Welcome to the Dream Industrial REIT Third Quarter 2023 Results Conference Call for Wednesday, November 8, 2023. Please be advised that all participants are currently in listen-only mode, and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. During this call, management of Dream Industrial 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 Industrial 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 Industrial REIT's filings with security regulators, including its latest annual information form and MD&A. These filings are also available on Dream Industrial REIT's website at www.dreamindustrialreit.ca. Your host for today will be Brian Pauls, Chief Executive Officer of Dream Industrial REIT. Mr. Pauls, please proceed. Good afternoon, everyone. Thank you for joining us today for Dream Industrial REIT's Third Quarter 2023 Conference Call. Speaking with me today is Lenis Quan, our Chief Financial Officer, and Alex Sannikov, our President and Chief Operating Officer. It's truly a pleasure to announce the promotion of Alex Sannikov to CEO of DIR, effective the beginning of next year. Alex has done an incredible job since joining the DIR team in 2019 and has continued to add value and grow his responsibilities throughout the last four years. DIR is in strong financial shape and is in great management hands to navigate the future, to keep the company safe and capitalize on opportunities that materialize. I am delighted to remain close to the team as I transition to focus in other areas. Moving on to our Q3 results, DIR achieved 10.4% comparative properties NOI growth, and FFO per unit growth for the quarter, making the fourth consecutive quarter of double-digit FFO growth. We remained focused on expanding the Dream Summit JV in our target markets, with the acquisition of 6 assets in the GTA for a total purchase price of approximately CAD 272 million. In addition, the venture is in exclusive negotiations or under contract to acquire 2 additional assets located in the GTA, totaling 250,000 sq ft for approximately CAD 50 million. These acquisitions are all accretive to the REIT's overall return profile, with an expected yield on equity of over 7.5%, while requiring limited equity and hence preserving our balance sheet flexibility. Our private capital partnerships continue to generate a strong recurring fee stream that is expected to grow significantly over time, with over CAD 6.7 million of net margins generated this year from our property management and leasing platform. From an occupier market standpoint, there has been somewhat of a bifurcation in leasing momentum. In the small to mid-bay segment, leasing momentum remains healthy, and we are continuing to push rates. However, we are currently seeing a slowdown in leasing velocity in larger bay products across our markets compared to 18 months ago. We have already seen the future development pipeline slow down, with limited spec starts this year and a number of projects getting pushed out to future years. Development returns have been under pressure due to higher financing costs, and we expect this to continue to keep a check on new supply. The outlook for rental rate growth remains healthy, with market rents over 30% above in-place rents. We can therefore continue to capture significant organic growth within our portfolio with less reliance on continued market rent growth. I will now turn it over to Alex to provide additional color on our business. Thank you, Brian. Good afternoon, everyone. I want to take this opportunity to thank Brian for his leadership of DIR over the past six years. It has been a great honor working side by side with him and the entire management team in a true spirit of partnership over the last four years, as we have transformed our business to grow to be not only the largest industrial platform in Canada, but a sizable player in Europe as well. We have established a significant development program and solidified our balance sheet, all while delivering sector-leading total returns to our unitholders. I'm very excited about the prospects for our platform going forward. I will start with our perspective on the current market environment. In our key markets in Canada and Europe, we entered the period of rising interest rates with very, very limited supply pipeline, record low availability rates, and significant structural demand drivers for industrial space. These dynamics, combined with continued population growth in major Canadian urban centers, underpin the continued health into the occupier markets. While availability rates have increased somewhat from the start of the year, the supply pipeline, which is already limited, is shrinking as projects get delivered, and we expect limited new spec starts and a substantially lower development pipeline in the near term. The headline rent growth, as published by major market participants, has declined compared to prior years in most markets in Canada. While this is in line with our expectations, we note that most of these research reports are based on average asking rents in any given market. As such, the published statistics could be influenced by changes in asking rents and composition of available space. What we see in our business is that rental growth, we projected for 2023 as a whole, has already been achieved. We have completed nearly 4 million sq ft of new leases and renewals in Canada across the DIR and Dream Center portfolios. Our combined spreads averaged approximately 75%, meeting or exceeding our budgets for the year, which were set with mid to high