're probably more keen on having it full than to push the rates today. Okay. If it's 10% at sort of full potential, where would you say it was in, well, I guess Q4? It's pretty wide range in Q4. I would say out of the 10%, we're probably around 4%-5%. When you say the 5% contractual, are those parking contracts with individuals, or are those tied to leases with certain tenants? Those would be tied to the. You know, sorry, go ahead. Those would be leases. I was just thinking about, you know, what the average user might be tilted towards if they're not necessarily gonna be in the office five days a week, but these are tied to leases. Yeah. Those are tied to leases at market terms that adjust every year. Okay, great. I have a bit of a technical question on the accounting side. As far as the input on your DCF calculation, it looks like the market rent has gone up a bit, starting in Q3, actually. I think it was about CAD 44 in the last couple of quarters, and it's up from that CAD 30 range. It looks like the bottom end of your assumptions went up from CAD 10 to CAD 31. I'm wondering if that was the big driver of the change and what drove that from, I guess, Q2 to Q3. On that one, we'll have to take a look and get back to you. Can I call you offline? Yep. Yep, that sounds good. Yeah. That's it for me then. I'll turn it back. Yeah. Thank you. Our next question on the line comes from Sam Damiani from TD Securities. Thanks, good morning, everyone. Just maybe first for Gord, perhaps. When you look at the committed occupancy and the in-place occupancy, it's a very wide gap today at about 2.5%. Is there something there that, you know, seems unusual? How should that play out for the balance of 2022? Good question, Sam. There's a bit of a spread because we've done a couple of large pocket deals that don't start paying rent until kind of mid-year Q3. Western Canada, we did a 30,000 sq ft deal with a tenant at Saskatoon Square. Then we did a deal at 655 A that starts later in the end of the year. That was a big deal. That was about 50,000 sq ft, Sam. That was a deal where we took the expiring rents from CAD 17 and brought them up to CAD 30. That's why there's a bit of a spread between committed and in place. That gap should narrow over the course of the next Cor-correct. Yeah. Okay. Correct. Okay. Michael, maybe just looking at, you know, the development projects, you know, planning is getting pretty finalized here. Approvals are coming through. You talked about 250 Dundas starting late next year, maybe. How are you preparing the balance sheet to accommodate the funding for one or more projects and balancing that against obviously your buyback activity and what other capital sources would you be considering? We have discussed having partners in the projects potentially. In addition, we think that with the completion of the rezonings, the value will be appreciably higher as well. 2200 Eglinton is really interesting because it's not one building. It's a whole series of buildings. When it's fully approved, the value will be quite high, and that increase in equity will be more than enough to fund each phase if we'd like to do that. That one's pretty easy. 250 Dundas, again, that's, there's lots of value there. The trickier one is 212 King, but because that's just a huge building, you gotta build it all at once. We have a partner there already, but it's too far away to actually plan the financials. Okay. All of these are keepers. You're not getting the approvals and looking to sell the site. You're keeping these and proceeding with the development, potentially with partners and staggering them over time. You feel like you've got the balance sheet to be able to do what you need to do. Yeah, we think so. We think so for sure. Okay. Maybe one for Jay. Just when you look at the IFRS, you know, valuation process, what does that process do to the NOI for valuation purposes relative to what the NOI actually was in 2021? Specifically thinking about, I guess both occupancy, but also adjustments for, you know, normalizing parking. For example, what would be the net adjustment on the parking side to bring the NOI up to some stabilized number from where it was in 2021? Yeah. Sure. I can talk about the valuation conceptually, and then we can drill down. It's been a big topic because if you look at it, there's a lot of private comps. The valuation methodology looks at a variety of factors. They do direct comps, they do DCF, they look at data points on the private trades as well. We have a large portion of our portfolio appraised every single year. Generally, their methodology is consistent with how we would do it internally for accounting purposes. I'd say that during COVID, there's probably more of a focus bias on near-term fundamentals. When you look at the underlying assumptions, for example, occupancy, rents, parking, it's hard to push the values up significantly to try to reconcile with a private trade. At the same time, we've been doing the leases. All of the leases are coming in at a pretty high rent. When you take a discount on parking or you take a discount on potentially a downtime of four to six months until you pick up that leasing velocity again, what you would typically do is probably present value that as a deduction. At the same time, if your income is stabilized and it gets capped, that's a much bigger value. What we're seeing is the reason why you see sort of the values, they fly over the course is when we are replacing the tenants with the renewals or the new leases that are coming in high. Then when you cap it's a good value. We're offsetting that with some of the maintenance capital and just downtime from parking and leasing. You sort of end up back in the same place. The private buyers are obviously seeing much better value for the long term. That sounds very simple. Okay. Thanks very much. Thank