Good morning, ladies and gentlemen, and welcome to the Slate Office REIT First Quarter 2023 Financial Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, May 2nd, 2023. I would now like to turn the conference over to Paul Wolanski. Please go ahead. Slate Office REIT. I'm joined this morning by Steve Hodgson, outgoing Chief Executive Officer, Brady Welch, incoming Interim Chief Executive Officer, and Charles Peach, Chief Financial Officer. Before getting started, I would like to remind participants that our discussion today may contain forward-looking statements, and therefore we ask you to review the disclaimers regarding forward-looking statements as well as non-IFRS measures, both of which can be found in management's discussion and analysis. You can visit Slate Office REIT's website to access all of the REIT's financial disclosure, including our Q1 2023 investor update, which is now available. I will now hand over the call to Steve Hodgson for opening remarks. Thank you, Paul. This quarter, we continued to focus our efforts on strengthening the REIT's balance sheet and liquidity position to preserve value for unit holders during a challenging operating environment. We believe the value preservation plan announced following the board's comprehensive review of strategic alternatives will provide the flexibility and capital to continue strengthening the REIT's core business. We're also pleased to have added to our board two experienced independent trustees to provide further expertise and stability. We continue to have conviction in the value and resilience of our office assets. We believe that by shoring up the REIT's capital and balance sheet, we can emerge from this economic cycle in a stronger position. Our long-term focus, which will remain unchanged under Brady's leadership, remains on repositioning our portfolio to align with markets, assets, and tenants that are driving growth and long-term performance. We believe well-located, high quality and modern office buildings with growing strong credit tenants will continue to outperform. We will continue to position our portfolio to focus on opportunities that align with this demand. We are confident that our value preservation plan, operational excellence, and experienced management team will greatly benefit unit holders and position the REIT for long-term success. I will now hand it over to Charles for some additional highlights. Thank you, Steve. As Steve mentioned, in 2023, our focus has been on our existing portfolio and balance sheet. The board unanimously agreed to amend the monthly distribution to CAD 0.01 in April, allowing the REIT to continue to improve its assets and repay debt where possible. Increasing expensive and selective credit markets have made dispositions and acquisitions more challenging. The 5.8% weighted average discount to market rent of our portfolio at quarter end means we can work to expand the revenues from our existing tenants. The REIT focus on operational performance continued in the first quarter, with 120,000 sq ft of total leasing at a weighted average rental rate spread of 5.8% above in place and expiring rents. Net operating income fell slightly over the past quarter, and increased borrowing costs and the cost of the special committee of the board review reduced FFO to $0.06 per unit for the quarter. The NOI is supported by an average weighted lease term of 5.4 years and government or high quality tenants making up 67.9% of the portfolio. While we do have some vacancy, this along with our weighted average 5.8% discount to market rent, gives the opportunity to improve NOI further on our existing assets. In an increasingly expensive financing market, we've had the benefit of our debt being over 90% hedged for the first quarter. As we have a number of maturities this year, we're working with our universal lenders to refinance these and continue to strengthen our balance sheet. I will now hand over for questions. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the number one on your touch-tone phone. You will hear a three-tone prompt acknowledging your request. If you would like to withdraw your request, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Jake Stivaletti with CIBC. Please go ahead. Good morning. Morning, Jake. Given the price tag, is there anything further coming from the strategic review, other than a distribution cut? I think the focus for the, for the board, out of the strategic review after reviewing, you know, all the assets in great detail and all the different alternatives that we had, was, you know, a strong belief by the board that there's a lot of inherent value in the assets and that, you know, trying to sell, for example, into this market would be more destructive to value, whereas, you know, preserving cash is an excellent way to preserve the value of the company. You know, as management team and board, we look at ways to unlock value on an ongoing basis, outside of the scope of the strategic review as well, and we'll continue to do so. How are the tenant incentives for Q1 compared to 2022? It looks like straight-line rents increased a bit. Yeah. What you'll find is that in the leasing that we did in the quarter, we did a fair amount of new