Thank you all for joining us today. My name is Ksenia Zutkis. I will be your moderator for today's session. The TELUS team acknowledges that our work spans many territories and treaty areas. We are grateful for the traditional knowledge keepers and elders who are with us today, those who have gone before us, and the youth that inspire us. We recognize the land and the benefits it provides all of us as an act of reconciliation, as recommended by the Truth and Reconciliation Commission's 94 Calls to Action. Gratitude to those whose territory we reside on or work on or are visiting. We'll begin with a few housekeeping items. This webinar is being recorded live. The recording will be available to participants and those who couldn't join us after the event. The presentation will be in English. There will be a separate French session tomorrow at 2:00 P.M. Eastern Time. During the webinar, attendees are in listen-only mode. There is a menu of options available at the bottom of your screen, which includes an ask a question option. To ask a question, which we do encourage you to do, please submit it through the question dialog box, and we will direct your questions to our panelists at the end of the presentation. We have saved some time for that. A copy of the presentation deck will not be circulated. As I mentioned earlier, we are recording this session, and we will make it available to you after the webinar. Finally, we would love to have your feedback on the session. There is a survey that you can access either from the console view or at the end of the presentation. We would encourage you to complete that. Moving on to the next slide, a few words about ourselves and about the Manager Speaker Circuit for those of you who are perhaps less familiar with these events. The investment consulting team here at TELUS Health launched the Manager Speaker Circuit about 2.5 years ago to share our views on a range of investment topics and to give our highest conviction investment managers the opportunity to share their perspectives. This is a quarterly webinar, and we do generally start the year with an economic outlook event, which is what we'll be discussing today. You can see on the slide how the investment consulting team fits within the overall retirement and benefit solutions line of business at TELUS Health. As you can see, even though we are now under TELUS Health, we continue to do the same work as before. This is just a snapshot of the services that the team provides both in Canada and in the US. Now just a little bit of background before we dive into the presentation. As we begin the new year, a few topics are top of mind for many investors. Interest rates goal, how quickly will inflation come down, and how will this affect the economy is what many of us are wondering. As we saw from the Bank of Canada announcement today, for now, they are keeping the overnight rate at 5%. A lot of us are wondering how things will evolve from here. Upcoming elections, with roughly half of the world's population estimated to be electing a leader in 2024, and the geopolitical issues that we're seeing are adding to some of this uncertainty. Now, while there may be different views out there about some of these topics, one trend that is quite clear and that we are seeing with many of our pension plan clients is that is the impact that the current economic environment has had on funded positions. The higher interest rates mean that many plans are at funded levels that they haven't seen for some time, and this often does raise the question of whether or not it may be a good time to de-risk. We do think that because many plans are in very different funded situations than they were, let's say, two years ago, it is a good time to review the asset mix, the end state goals of the plan and perhaps do an asset liability study. Of course, pension plans are not the only clients where the effects of the current economic regime can be felt. For example, on the endowments and foundation side, we are seeing some great returns from fixed income right now. This new regime has also brought some drilling down on specific asset classes. One asset class, of course, that comes to mind is real estate. We have seen some doom and gloom headlines surrounding this asset class lately, but we do think that real estate can play an important role in an investment portfolio, and that this asset class is much more nuanced than the headlines would lead you to believe. We will hear more about this during the webinar. Today, we are excited to have Fiera Capital here with us during the webinar. I am happy to welcome our speakers, Nicolas Vaugeois, Portfolio Manager, Global Fixed Income at Fiera Capital, and William Secnik, Senior Vice President and Fund Manager at Fiera Real Estate. I will let Nicolas and Will introduce themselves. Maybe if you can start, if you could say a few words about yourselves, starting with Nicolas. Much, Ksenia and everybody on the call today. Nicolas Vaugeois, Portfolio Manager, Global Fixed Income at Fiera Capital, managing every global fixed income strategy, such as multi-sector and Global Green, at Fiera Capital. Will? William? I think you're on mute, but you'll have the chance to present yourself a bit later in the presentation. If you want me to go, Ksenia, let me know. Yeah. Yeah. Thank you, Nicolas, for the introduction. I guess we'll hear from Will a bit later, but we will kick off the presentation right now with Nicolas, who will share Fiera's economic outlook for 2024. That will be followed by William, who will dive into the topic of Canadian real estate and discuss the Fiera Real Estate process. I'm gonna hand it over to you, Nicolas. Thank you very much. In the next 20 