RioCan Real Estate Investment Trust (REI-UN) Q1 2026 Earnings Call Transcript

Good day, ladies and gentlemen, and welcome to the Rio Can Real Estate Investment Trust first quarter 2026 conference call and webcast. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Ms. Jennifer Seuss, Senior Vice President, General Counsel, ESG, and Corporate Secretary. Ms. Seuss, you may begin.

Thank you, and good morning, everyone. I am Jennifer Seuss, Senior Vice President, General Counsel, ESG, and Corporate Secretary of RIOCAN. Before we begin, I am required to read the following cautionary statement. In talking about our financial and operating performance, and in responding to your questions, we may make forward-looking statements, including statements concerning RIOCAN's objectives, its strategies to achieve those objectives, as well as statements with respect to management's beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts. These statements are based on our current estimates and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these forward-looking statements. In discussing our financial and operating performance and in responding to your questions, we will also be referencing certain financial measures that are not generally accepted accounting principal measures, GAAP under IFRS. These measures do not have any standardized definition prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other reporting issuers. Non-GAAP measures should not be considered as alternatives to net earnings or comparable metrics determined in accordance with IFRS as indicators of RIOCAN's performance, liquidity, cash flows, and profitability. RIOCAN's management uses these measures to aid in assessing the trust's underlying poor performance and provides these additional measures so that investors may do the same. Additional information on the material risks that could impact our actual results and the estimates and assumptions we applied in making these forward-looking statements, together with details on our use of non-GAAP financial measures, can be found in the financial statements filed yesterday and management's discussion and analysis related thereto, as applicable, together with RIOCAN's most recent annual information form that are all available on our website and at www.cedarplus.com. I will now turn the call over to Rio Can's President and CEO, Jonathan Gitlin.

Thank you, Jennifer. Good morning, everyone, and thanks so much for joining us today. Our first quarter results reinforce the message we've consistently delivered since our 2025 Investor Day. Rio Can is executing a strategy anchored in our retail core. We are delivering durable organic growth, enhanced financial flexibility, and meaningful long-term value for unit holders. Our strategy is supported by our proven and future-focused platform. It's grounded in a culture of excellence, ongoing innovation and technology advancement and prudent ESG practices. The quarter demonstrated momentum across all our key priorities, including leasing performance, same property NOI growth, capital recycling, and disciplined balance sheet management. And it did so in a manner that is consistent with the plan and targets we laid out at our investor day. First off, I'd like to highlight operations. Record blended leasing spreads of 25.8% in the quarter was driven by new leasing spreads of 58.5%. This demonstrates once again the potent mark-to-market opportunity within our retail portfolio. And importantly, these results are not one-offs. As we discussed last quarter, we continue to benefit from a favorable retail leasing supercycle driven by a combination of expiring legacy leases and constrained new supply. They also reflect the structural advantages we highlighted at our investor day. These include high-quality, necessity-based retail in densely populated, supply-constrained markets, and strong, long-standing tenant relationships fostered over the last 30 years. We don't have an external sponsor that influences our decisions. That means we remain focused exclusively on maximizing the productivity of every square foot of our portfolio to drive unit holder value. The combination of our leasing strategy and full operating independence continues to translate into durable, repeatable growth. Our sustained organic growth reflects disciplined execution of our retail-focused strategy. Over the last 12 months, that focus has delivered blended leasing spreads of 23.1%, which are now beginning to translate into same-property NOI growth. Our competitive advantages were on full display again this quarter, with commercial same property NOI growth of 4.7%, marking the third consecutive quarter at or above 4.5%. While we expect commercial same property NOI growth to move modestly quarter to quarter, this level of performance reinforces our confidence in the full-year outlook of 3.5% to 4%. In the first quarter, we achieved a 92.4% retention ratio and a 98.6% committed retail occupancy. This underscores the resilience of our cash flows and our ability to strike the appropriate balance between peer-leading rent growth and extremely high occupancy. What we're seeing today is the compounding effect of years of disciplined portfolio positioning where leasing strength, occupancy, and mark-to-market gains reinforce one another. A second major pillar of the strategy we presented at our Investor Day was strategic capital recycling, particularly through Rio Can Living. The progress this quarter was meaningful. As of May 4, 2026, we anticipate repatriating approximately $1.04 billion through closed, firm, and conditional transactions. This represents approximately 80% of our $1.3 billion Rio Can Living disposition target. We continue to see strong interest in the remaining four Rio Can Living assets. We're monetizing residential rental buildings and residential inventory. In doing so, we're simplifying our business and increasing clarity in our earnings profile. The proceeds are being redeployed accretively into portfolio investments, unit repurchases, and balance sheet flexibility, exactly as we outlined at Investor Day. Our capital allocation decisions continue to be guided by a disciplined hierarchy, always having a view on the most accretive outcome. During the quarter, we reinvested $22 million into high-return portfolio investments, including retail infill and asset enhancements. This allows us to unlock embedded density within our existing footprint. At the same time, we remained opportunistic in the public markets, repurchasing and canceling 2.6 million units at an average price of $19.51 under our NCIB program. This reflects our view that the current unit price does not fully reflect the value and earnings power of our business. There has been a steady stream of private and now public market transactions involving high-quality retail assets and portfolios that are similar to ours. These market reference points offer strong evidence of current valuations for assets like ours, reinforcing that we are trading at below NAV. Our balance sheet remains well positioned as assessed by a suite of key credit metrics. RioCan's adjusted spot debt to EBITDA is 8.94 times. As we advance our capital recycling strategy through 2026, we fully anticipate net debt to EBITDA to settle into the midpoint of our stated guidance range. The strength and flexibility of our balance sheet were further recognized this quarter as Morningstar DBRS affirmed our BBB credit rating and revised the trend to positive. Looking ahead, we reaffirm our 2026 financial outlook, including core FFO per unit of $1.60 to $1.62. Additionally, we reaffirm our guidance of commercial same-property NOI growth of 3.5 to 4%. These targets are firmly supported by embedded leasing spreads already achieved, strong visibility on 2026 lease maturities, continued discipline and capital deployment, and reduced capital intensity as we complete the wind-down of mixed-use construction. In closing, Q1 was a strong start to the year and a clear reflection of our consistent execution of the commitments we outlined at investor day rio can has a focused strategy in is perfectly positioned to compound organic growth the trust has strong leasing fundamentals and a data platform that continues to provide multi-year growth visibility we're also equipped with the balance sheet flexibility to act decisively. In this turbulent world, owning hard assets with reliable cash flow in prime markets is advantageous. To put it another way, it is a great time to invest in RIOCAN. With that, I'll turn the call over to Franca Smith, RIOCAN's interim chief financial officer, and afterwards will be happy to take your questions.