leasing of which the weighted average lease term on that new leasing was about 9.1 years. That comes with slightly higher inducements to incent people to do longer term deals. One particular larger lease that we did at 2599 Speakman, which was a building that was 50% occupied and is now 70% occupied. There was additional landlords work that was required to accommodate that life science tenant. Really strong covenant, really strong rents, but slightly higher cost to execute that deal. Okay, thanks. Like, I wouldn't say it's a trend. I'd say it's a more, deal specific one-off. It's a little lumpy. On that 15.4% spread on the new leases, were those spread across the portfolio or more weighted to a certain region? Yeah. I would say it was on the renewal side, it was heavily weighted to Atlantic Canada. On the new leasing side, it was Ontario, which was primarily that deal at 2599 Speakman. Okay. Thanks, guys. I'll turn it back. Thank you. Next question comes from Brad Sturges with Raymond James. Please go ahead. Hi there. Maybe just sticking on the leasing front, you know, given the REIT's, I guess, lease rollover exposure's a little bit more limited over the remainder of this year and then even in the next. I guess, where do you see occupancy trending over the next few quarters? Do you think you'll start to make back some ground from where you are today? I think so, Brad. Like, it's a, it's a difficult environment to have a firm view, you know, 'cause we are starting to see more traction on the, on the new leasing side. Renewals and maintaining tenants at their existing square footage is also a challenge. To your point with, you know, we have pretty good visibility on the balance of this year now on the renewals. I would say that our goal is to at least maintain occupancy, but incrementally improve it by the end of the year. Just with the Atlantic Canada, as you know, I think you dipped a little bit in terms of occupancy. Just can you comment more specifically on that region in terms of the leasing and touring activity you're seeing and, you know, what would your outlook be for occupancy within your Atlantic Canada portfolio? St. John's, Newfoundland, for example, had a pretty strong recovery of about 500 basis points. 5% increase in overall occupancy in the downtown market in St. John's. We're continuing to see some traction there. We were a big part of that improvement in the market. You know, we had some turnover in our Fredericton building with one of our large financial institutions giving back a floor, but maintaining and doing a longer term deal on the floor that they retained. You know, we're still having some turnover, but I would say the sentiment continues to be strong there. The utilization rates are much higher than we're seeing in Toronto. You know, Jeremy and the asset management team are doing a great job, continuing to lease up Maritime Center now that the redevelopment is complete. There's some exciting kind of things happening in New Brunswick, particularly in St. John as well around the energy market and, you know, just some renewed activity there. Yeah. Just to go back to your comment around asset sales not being really prudent at this point, just given the limited transactional activity. I guess when we do start to get more of a opportunity through higher transactions and you're seeing better pricing discovery, I guess I'm curious to know what the strategy would be if you're contemplating asset sales. Would that be more potentially opportunistic by asset or could it be more targeted by region? Yeah. I think it's more by asset. You know, I think we would like to see eventually the, as we've messaged before, you know, our waiting to Atlantic Canada reduce. In this environment, it's probably through dispositions. I think it's more asset specific. What we're trying to focus the REIT on is assets that are high cash yields, low capital requirements, newer buildings, credit tenants that are, you know, life science or like other industries that are growing, and in strong markets. To the extent assets don't align with that, and we can get a fair value for them, we'll look to execute. I think being able to deleverage, the balance sheet will be a great opportunity for us, too, given where the cost of debt is right now, and it just set us up in a good position for, you know, coming out of this economic cycle. Yeah. Hi, it's Brady. I would add like, you know, since 2019, Slate Office REIT sold 280 million of properties. Mm-hmm. We are buyers and sellers, and when we stabilize an asset, and we figure it's the right time to execute, we will sell. I think what Steve's point is that today office is under different pressures besides rising interest rates and inflation. It's human behavior. We will look to sell assets where we feel that we've done our job and it's the right time to sell an asset. We always continually do that at Slate, and that's our job. I think we're pretty good when it comes to, like, operating real estate and figuring out, you know, what needs to be done and sell the asset. We'll always look for those things, opportunities. Last question for me, just more modeling question. I guess G&A has been elevated partly due to the strategic review. How