minutes, I'll go over a review of the economic outlook and also how the fixed income landscape is showing some opportunities also. If we just take a step back and look at 2023 coming out of that year, it's been a really good year in terms of return for every asset class, basically. If we look at the stock market return of 26% on the S&P, TSX and Canada front also, a lot of the return in the US was coming from the Magnificent Seven, so of the Apple, Amazon, Google, which represent almost 25% of the index. The lowest type of return was Apple at 50%. The 26% is huge and is mostly driven by the big tech. If we exclude them, it was closer to the 10% mark. A big push toward like the AI buzz and technology last year. Even on the fixed income side, when central bankers across the globe, hiked in the developed world, we've seen rates pretty flat in the longer part of the curve in the 10-year and even in Canada, lower. We've been able to see positive return in that asset class. If we look at Canadian fixed income only at the index level, we were up 6.5%, close to 6% in the US If you were in a Global Multi-Sector, our fund did 12% last year. Really, a really good year last year for fixed income and the equity market as well. Now, going into 2024, what do we need to look at? It's basically the same major theme as 2023, but the difference between the two years is basically when we started 2023, the consensus and the positioning in the market was for a recession. Credit spreads were wider, positioning were a bit more defensive. Now we're coming into 2024 because of the year we had last year, because of the resiliencies of the US consumer. The expectation are for a soft landing and maybe avoiding a recession. This is where we, our team tend to disagree on that front. Monetary policy, inflation, and employment will be key to watch for in 2024. Really positioning and consensus for this year is different than 2023. On top of that, we have a US election. I don't think it's gonna be a big surprise to see Trump, the nominee of the Republican Party, versus Biden at the end of the year. What are the implication if Trump wins, let's say? Well, we know the what he did for his tenure for the last four years between 2016 and 2020. He will be pro tax cut and pro-business for sure. I don't think it will create any sort of surprise or necessarily uncertainties on the market. The way we'll manage the global, let's say, trade might be different than the one that Biden was doing. Biden was on the same page as Trump on the commerce, global commerce against China, but he was more working with his ally instead of going solo and commando style. That's a big difference. Of course, you still have in the mind of a potential spillover effect in the Middle East. We're seeing some Red Sea issue in terms of transport and the Houthis sending some missile on cargo. The US and the UK are taking care of that, but that can be a source of disruption for trade in 2023. Let's move for the, let's say, cover, trying to cover the monetary policy, inflation and employment and what it looks like. This morning, we had the Central Bank of Canada coming out and keeping their overnight rate at 5%. The message is pretty the same as its previous meeting. Basically, consumption is subdued. They're seeing softer demand on the consumption side. They're seeing and starting to see that the monetary policy is starting to bite. That's why they're kind of sending the message that they are done hiking. They left the door open for potential another hike if, let's say, inflation start picking up. It's kind of normal to have that kind of message where the CPI is not fully under control. It doesn't mean that they will go for another hike. That was just to say that if it has to turn around, they will be ready to act. That's typical of a central banker in our opinion, that they need to be open for every scenario. In our mind, the next move will be for a rate cut. The market was pricing aggressively at the end of last year. Many cut, it went to 7. We thought that it was a bit too excessive. We're seeing some sort of a readjustment early on in 2024, in terms of market expectation. On the US side, it's the same thing. Credit conditions are also having their effect. The US consumer seems to be in better shape than the Canadian one, but we are in the camp that they will be staying on the sideline for at least a couple of months and potentially cut also as we are heading into a softer and slowdown economic scenario in the US In terms of monetary policy implication, of course, Canada have lower rates than the US. One of the reason is that we also the need to hike more is less than the US, meaning the direct implication of rate hike has more effect in Canada than in US because of the way the mortgage are structured. We on average have to renew every 5 years, and a third of the mortgages are variable, where in the US it's less than 10% now. That has a big impact. Everybody that was on the variable rates took the hit. Forty percent of the Canadian household who have a mortgage will need to refinance this year or next year, so they will take the hit. This is a factor of a slowing economy also, so less cash to consume discretionary. Let's see if the Fed and the Bank of Canada are doing a good job in terms of bringing down inflation. This is the US CPI. In the US, it's basically the same thing in terms of component in Canada. In terms of inflation in goods, it's close to zero, that's very good news. Energy is a negative contributor to CPI as we speak. Inflation now has been a big driver inflation in 2022. Now that the barrel of oil is around CAD 70, that's having a negative impact. Where they need to focus on is on the service side. Service