Thank you, Jonathan, and good morning, everyone. Our first quarter results were in line with our expectations and reflect continued progress on the priorities we set out at our investor day, driving organic growth from our retail core and maintaining a disciplined approach to capital allocation. Our balance sheet remains strong, supported by healthy credit metrics. Our financial flexibility continues to improve as we execute our capital recycling strategy. I'll walk through the quarter, starting with Core FFO. As discussed at Investor Day last fall, we intentionally moved to Core FFO as a key performance metric because it better reflects the recurring earnings power of our core retail business. Core FFO also gives a more consistent basis to track and assess operating performance and cash flow generation over time. Mechanically, it starts with FFO and adjusts for items that don't reflect our underlying run rate operations, such as residential inventory gains, HBC-related income, and restructuring charges. Core FFO in the first quarter was $0.39 per unit in line with Q1 of last year. There were four primary drivers of our core FFO results. Commercial same property NOI increased 4.7% year-over-year, contributing over $0.02 per unit. Our unit buybacks had a positive impact of approximately $0.01 per unit. These factors were offset, primarily by higher interest expense and lower interest income, which had a combined impact of just over $0.02 per unit. and lower NOI from the sale of residential rental assets had an impact of approximately $0.01 per unit. We anticipate Core FFO to ramp up over the balance of the year, and as Jonathan mentioned, we expect to deliver on our 2026 guidance. Turning to other items in the quarter, we recorded approximately $2 million of one-time restructuring costs related to the reduction and consolidation of development and construction functions. Adjusted G&A expense as a percentage of rental revenue, which excludes these restructuring costs, is expected to remain below 4% on a full-year basis. We also recorded approximately $6 million of condo-related income in the quarter. Remaining residential inventory under construction is approximately $100 million at our proportionate share or roughly 1% of NAV. While this balance will be addressed responsibly over time, we do not expect condominium-related items to make a material contribution to FFO for the remainder of the year. Together, these two items account for the majority of the difference between FFO and core FFO. Moving on to our balance sheet. Our adjusted spot debt to adjusted EBITDA ratio was 8.94 times at quarter end. The increase versus year end was primarily driven by acquisition timing related to Georgian Mall and Oakville Place, where the associated EBITDA contribution builds over time, while the associated debt was recognized immediately during the quarter. We expect these acquisitions to contribute positively to both Core FFO and our leverage profile over time. Looking across our suite of metrics, our unsecured debt to total debt improved to 66%, and this mix will continue to improve as we execute on our financing plan. We had approximately $9.4 billion of unencumbered assets and approximately $1.3 billion of available liquidity at quarter end, providing ample financial flexibility and capacity. as jonathan also mentioned during the first quarter dbrs reaffirmed our triple b credit rating and revised the trend from stable to positive we view this as an important endorsement of our balance sheet trajectory and the continued progress we are making on deleveraging on financing activity during the quarter we raised 200 million of senior unsecured debentures with a 4.308% coupon rate and a seven-year term. We also repaid $100 million of unsecured debentures upon maturity. For the balance of the year, we expect that our capital recycling activities and capacity on our credit facility will be used to repay the vast majority of our remaining debt maturities. Additional debt issuances will be completed on an opportunistic basis. to wrap up our first quarter results represent a strong start to the year and align with the three-year outlook we shared at investor day operating fundamentals across our portfolio remain exceptional and we are delivering on our strategy and commitments both private and public market transactions continue to validate the inherent value of our business and we remain focus on executing our plan to drive unit holder value. With that, I will turn the call back to the operator to begin the question and answer session.