should we think about the run rate, I guess, into Q2 and the rest of the year? I think what you should be doing is The first quarter had the impact of the special review, particularly. My suggestion would be on the G&A side is to look more towards where we were in the fourth quarter of last year as more along the run rate you should be using going forward. Okay. That's helpful. Thanks a lot. Thanks, Brad. Thank you. Next question comes from the line of Gaurav Mathur with iA Securities. Please go ahead. Thank you. Good morning, everyone. Just to your prepared remarks, are you envisioning any change in the tenant mix as you go through the repositioning strategy? Yeah, for sure. That's, that's more of a long-term view on strategy. I, but I think, you know, the message that we put out there and continue to reinforce is that, you know, the environment's changed. As Brady mentioned, it's been a human behavior type issue. Every market's a bit different, but every tenant is different. We're trying to align the portfolio. We're still very bullish on office and think that, you know, employers are going to continue to strive to get people back into the offices because of all the benefits of culture and collaboration, et cetera. We know that every tenant and industry will operate differently, and we're trying to align ourselves with the tenants that will be the biggest utilizers of office space, markets that are proponents of having people back in the office. You know, the deal we did in Ireland is exemplatory of that, as is the deal with the Pfizer building in Chicago. You know, the CAD 280 million of assets that we've sold since 2019, you know, those came with leasing risk, capital risk, a lot of below the line costs, older buildings. You know, The flight to quality is real. It doesn't mean that tenants are lining up trying to go into triple-A buildings necessarily. There's a lot of B and C buildings in the suburbs that, we've had success taking tenants from in our Class A suburban office. That's sort of, we're just aligning our portfolio with where we see the demand. Right. That's a great segue into my next question, because as you're looking at the tenants, filtering through the door, can you maybe perhaps discuss, you know, the level of tenant incentives that are now required to attract tenants and how that's probably changed since the beginning of the pandemic? Yeah. I'd say it's changed since the beginning of the pandemic. Well, I mean, the beginning of the pandemic, there wasn't really leasing activity to speak of. You know, the incentives were actually quite low because tenants were just looking to kick the can down the road and do short-term renewals in their existing space until they figured out what their work, place strategy was going to be. I think what we're seeing now is that bigger tenants are making moves, and they're committing to space long-term. It may be slightly less square footage, it might be more square footage, and tenants continue to evaluate that. To get tenants to move to a new building, there's certainly increased inducements. Those can be in the form of, you know, out-of-term free rent. They can be in the form of a TI package. Base rates have, you know, as we've demonstrated in our portfolio with the growth that we've had in rates, the base rates is not the issue. Like, tenants are motivated by being in the building that works for their employees, that's higher quality, has the right location and, you know, a landlord and operator that can service them properly. They're still willing to pay for that. Yeah, inducements are slightly higher because it's still competitive to get new leases right now. Okay, great. Just my last question, when you're looking at fair value adjustments, what seems to be the toughest part for you to estimate in the current environment? Yeah, I can address that. The, you know, there's still very few comparable transactions in all of our markets. We had some appraisals done at the end of last year, which, you know, indicated some movement in the cap rates and discount rates, which we applied across our whole portfolio. In Q4, we took a write-down on our book values. This quarter we've remained relatively flat. We always have some fluctuations with currency, et cetera. Because any of the transaction comps that we see in today's market, we knew about last quarter and we haven't seen any further evidence of movements. You know, looking at our peers, our like, you know, the views of our auditors, the views of our appraisers, we seem to triangulate, you know, where we think is an appropriate appropriate number in the range of value. I think one thing that I could add to that is that while there's been a lack of transactional evidence, and the transactional evidence is relatively idiosyncratic between particular buyers and sellers, one thing that we have noticed, given that we have refinancing on at the moment, is that those appraisals which match those values that we have, are exactly those which are being used to provide financing to us, showing belief in those not only from ourselves, but also from those others who are willing to provide us financing. Yeah. Thank you for the call, gentlemen. I'll turn it back to the operator. Thank