single-digit growth assumptions. Over and above the leasing spreads, we have crystallized, we locked in an average of 4% annual escalators. The availability, availability rate within our portfolio has increased slightly in the quarter. This increase was in line with our expectations and was factored into the NOI outlook we communicated previously. In a multi-tenancy portfolio with staggered lease maturities such as ours, occupancy rates will always fluctuate slightly over time. As Brian commented, we're seeing limited large bay requirements for units over 400,000 sq ft in most markets, but small to mid bay activity remains healthy. Our properties are designed to be flexible and accommodate these changing demand patterns. We remain encouraged by the level of new leasing interest for both existing assets and new development projects. We're currently engaging with several prospective tenants for our 200,000 sq ft Dickson property in Montreal. We're in discussions with four tenants for our 200,000 sq ft Courtneyp ark development project in Mississauga. We're continuously responding to requirements for our two developments in Calgary, ranging from 30,000-300,000 sq ft. We have recently signed a 20,000 sq ft conditional lease at our recently completed Abbot side development, at rent 6% higher than the first lease signed this summer. In general, we see significant strength in the smaller bay segment of the market, especially in the GTA and Southwestern Ontario. So far this year, across our platform, we completed 800,000 sq ft of leasing in these markets. For premises below 50,000 sq ft, we achieved over 100,000% rental spreads and annual escalators averaging 4.5%. Notably, for smaller spaces below 20,000 sq ft, annual escalators are 5% on average. Overall, our organic NOI growth outlook for the year remains intact, and we reiterate our prior guidance of 10%-11% CP NOI growth for 2023. Looking ahead, over the next two years, we have nearly 6 million sq ft of GLA maturing in Canada, with approximately 74% located in Ontario and Quebec, where average market rent is approximately double the in-place rent. In Europe, we have 2.4 million sq ft maturing over the next two years, and the current market rents for these European leases is over 10% higher than our in-place rents. With that, we remain optimistic regarding our mid- and long-term prospects for organic NOI and FFO per unit growth, despite the pressure from interest rates. I will now turn it over to Lenis to discuss our financial highlights. Thank you, Alex. Our third quarter financial results were strong. The diluted FFO per unit was CAD 0.25 for the quarter, more than 10% higher than the prior year quarter. The solid year-over-year growth was primarily due to strong comparative properties NOI growth and property management income from our equity investments. Our NAV per unit at quarter end remains steady at CAD 16.80. We continue to focus on maintaining a strong and flexible balance sheet with ample liquidity. During the quarter, we closed on EUR 229 million of European mortgages with three lenders at a weighted average rate of 4.93% for a term of five years. We raised CAD 107 million of capital through our ATM program at an average price of CAD 14.27 per unit. These proceeds were immediately used to repay outstanding indebtedness accretively to FFO per unit, and reduced our leverage by approximately 100 basis points. This also created additional balance sheet capacity to ultimately fund our developments and co-investments in private capital partnerships, leading to NAV accretion in the medium term. We've addressed all of our 2023 debt maturities. Looking forward to 2024, we have approximately CAD 300 million of debt maturing at an average rate of 3.5%. 95% of this maturing debt is euro-denominated. We are presently evaluating various financing options with existing relationship lenders at favorable rates that allow us to optimize our cost of debt. We ended the quarter with leverage of 35.1% and debt to EBITDA of 8.2 times. With over CAD 526 million of available liquidity at the end of the quarter, plus an additional CAD 250 million accordion on our facility, our balance sheet strength positions us well to continue executing on our strategic initiatives. Looking forward, we expect our 2023 FFO to be in line with our previously updated guidance, which is FFO per unit in the high 90-cent range. This translates into approximately 24 cents for the fourth quarter, assuming FX rates near current levels and leverage largely in line with Q3, and represents FFO per unit growth of approximately 10% year-over-year. Just before I turn it back to Brian to wrap up, I'd like to say thanks to Brian for his leadership and guidance over the past six years. I look forward to the continued growth and success of our industrial platform under Alex's leadership. Thank you, Lenis. It's truly been an honor for me to lead DIR for the past six years. I'm grateful for all the friendships I've made, and I look forward to DIR's continued success.... We'll now open it up for questions. Thank you. We will now begin the Question and Answer session. To join the question queue, you may press star then one on your telephone keypad. You'll hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. Our first question comes from Frederic Blondeau of Laurentian Bank Securities. Please go ahead. Oh, thank you, and good morning, and congratulations, Brian and Alex. First question from me, Alex. We discussed Germany in August, and obviously the portfolio continues to perform well in