Hello everyone, and welcome to the European Residential Real Estate Investment Trust third quarter 2021 results conference call. My name is Charlie, and I'll be coordinating the call today. You will have the opportunity to ask your question at the end of the presentation. If you'd like to register your question, please press Star followed by one on your telephone keypad. I will now hand over to your host, Phillip Burns, CEO of European Residential Real Estate Investment Trust, to begin. Phillip, please go ahead. Thank you, operator, and good morning, everyone. Before we begin, let me remind everyone that during our comments call this morning, we may include forward-looking statements about our future financial and operating results. I direct your attention to slide two and our other regulatory filings. Joining me today is our CFO, Stephen Co. After I provide an update on our operational progress during the quarter, Stephen will provide an overview of our financial results and position. September 30, 2021 concludes another quarter of extremely strong operational and financial results that continue to trend consistently in a positive and accretive direction. Compared to Q3 2020, our suite count has increased by almost 8% to 6,183 suites, including an additional nine residential property acquisitions of over EUR 107 million, excluding transaction costs and fees, which closed since the comparable prior year period. The market value of our investment portfolio increased by an even greater 17%, which demonstrates the high quality of our diverse portfolio. They're outperforming operating metrics, the increasingly favorable conditions in the Dutch market, including ongoing cap rate compression of capitalization rates, and the successful execution of ERES's value-adding capital expenditure program. As a result, the REIT recognized a large fair value gain on investment properties in the amount of almost EUR 77 million during the three months ended September 30, 2021, an increase of 5% compared to Q2 2021. Our market capitalization and public float increased by 3% and 4% respectively compared to the prior year period, but yet still exhibits a persistent disconnect between the REIT's unit price and its true underlying value, both on an absolute basis and relative to our peers. Slide 5 contains an overview of business development during Q3 2021, starting with the fair value of our investment properties increasing significantly to EUR 1.64 billion as of September 30, 2021. As I just mentioned previously, which is comprised of EUR 1.54 billion in multi-residential properties that represents 94% of our portfolio value, with the remaining 6% constituted by the EUR 100 million in commercial properties, which we have located in Germany, Belgium, and the Netherlands. In terms of financing activity and liquidity, during the period, ERES obtained mortgage financing for its acquisitions, which closed last quarter on the 30th of June, in addition to refinancing of certain existing properties in a total principal amount of EUR 92 million. The new mortgage bears a 6-year term to maturity with a weighted average interest rate of 1.12% over the term of the mortgage, which lowered the REIT's weighted average effective interest rate by 8 basis points to 1.53%. Incorporating this new mortgage financing as at period end, the REIT had available EUR 255 million in immediate liquidity through cash on hand, undrawn credit facilities, and a EUR 165 million pipeline agreement with CAPREIT. Our strong operating results this quarter translated through to our key financial metrics, with FFO per unit increasing significantly by 15% to EUR 0.039 compared to the prior year period. AFFO per unit similarly increased significantly by 13% to EUR 0.034 compared to last year, both measures powerfully evidencing the REIT's overall accretive financial performance. Slide six provides some statistics on our current residential portfolio. Average occupied monthly rents were EUR 884 as of September 30, representing an increase of 3.8% in Q3 2020. Residential occupancy remained strong at 98.2% this quarter end compared to 98.4% in the prior year period. It is important to note this includes the REIT's recently acquired new prop, new build property that was in the process of being leased at September 30, but which has now been completed at rental levels exceeding the REIT's business plan. Further, a significant portion of the residential vacancy in the current period is due to renovation, with 66 suites under renovation as of September 30, representing over 60% of the vacancy. Upon completion of the renovations, a significant portion of these suites will convert from regulated to liberalized, demonstrating the execution of our value add capital investment program. Turnover was 3.5% for the third quarter of 2021, comparable to 3.2% in the prior year period. Rental uplift on that turnover continued to improve meaningfully at 15.7% compared to only 8.2% uplift achieved in the same prior year period, thus contributing significantly to the REIT's achievement of its top-line rental growth objectives. ERES portfolio is well diversified by number of bedrooms, ensuring we meet the demand for smaller units as well as for families. You can also see that approximately half of the current portfolio was constructed since 1980, providing an average age of under 40 years, resulting in lower ongoing repairs and maintenance and driving higher asset values. To elaborate further on the balanced mixture of our properties that constitutes our total portfolio, on slide 7, you can see that over 40% of our current properties are located in the high-growth urban conurbation of Randstad, with approximately 25% directly located in the cities of Amsterdam, Rotterdam, The Hague, and Utrecht. The rest of the portfolio is situated in smaller urban areas throughout the country. Further, approximately 35% of our portfolio is comprised of single-family homes, also known as Dutch row houses, a segment which represents an additional diversifying and unique contributor to our