We are now ready for the Q&A portion of today. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. Once again, that is star followed by the number one to enter the question queue. We will pause for just a moment to compile the Q&A roster. Okay, our first question is in queue. If you can please state your name and company, that would be greatly appreciated.

I didn't know whose line is open. Just one more little technical difficulty, but let's put that behind us and get down to the good stuff. So on same property and OI, you guys had a continuation, I think, of some solid prints in 3Q and 4Q into 1Q. And I think you called out a part of that was the spaces that have gone dark in 2024, cash rents resuming. How do you expect same property and OI to trend over the balance of the years? Kind of 2Q should be another one that's a little bit outsized and it moderates a bit over the back half.

Hey, Lauren, a couple of things to start. First of all, no need to apologize on your end. This is totally our service provider's issue. Second of all, love the headline of your report. Wooderson is always a good quote. Thirdly, with respect to SPNOI, we had a great quarter. The year is going very well. It's a little too premature to predict the entire remainder of the year, and we still remain very confident in our guidance. It will be between 3.5% to 4%. things are all pointing to very favorable outcomes and if the year continues to go the way it is going we will provide updated guidance in the coming quarters but right now we are firmly confident behind the three and a half to four percent number that we gave out in our guidance okay that's that's good to hear and then maybe just flipping to the Rio Can Living side of things It seems like you guys made some really, really good progress there.

I was just wondering if you'd give us a, I know it's a sensitive one, but a rough idea perhaps of the yield on the assets that are either sold or under agreement to be sold, and then just maybe an idea of the buyer profile.

Sure, Lauren. So it's all in line with our IFRS values, and it's in the low four to mid four range. across the board. Now that's a balanced summer, lower summer, or a bit higher. The buyer pool is consistent with the pool of buyers that we've had to date, which is a range. It's some private wealth and family net, sorry, family office buyers. It's some institutional buyers and it is some private equity buyers. So it really is a range.

And I guess as you kind of look ahead, I think you've got four or so left to go. Has there been any change in the acquisition transaction environment since the aforementioned deals were consummated?