side, the big chunk of the service side is toward shelters and real estate. If that can come down or necessarily crash, just stabilize and stop going up, that will be a good news for central bankers, and the signal will be sent maybe to start cutting. They need to control that part of the inflation and CPI basket, and it is really in the service basket. On the food front, even though food goes up, I don't think they're gonna start hiking or panicking about it. They don't control El Niño effect. They don't control mother weather. It's all about services that they need to calm down. We're starting to see month-over-month numbers that are lower. Even in Canada last month was negative month-over-month, still too high on a year-over-year basis, but we're seeing some clear sign of stabilization on the inflation front. Another topic that we like to look at is employment. Labor shortage was a big topic last year and, I would say for the last couple of years. One thing we like to look is the jobs number in the US This is the jobs opening. Basically how much opening they are in the US to fulfill opportunities in the marketplace. That has been coming down lately. This is a sign that corporation are less inclined to hire. Maybe because of weaker expected demand on their side. Instead of starting to fire people, they start to realize, "Oh, maybe I don't need extra working people in my company, and I'll wait to see if there's a real economic slowdown coming up." We're starting to see some sort of decline in jobs opening, and that to us is a sign of economy softening. Another point that's touching maybe more growth are the inventories levels. I picked the car inventory because that was a hot topic also in the last three years regarding inflation. we've seen inflation coming up because of used car and car in the last 2 years. Now we're seeing the level of inventory of car back to pre-COVID level. people are buying less car and also, of course, there's a price effect. It does in those kind of series, but volume-wise and the inventory levels are back to pre-COVID. company is not only on the cars' part, but also other corporation that are seeing their inventory level going up, not because they expect to sell more, but because they cannot sell as much as expected. that's another sign for us of economic slowdown. I picked that one, but if we look in Europe, for instance, Germany released a number about export recently to the US and China, and they were down 9% and 15%. Europe is not doing great at the moment, taking Germany as a proxy for Europe, which is the biggest economy. China are having big issue with their real estate market and stimulating their economy. They will cut, they will try to inject some cash, but they have, I think, and we think, bigger issue right now. China won't be an engine of growth in the coming years and maybe have some ripple effect on the world also. We're seeing also Canada having anemic growth. That's also negative in the last quarter. There's only the US remaining, and we think they're going to start seeing weaker number down the road in 2024. Now, if you look at the fixed income market, how it react, well, you all know how the asset class move the last 2, 3 years and even beyond that. On the developed world, rates have been moving in tandem, Well, tandem, yes, sometime a little bit with a little lag. Maybe there's all the volatility in the UK in September of 2022 because of the LDI story. All in all, they all moved in the same direction. They waited too long before hiking. What we're seeing is really attractive level of yield across developed market, but especially in the US. We're seeing US 10-year treasuries right now above 4%, 4.15%, where Canada 10-year on 3.50%. From a duration point of view, we really like US duration as we speak. Something that is worth mentioning is on the emerging market front and maybe more on the LatAm. This is where we see more value, local currency and some specific opportunities on the hard currency one. LatAm has been pretty responsive, and they act quickly on the inflation worry when COVID started because of the past and the history of a higher inflation in the region. They didn't wait to see higher inflation number and play the card it's transitory and temporary or whatever they want. They went and they hiked to fight it as fast as possible. They decided that they were able to cut last year instead of hiking rates like most of us developed central banks in 2023. They went the other way. Also that was a source of positive return for those country. When you look at the inflation, let's say for Brazil, Mexico, we're talking about 4%, but they have the overnight at 10. You have positive real rates in those region, which is quite attractive in our opinion at the moment. We've touched base in the introduction about de-risking. Why de-risking? Because of the actual level of rates across the fixed income asset class. I would say in the last 10 years, fixed income hasn't been attractive. Rates were close to zero. Investors were trying to find all sort of alternative to get some yield. Now you can sleep tight and get 4.15% on a 10-year US Treasuries without taking any risk about the duration one. That's not a credit risk. In our opinion, the US will be able to pay. 4.15, and you'll get pretty good opportunities also on the credit side if you are able to be flexible in terms of security selection and sector selection. What we've been seeing is more requests, more interest also on the fixed income side and the opportunity we're about to find. That's mainly because of the level of interest rates. We're not... We haven't seen those type of yield before since 2008, 2007, before the Great Depression. Pretty attractive