portfolio mix. Importantly, our suites continue to be nearly evenly divided between regulated and liberalized, with a modest weighting toward liberalized, providing balanced growth in rents on turnover and indexation, as well as the opportunity to liberalize more suites. On that note, you might remember from the last quarter, ERES served tenant notices to 94% of its liberalized suites for indexation, which became effective on July 1, 2021, across which the weighted average rental increase due to indexation was 2.3%. This was in line with the recently enacted government legislated maximum annual indexation for liberalized suites at CPI plus one, which was effective for an initial period of three years from May 1, 2021, up to and including April 30, 2024, combined with the Dutch government's allowed inflation of 1.4%. The rent of tenants of regulated suites was not indexed in compliance with the Dutch government's maximum indexation for all regulated suites set at 0%, effective for the one-year period from July 1st, 2021, up to and including June 30th, 2022. Inclusive of these regulated suites which were not indexed, our weighted average rental increase due to indexation was 1.5% based upon tenant notices served on our total portfolio. Knowing that the regulatory and legislative developments continue to be a hot topic in light of the recent changes, I will take this opportunity to reiterate that ERES has been productively operating within this regime to date and will continue to do so. Indexation constitutes only one component of our rental growth strategy. A strategy that is also fueled by rental uplifts on turnover and our conversion of regulated suites to liberalized pursuant to our capital expenditure initiative. It is therefore important to reemphasize that these caps do not apply to rent increases on turnover, nor do they apply to increases driven by incremental points from CapEx. As such, we still expect to continue to achieve rental growth in our target range of 3%-4% going forward. This is already evident with our 3.8% occupied AMR growth compared to Q3 of 2020, which incorporates the latest indexations at the start of the third quarter on July 1. On slide 8, I can provide a further update on the COVID-19 pandemic and the Dutch government's actions. As of October 1, the majority of the support measures previously introduced by the government were not renewed as a direct response to the improvement in economic conditions and continually low unemployment rate, with a view to fostering organic economic recovery and growth. There are a small amount of support measures which will remain in place to help facilitate this recovery where deemed necessary. Overall, the Netherlands has fared well in their withstanding of the pandemic, especially compared to many of their Eurozone counterparts. Although the Dutch government almost fully relaxed all previously imposed coronavirus restrictions as of this past September in the final stages of their reopening plan, the recent surge in cases has resulted in a number of restrictions being put back in place, as announced on November 2, that include proof of vaccination and mandatory face masks for public places, all of which are commonplace in many countries already. With the Dutch government's approach to managing the crisis to date, having protected both its people and its economy to a great extent, we expect that this track record will continue. With that, I will now turn the call over to Stephen. Thank you, Phillip. As you can see on slide 10, our operating metrics remain consistently strong and on top of that, continue to improve quarter-over-quarter. Operating revenues increased by 10% from EUR 17.6 million to EUR 19.3 million this past quarter, due partially to acquisitions since the prior year period end, but also largely driven by higher monthly rents. These higher operating revenues contributed to the increase in net operating income, which was up by an even greater 13% from EUR 13.3 million to EUR 15 million in Q3 of 2021. That was additionally positively driven by a decrease in property operating cost as a percentage of revenues. This was in part due to the recognition of the non-recurring landlord levy rebate, which reduced the REIT's landlord levy expense this year to date. In aggregate, this resulted in a significant increase in our total portfolio NOI margin up from 75.6% in Q3 of 2020 to 77.9% in Q3 of 2021. Excluding the impact of the landlord levy rebate, however, property operating costs as a percentage of operating revenues still decreased, predominantly as a result of lower commercial R&M costs, and therefore total portfolio NOI margin, excluding the rebate, still increased substantially to 77.1% for the three months ended September 30, 2021, representing an increase of 1.5% from Q3 of 2020. Funds from operations and adjusted funds from operations also both increased significantly, up 15% from the comparable prior period, prior year period. Mainly due to the positive impact of accretive acquisitions, which similarly drove the 15% and 13% increases in FFO per unit and AFFO per unit respectively compared to Q3 of 2020. The REIT's AFFO payout ratio remained in our long-term target range, but decreased to the lower end that at 80.4% for the three months ended September 30, 2021, compared to 87.6% in the prior year period. Reflecting the 5% increase in monthly distributions, which were effective from March 2021 onward. Slide 11 continues to showcase ERES' outperformance, which translates into the consistently high and strong operational metrics shown here. As Phillip briefly mentioned earlier, our residential suite count has increased by almost 8% since Q3 of 2020, and now includes 9 additional residential properties inclusive of 432 suites, which have now been acquired since the prior period end. The REIT has also just recently signed a new purchase and sale agreement to acquire another multi-residential property comprised of 63 suites located in Rotterdam that will further grow our property portfolio. We expect that we will be able to