No, it still remains strong. These assets are new. They're transit-oriented. They don't have rent control. And there's a high degree of demand for them. For us, it's just a question of getting all of them stabilized, getting the lease up as we we intend to get it and then i think there will be a fairly robust market for them okay and then i guess just to be clear you still expect those remaining four to kind of hopefully transact on them by the end of the year so as i had indicated previously it's our intention to get them done as quickly as possible just because of stabilization taking a little bit longer there might be a couple of them that trickle into 2027 but our hope is that we have them contracted for by the end of the year and we'll provide updates as the year progresses but

given the strength of the assets um and given our desire to sell we are confident that they will all be sold in short thrift okay thank you so much i'll turn it back thanks lauren our next question comes from the line of matt cormack your line is open hey guys um you had a strong quarter on same property and uh no i growth um and that's notwithstanding it looks like recoveries were maybe 99 as opposed to 100 uh historically uh could you give us a sense of that that's just a timing issue in in this particular quarter and then also percentage rent looks a little bit low

relative to what we've expected in the past but if there's any anything color wise there that would be helpful um yeah so i i think it's all just seasonality um i don't think there's anything to read into it um on the percentage rent most certainly it's seasonal and we that usually picks up as the year progresses and on the recoveries um again i think that is really just a byproduct of the fact that it was first quarter usually a little bit softer on the recoveries but that usually uh stabilizes and ramps up by the end of the year yeah matt the only thing i'd add this is John Valentine percentage rent, you will probably see that drop over time, not because tenant sales productivity is decreasing, but because we are converting some, I would say, historic or legacy

percentage rent in lieu of net rents.

So, you know, based on the hotness of this leasing market, we're able to get in front of these tenants and convert them to net deals, which will obviously benefit uh same property in a line okay no that that makes sense um on the in-place occupancy front committed remains essentially at an all-time high fold but there was a little bit of a dip in the in-place um did you have some tenant turnover and if we look at your uh new leasing spreads in like the 50% range is that the kind of rents you're getting on on any sort of turnover you're seeing in tenants uh yeah i think that the um this is i would say an anomalous quarter with

respect to that that gap between committed and in-place occupancy um based on the leasing that the team has done you're already seeing that gap close quite dramatically um and largely due to the hbc deals that we did in oakville place and so i think uh you'll you'll see it back to the normal range closer to 75 beeps which is our historic average um and the second part of the question i can hand it over to yeah and and look matt the in-place occupancy did drop we did buy a half interest in oakville and georgian mall which obviously had those two hpc boxes which have been fully leased but uh are not paying rent yet that accounted for about 40 basis points as jonathan said with um oakville taking possession in uh april uh there's only about a 70 basis point gap now between committed and in place yeah and you'd ask about the new leasing spreads i mean look it's just a sign of the market the sign of our portfolio and the sign of our team uh strengthen them all and we feel confident that you know while this is an outsized quarter for new leasing spreads it is it sets a tone and i think it it uh is it underscores the strength of the markets out there on on that front maybe just a broader commentary um i mean it seems i didn't think they could go higher but you're setting all-time records like is the market

sequentially still improving or are we at a period of stability here now after getting some really good red growth it's just it seems like you you've got continued momentum and interested if you're being that in the marketplace now.

It's certainly been a great quarter and we think it is quite durable. That said, all of our projections that we provided at Investor Day were predicated on a 15% leasing spread combined. These leasing spreads are obviously in excess of that and we are certainly taking advantage of a very strong market, an ever-improving portfolio and a team that It has very deep relationships to continue driving growth. The consistency of these spreads, they're going to ebb and flow. I mean, they're very sensitive to specific deals, and you'll see a bit of fluctuation between quarters. But right now, based on all those strengths that I spoke about and the strength of the Canadian retail landscape, we feel confident that there will be a continued strength in that regard and operationally for Rio Can. But as I said, you're not going to see that exact same level every single quarter going forward. But we're happy with where we currently stand. And we think it's reasonably sustainable, but there is going to be ebbing and flowing.

That makes sense. Last one for me, just obviously we've had a big M&A trade at a pretty low cap rate for some of the more core assets. Does that give you comfort around your IFRS value? maybe some optimism on the portfolio being more than what you thought it was worth or just any read-throughs from a fairly sizable transaction in the grocery industry?

I don't even know which transaction you're referring to, Matt. I jest. Of course, for us, we've always been comfortable with our IFRS valuations. That's why we certify them and put them out there. That being said, I think that transaction stands as a great validation for the strength of retail in Canada and the desirability of it for both institutional owners and other REITs. So I think, again, it just draws us closer to what the private market has been seeing for quite some time. We've been seeing trades, I mean, they are quite disparate because there haven't been a lot of them, but we've been seeing trades that are also indicative of a very strong market for retail assets. So this didn't surprise us, but I think it just serves as broader validation behind the strength and desirability of great major market retail assets like those owned by RIOCAN.