level of yield as we speak right now in the fixed income space. In terms of what's priced in the market, I mentioned it a bit earlier in the presentation. There are 6 rate cut priced in as we speak. It doesn't really change since December. In our opinion, if they have to do 6, it's because we're heading into recession. If the soft landing scenario is the one happening, they don't need to do more than 3. With the soft landing scenario, inflation will return normally to 2%, everything will be awesome, and if they need to do more, inflation will go lower, consumption and unemployment rate will go up, and this is when they will have to do more than 6%. Just the pace and the fast the way we get there, we don't think they're gonna cut the first quarter, maybe more story of second half of 2024 or late in the Q2. We don't expect rate cut this quarter, later into the year. I would say we are more in the camp of 4%-5% than the 6%. Okay? You will say it's not a big difference, but sometimes some 25 basis points readjustment, if you're an active portfolio manager, make a difference at the end of the year. In terms of opportunity and traction. Yes, de-risking is a big theme because of the level of rates we're seeing. This is a table of what type of yield you can find per asset class level in the fixed income universe. That was as of the end of December of last year. As we speak, you can add 40 basis points pretty much across all the asset class. We are at 4.15% in the US, 3.5% in Canada. Pretty decent type of yield for the amount of risk you're taking. You can also dig in and go lower in the capital structure for Additional Tier 1 or LRCN, if you are familiar with that, to get a decent yield of 7.5%-8% on average. I would say a topic of interest are Global Multi-Sector Income Fund, global credit, and also core plus solution or popular or at least on our side, or we're seeing some demand to have fixed income asset, but to be able also to gain some carry and credit exposure. You can easily do with security selection and sector allocation a good diversified fixed income portfolio, having a yield north of 7% if you're going global. I've told you what we like in the fixed income space. What we don't like at the moment, if we go back in Canada only, we like Canadian corporate spread, we don't like 30-year Canada. We think 30-year Canada are too expensive. We don't like the shape of the curve either. Keep in mind that Canada is the only developed countries where the 10-30 is inverted. That's an anomaly in our mind. Seeing it negative 5-10 basis point, where on average there's a steep steeper by 40 basis point. In our Canadian portfolio, we are really underweight 30-year and favor the belly 10-year. We expect, as we're going toward a slowdown and a recession and potential rate cut, the 10-30 will steepen and go back to historical level. That's in terms of positioning. Another way to look at it also is versus the US. I mentioned that we like US ration versus Canada. When you look at 30-year Canada versus US, we're talking about almost 1% full difference. This is too much, in our opinion. The spread should compress by at least 50 basis points, in our opinion. Because the slowdown is already more priced in in Canada and a bit less in the US, we see more potential upside and spread compression with the US versus the world, because this is the strongest economy and this is the only place we think right now in the world where the odds of a recession is not where it should be. We think the market is too optimistic on that front. At the moment we're starting to see weaker earning and negative or weaker leading indicator. We think that could turn around and see an outperformance of US. US bond. That being said, before I move it to Will for the real estate. Another advantage of the going global, in our opinion, about fixed income is the fixed income opportunities and the vast area of sector and security and name that you can get access. That's a key plus. If we look at the widest credit spread right now in the US. Are the office REIT, okay? I don't know if you see it pretty well on the table here, but I will highlight it. Office REIT, you've seen it in the news. It made the headlines. We've seen some private real estate and private credit shops selling their office for $0.50 on the dollar. Those had some loans in the US giving the keys to the lenders. Lenders not being able to sell at full price and get $0.50 on the dollar. That's an issue because offices are empty in the US, well, almost empty, and they're having a hard time collecting the rent. That's an issue. Do we like it, office REITs in the US? No. We still see value elsewhere in this area. It doesn't mean that all real estate are equal. You'll see in the next couple of minutes why maybe Canadian real estate is the best place to be in the real estate world. all in all, I would say, I think we highlighted the fact that in our opinion, the economy will start slowing down. It's already happening in Canada. We think, it's gonna happen also in the US. Fixed income is attractive, and the merits also of going global with the type of yield and diversification you can get is a big plus for investor in our mind. I think, in this 20 minutes that I had, I will leave it to Will to give you a view on the Canadian real estate and why this is having a really good value added to have it in your portfolio. Will, I'll leave it to you. Thank you very much, Nicolas. I appreciate the context and we'll build on the work that you've put forth here and explain the virtues of why Canada is relevant both domestically and internationally to investors, and how we construct our portfolios towards performance. That I think is relevant to our investors