act on securing more acquisition opportunities before the new year that will propel our growth-oriented trajectory. The occupancy throughout our portfolio remains consistently high and stable as well. Residential occupancy was 98.2% as at the current period end, relatively in line with the residential occupancy of 98.4% at Q3 of 2020. However, as mentioned, a significant portion of the current period's residential vacancies is due to renovation, which will provide further rental uplifts once suites are leased out again. It also includes the REIT's recently acquired newly built property that was in the process of being leased as at September 30, 2021, and which has now been completed at rental levels exceeding the REIT's business plan. If we exclude that property and all other properties acquired since September 30, 2020, residential occupancy on a stabilized basis increased to 98.5% as at Q3 2021. Occupied AMR on a stabilized basis increased by 3.6%, demonstrating that top-line rental growth that we continue to achieve. This is supported by an even higher 5.7% growth in net operating income on our stabilized portfolio. Similar to the total portfolio, higher operating revenues were magnified by lower property operating costs as a percentage of operating revenues, predominantly due to the recognition of the landlord levy rebate. Together, this drove stabilized NOI margin to increase to 78% compared to 75.6% for the same period last year. Excluding this positive impact of the landlord levy rebate, however, NOI margin on the stabilized portfolio still increased by 1.6% to 77.2% for the three months ended September 30, 2021. Our liquidity and leverage continued to remain strong and flexible at quarter end, as you can see on slide 12. ERES has been able to maintain its debt to gross book value within its target range of 45%-50%. We continue to lower the REIT's weighted average mortgage effective interest rate, which you can see went down by 12 basis points since Q3 of 2020. That includes the effects of both the Q4 2020 mortgage financing that was secured at a stated interest rate of just under 1%, as well as the latest mortgage financing, which closed on September 29, 2021, at a weighted average of interest rate of 1.12%. This evidences our ability to continue to secure financing in the persistently low interest rate environment prevalent throughout the European Union, which itself is a fundamental component of our ability to secure acquisitions at high yield spreads. We also continue to maintain a conservative term to maturity on our total mortgage portfolio that currently has a weighted average of a 4-year term. As of September 30, 2021, accounting for the post-quarter repayment of our credit facilities with excess cash from our mortgage financing, we have immediate available liquidity of over EUR 250 million, comprised of approximately EUR 85 million in undrawn credit facilities, EUR 165 million via the pipeline agreement, and the remaining EUR 5 million in cash and cash equivalents. This liquidity provides us with acquisition capacity in excess of EUR 500 million that is dedicated to fueling our growth initiatives. Reinforcing the above, on October 29, 2021, the REIT amended and renewed existing credit facilities that resulted in combining the REIT's revolving credit facility and bridge revolving credit facility into a single new facility, providing access to up to EUR 100 million for a three-year period ending on October 29, 2024, and with better pricing. This therefore ensures that ERES continues to have the means to act on upcoming acquisition opportunities. Slide 13 provides more detail on our staggered mortgage portfolio, with the nearest debt maturity not occurring until December 2022. Our latest mortgage financing is highlighted here as well, which you can see favorably complements our renewal profile. In addition, the majority of our mortgages are not amortizing. As we continue to grow, we will ensure we maintain this smooth maturity profile in order to reduce renewal risk. Thank you for your time this morning, and I will now turn things back to Philip to wrap up. Thank you, Stephen. That brings us to our investment highlights on slide 15, and these have never been more true than they are today. As you may have gathered from our presentation this morning, ERES has been consistently outperforming on its benchmarks and targets and achieving accretive growth, both organically and externally, despite many economic, regulatory, and social challenges that it has faced since its inception. ERES has not just remained stable, robust, and resilient, but has also created meaningful value quarter over quarter through excellent operational management, high quality and diversified assets that have appreciated significantly in market value. A multi-residential market that is extremely conducive to ERES' strategic objectives, with factors that continue to develop to the benefit of our business, and all backed by a liquid balance sheet and an aligned partnership with CAPREIT that in aggregate effectively ensures that the REIT can continue to accretively achieve milestone after milestone on its growth-oriented mission. In this regard, we believe that ERES offers a compelling investment opportunity. The REIT provides unique opportunity to invest in the fast-growing and attractive European multi-residential real estate market. Our partnership with CAPREIT brings significant benefits to our unitholders. We are growing our portfolio at very attractive yield spreads with strong and highly accretive organic and external growth opportunities. We have established a strong foothold in the Netherlands multi-res market, and we are building size and scale to drive value going forward. Our conservative balance sheet and financial position provides the flexibility and resources to drive further growth, and we have in place an experienced management team and seasoned board of trustees. Thank you for your time this morning, and we would now be pleased to take any questions that you may have. Thank you. If you like