you. Thank you. The next question comes from Matt Kornack with National Bank Financial. Please go ahead. Good morning, guys. Just to follow up on value. Have you guys done any exercise, maybe particularly around the GTA portfolio, trying to get at alternative uses for potential density on sites? Is there anything there with regards to zoning, et cetera, that potentially would add value just given the land that you own? I mean, we have the benefit with Slate Asset Management of having a full development team internally, and we've been exploring this. There's 5 assets in our portfolio. Just for competitive reasons, I won't mention them, but there's five assets in our portfolio where we're actively looking at a change of use or a mixed use component. There's certainly some opportunities out there. I'm not sure. It doesn't work in every market. The math doesn't work in every market. Outside of SOT, Slate's very active in other markets where this is being reviewed, for example, in Calgary. You know, our team's very well-versed in running these models and understanding the economics. I'm not sure. We're in the early stages of that, Matt, but we'll provide an update to the extent there's anything to update on. Yeah. Hey, Matt, it's a great question. We look at all of our assets, particularly the GTA or even other markets where we feel like what's the highest and best use, can we extract more value from the asset? Absolutely, we look at that stuff. Yeah. Okay. Makes sense. Yeah. Thanks. I guess when you think I don't know if we quite know yet what the new kind of normal would be in terms of per capita square footage of office, and it's probably going to change. Canada's seen some of the best population growth in years. I mean, is there any discussion now with your tenants that, "Hey, look, we're hiring more people. We may not need as much space per person," but employment growth has been pretty good. Is it still too early? I mean, there's also recessionary fears, we're in a weird position at this point, just any color there. Yeah. Listen, there's a number of tenants in our portfolio that we speak to that say if everyone were to return to the office, they wouldn't have enough space, right? They're managing the hybrid workforce kind of strategically. I think, you know, they're also saying that they want people back to the office. The employers are telling us that. That's why I get so such a strong conviction that eventually, you know, over time, it's taking a long time in Canada relative to other markets, but over time, we're going to land. It may not be five days a week, but you know, I see it at least being four. That's what our tenants are telling us, and that's what we're hearing on the street, right? I would say, you know, like, listen, there's 40 million people that live in Canada. There's 8 billion people that live on the planet. If you go to other markets, like if you went to Asia, they have 90% utilization of office space. You need to really think long term. Humans are social creatures, and if you want to develop a business, you need to be together as a team. We're big believers in office because that's what you need to do. Canada is a little isolated. It's on its own. Yeah, it's got positive migration, but, like, it's different behavior and different markets. Like, there are markets where office rents are hitting all-time high. It's just a very specific thing here, and you gotta think long term. I think we have great assets with great credit tenants, and it's for the long game, it's not for the short game. I think that's what we believe in. I think that Canada's a great place and it's just a matter of time. Mm-hmm. Sure. Yeah. No, I hope that's the case. Just switching gears a bit, there was some subsequent event disclosure around kind of the financing side. Can you give us an update as to where things stand on that front or at least the approach? Looks like some of them were a bit shorter term, renewals. Yeah. Do you have a sense? Do you go five-year fixed at this point, or do you remain kind of give yourself a bit of leeway in terms of where bond yields may go? Absolutely happy to give a direction there. Given that some of them, those we are in negotiation at the moment, I won't go into full details on those because that is commercially sensitive. What we have had is we have had the opportunity to refinance one of those that you'll notice there on Commerce West with incremental proceeds, which we were pleased to be able to get. On the others that we have, they're in a mix at the moment of certain ones where we are very close in legals, in the legal process, in the refinancing that we have there. I think for the majority of those, we'll be looking at something relatively shorter, something along the two years. I think we have a couple of reasons there. The first of which is we want to ensure that as a portfolio, that we have a reasonable debt ladder of maturities, ensuring that they're fairly well spread out over time. The second of which is, while interest rates have gone up, at the same time, the margin that's been required by lenders has, in a number of instances, gone up, not always, in a number of instances. As such, as opposed to locking that relatively