Europe. But I was wondering, with the increasing macro headwinds in Europe, I was wondering if you're starting to see either signs of stress within your portfolio and/or if you're starting also to see either distress or interesting acquisition opportunities? Thanks, Fred. What we see in Europe is, generally supply-demand dynamics are pretty, favorable for, landlords in most markets. So, that's Germany, Netherlands, France, we see very limited supply, and, continue to see strong demand, across, across the board. So we are encouraged by the occupier fundamentals. One aspect to note about our European portfolio is, our European portfolio is not pure logistics product. Roughly half of our, portfolio in Europe is what we would describe as urban and last mile logistics, and the, supply-demand dynamics in that segment of the market are even more, robust, with virtually no supply, that, is either on the horizon or has been added recently, translating into rental growth and strong, occupier fundamentals. There are some markets in Europe, particularly in and around Barcelona, where we see a little bit more supply compared to other locations, so we are watching that. But Europe as a whole and our portfolio as a whole is well positioned. As far as acquisition opportunities, we are starting to see interesting opportunities, especially in that urban logistics and last mile logistics segment of the market, where we expect continued rental growth and continued lack of supply. That's great. Thank you. One last from me. Just in terms of the Dream Summit joint venture, I was wondering what are you budgeting in terms of expected external growth for 2024? We're not budgeting external growth generally across our businesses. We're not budgeting external growth for DIR, nor are we budgeting for Dream Summit. Having said that, Dream Summit continues to be active in the market, and we continue looking at opportunities as we have so far this year. That- So we generally expect to remain active. The volume is hard to predict. That's great. Thank you. That's it for me. Thank you. Our next question comes from Himanshu Gupta of Scotiabank. Please go ahead. Thank you, and good afternoon. So my question is regarding the Montreal industrial market. So are you seeing any weakness in the leasing demand, in this market, in this market in particular? And, then if I look at the lease expiries next year, you have a sizable, you know, 1.2 million sq ft coming due. So any, any thoughts on the lease expiries, next year? Lease expiries, maybe I'll start with your second question. Lease expiries, especially in a market like Montreal, generally provide an opportunity, and we are excited to get the space back and be able to capture that market upside. When it comes to general health of Montreal market, we remain encouraged by what we see, especially for a portfolio like ours, which is very urban, generally targeting small to mid bay users, and mid bay in our definition, so 50 to 200,000 sq ft range. And small bays, everything below 50,000, we remain well positioned, and we generally don't compete with some limited new supply that was added to the market, especially in the South Shore. I know that Montreal market is generally in the headlines, given the... Some of the recent statistics show sequential negative rental growth. We commented earlier that those statistics need to be interpreted, understanding how they are derived. What we are seeing in our portfolio is, you know, rental outlook is intact, compared to what we expected. Sure. And then, just on the market rent growth, and, you know, we'll keep the statistics aside. What are your thoughts for the market rent growth in Montreal in the next year? Do you see that flattening out, or do you see, you know, chances of maybe a negative rent growth as well? ... We would generally expect a comparable rental growth in 2024 compared to 2023. So, in the mid-single digit range. What we are seeing in Montreal, in particular, is that supply pipeline relative to inventory is very low. And, our understanding is that the vast majority of market participants are not looking to add new spec starts. And, we expect that inevitably that will translate into stronger rental growth over time. It's hard to predict exactly when, but that supply pipeline that is shrinking will inevitably support the market. Got it. Okay. And maybe the last question. Alex, you mentioned about, you know, achieving 4% rent escalators in the near term. I mean, that's what you have been printing. Has that coming down now? I mean, as we started to see some normalization of leasing demand, and also, you know, like, inflation moderates as well. So is that 4, like, becoming, like, 3, or, like, 4 is pretty intact? So 4% was the average around 4 million sq ft that we've completed this year so far for the industrial platform as a whole. So it's a pretty representative data set. It includes leasing in Ontario, or in the GTA, in Southwestern Ontario, and Montreal, in Western Canada, so it's the average for the entire leasing volume. We commented also that, for the year, we completed about 800,000 sq ft of smaller bay leasing, let's say, in the GTA, and Southwestern Ontario, achieving roughly 4.5% escalators. So those are the numbers that we've seen so far in 2023. When it comes to go forward, we do see some pressure on escalators, but so far for our portfolio, which is, again, small to mid bay, on average, we've been achieving our targets. Got it. Okay, thank you. And maybe just one last follow-up. I think you have a vacancy around