to ask your question, please press star followed by one on your telephone keypad. If you like to withdraw your question, please press star followed by two. And when you're preparing to ask your question, please ensure you're unmuted. Our first question comes from Kyle Stanley of Desjardins Capital Markets. Kyle, your line is now open. Thanks, and good morning. Morning, Kyle. I'm just wondering, could you provide your thoughts on the Dutch regulatory environment and maybe any expected changes or maybe more specifically, you know, your expectations with what happens to regulated rent indexation in 2022? Sure. I mean, the short answer is there isn't great clarity, simply because the government has yet to be formed. As everybody will recall, there was elections in Q1. They have now set a record in terms of the longest period of time since elections and the point in time when the government is formed. There is more clarity now in terms of which parties will form the coalition, and it'll be the same parties that formed the coalition for the last government. We have confidence that there will be continuity. They're still debating upon, you know, what the split and who will populate each of the ministries, but we hope to get resolution there soon. Of course, that will influence the posture towards regulation or changes in regulations as it pertains to everything, including the housing market. Given that it's the same four parties, we would expect it to be reasonably consistent with their approach, you know, in the previous government. Again, it was generally, as it always had been, a more evolutionary process than revolutionary. They did enact the changes with respect to the liberalized space at the beginning of the year. Again, those were put in place for a three-year period. It's not our expectation that those would change. They didn't announce any changes with respect to the regulated regime. They just put the annual guidance at zero. Uncertain again how that might play out. The short answer is it's a bit up in the air now. They did enact changes recently. Might they enact more? They could, but it's really too early to tell. There are certain things that we expect to happen, as we've mentioned before, like capping the contribution of your municipal tax value to point, et cetera. That will have a very insignificant impact on our results and our performance. Most importantly, I think we need to just double emphasize that we're still achieving, you know, the very top end of our growth targets at the top line, notwithstanding these changes that have already taken place, simply because of our diversified portfolio and that we have multiple levers to pull. If we're not getting it in the indexation, then we can get it with incremental CapEx growth measures, or we can get it with incremental uplifts on turnover, et cetera. I can't say it's a benign regulatory environment at the moment, but I can say with confidence that, you know, we and CAPREIT have a long history of operating in regulatory environments, and our history at ERES, you know, demonstrates that we can continue to meet our top-line growth targets even in a changing environment should more changes come to pass. I think we also need to be aware that most of the regime is set up upon an inflation plus basis. Given the inflationary environment that we're in today, I certainly would expect for 2022 that inflation would be higher. So that might give us a little bit of a tailwind as well, but we just have to wait and see. In any event, we remain confident that given the construct of our portfolio and how we have multiple levers to pull, that we'll be able to continue to perform well within the range of our top-line rental growth targets. Okay, thanks for that. Just taking a look at your regulated versus liberalized mix, and I know you mentioned it in your prepared remarks that it seems like there's been a slight shift in the last, call it 12 months towards more liberalized. Just wondering, is this an intentional shift or is it just a function of the acquisition opportunities you're seeing in the market? More of the latter. You know, if you roll back two years, it was closer to 50/50, and now it has moved more towards 40/60 weighted toward liberalized. Again, we like both components. You know, there's generally less growth, but more stability in the regulated. You know, they're more bond-like, lower turnover, lower indexation, et cetera, but really stable. We also like the liberalized segment because it gives us the opportunity to take more advantage of rising market rents, which we're seeing across the board in our markets, as well as just further diversification. Because you generally, you know, you see that those liberalized suites tend to be more in the Randstad, the regulated tend to be more outside of it. We very much intend to keep a good solid mix between the two. For us, there isn't really a fine line, whether it's 40% regulated or 50% regulated. It often is more influenced by the product that's available to buy, as we seek to achieve external growth. Okay, great. Just the last one for me. Commentary in the MD&A, and then also in the prepared remarks earlier, just suggested the possibility for more acquisitions before year-end. Just wondering if you could comment on, you know, what you're seeing in the market, you know, if there's been any significant changes to pricing. Given the targeted leverage range between 45%-50%, kind of being right in the middle there, would you be comfortable taking a bit higher for the right acquisition opportunity? Thanks. Yeah, there's a couple of things to unpack there. You know, we'd already acquired at the end of June about EUR 50 million. We announced just the other day, another acquisition. This year ended up being very back-end weighted, more so than we even anticipated. People will probably recall that, you know, 2020 was very back-end loaded as well, largely because of COVID and some tax changes. The first half was quieter than we'd even anticipated. Q3 and Q4 has accelerated in terms of people