high margin now, there could be an opportunity if one's slightly shorter, let's say in the two years, somewhere slightly north of that, to be able to only pay that for a relatively short period of time before we come to refinance out as well. Okay. No, appreciate that color. Sorry, one last question that's very small, but just the hotel year-over-year, I don't know whether Q1 of 2022 there was something there or if it was a margin issue, but it was a drag on NOI this quarter. I know it's a seasonally weak quarter, but is there anything one time in there or is that kind of just people weren't. No. in New Brunswick in the winter? Yeah. Yeah. It's just, it's just seasonality. The hotel is performing very well. You know, we still expect this year to be at or better what we achieved in 2019. We're very pleased with the return of... You know, group business in the hotel sector is taking longer to recover in the, in the major city centers. These sort of regional smaller association groups are back and the cruise business is back in St. John's and and the leisure travelers. New Brunswick continues to have an incentive similar to what we have here in Ontario, for staycation tax credits. The hotel is doing well. Okay, great. Thanks, guys. Thank you. Next question comes from Sairam Srinivas with Cormark Securities. Please go ahead. Thank you, operator. Good morning, guys. Morning. Steve, just going back to your comment on incentives, I know this might be difficult, but is it possible to kind of tentatively see what the delta looks like or quantify the delta between cash rents and in-place rents? Between cash rents and incentives? Yeah. In-place rents. In-place rents. Yeah, like our portfolio is still market rent still was at 5.5% above the in-place rents. We continue to see that. There has been some incremental cost as of late to secure new leasing. Renewal leasing, we're still seeing the incentives on par with prior history. Yeah. I'm not sure if that covers the question you're asking, Sai. It partly does, Steve. I was just trying to see if you have a broader number to it, but I do understand it might be difficult to kind of put a number to it specifically. If you do, that's great. If not, that's fine too. It's hard to put an average. Like, it depends on the deal, the market, you know, because we have a diverse portfolio across different markets, different types of properties. It's hard to put a number on it because if you extrapolate that, it may not be the right weighted average for, you know, what we have renewing or coming online in the next 12 months, right? That makes sense. Guys, just looking at Ireland, I know it's been one year now since you have had these assets. Can you just talk a bit about the fundamentals seen in that market there and Europe in general and the opportunities out there? I think one of the things that we can hark back to is what Brady said earlier about the fact that we have different markets and some markets are doing relatively better at the moment. Given there's a lower transactional volume, the area in Ireland which there is more transactional and volume is in central Dublin itself. What we see there is we see rates, rental rates there at levels which are the highest that they have had. We're looking at EUR 65-70 per sq ft, which is higher than they have had before. That shows that there are some markets out there which have the ability to attract tenants, and they have good quality tenants there, and those tenants are willing to pay for that space too. Ireland has, from transactional volume, particularly on the leasing side, shown that it's had the ability to improve its rental rates there. The occupancy of our portfolio there sits at 92.5%, which is pretty good in comparison with the remainder of our portfolio. Where we have vacancy, we've shown we've had the ability to fill that vacancy. I think one of the things about those tenants we have in Ireland is the majority of those tenants are FDI. They've come into the country for a specific reason. They found one place where they have the ability to attract employees, and they're relatively sticky once they're in place. As such, a lot of the work that we have there, as opposed to looking for future tenants, is looking to capture that increase to market rent that we can within that portfolio. From a performance perspective, it's doing what we would have expected, and the market seems to be supportive of that too. Yeah. I would just add. Listen, Ireland is part of the EU. It attracts a lot of foreign direct investment from North America. I think we want to put the REIT in a position where we can invest in assets where we see rental growth and strong covenant tenants, and it's a great place. That portfolio is performing extremely well with high occupancy, right? With growing rents. In today's world, with rising interest rates and everything else, inflation, you want to be in a place where you can have an investment with economic drivers. Ireland's a great place to be, and that's why we made that investment, and it's been performing very well. Thanks for those color, Brady Welch and Charles Peach. Just maybe, you know, shifting gears to Canada and just looking at what's been happening over the