the Port of Montreal, and I think you mentioned four tenants or prospective tenants. Any thoughts when should we expect to backfill that vacancy? We expect it will be leased and producing income in the first half of 2024. Exact timing is challenging to predict. As we communicated prior, we are targeting to capture the value for significant land component that this particular site offers. And therefore, the users who are looking at this site is a somewhat specific audience that requires that outside storage component for either the fleets or trailer storage, et cetera. And that will inform both the market rent and the timing. And as we communicated previously, we're remain confident that we'll achieve those rents, and if we don't, then the site does offer significant development opportunities which we can capitalize on. All right. Fair enough. Thank you so much, and I'll turn it back. Our next question comes from Brad Sturges of Raymond James. Please go ahead. Hey, good afternoon. Just to continue on the discussion around leasing. You know, given, I guess 75% of your lease maturities over the next couple of years are Ontario, Quebec, I guess, just curious to get a sense of, or what you would be forecasting in terms of retention rates, for the space pooling. Would it be similar to historical averages? Thanks, Brad. So if you look at our investor presentation, we disclose our long-term track record of retention ratio. You will see that retention ratio generally averages around 70%-75% for us over the past 10 years. We have seen somewhat of an increase so far this year in retention as occupiers generally decide to stay within the existing footprint. It remains to be seen whether that elevated retention ratio will persist or whether it will revert back to normal. But for modeling purposes, you can assume the long-term average, if that's the direction of the question. Okay, that makes sense. I appreciate the comment, the market commentary around market rent growth on Montreal. I'm curious if you're expecting market rent growth in Toronto to be similar in 2024 as 2023 as well? Yeah, we, we're generally modeling kind of single-digit rental growth in 2024 in most markets. In most markets. Okay. And, my last question would be just on the, Including in the GTA. In the GTA, okay. With the commentary around, you're starting to see some more opportunity within Europe for acquisitions. Can you comment on where valuation metrics in Europe for the target markets you're looking at and the type of assets that meet your investment criteria, where cap rates or price per square foot would be today? Thanks, Brett. What we continue to like in Europe is the urban industrial urban logistics last mile type assets, which we have significant exposure to in our portfolio. We continue to see strong rental growth in that segment. If you look historically, rental growth for urban assets in Europe has outpaced the big box logistics, and we expect that that trend will continue. As far as metrics, we're generally starting to see opportunities that translate into double digit, low double digit or high single digit total return on an unlevered basis. The going-in metrics can vary depending on the lease term and the rents in place rents relative to market. The mark-to-market rents, which is market rents over capital value, would be comparable, on average, to what, you know, our portfolio is marked at, and yeah provide attractive opportunities for total return. Okay. That, that's helpful. I'll turn it back. Our next question comes from Mike Markidis of BMO Capital Markets. Please go ahead. Thank you, operator. I guess just, we've talked a lot about the market rent growth. So I guess a two-part question here for next year. You know, how are you guys thinking about maybe occupancy, just given the environment, expecting maybe a little bit of a trickle-down over the next 12 to 18 months? And, I guess I'd also be curious to hear, notwithstanding your comments on how strong the small and mid-bay tenants, or, or product type has been, if you've seen any, you know, increase, or you're getting a little bit more incrementally worried, I would say, about, potential tenant failures over the next, 12 to 18 months. Thanks, Mike. With respect to occupancy, we will be providing guidance, as you know, in February, and that will include the outlook for the year for the following year in terms of NOI and occupancy. You know, we generally see some lease-up opportunities within the portfolio, including some of the development projects such as Abbotside, our Dickson property in Montreal, et cetera. So there's gonna be an upward possibility for occupancy. But then, as we commented earlier, we do have some expiries, so we expect sort of natural non-renewals there. So there will be ups and downs in terms of occupancy outlook. But on average, our portfolio has always remained stable in the high 90% range over a very long period of time, as we also disclose in our materials. We don't expect that there's... Or we don't see anything that will that would change that long-term trajectory. When it comes to tenant health, we generally continue to see health from tenants. We're not concerned about any particular group. We do see some subleasing activity from 3PL users in particular, but that's reflected in the overall availability rate in the market. Generally speaking, we're still able to capitalize on those opportunities. When tenants need to give back space, we're able to capture the upside, that is not budgeted, if you will, because we, we didn't