bringing product to market. In that context, you know, we expect some more portfolios to trade by year-end, and we have a high degree of confidence that we will be announcing in the coming weeks incremental acquisition. Cap rates, just because of the performance of the market, as well as the housing crisis that's getting worse rather than better, cap rates are coming in, you know, continually as they have been trending over the past 18 months. Again, where the debt markets are in Europe and how that's structured, there's more and more debt providers willing and keen to finance Dutch multi-residential. We expect to continue to secure very attractive financing on those portfolios. As Stephen mentioned in his comments, still be able to achieve very robust yield spreads. Including if you take the most recent acquisition that we announced in Rotterdam, we see in the portfolios that we are bidding on and that we hope to secure very significant embedded rental uplifts in those portfolios. Even though the cap rates might be tighter, we're financing them very attractively, and we see, you know, very significant room for rental growth on those portfolios. Okay, great. Thanks very much. I'll turn it back. Thank you, Kyle. Our next question comes from Matt Logan of RBC Capital Markets. Matt, your line is now open. Thank you, and good morning. Good morning, Matt. Phillip, can you give us some color on the leasing environment? Like, your portfolio is near full, and what vacancy you have looks to be held back for renovations, or at least a good chunk of it. So any commentary on the rising rents and where you see your mark-to-market potential across the portfolio would be appreciated. Yeah, I mean, I think the only negative KPI that was in Stephen's presentation was, you know, quarter-over-quarter, you know, occupancy decreased, but it was by a basis point, right? Then if you know, exclude the building that has now been fully leased, it was, you know, a little bit higher. Then if you take the 60%, that's offline intentionally, you know, that's gonna get you to occupancy levels, you know, above 90%. Or above 99%, excuse me. That is, you know, structural vacancy. You know, you're not allowed to show flats in the Netherlands until the tenant vacates. We're always gonna have a constant churn. We believe, you know, we are running, quite frankly, you know, at full occupancy. That's just a reflection of the market. It is absolutely certain that the housing crisis in the Netherlands is getting worse. House price inflation is double-digit. It's going up at double the rate of rental inflation. It's just a very, very strong market. Market rents are going up, generally speaking. You know, we all also have embedded rental growth in our portfolio already. We're chasing that moving target. People can't buy, so they have to rent. It's just across the board real estate fundamentals that are very much in our favor. That's why we're seeing even more pricing power on turnover. You know, we doubled our turnover uplift versus the prior year quarter. We expect to continue to run at those levels going forward just as a result of our efforts to, you know, absolutely maximize the price elasticity of our product and take advantage of that very, very tight market. That's, that's great color. In terms of the embedded rental uplifts that you talked about on your Willem acquisition, can you quantify that for us? Like, would that be in the mid-teens, double digits? Higher. Yeah, higher than mid-teens. I guess. That acquisition is one where we will. Some people have seen our biggest asset in Utrecht where we have a very systematic CapEx program where we get incredibly meaningful uplifts on our rent. The Willem Rotterdam asset is an asset where we expect to deploy a significant amount of CapEx initiatives there on in-suite enhancements. We believe that the return on capital of that will be above target. We generally try and, you know, target, you know, 10% on levered returns. We expect to do better than that. We also expect that the rental uplift available for us to achieve is even in excess of the 15% that you suggested for that asset. I didn't hear this in Stephen's comments, but what was the cap rate on that acquisition? It was about a 3.2. Three two. That's great. I think that's all for me, guys. I appreciate the commentary. I will turn the call back. Thank you. Thank you, Matt. Our next question comes. Just to emphasize that. Sorry to interrupt, operator Matt. Just to clarify, that 3.2 is in-place. It doesn't reflect the upside potential. Perfect. Our next question comes from Himanshu Gupta of Scotiabank. Himanshu, your line is now open. Thank you and good morning. Good morning, Himanshu. In this year, you've done around, call it, EUR 60 million-EUR 65 million of acquisitions. Just wondering how much did you underwrite? Or, how big was your transaction pool, or the acquisition funding was? I'm just trying to see if you have been very selective in acquisition or not much is trading in the market anyways. We reviewed about EUR 1 billion this year, a little bit more. Some of those would have been new build opportunities, but, you know, roughly half of those would be existing assets. We are very selective. Even though cap rates are compressing, we remain very, very strict in our underwriting criteria. We certainly want to grow externally, but we won't do it at any cost. There were several trades in August and September that we bid on that we lost. We've obviously secured the Willem Rotterdam one, and there's a couple of others, as I've mentioned and alluded to, that we expect to be successful on toward the end of the year. Our discipline regarding underwriting doesn't change. You know, we don't win everything, but there has been a fair amount of supply, but it's been very back-end loaded and we win some and we lose some. But again, where we see the market, you know, we don't have to win them all. We just have to win the ones that we like the most and our fair share, if you will. Okay. The several trades which you lost, like which groups