last couple of months with the strike action. I know there's been a bit of a resolution in terms of federal workers, you know, working from office or working from home, et cetera. Like, do you see any of that flow through to your discussions with your, with your federal tenants? Yeah. sorry, Sa, you said the strikes that went on with the government workers and the related settlement? Yeah. And that- Yeah. Yeah. Like, you know, we are not currently exposed to any near-term maturities with significant government tenants. I think we're all, you know, disappointed in the result of that and, you know, the lack of leadership from, you know, the governments. You know, it's a disappointing result. It's, it's interesting. You know, I think it's 12% over 3 years, which, you know, might be suggestive of where they think inflation's going to be and certainly might set a precedent for other negotiations in the future too. You know, but more importantly to our business and I think just the overall competitiveness of Canada on a global scale, it's concerning that, you know, people only need to be in the office a couple days a week, and somehow are going to be able to provide a public service to taxpayers that's as efficient and as it used to be, right? You know, we're concerned about that. I think as to direct impacts on our portfolio to be determined, but we certainly are less exposed to that particular segment than others. Yeah. Yeah. I mean, Awesome like we don't have any exposure in Ottawa. Yeah you know, in our portfolio, so those federal tenants. Mm-hmm. We have provincial tenants, but we don't have a lot of federal tenants. Yeah. Yeah. It's a concern. It's a concern I think not for Slate Office REIT. Mm. -for the country, right? Like, yeah. Mm-hmm. Awesome, guys. Thanks for the call. I'll turn it back. Thank you. Next question, we have Jonathan Kelcher with TD Cowen. Please go ahead. Thanks. Just a couple questions. Brady, you talked about utilization rates being a lot higher than Canada in different parts of the world. Could you maybe walk through your portfolio and what you're seeing in your different regions? Yeah. I mean, I can give you my opinion. You know, I think what Slate Asset Management can bring is a global perspective. I mean, we invest in Europe, we invest in Canada, and we invest in the U.S., and it is different. Like, if you were to go in the southern part of the U.S., the utilization, say, in Dallas and Florida, would be much different than you see in the northern cities of the U.S. or even in Canada, or say San Francisco and Seattle. It's behavior and it's leadership, as Steve said, both politically and from the private sector. For example, in the west end of London, they're hitting all-time high rents. You know, they used to be GBP 80-GBP 85 per sq ft. They're hitting GBP 135. People are back to work, and they're working there. Big users of space, which we don't have. Like, I would have concern being in office in downtown cores in markets where occupiers aren't having people come back to the office. Like, I would be concerned with that. We're not there. For example, in the GTA, we're actually getting activity because we're not downtown. People are actually wanting to be in suburbia and close to the offices. We're seeing a difference. We're seeing rents that are actually holding up. It is very spotty. It's all to do with human behavior and leadership in those communities. It is what it is, that's my opinion. I think it's going to change, and you have to adapt. Like I do have concerns about big cities who have big financial institutions that aren't working with local political. Like I'd be concerned with, for example, if I was the mayor of Toronto, like who pays for the firemen? Who pays for the policemen? Who pays for all those things? It's not about an office building, it's about a community and getting people back to work. It's an ecosystem, right? Those cities need to give a really hard think about, it's just not office buildings. It's about what's going on in the community so we can pay for all the services that people want. I think like that's why Ireland's performing very, very well. The office assets we have in GTA, they're performing well. It is specific, and you got to give a think about that, right? Like where you want to be. That, that's why we want to be in a place where there's economic engines and people want to actually be there, and they want to occupy space, and they want to grow their businesses, right? Those are the assets we want to own. Okay. How are your Chicago assets doing? Yeah, I mean, like, I mean, Steve, you can probably. Like, I would say, you know, those assets, there is a big regentrification going on in the nodes. Well, we're downtown, where Google is has made a big play to occupy and employ a lot of people. We're pretty excited about what can happen in the node we're in the West Loop. You know, but it's a challenging office market, but I think we're well positioned with those assets. Yeah. I think it's a challenging office market that long term has some exciting things happening in the central loop, as Brady alluded to. There's a whole revitalization of LaSalle Street. There's some proposed tax incentives to convert some