you. Our next question online comes from Mr. Matt Kornack from National Bank Financial. Please go ahead. Hi, guys. Just a quick follow-up on 2200 Eglinton. Is there a residual office or even, I guess, commercial real estate component of that? The residential, would that be rental, maybe early days or condos? Firstly, it's a 165,000 sq ft existing office building. It's pretty fully leased. I mean, I don't remember if it's 82% or whatever, but it's well leased. That building will remain. Just as a reminder, this is a 16-acre site, so there's a lot of land there, and most of the development is not that high-rise. It's fairly mid-rise. We are hoping to be able to come up with ideas that will make it economically very attractive to do apartment rentals. We would look at condos to manage cash or whatever. You know, through our Impact business, we have come up with some really wonderful ways of financing buildings that provide the government with some of the benefits they're looking for for their major initiatives. It's too early, but we need to get it approved first. We are talking to governments now on different ideas on how to make it rental that includes some affordable that would make it very attractive for the owners as well as for the community. Absolutely. It would make sense in that area. Then on Bay Street, I'm saying this asking this somewhat selfishly because I walk by it every day on my walk into the office. What is the timeline in terms of sort of the facade work as well as getting some of those new really interesting restaurants that you guys have spoken about into the base? Because at this point, there's a lot of scaffolding. Has that impacted the leasing on the office component, or are people willing to lease the space on renderings at this point? Good question, Matt. There's two big facade projects that we have underway right now. Three Thirty Bay, which is a complete re-facade where we're reglazing the whole front. That's tied to a retail deal that we're working on on the ground floor. We have another pocket of strategic vacancy that we're holding off for higher rents. The other big component of the facade project is Eighty Richmond. Eighty Richmond should be done in the next 15-30 days. We have some tinting that we're waiting to do when the weather gets a little bit warmer, but those will be done. The retail deals that are on Bay Street and in our alleyway project, those are actively being worked on right now. They're in the final stages of the planning and costing, and we plan on starting the construction on that within probably about the next 30 days. We're excited to unveil all that, and we're targeting this summer to announce and showcase in person at least one of those large retail deals. Okay. Looking forward to it. Last one for me on the cadence of occupancy throughout the course of the year. Jay, are there any known vacates versus some of that lease up, or is it it's pretty much leasing vacant space and maintaining existing tenants in place? Yeah. A lot of it is block and tackle. Actually for 2022, just heading into it even pre-COVID, the two large ones were 74 Victoria, that was the passports office, and then State Street here in our head office, we're at 30 Adelaide. We addressed the 74 Victoria in 2020. So I think they were expiring at 2027. We got them to 2033. And then State Street, Alec Moor will probably talk about it in more detail, but we did address a significant portion of it, but they'll be probably timing from the new leases and then, as we talked about earlier, the fixturing and the commencement. Yeah. State Street, Matt, if you remember, they expire this year. They're about 225,000 sq ft. We have commitments on about 185,000 of that 225,000 sq ft, even in advance of the lease expires. We've addressed a really good chunk of it. They had two subtenants that we renewed directly, and then we're working on a direct deal that's conditional right now, for a very large pocket of the balance. We'll only have about one floor left that's actively being marketed. That's how we've addressed State Street. Jay mentioned 74 Victoria. Last year, we renewed the whole building. Okay, fair enough. That was a good outcome on State Street. Just to be clear, State Street is keeping a significant amount of the space. Correct. They had some subtenants, and we're dealing with the balance, but it should turn out quite well. Okay, perfect. Thank you. Our next question online comes from Pammi Bir from RBC Capital Markets. Thanks. Good morning. You commented on this a bit in your release, but you know as we get closer to full reopening and being open, what sort of feedback are you getting in your conversations with tenants in terms of how they're planning to use their space maybe differently in a post-pandemic world? And maybe what are some of the surprises? Just by the way, we talk about it more with analysts than we actually do with tenants. Yeah. For whatever that means. What are you hearing from tenants? It's pretty broad. You know, some tenants are taking a little bit more space and some are taking a little less. It's almost 50/50. You know, to Michael's point earlier, the tech companies that we're often dealing with, they're looking to expand, and they're taking more. Some of the professional services firms that we're dealing with, independent boutique firms, maybe they're taking a little bit less, but they're doing blend and extends, and we're working with them kind of longer term on some pockets. It's pretty much 50/50 across the board. What we're finding is people don't know how they're gonna use their office space in the future. I mentioned this a year ago, and I keep in touch with furniture manufacturers, they aren't doing anything that's different. We hear discussions about maybe have groups of people working together, but not all open. I actually think that