did you lose to? Like, is it, you know, pension fund? Is it private equity? Is it housing associations? We don't really lose to housing associations. You know, they're probably developing more than they are anything else. You might recall that we purchased the De Horizon asset, you know, from a housing association because it is moving into a liberalized zone. They're not our biggest competitors on the buy side. The competitors, you know, the existing competitors are there, as I'm sure is happening globally. The residential asset class, along with, you know, industrial logistics are sort of the soup du jour, and there's more people raising capital coming into the market. A lot of people, you know, particularly given where house price inflation is, are operating a privatization strategy. You know, we don't do that. You know, we might someday, but, you know, we're bidding on stabilized yield or what we think the stabilized yield potential is. If somebody else believes that there's more value that can be extracted on a buy wholesale, sell retail and extract the discount to vacant possession value, you know, we might lose to them. It's a mixed bag. You know, there has been the same competitors, you know, that we've had historically, plus some new entrants into the market. Again, you know, we bid, you know, sort of not necessarily in a vacuum, but we look at it from our perspective only and that allows us to be successful in some cases and less successful in others. Okay. Got it. You know, seems like there has been capital compression, and it seems like, you know, transactions are still happening in the market. My question is on the large fair value gains this quarter, have you had any of your portfolio externally appraised at all, like this year? Himanshu, we actually get our portfolio externally appraised every quarter. It's not a full valuation. It's kind of like a desktop valuation. We work with our evaluators on a quarterly basis, where we share information and they give us the output and we ensure that it actually makes sense given where the market's at right now. Awesome. Okay. No, definitely I think, values are going in one direction. Just question on the general organic growth environment. CPI plus 1% is what you can do on the liberalized. What could be the CPI for next year, for 2022? I mean, any indication so far? I mean, we have seen a pickup in inflation, but will that be reflected in the CPI number this? I mean, we can't. Yeah. Go ahead, Stephen. Yeah, I mean, to fill this one, we can't really predict what it is, but it is kinda a backward-looking in some ways in how we calculate CPI. We are expecting it to be more than the 1.5%. I would say closer to 2% for next year. That's how we kinda see it right now. Okay. As you know, the letter will be sent. Just to be clear. Sorry, Himanshu. Just to be clear, we don't calculate the CPI. We can look backwards and try and see what it was. But ultimately, the government or the housing regulator announces what CPI, the applicable CPI will be for the next indexation. We would expect that to be announced in Q1 as it has been traditionally. Exactly. That's what I meant. You know, letters will be sent in April, I believe. You will get to know that CPI very soon. If it is backward-looking, you might have already known that, you know, where the CPI is shaping up to be. I think that that's helpful. Then the final question is on the rental indexation on the regulated 0%. If it is not extended beyond July 2022, what could be the rental growth rate on the regulated portfolio? Yeah. Another difficult question to answer. If you look at what had been happening for many years on the regulated side, the regulator would announce an income threshold, and then the regulator would provide a CPI plus X if you were above the income threshold or CPI plus Y if you were below the income threshold. Those numbers for a very long period of time had been CPI plus 4 and CPI plus 2.5, respectively. The regulator deviated quite dramatically from that last year, where they initially announced it would be CPI plus 1 for regulated across the board, and then they rescinded that and said 0. Again, it's difficult to know where they will be. If inflation is going up significantly, I doubt that they would put the plus X and plus Y at levels that were as high as they were before. I think we just have to wait and see. I mean, it's not a great answer, it's not clarity, but we've demonstrated this year that even if it were zero for regulated indexation, we can still deliver top-line rental growth across the portfolio very close to the high end of our target of four. I'm optimistic it will be better than zero, but we've demonstrated the ability to deliver our targets even in the event if it were zero. Got it. You still believe in a 3.5%-4% rent growth for the next year, full 2022? Yeah. I mean, we've always said 3%-4%, but we've always, you know, exceeded that. This year, you know, we're at the top end. Is it 3.5%-4% or 3%-4%? You know, the answer would be yes. This year it's certainly above 3.5%. Awesome. Thank you. Thank you, guys, and I'll turn it back. Perfect. Thank you. As a reminder, it's star followed by one on your telephone keypad if you wish to submit a question. Our next question comes from Jonathan Kelcher of TD Securities. Jonathan, your line is now open. Thanks. Just sticking with the inflation stuff. On the liberalized, it's CPI plus 1. There's no cap though, is there? Just to clarify. No. No cap. Okay. That inflation is, it is backward-looking, but it'll be whatever 2021 average CPI inflation is for the Netherlands. We can look that up in late January or early February, whenever that comes out. Correct. It's for the calendar year preceding. Yes, 2021. Okay. Then on the flip side, on the cost side for inflation, how are you guys impacted? What sort of levers, where do you see cost pressures and where might you benefit? I mean we have always guided that margin around 75%-77%. We continue to believe that that holds true. I mean, there are cost pressures, and we see that