and stakeholders. As we move through the deck, I'll outline that Canada's strong fundamentals, after some broader challenges in the last 18 months related to inflation rates and impacts of cost of capital, and interest rates, will continue to be well poised to deliver income and capital returns, given its growth with the backdrop of rate cuts, and improved repricing by way of context, capital market improvements, et cetera. I think that backdrop will give us some wind behind the wings as we move forward. Part of those fundamentals at its core is Canada's ability to grow and attract immigrants and increase its population. That fundamental base of population growth is again some wind beneath our wings as I speak to this slide and how it relates to real estate capital growth. Canada certainly benefited from its population story. Again, we'll go through a bit more detail as to how that influx of people in particular will create higher demand for real estate. This chart shows it in terms of the G7 context as Canada is at the top end of that curve. We'll also outline that Canada is undersupplied in terms of context with respect to most markets. We'll touch on each asset type as we go through this deck as well. Canada as an immigration leader is quite important within the broader underpinning. We know that Canada has a high migrant acceptance score globally, so it's obviously allowed it to increase and counteract the lower fertility rates that we're seeing across the G7. We could see that from this chart going forward, that 12.5% is gonna be one of the highest in the G7, with that backdrop of the immigration story, and certainly propel its strength within the real estate space given the sheer demand that is created with respect to immigration. As we go through some of the further elements of the population growth, driving one part for sure is the retail sales and effect of e-commerce on industrial. We can certainly see that the growth of retail sales and through the many years or several years going forward, that positive impact is gonna not only improve the situation for retailers, but will also cause industrial absorption to maintain its strength. This is again, a strong backdrop in regards to the fundamentals of real estate. Further, on the demand side of an industrial equation, what we're seeing is continued strength in the industrial space as warehouse and distribution space absorbs the demand of online sales. This slide is quite detailed in nature, but really outlines that the demand for space is going to be quite substantive. To the tune of an undersupply situation in the broader scenario of Canadian real estate. Again, it's a great underpinning as part of our research at Fiera. Supplementing that industrial story is certainly the shortage of housing on a residential basis. Where as we look at the amount of dwellings within the Canadian context and in the G7 context, you can see here, we've got one of the lightest dwelling counts per 1,000 inhabitants. So that undersupply situation will continue to create pressure within the context of the real estate story. We further see this by province with Ontario highlighting the steepest undersupply, if I can use that word. On a broader context in the Canadian total undersupply as well. This is, like, you know, important in the sense of the federal situation we're seeing with the federal response to the sector by trying to support this, whether through CMHC initiatives. Fiera has also been actively involved, and we'll explain that a little bit later on. Needless to say, the underpinning of low supply, with this demand context of immigration and general population growth, will mean continued growth in this sector. As we look through the deck here in terms of the Canadian market, I think the context I would say is, you know, we don't always hear that Canada is a substantive market. I'm sorry. I think my slides here. Just one second. I just wanna double-check one item here. No, I think we're good. Just wanna make sure that, you know, as an audience, we outline that Canada has a substantive market size and position in the Canadian context as an investable universe. Relevant from a, you know, transparency standpoint as well. Ranks Canada as a formidable investable universe, given that context around how we're positioned here relative to peers. It's a bit understated sometimes and from a Canadian positioning, but that means there's opportunities for the marketplace and the this essence is highlighted here. As we roll through the attractive returns on real estate, I think the long-term profile is highlighted through this, and particularly the income story, with an overall return of 8.6%. I think it really highlights the long-term nature of this asset type. Obviously the capital growth, which has been impacted, due mostly to capital markets and global events. You can certainly see that's out of, out of volatility in this slide. The income story is really quite consistent, and I think that really resonates with investors who have particular needs to meet the income side of their investors. Jumping to how Canada's been performing on a global basis, again, with that underpinning of immigration and population growth. You can see that with Canada in the red is a general outperformer on a global basis. I think that's quite helpful. We outline and are able to quantify the volatility, how it compares to the range of risk tolerance as well within the context of a G7 set. Again, Canada is situationally in a good position and historically has delivered performance. What we're also seeing throughout this piece is the changes in the marketplace over the last many years, and this highlights some of the stresses that have been