Thanks, Ben.

Thanks for your patience.

Thank you. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. Our next question comes from the line of Sam Damiani with TD. Your line is open.

Thank you. Good morning, everyone. Maybe just on the leasing side here, obviously a highlight for everyone seeing these spreads. You know, occupancy, you know, remains essentially full. You really can't accommodate, you know, new demand except for any turnover that you have, which also remains low. So, you know, how is the leasing discussions changing? How will you be the mix of tenant categories that you're dealing with as you deal with this increasingly scarce amount of available space in your portfolio?

So first of all, thanks for your patience, Sam. And I understand that you might have missed the extremely eloquent opening remarks by Jennifer, myself, and Franca. And we'll get those to you. But the backdrop. Oh, good. They were brilliant, right? The backdrop is very strong. And I think we're doing extraordinarily well with the necessity-based tenants. But keeping in mind that we do have this mark-to-market opportunity that we have been conveying for a very long time. Our average new rents in the quarter were now well over $30. Our average rents across the portfolio were just over $23. That leaves a sizable room to really extract what we feel are market rents out of our portfolio. And the team has done an extremely good job in taking tenants through this and making them understand what the true landscape is. And we are using data more so than we ever have to figure out exactly where market rates lie. But with respect to the tenants out there that are utilizing the space, it really is the list of the same incumbent tenants that you've seen that make up a part of our portfolio for quite some time. I'll turn it over to Oliver Harrison, just give you a little more color on who they are. But I don't think you'll hear any surprises.

Correct. If you look at our quarter, the volume is really being driven by grocery pharmacy, essential personal services. No change from what we've seen over the past few quarters. And back to your first question, excuse me, on how the negotiations have changed. I would say the only thing that is being done differently, and this isn't like a Q1 event, but this has been happening, let's say, over the last year to 18 months, is that the negotiations are more holistic than just the economic outcome of the deal. You know, we are using the current market environment to remove no builds. New leases do not have any fixed rent options. You know, annual growth is, you know, is a concept that, you know, two years ago was was challenging to get tenants to agree to. 98% of our deals now have some form of annual growth embedded in the negotiation. So we are leveraging all aspects of this market to produce not only the best economic outcome of these deals, but from a long-term kind of value creation and flexibility, I think we're doing extremely well.

Okay, great. That's helpful. And maybe just on the other side, are there any known larger or multi-space retailer tenants that you expect to be moving out or not renewing in the coming year?

I think just there's certain tenants that we know might leave a space, but they're sporadic. There's no theme to it. And the good news is there's demand for whatever space we know might be coming back to us.

Okay, great. And just one last small one. You know, it was a pretty tough winter. Just out of curiosity, was there snow removal costs, you know, meaningfully above normal in Q1?

Hey, Sam. Yeah, they were. You know, there's probably four or five larger centers in the GTA area that we actually had to haul snow, which is expensive, which means you basically have to bill the tenants. The tenants do pay for all this. We had to send out some interim billings just to catch up on that. And all good.

Yeah, and stowal removal is not included in the limited number of tenants that have caps on CAM, so it's fully recoverable.

Oh, that's good. Okay, great. I'll turn it back. Thanks very much.

Thanks, Sam.

Our next caller comes from a line of Brad Sturgis. Your line is open.

Hey, good morning. Just from a capital allocation perspective, just thinking about the NCIB, obviously, you know, leverage ticked up over the quarter of a quarter, and at the same time, I guess, your stock price improved. Like, how do you think about capital allocation towards unit buybacks in the short term as still an opportunity, or should we see a little bit of a change in thinking, at least in the short run, on the NCIB?

Thanks, Brad, and again, thanks for your patience on the call today. The capital allocation decisions are really rooted in achieving our 9% unlevered IRR hurdle. When the stock price goes up or the unit price goes up, it obviously makes it challenging to achieve that. The good news for us is that there are other opportunities to invest in, such as putting money into our own shopping centers, building out pads and strips, which in this environment certainly allows us to hurdle that 9% IRR number. But yeah, if we are in the fortunate circumstance where the unit price continues to increase, then NCIB becomes less of a promising prospect for capital allocation. But we feel that there will be other opportunities that arise out there. And then the other thing I'll just remind you of is that the balance sheet and the strength of it is a core principle for Rio Can. And so that will always be our principal focus. And, you know, as we've asserted before, as Rio Can Living Assets close as the year goes on, it will continue to strengthen that balance sheet and we'll get closer to the mid part of that range for net debt to EBITDA.