in the realty taxes, and that's a function of the municipal tax values that have been increasing over the past couple of years. In terms of utilities, we're less impacted by some of the natural gas because a lot of those are costs that are incurred directly by the tenants. We do see some inflationary pressures on R&M and other type of expenses. Again, we still believe we can maintain that 75%-77% margin. We are looking at other opportunities. As you are aware of the landlord levy rebate, there are other opportunities out there. We're currently evaluating a couple of them, and that may provide some benefit for 2022. Yes. I think, you know, just being a CEO, as opposed to CFO, you know, more optimism. I think it's sometimes lost on people that we have been controlling our cost incredibly well. When we originally announced the 75%-77% range on NOI margins, we were closer to 75%. If you exclude the benefits of the landlord levy financial transactions that we've done, we're now operating our NOI margins at 77%+. You know, on top of our top line rental growth, the team is also doing a great job of controlling the costs, you know, taking advantage of all of the experience that we and CAPREIT have. You know, I think that's often lost that, you know, we've increased our NOI margin by 200 basis points on top of driving our top line rental growth close to 4%. Perfect. Our next question comes from Matt Logan as a follow-up. Matt, your line is now open. Thank you. Just circling back on some of the financial questions on transaction volumes. It sounds like the deal flow in the Netherlands was quite back-end loaded this year. I'm wondering if you think all of the transactions that, you know, occurred, you know, through to November would have been reflected in that cap rate movement, in the current quarter. I think cap rates are continuing to trend down, and I think, which is always the case, portfolio valuations, including external valuers, tend to be lagging in terms of reflecting where current cap rates are. You know, they're always looking backward, for their precedent transactions and not necessarily looking at what's happening currently. If you know, say that we're buying cap rates in sort of the 3.2%-ish range, and you look at where our portfolio is valued in the 3.5% range, it demonstrates there is still a gap. Whether or not our entire portfolio would move to 3.25%, I'm not certain. I think as Stephen explained, you know, we rely and utilize and use as a data point for establishing our values, what input we're getting from outside valuers, and they tend to be behind in my experience, which would demonstrate. No, I appreciate the call. I appreciate the call, Phillip. That's all for me. Thank you. Our next question comes from Matt Kornack of National Bank Financial. Matt, your line is now open. Hi, guys. Just wondering, with regards to the 60%, units that are being held for renovation, is that above a normal range? Would you anticipate that as those are renovated, you will be adding new properties to be renovated and that vacancy would be somewhat stable? Yeah. I think the vacancy is stable. I think running at 98%+ is a great number. And as I mentioned before, you know, if you ignore, you know, the offline investment in train investments, it would be above 99%. And I think that is, you know, truly normalized. And we're always gonna have a collection of assets that are candidates for investment. I mentioned the Willem Rotterdam portfolio that we just acquired, that we'll have some investment going into it as those assets turn. I think historically, sometimes the component of vacancy due to capital investment is in 70%-75% this quarter at 60%. We're always gonna have a meaningful number of units offline for turnover CapEx, whether that be already a liberalized suite that we're investing in or whether it be a regulated suite that is gonna be converted. We're always combing through our portfolio to make certain that we're taking advantage of every regulated suite that can be converted. We're finding more and more. Again, I don't think that's gonna move, you know, dramatically from the, you know, 1.5%-2% that we do a year, but on the margin, yes. We're always gonna have that, you know, 50%, 60%, 70% component of our vacancy that is a result of our capital investment program. Okay. No, that makes sense. Then just with regards to obviously the demand is quite strong on the multifamily side. Has there been any change in supply at this point? I know there were some restrictions around greening of assets for some of the ones that would typically supply the market, and that made it less economic to do so. Is supply catching up at all or is it still kind of this persistent supply-demand imbalance? Persistent supply-demand imbalance. There's been no movement whatsoever to try and address it. Again, this you know, it's only anecdotally, right? You know, there is a supply-demand imbalance in many countries, you know, globally, including Canada, of course. One of the biggest things to observe is what does the new government do? You know, ultimately, and the existing housing minister, whether she stays in place or not, we're not quite certain. You know, she's very aware that the biggest problem is on the supply side. If you just take it anecdotally, if you look in Ireland, you know, the government recently, you know, put in new initiatives to address the supply as opposed to tweaking their top line growth. Doesn't mean the Netherlands is gonna do the same thing, but one would hope if you're trying to remedy a structural supply-demand imbalance, they would focus on supply, as opposed to new regulations on existing. Whether they do that or not, I'm not certain. It is definitely not been addressed, and it's continuing to get worse. Particularly there was a small pause in it getting worse. Or it was getting worse, less quickly or more slowly during the pandemic because, you know, you had a lot of the immigration, you know, subside, and that the level of housing unit demands were suppressed. Now that immigration is