count on that space coming back to us. And we're working through a few cases like this, where tenants approached us, either in the IR portfolio or Dream Summit portfolio, looking for less space, and we immediately found replacement tenants at significantly higher rents to, to take their space. So, we, we do see some of that, but again, it usually results in an opportunity on the well side. Okay, thanks for that. Maybe just over to Lenis. You know, you made your comment about 24 maturities and, and working with lenders, and you were able to do a, you know, have achieve a good outcome on the, the last refinancing that you did. But, maybe in the last couple of months, have you seen any sort of change in the lending environment at all, or, or would you expect, you know, barring any more volatility in the long end of the curve, is your expectation that you'll be able to achieve a similar outcome, in 2024 as you just did on the last, last maturity? There's a few questions in there, Mike. I think in terms- Sorry. of the lender, lending market, I don't think we've seen. I just wanna make sure I answer all your questions. I don't think we've seen a significant change from secured lenders. You know, unsecured debt market seems to be functioning open and healthy. So no concerns, you know, or we're not seeing any cause for concerns in any of those markets. In terms of what we think we can achieve for next year, obviously, you know, we all read sort of what the outlook is for future interest rates. But I think I had mentioned that of the debt maturing next year, it's an average rate of 3.5%. The mortgages that we just closed are—and 95% of that debt maturing is euros. The euro mortgages that we did close are just below 5%, so, you know, we expect to do something similar in that range if we were to replace the euro mortgages. If we were to look at unsecured market, I think that's, swap to euros would be in the low 5s. So again, any, you know, any guidance that we will be providing in early next year will incorporate, similar assumptions. Okay. And then just timing-wise, is that, is that relatively spread out? Is it a, is it more of a bullet maturity in the, in weighted to a specific part of the year? So we do have an unsecured debenture maturing in the middle of next year, so that's about two-thirds of next year's maturities, and the rest are fairly spread out. They're mortgages. Got it. Awesome. Thanks so much. Our next question comes from Pammi Bir- Thank you. Of RBC Capital Markets. Please go ahead. Thanks. Hi, everyone. Just coming back to your comments on the slow and large bay leasing velocity. Are there any known sort of large vacancies that you're aware of that are coming back to you or the next, call it, six months or even year, if you know that far out? Within our portfolio, there's 100,000 sq ft space in the GTA that is gonna be coming back to us, and we're working through leasing that unit. Other than that, there's nothing significant. That is a known vacancy. Sorry, Alex, did you say that was in the Summit JV portfolio or? No, within the DIR on balance sheet portfolio. Okay. All right. And sorry, is that coming in Q4 or 2024? In Q4. Okay. And then just, you know, coming back to the commentary around, you know, the maturities for the lease expiries for next year getting weighted to Ontario and Quebec, and, you know, there is a big mark-to-market opportunity there. And then just maybe layering your, you know, your comments together on, around the leasing velocity, et cetera. You know, is there perhaps anything that, you know, might be repeat, you know, from your standpoint, the ability to put up, you know, high single digit, organic growth on an NOI basis, you know, as you think about the next call in 12 months, or would that be unrealistic based on what you're seeing today? Pammi, thank you for the question. We, as we said, we've generally providing guidance, more specific guidance, in February. And we're trying to summarize the ingredients for organic growth for us, for the next 12 months and 24 months. So I think the conclusion that you are getting to is probably informed by some of our disclosure, and we will provide more color for the next 12 months in February. Okay. All right, I hope this help, this is helpful answer. Yeah, we can, I guess we'll wait for the full update in a few months. And just, you know, with respect to the ATM, you know, just given where the unit price is and where leverage is, you know, what are your thoughts on further use at this point? Pammi, your line got cut out for about 30 seconds. But so we, we missed a part of the, part of the commentary, but we did get the question about ATM. Should, should we switch to that, or do you wanna... Yeah. Get back to your commentary? Sure. Can you hear me now? Yes, we can hear you. Yeah. Okay. It was just really a question around the ATM use, just given, you know, where the leverage is and where the unit price is. Just curious how you're thinking about the ATM use going forward? Yeah. So as Lenis commented in her remarks, when we used ATM in late August, we had great use of proceeds. That was accretive to FFO per unit immediately, improved leverage and was accretive to NAV in near to midterm. And we haven't, as you have seen from our disclosure, used ATM since then. And as we commented previously, we will remain very disciplined in terms of using the ATM vis-à-vis the use of proceeds and obviously the price. So yes, there's no immediate usage of the ATM plan given the current unit price. ... Good. Last one for me, just on