experienced with respect to cap rate expansions and the ultimate compression that we're seeing right now between the bonds and the cap rate. Ultimately, this has put some pressure in the last 18 months. We're starting to see that come back, recognizing the drop in rates, and again, that will benefit real estate going forward. As we think about Canada in the context of those fundamentals, we'll highlight that it's certainly been quite robust because of the 8 elements that we've outlined here, from immigration leader all the way to relatively politically stable, and slow GDP relative to other G7 nations. Along with the fundamentals of its market, with respect to size, transparency, and less volatility. Again, providing context of a, of a quality investable universe. How does this dovetail in our day-to-day construction we have of our portfolio? We have a Strategy Planning Analytics team at Fiera, which gives us forward-looking models, which has helped deliver performance in our, in our context. Briefly, what we have is a Target Markets Model which outlines that this is an important element to the funds and the entire Fiera platform as to how we articulate and drive performance by looking forward by each market and subsector. This example here shows our demand supply equations that we factor into the macro and underlying real estate fundamentals to examine each market. As such, able to navigate what is otherwise a rather illiquid investment product by looking forward to the future in our investments, our divestments, where we're developing. That is important in our overall modeling at Fiera. When we have assets in our portfolio, we undertake quantitative and qualitative assessment with a risk measurement formula that again gives us some weightings. Illustratively on this chart, you'll see on the far right, our risk-return ratio and those that are go low and above that react across that line rather, will cause a reaction from our asset management team and the fund manager to behave in a fashion towards performance. A highlight, and not enough time to really go through the detail here as we, as we work through our portfolio, but it certainly is an illustrative tool for the fund managers to address risk and opportunities within the portfolio. I'll talk a little bit more about real estate. Nicolas mentioned about the office market, but we'll start off with the industrial segment. Again, quite strong in terms of the profile. What we're seeing is continued demand. It is not at the robust pace that we've seen around the last four or five years, but we're still seeing continued growth. Where it was, high double-digit growth, we're seeing, kind of mid to high single-digit growth now. High strong rates, within the portfolio, or within the market rather. Some reduction in construction given some of the interest rate movements that have come into play. That has meant it, you know, still undersupply generally in the market. But if we think about the challenges on the supply side, i.e., geopolitical issues with the Suez Canal, low water in the Panama Canal is changing the marketplace and is re-resulting in tenants and manufacturers coming and storing their goods and creating their goods locally. That has certainly put increased demand to the Canadian marketplace in this respect. All in all, a long-term view around industrial. You can see here that it's quite a positive chart in terms of the fundamentals between supply absorption and availability. With the backdrop on the fundamentals of immigration and population growth, the multi-residential story again is quite positive. Unfortunately, we have a little bit of a delay in what CMHC delivers in terms of statistics. Needless to say, it's quite topical around the marketplace as to the lack of product, the affordability issues. Cost of owning housing on a homeownership basis has really improved the fundamentals of multifamily real estate in the rental market. This chart again shows that scenario. In our long-term outlook, with that fundamental backdrop of population growth will continue to drive this. The challenges of constructing and title land and service land again, will support a scenario of low supply, generally speaking, relative to demand. Jumping to retail, an asset class that is or asset type rather that is quite has had some challenges during COVID, as you can imagine, with the number of closures. What we're seeing is that a number of retailers have failed or have in that duration, but you've got a period of stability with strong tenants in place, particularly in the food and drug space. Fashion is a little bit more challenged. But we've seen that open air centers, what we call unenclosed ones and neighborhood ones are seeing improvements with rental rate increases. Not any new supply really in the retail space, and that has really stabilized this segment of the market. Is again in a situation of strength, particularly relative to what we had seen during the COVID, full COVID lockdown period. In office, something that we have looked at quite dimly for the near term. Our outlook, as you can see here, is tempered by what you're seeing on this slide with almost record vacancies, negative absorption. Class A buildings certainly outperforming Class B and C assets. The challenges for a landlord to induce tenants to stay and come to their properties requires higher incentives, so it's becoming a more expensive proposition. Lenders are quite shy to fund them given that fundamental backdrop related to the hybrid usage and use of space. That again is a context that we've written about in our white paper. effectively, seeing this market in the near term being quite weak and not really getting back to stability, only