back, the expats are back. Once again, I would argue it's more accelerating than decelerating. Again, very much in our favor without being insensitive because it gives us more pricing power. Sure. I guess we didn't see it in your portfolio because it was remarkably stable throughout the pandemic. Were there sort of temporary similar things with like, student cohorts moving in with their parents and students not going to universities? Like, were those demand drivers actually pulled back during the pandemic in the Netherlands? Was it pretty sort of status quo on that front? I mean, I'll answer your question, but it'll actually gives me an opportunity to then, you know, to address something that's sort of a bee in my bonnet, if you will. For ERES, you know, different than, you know, a lot of our peers, whether it be Canadian peers or European peers, you know, we were a train running down the tracks exactly as we had advertised pre-pandemic, and we never wavered. The train never came off the track. Where many of our peers, the train came off the track in various, you know, levels of severity, and everybody's getting rewarded for getting their train back on the track. Well, we never went off. It's just been steady as she goes. Our collection rates are the same. Our occupancy rates were the same. Our rental uplifts are getting better. Our turnover rate's staying stable. Our return on CapEx is getting better. You know, our train not only didn't go off the tracks, it's probably accelerating. People just seem not to be recognizing that, where a lot of our peers, both in North America and Europe are getting rewarded for, you know, getting back or making progress back to where they were. You know, their stock price reflects that. We traded a discount to everybody, and we never wavered. You know, that isn't necessarily addressing, you know, your comment. It's sort of free commentary. From the student effect, we didn't really see that because we don't have purpose-built student housing. You know, our target market are just basic young professionals and/or young families. We don't have a student component within our portfolios. We didn't see a big movement, you know, negatively that has subsequently recovered. You know, our portfolio has stayed on track and has been accelerating, you know, since pre-pandemic all the way through the pandemic. Now. Well, we're not post-pandemic, but you know, in the process of post-pandemic. Thanks for that. We hear you. We've agreed and noted it throughout because you have really been outperforming throughout the last year and continue to do so congrats. Our next question comes from Brad Sturges of Raymond James. Brad, your line is now open. Hi there. Just to touch on the acquisition commentary that you gave. You know, you've been letting, I guess, leverage tick up a bit to do some of these smaller tuck-in acquisitions. I guess if you continue to see opportunities there, it's fair to say that could tick up a little bit higher. I guess what would be the catalyst or the thoughts on selling the two legacy office assets to fund some of the opportunities you're seeing on the acquisition side? Yeah, I mean, you know, we've been very, very open about our view on leverage. Again, targeted range hasn't changed between 45%-50%. But we would certainly be comfortable taking that leverage up modestly to, you know, still a reasonable level before we would entertain issuing equity at current levels. So, you know, taking our leverage up, you know, modestly, is not something that we're concerned about. With respect to selling the commercial assets, they're always, if you will, for sale at an appropriate price. Pre-pandemic, I would have thought they would be sold by now because the market was conducive. You know, post-pandemic or since the onset of the pandemic, those are core assets, although they're not prime core, as I like to say. That pricing has not yet returned, in terms of the trading market. You know, people buying those assets would want a discount that we wouldn't be prepared to give. You know, we will sell those assets in the course of time when we get what we believe is appropriate pricing. Again, we don't have liquidity restrictions either, so that isn't an incremental catalyst to cause us or want us to sell them before we should, because we don't need that liquidity. We have undrawn capacity on our lines, and we also have the undrawn pipeline agreement with CAPREIT. Yes, we would sell those at appropriate price, but we don't have a liquidity constraint in terms of achieving our external growth that it might cause us to sell them earlier than we should or at a price less than what we think is fair. Makes sense. Within the acquisition pipeline you're seeing right now, you know, like as you said before, I guess, you know, the better opportunities have landed more on the liberalized side. Is that still what you're seeing right now, within the current pipeline, that it could be still a little bit more weighted towards call it, lower going-in yields but higher growth, liberalized assets? Yeah, I think that's accurate. Again, I don't think it's systematic or a trend. It's almost that's what's coming to market. With the Rotterdam asset that we just announced, it's 20% regulated, 80% liberalized. Again, very significant double-digit growth potential with a couple of the other ones that we're expecting to sign by year-end, they would have a similar profile. Great. But again- I'll turn it back. Thank you. Just to reiterate, that's not an explicit decision and path that we're taking to weight the portfolio more towards liberalized. Again, we like both. We like that diversification, but it's just a recognition of the product that's coming to market. Yeah, that makes sense. Thanks a lot. I'll turn it back. Thank you, Brad. At this time, we currently have no further questions. I'll hand back over to Phillip Burns for closing. Again, thank you all for joining us this morning. If you have any further questions, please do not hesitate to contact either Stephen or myself. Thank you very much.