the, on the Caledon development. What's your sense of timing of getting the balance of that site leased up? Yeah. So we have one conditional lease signed already. We're just finalizing the actual lease, and then we expect that before we report next time, we will have the balance leased, at least from in terms of having the document signed. Thanks very much. I'll turn it back. Our next question comes from Sumayya Syed of CIBC. Please go ahead. Thanks. Good afternoon. I just wanted to touch on the leasing activity in the quarter in terms of what are the average lease terms you're doing, and if there's been any change in trend from prior leasing? Thanks, Sumayya. It's generally in line. We're signing anywhere between 5- to 10-year leases with escalators. We haven't seen any sort of significant changes vis-à-vis the term of the leases. It's generally informed by the tenant's requirements, the investments that they would like to pursue in the premises, and that those are the main factors for our occupiers. Okay. Just also on your occupancy, it dipped a bit. I guess, you know, you're being more strategic in going after the rent lift. To what extent would you be okay with it dipping a bit more or going lower than 97%, or is that sort of the floor in terms of your occupancy targets? We don't necessarily set floors or ceilings vis-à-vis occupancy. We generally approach it from the perspective of what's the highest and best use for the space? What's the return we are getting or foregoing by pursuing occupancy versus rate for any given asset and giving any given space. For certain spaces that are perhaps more customized and may have kind of a high degree of tenant-specific fit out, we would maybe be less open to getting that space back compared to some other units. So that's how we generally approach it. So, as we commented on earlier, on average, over the long term, our occupancy is going to be in line with our historic averages, and it will fluctuate over time with any given maturities or any given situation. Okay. And lastly, I wanted to touch on the acquisition activity you have with the JV in the quarter, and just any more info on what pricing looks like and cap rates on the recent transactions? We generally haven't been kind of disclosing the acquisition metrics other than what's in the press release in terms of the return parameters, prices per square foot. We'd refer you to that. Generally speaking, when we look at mark-to-market cap rates that we are achieving on these acquisitions, they're kind of in the, call it, high sixes on average for the properties that we've tied up so far. Okay. That's it for me. Thank you. Our next question comes from Matt Kornack of National Bank Financial. Please go ahead. Hello. Just with regards to the vacancies in the quarter, namely the one in Spain for 216,000 sq ft, and then the 300,000 sq ft expiry in Edmonton with the Dream Summit JV. Do you have prospects on those? You disclosed that they were below market rents, but any interest there? And also, it looked like there was sort of another 100 basis points slippage in occupancy in Montreal. Did that relate to multiple tenants, or was it a single tenant? Thanks, Matt. So the asset in Spain is going through a minor refurbishment, so we were expecting to get this building back for some time. The tenant that was occupying it was extending for shorter periods as we were getting ready for our refurbishment program. So we're going through that currently, and as that program gets finished, we expect to see more activity on that particular unit. The property in Edmonton is currently being marketed. It's being marketed as one project, one contiguous unit or a subdivide option. And we expect to see some activity there over the next few months quarter, the vacancy in Montreal is really multiple tenants and nothing significant in particular to point to. Okay. No, that makes sense. And then I guess it looks like from your disclosure standpoint, you held market rents flat for this quarter across the board. You had had growth year-to-date already. But the one that I guess is maybe a little bit surprising, just given what's gone on in the market is Western Canada, and you did move rents up a bit in Europe. But should we expect those two geographies to be the place that you'd potentially get more market rent growth of late? Or sorry, I should say, in the near future? We are generally encouraged by the fundamentals in Western Canada, and we expect to see continued rental growth there. And same for Europe. And in Europe, as you know, we're starting off a much lower basis. So as we get more data points in Europe, we'll continuously adjust our market rent estimates. Okay. Fair enough. And then maybe quickly, Lenis, with regards to the guidance for the year and just the sequential FFO per unit decline, is that a function of kind of the timing of some of these vacancies impacting NOI? Or is it something else? I assume there's an aspect of just G&A seasonality as well. So I think I believe in the prepared remarks, Alex shed some color there. I think some of these transitory vacancies were expected and included in our forecast, so that's really the biggest driver of that. Okay. Fair enough. Thanks, guys. Our next question comes from Sam Damiani of TD Cowen. Please go ahead. Thank you, and good afternoon, everyone. First question, just on the pre-leasing of the development pipeline. You talked about Caledon being put to bed early next year. Is that, is that the kind of timeline you're thinking for the other half dozen or so