with the population growth coming in place to increase office usage, and that's more of a midterm context. Okay. I think we'll pause there, and I will turn that back to you, Ksenia. Great. This was very interesting. Thank you to both of our presenters. This does conclude the official part of the presentation, but before we let Nicola and Will go, we do have some questions that we have received. Just as a reminder, if you do have a question, please use the question dialog box to type it in, and we will relay it to our panelists. Okay. The first question that we have received, somebody is asking, this question will be for William. If you could comment on the US real estate market. Yeah. I mean, it's certainly one that's bifurcated. obviously larger scale, you know, would comment on, they have the ability to build more. They don't have the same entitlement restrictions we generally have in Canada, meaning it's more difficult to produce, lands that are produced, product or real estate build. so that context is important. They have an ability to build quicker and have zone land, in essence. We have a little bit more restriction and a cost structure that, is less, I guess we'll say induces, development as much. With that backdrop, and lenders that are not typically in the same context or Canadian context, which has fewer institutions, financial institutions and relationships, it's a challenging market in the American context, from the perspective of oversupply, and lenders that aren't treated as well as they are in Canada. You hear stories around giving back the keys in the US more frequently than you do in Canada, because if you do that in the Canadian context, you're basically gonna be out of business because the lenders will not come back and provide debt to you going forward. In the US, there's just a bit more laissez-faire approach to that, and that's why you hear a bit more of particularly in the office context of keys being given back. I mean, it's a broad question there as to, you know, the US market. You know, it's really a very different one than the Canadian one. Not that I'm obviously familiar with it, but not that I'm one that I play with it exclusively, with the context again of coastal cities performing generally a little bit better than in the interior of the US, et cetera. You'll have your growth states like Florida and California carrying some of the, I'll use quote-unquote, "rust belt." I mean, lots to be said around the US Just a brief touch point around that. Hopefully, that answers your question? Great. Thank you. Another question for you, William. It is a twofold question, I'll probably just read it out because it's fairly detailed. Can you please explain the difference in performance between publicly traded REITs and private real estate? Even within the same sector such as office or industrial, the difference is significant with the REITs performing considerably worse than private real estate. The second part of the question talks, I'll also read it out. There was a bit of a drop in private commercial real estate. This was due to a sale of a Class A office building at a lower price than its NAV, resulting in the reveal of other Class A buildings in major cities. Any concerns that there could be a reval in other office sectors such as suburban spaces or Class B or Class C buildings? I'll touch upon the first one in terms of private versus public. Certainly, the public market's driven a lot by sentiment. We see that situation where moods actually influence values and unit values. Would also say that there's a general higher debt exposure in that, in those, private, sorry, in the capital markets. That laddering of debt, which is generally near-term, has certainly caused them a lot of pain, if you will, in terms of returns as they adjust to the new interest rate environment. That would be one of the key variables that we're seeing within that context. Yeah, sentiment and their laddering in their, in their debt portfolio and the level of debt that they have in their portfolio would be the key sentiment drivers, again, by asset type. You know, certainly industrials and multi-res would be viewed as stronger than, say, retail and clothes and office. Again, you'll have those differences as well. Your question on the office space. Sorry, that was about whether it's another shoe to drop or. You know, there is revaluations going on, and I would say there is there are some challenges until we get clarity on office usage and underpinning of that. It seems to be improving, so there is a lot of wait and see in respect to that office type. Again, Class A would do better than Class B and C, whereas tenants who have choices will go to better space that just recently are relatively more cheaper than it was previously. They'll go for value and go to A space. Also the suburbs perform differently. I mean, we've seen those who are looking at competitive costs would go to the suburbs. Like, there is a balance that's going on where we are seeing improvements in the suburban office space because of that cost, because it is closer to the users, i.e., office workers who are working in a suburban setting and maybe not wanna go on transit right now as they kinda recover from post-COVID distancing desires. There is certainly in play but, you know, there's a story for each of them where we see Class A office buildings downtown not necessarily having all the retailers open because people are in only 3 days a week at best. That certainly adds pressures to operating a cafe in the parking lots that are in those buildings which would certainly have less income and that would have valuation impacts. A lot to unpack in that point but, you know, we are as a