most people are thinking about it, want people to come back, and once they know how the space will be used, they would do something. You know, amazingly enough, we're not seeing a change in the way that people are using space or how they wanna lay out the space as of yet. Got it. No, that's helpful. I guess just coming back to your comments on the same property NOI outlook for the year just, and then, you know, you mentioned that the weighted average occupancy is gonna be coming in relatively flat. I'm just curious how that same property NOI breaks out between the Downtown Toronto and the rest of the portfolio. Yeah. When we look at the stats, we think this year it'll actually be quite consistent, so we'll see minor increases in both markets. Okay. Just last one for me. On the 2022 maturities, you know, you've obviously made some good progress. What can you share with us just in terms of the spreads and how those were coming in on the leasing spreads, sorry? Yeah. We're seeing average net rents up by about 10% on what we're seeing on pre-negotiations and deals that we're conditional on. We're seeing a good uptake on that. NERs right now for deals that are closing early in the year are flat or up a bit. 2022, we're in pretty good shape. Like, we've addressed about 75% of our expiring revenues, and we're keeping on top of it. Yeah. To just try to be a bit more specific, the two large pockets that we talked about earlier are probably gonna be the biggest drivers of that. 74 Victoria, that was over 200,000 sq ft, and you have a spread of 33 over 27 on that. I think that's about 20%. As we get through State Street and put together the various pockets, we think we're gonna get a quite a nice lift once everything's filled. Consistently, when we execute our new leases, it's about close to 30%. The other markets, we have in our disclosure, we just roll them to market. Overall, I think for the year, we'll probably be in the high teens to 20% overall. Got it. I lied. I've got one more. Just in terms of some of the you mentioned, you know, tenants expressing interest in some of your new projects. Can you just expand on that? Like, what types of tenants, you know, have, you know, contacted you in terms of some of the projects underway? It ranges. On Bay Street, we get some professional services firms that are quite interested in having a full floor on Bay Street. That's appealing. Technology, we've been getting a lot of calls on tech users. We announced publicly about 212 King, and we're going in for rezoning and approvals. We've gotten 15 calls from large tech tenants bullish on that corner, the corner of King and Simcoe, that are looking for space. A lot of tech firms that are growing and expanding. A lot of co-working. We get a lot of calls from co-working in the market as well too, but it's been predominantly tech groups that are leading the charge. That's great. I will turn it back. Thank you. Thank you. Our final question comes from Mario Saric from Scotiabank. Hey, good morning, guys. You made it. I made it. I'm working from home today. I suspect the connection would have been stronger if I was working from the office. There's that. Michael, I wanted to come back to your comment on land values. Yeah. You mentioned condos are selling at CAD 1,500 a sq ft. You're at implied 500 for Dream Office in the market today. What would you say the differential downtown in land values between office and residential today for buildable sq ft in terms of density? I want to clarify it a bit. We're sitting at 30 Adelaide. It's a 400,000 sq ft building. If we rezoned it, we could probably get 1.1 million sq ft here on 65,000 sq ft. At CAD 500 a foot times 400,000 sq ft, it's worth CAD 200 million. If we were to rezone it at 1.1 million sq ft at CAD 108 a sq ft, it's worth what the building is currently in the implied stock market, and it would be worth more than that. On Bay Street, they're historic buildings, you wouldn't be able to do that. I was thinking more about this kind of building, 720 Bay, 655 Bay. A lot of these buildings, like we saw it at 250 Dundas, it's worth so much more money if we do something new with it. What I was trying to say was, we can't tell you with confidence how every office is going to function and how many people are going to work at home or any of those things. We're confident that there'd be a lot of people to work from offices. What I was trying to say was, just with the value of what's going on in downtown Toronto, I don't know if it's known, but we're chosen to do the Quayside bid this week. That's about a 3.5 million sq ft development. Besides that, we own a 1.3 million sq ft development. We're pretty tuned into what's happening, and we can see just how valuable Toronto is. You know, I think on these calls, everybody has this a vision about what's happening on office rents, what's happening where people work from. What I was trying to say was, there are other alternatives, and the difference between CAD 500 a sq ft, the implied value, and CAD 1,500 a sq ft for condo is impressive. You know, when we bought Adelaide Place, we paid CAD 212 million in 2009. It was a 7.2 cap. I think it was about CAD 300 a sq ft. Across the street, they were building the Shangri-La, and they were getting about CAD 900-CAD 1,000 a sq ft. I just thought, "I would buy this building for CAD 300 a foot if the Shangri-La gets 1,100 a foot because the comparative value is amazing." Today, I think the comparative value continues to be amazing. The difference is, we're seeing buildings like Blackstone bought a Liberty Village building at CAD 925 per square foot, and it has no further development. I mean, we didn't see that back there in 2009. If you think about it, in 2009, we stepped up big to buy the first big building coming out of the global financial crisis at CAD 300 a foot or maybe 40% of