developments that are active currently, sort of being fully leased up 6-9 months post-completion? Thanks, Sam. Yeah, we generally see that there's a bit of a normalization in the market in terms of how new development gets absorbed. What we've seen coming out of the pandemic is not sort of normal occupied behavior, where new development gets absorbed prior to completion. Not normal vis-à-vis historic context. What we are seeing now is that buildings get delivered, and that's when they generally get leased. So that six months on average is a reasonable estimate. Okay. And the last one for me is just on the balance sheet. With the leverage coming down, you know, absent any major transaction, you know, that we've, like we've seen on the, on occasion over the last few years, but absent those, should we expect leverage to continue to moderate lower into 2024, Lenis? So one of our capital allocation priorities is to complete the development pipeline that's underway. So that could, in the near term, result in a leverage ticking up a little bit, but obviously, we're generating free cash flow. And, you know, capital recycling is always something that is on our radar as well. So it could move up and down. But I think, you know, just in this environment, I think we have spoken before that, having leverage in the longer term, on the lower end of our targeted range is probably prudent, just given the higher rate environment. That's great. That's it for me. Thank you. Our next question comes from Himanshu Gupta of Scotiabank. Please go ahead. Thank you. I just have a follow-up question. So any thoughts on how CPI indexation in Europe will look like next year? And obviously, you know, this is one of the key drivers for same property NOI growth in Europe. So any thoughts there? Thank you, Himanshu. As we commented before, CPI adjustments in Europe are generally backwards looking. So what we see in a given period is a reflection of CPI over prior 12 months, or in case of, let's say, German leases, it can be accumulative effect of a few prior years. And so we expect to see that in 2024. So there's a delay effect as inflation comes down. There's going to be a delay effect in terms of what comes through our net rents. Okay. So, so Alex, you are, you know, sitting in November right now. For leases coming due in January, you would already have a sense of how that, you know, look back 12 months will look like. So any sense that, is there a material deviation for 2024 versus 2023 so far? ... So too, we expect that 2024 will be lower than 2023, as you know, CPI rate of CPI change has been coming down in most European markets. Okay. Okay. But we don't have a sense of how much lower it could be for now? Well, we obviously do have our modeling. It's generally reflecting the slowdown in pace of inflation in Germany, Netherlands, and France. So, I think our outlook is generally informed by the same research that everyone in the market would be looking at. And we'll obviously incorporate this CPI outlook in our guidance for next year. Okay. Okay, fair enough. Okay, thank you so much, and I'll turn it back. Thank you. Thank you. Once again, if you have a question, please press star then one. Our next question comes from Kyle Stanley of Desjardins. Please go ahead. Thanks. Afternoon, everyone. Just one quick one for me. You mentioned in your disclosures that you are actively exploring several disposition opportunities. Just wondering if you can elaborate on that a little bit. You know, is there specific markets or asset types that you might be looking to recycle out of? And then further, you know, is there any expectation on timing or quantum of deal flow? Thanks, Kyle. We generally see two types of dispositions. There are opportunistic dispositions where we are getting significant volume of inbound interest on select properties primarily from private buyers or users. And those properties are not necessarily targeted for disposition, but at the right price, we would consider it, and we would generally model those properties in terms of go forward return at the proposed price, and look at our reinvestment alternatives. And we'd want to make sure that we're selling assets at accretive returns. And then there's a second category, which are non-strategic assets, where we are gradually engaging with market participants in terms of disposition of those properties. The filter is the same. These assets are performing or are in performing markets, and therefore we're not looking to part with them at any price. We're looking to part with them at the right price, whereby we can reinvest the proceeds accretively from an FFO perspective, from a return perspective, et cetera. Quantum-wise, it's generally challenging to predict. I think we've commented on it previously. And timing of these dispositions, especially given that we are frequently working with private buyers, is and in many cases, off-market discussions, it's hard to predict because some of these discussions may or may not result in a transaction. So we're engaging, as we commented, in our disclosure, we are engaging in a number of discussions. Some of these discussions may or may not materialize. Okay, great. Thanks for the color. I'll turn it back. As soon as we have more concrete update, we'll... Yep. Thank you, Kyle. This concludes the Question and Answer session. I would like to turn the conference back over to Mr. Pauls for any closing remarks. Thanks so much. I'd like to thank everybody for your time today, and we look forward to speaking again soon. Take care.