house, certainly, very conservative around that space, and focusing our energies on industrial and multi-res in that context. All right. Thank you. We do have another question about the office space. It is a hot topic like we mentioned. Do you anticipate that some of the office vacancies can be repurposed to residential housing to alleviate some of the supply concerns? Yes. I mean, we're seeing that in the Calgary context, a little bit in Ottawa as some of these buildings, again, the B and C that are well situated to transit, can be converted, i.e., windows. You may want a balcony. You know, not every, not every building is perfectly aligned to be repurposed. You have to effectively take the building back to shell space, as we call it, so back to the concrete and deal with a lot of costs, including HVAC and plumbing, et cetera. You can imagine it's quite expensive time to take that. You have to buy cheaply enough. Calgary does have credits towards that. That's helped take some space off the market. All right. Thank you. Another question that we received is talking about the impact that the current immigration policies are having on the Canadian housing market. The question is whether it is reasonable to expect that the current policies continue, especially if there is a change in government in 2025. Well, you know, we've seen the cap on foreign students come into place. There are a number of folks who are in Canada already, there is quite a bit of momentum already from the demand side to meet the current need of those who are here already. Difficult to quantify some of the folks that are kind of in the shadow population component, which is some of the temp workers and expats that are here. There is even further demand, I think, than what we currently see. Ultimately, there is pressure to alleviate the housing crisis, if I can use that word, in the Canadian context. Don't know whether that'll be impacted too much by even a government change with the amount of demand that currently is in place now without adding further, you know, historical highs to our net immigration that's happening. Great. Thank you, William. Okay, we have received a question about the economy. I will now turn to Nicola. The question is asking about the Bank of Canada target inflation rate. Basically, in the past, the Bank of Canada maintained the policy to keep inflation at around 2%. Do you think this will still be the case, or will Bank of Canada, in your opinion, adjust the target inflation rate in its policy? Good question, and it's been some debate in the academic world and also in the practical world. I would say we think they're gonna keep it at 2%, because of historical reason. I don't think they're willing to take the move to say, let's say, "Let's target 3." They are in a mode of fighting inflation. Maybe a discussion for later, but I think they're gonna keep it at 2. It's been easy for them to forecast economic growth around an inflation target of 2. Even though we think inflation might be stickier for the future for various reasons, I don't think they're gonna keep or increase, I mean, inflation target toward 3% or 4%, 'cause there's always a risk of slippage. If you can, tolerate 3%, why can't you tolerate 4? Why can't you tolerate 5? We end up in a situation that is a bit more complicated. We have the amount of debt we have in the system, I don't think they are willing right now to go above 2. Okay. Thank you. Okay, another question for you. You did speak about some of the supply chain disruptions. For example, the situation with shipping companies in the Red Sea. Do you expect this to be a one-off situation, or do you think that there will be a trend with the geopolitical risks that we're seeing that would create more inflationary pressures? Yes. For the Red Sea issue, it will last as long as the conflict is there, I would say. I think the US and the coalition will be successful at containing, let's say, the damage and keeping it that way. It's sad to say, but couple of missile left in there, they're gonna send missile on the cargo. They're gonna send back some missiles, so they're gonna play cats and dogs. That's unfortunate, but I think it's a one-off situation. On the globalization, what we've seen since 2016, we've been talking about deglobalization, but I think it's more about relocalization. We're seeing more friendshoring and nearshoring. Moving your production or manufacturing out of China towards more closer, let's say, countries such as Mexico. Mexico has been the one benefiting the most in terms of market shares, gaining from China in the last four years. It's the biggest trading partner now of the US. Bringing your manufacturing or, let's say, outsourcing production closer to your home, you avoid that type of risk also. Unless there's some damage being done or out of control situation in Mexico and that south, I would say that that's contained pretty much what is happening in the Red Sea. I don't think. The other geopolitical risk could be Taiwan, China, okay? 'Cause China is still a big trading partner, okay? I don't think they are willing to create a war just because of political disagreement between Taiwan and China at this point. I would say that could be a big disruptor. What is happening in the Red Sea, I think, can be contained pretty much. Hopefully, it can answer your question. Yeah, that was great. Thank you, Nicolas. We are getting close to the top of the hour, and I don't believe we have any other questions that we have received. This does conclude our webinar. Thank you to Nicolas and William for the great presentation. Thank you to everyone who has joined us for your time. I hope everyone has a nice afternoon. Thank you very much. Yeah. Thank you.