a condo price. Today, we're trading at CAD 500 a foot, which is one-third of condo prices. At the same time, we're seeing Liberty Village at CAD 925 a foot. We're seeing Royal Bank Place at CAD 800 a foot. We're pretty comfortable that this company will do well whichever way things sort of roll out with office space demand. We're pretty excited about the existing use. Sort of as we get through some of the redevelopments, there'll be lots of more opportunities. You know, we're single-mindedly focused on reducing the shares outstanding. I think since 2016, we sold 140 of 172 buildings. We still have the 32. We've reduced our shares outstanding by about 60%. No, 55%. We've been single-mindedly focused on creating a business that has incredible assets with wonderful use. We're decarbonizing them, we're making them boutique buildings, but we also have a lot of buildings that have a lot of value for other uses as well. So that's where our confidence comes from and over the value of the business over a longer period of time. Yeah. 100%. Makes a lot of sense. I did wanna ask you on the Quayside announcement earlier this week. Congratulations on that. It's really early, but to what extent can you talk about the range of potential implications for Dream Office from that proposed development? Oh, that's a really interesting question. Look, this is a site that Sidewalk Labs have been working on. It's a big site. It's a very important site. You know, there's a tremendous number of competing goals that the governments have been trying to achieve, including a high purchase price as well as a lot of social goals. You know, our bid was. I mean, we were incredibly fortunate to be able to have some of the leading architects in the world, particularly Sir David Adjaye, who has not done a project in Canada. He was knighted for his work, and a lot of his work has to do with accessibility and diversity. He does a lot of affordable housing. I think. What's the name of the museum he did? The African American Museum of History, the Smithsonian. This guy is a legend. You know, he doesn't do a lot of these kinds of projects. We were very fortunate that he saw in us a business that was focused on trying to bring a real big goal of getting an economic return and getting stuff done for the community. He helped us. All the consultants helped us, and we put together a real combination of great social benefits as well as what we think will be a great economic return. I say all of that because we have about the plan now, I think, is for 200,000 sq ft of commercial space. Some of those uses are social, which will be really exciting. We're trying to create some real business opportunities for underrepresented groups. There is some commercial space, but at this point, we haven't done any work with Dream Office for opportunities there. It is interesting that we're seeing so many big tenants. Who knows what'll happen? I'm not sure about Quayside, our work on impact is definitely spreading into what we're doing in office. I think that, as we're getting developments like 2200 Eglinton, that's been an amazing benefit that we are so focused on impact and getting it rezoned. I think we're gonna see more and more opportunities for office to incorporate the impact framework on what they do and get benefits from it that could lead to more opportunities to build buildings. Was that a clear answer? Yeah. No, that's good. That's good. I have a couple more that I made just to email to you in the interest of time, given we're at about 70 minutes here now. Maybe one last one from me. When you think about the future of the company, like, it really focused on development and redevelopment going forward in terms of creating value. When we think about, you know, 212 King, 250 Dundas, 2200 Eglinton. I mean, when you look what the potential value creation there relative to what you have embedded in your IFRS NAV today, how would those two compare? Like, those three folders. Well- How are they valued within your IFRS today, and what are the benchmarks to increase that value in your IFRS over time? It's really early to determine what the ultimate value would be after developing the assets. Firstly, if you take 2200 Eglinton, 438 University, and our share of 212 King, the value of those three assets would pretty much double the size of our office portfolio. That's how big they are. They are close to CAD 2.5 billion in total, our share at this point. With it, there is definitely a significant increase in value from getting the zoning, and I don't think, in my mind, any of those sites reflect the full ready-to-go value. In addition to that, there's the development value. You know, very simply, what we use is if you spend CAD 1 million on a piece of land, if you rezone, it should be worth two. Once you finish development, it should be worth four. You know, we're probably, if I had to guess, 25%-30% of the way to recognizing value, let's say on 250 Dundas, considering it's zoned. If you look at 2200 Eglinton, we're not even close. 212 King, that one may not get as much of a margin. It's an incredible building, but it's gonna be a bit tough to build. But there, we're still carrying it at the 212 King value. If you're asking how many dollars, I don't wanna say a number. I'm only thinking that we might have a smaller denominator then. On a per share basis, it'll be meaningful. Yeah, that makes sense. Okay. Thanks, Michael. Well, I think we just set a new record for the longest Dream Office conference call. This has been going on for more than 20 years. I'm kind of shocked that today, of all days, it's the longest one. Thank you for your interest. We could have sat here for the rest of the day, but I guess we're done now. Thank you, and looking forward to seeing you in person soon. All the best. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.