major sized buildings into residential and make it more of a live, work, play environment. Long term, we like that. While it's a tough environment right now there, our buildings are significantly outperforming the market, 'cause one is, you know, anchored by CIBC, and the rest of the tenants have good weighted average term as well. So we're isolated in that building. The other building, it's more of a boutique offering, very well located, priced right in the market. We've had tenants vacate, but we've been as successful in backfilling them, so we're doing a good job of maintaining occupancy. The cost inducement costs are higher because of how competitive the market is right now. But I think that'll start to stabilize over time 'cause Chicago's like there's no new supply being built in any of these markets. Chicago is still a very attractive place for employers to be. Great education force, young workforce, and, you know, a really strong tech community. Okay. Just switching over to the balance sheet. I guess one of the reasons you guys cut the distribution was to shore up the leverage. What would your goal be for debt to EBITDA and debt to gross book value? How long do you think it'll take you to get there? The REIT has, and has had for some time a medium-term target for 55% when it comes to debt to gross book value. That recently has been driven, if anything, by changing in asset values themselves as opposed to a positive decision to move towards the leverage where we are at the moment. With the increasing cost of debt, it is more attractive to be slightly less levered. Any change to that is looked into the likes of what is the best use of capital. I think coming out of the special review that we've had recently, that didn't just look at that on an asset perspective about how things capital could be raised from and deployed on assets. It looked across all components of that about whether it might best be used in the repayment of debt, the repayment of which certain types of debt were there at the same time. At the same time, given that we do have value in our assets that we are looking to uncover, what we could do by applying the capital towards those assets as well. While we have a medium-term target of the 55%, I think it would require an element of a change in asset values to assist towards that direction. Along the way, we'll be driven by the board's desire to implement their special review and look across the many opportunities we have for capital in front of us at the moment. Okay. Do you have a target debt to EBITDA, though? I think you were 12.5 in the quarter. We don't have a target for that. To have it lower would obviously be beneficial for us as well. We do keep a very close eye on all of our debt metrics and our covenants at the moment. We don't have a specific target we're targeting there, though. Okay. I get that you're in negotiations with your lenders on the renewals this year. How are lenders looking at loan devalues right now? It was actually good to see you get CAD 1 million out of one of your renewals. Do you think there'll be any assets where you're doing renewals where you'll have to add some equity? I think that's one thing that we've been thinking about that for some time, and I think a good example of that is what we did with 120 South LaSalle at the end of last year, where we had an asset where that had a significant amount of finance against it. In order to improve the cost and availability of financing on that, we repaid $20 million of that at the end of last year as well. When it comes to it's relatively specific asset versus asset. The majority of our financing is on one asset as opposed to another one. We're not afraid of adjusting the leverage on one asset versus another, taking financing where we can and where we have to apply capital to repay financing capital, happy to do that on others as well. Mm-hmm. I think there will be some where we pay down and some where we look to take more. Yeah. Okay. Overall, do you think that sort of nets out? I think we have to see where that goes. Our aim is to look for things to net out at the moment. I mean, if we're looking at assets and what we might do on assets at the same time too, we may take the opportunity to further pay things down if we could do so as well, given where we are from a leverage perspective. Really, like, the output is the loan to value. In today's market, lenders aren't lending off an LTV, they're lending off debt service coverage. The pressure on debt service coverage is on the refinancing analysis that a lender will do on the back end in today's rate environment and, you know, and inflation. The loan to value is just the output from that. To Charles' point, there's some where we're well covered, and there's some where we're closer to the margin of where the lenders are comfortable, and we just sort of need to reallocate our debt, so to speak, throughout the year. Okay. That's helpful. I'll turn it back. Thanks. Thank you. There are no further questions at this time. I'll turn the call over to Paul for closing remarks. Thank you everyone for joining the Q1 2023 conference call for Slate Office REIT. Have a great day. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.