And just on the intensification opportunity, I know you've highlighted a few times in terms of the potential across the portfolio. I guess, is there in the short term, could we expect a couple more projects getting added into the active pipeline or how should we think about that over the remainder of the year?

Yeah, I think we've already put out guidance that we're going to spend about $100 million in 2026 on a combination of CapEx endeavors, one of which is, of course, putting money into pad build-outs and strip build-outs. And I think that's going to be fairly consistent. We're going to seek out as many opportunities as are logical on a year-by-year basis, but I think that's a logical run rate for years going forward. But we'll continue to update that guidance.

Sounds good. Thank you.

Our next question comes from the line of Dean Wilkinson. Your line is open.

Hey, Dean. Thanks for having me.

Always, you know me, I hang. Jonathan, look back over our illustrious careers. Every time we've seen things get better, right? Occupancy tightens up and rents are going up. New supply tends to come into the picture. When you look at the landscape now, is it still a case that just, you know, new construction costs, given land, all of those things associated with it, you just can't pencil that out. So the runway for existing assets is probably a little longer than maybe it has historically been.

I'm highly confident that there'll be no material supply in the Canadian landscape anytime soon, Dean. And that's not just because of the economic context. It's not just because you need certain rents to justify new build. You also need to find land, you know, unencumbered land of many acres that have rooftops and the appropriate demographics surrounding it. That's very difficult to find. And then the attributes of that land have to be such that they're easily accessible, they've got great visibility, and that you've got tenants that necessarily want to be in that specific area. These things take time to find, and they're very far and few between out there. I would also say that you also have to get that land zone, which is another very high barrier. And for us, this is a long time away. If Rio can't find viable land and the viable opportunities to build de novo, so greenfield new sites, then I suspect many others in the field will also have such difficulty, which is, I mean, obviously a two-sided coin. on one hand it really protects the landscape there will be no material supply going forward but on the other hand of course it does limit our opportunities to build anew the good news for us as i alluded to before is we have this excellent opportunity set which is our own portfolio and there's a lot of density to be had in that portfolio which as you can see from our um you know from the activity in our portfolio this year we are fully intent on extracting and building out

So that's the benefit of the cost basis. And I suppose this is why investors are willing to pay a premium to book value to acquire assets, not a discount.

That's it. Thanks a lot, John.

Thanks, Dean.

Our next question comes from the line of Patti Burr with RBC Capital Markets. Your line is open.

Thanks. Good morning. Just maybe coming back to the four Rio Can Living rental residential properties that are left to sell, where are they now in terms of that sale process? Like, have they been listed or just not yet as you work to stabilize them?

I would say there's no consistent theme, Pommie. They're in different stages. Some of them we are actively putting in the market in very short order, and others we're actually working on some off-market discussions, and others are just not ready to do either. So they really do range. But as I said previously to one of your colleagues, we are confident that those assets will be sold. I mean, I will not say with certainty that all four of them will be sold and finalized by the end of 2026. I have indicated that there might be a couple that literally just flow into next year simply because the assets aren't ready to be sold. They're not stabilized. But I don't think it'll be a big delay beyond that.

Okay, got it. And then I did want to come back to, I guess, maybe clarify some of the comments on the remaining condo inventory that's under construction. In that $1.3 billion target in a capital re-entaturation, I think there's still about $120 million related to condo closings, if I read that table correctly, in order to hit that target. But then I think your commentary, Frank's commentary, suggested that there's no further condo income this year that I guess you anticipate. So just trying to reconcile those two comments. And should we essentially infer that there's no further proceeds coming back this year in order to hit that $1.3 billion or just it wasn't clear?

So I'll start and then hand it to Franca. But there's about $100 million of inventory remaining. About $14 million of those are under contract. We expect most of those to close. And then the remainder, we didn't prognosticate closings for the remainder of 2026. But in terms of how it features in that 1.3, I'm going to hand it over to Franca.

Yeah, Pami, there's also some, if you look at the reconciliation in our materials, There's also some receivables that we're going to be collecting from one of the projects that are entering into final closing. So that's going to be added to the proceeds. Right now, as we sell them, you know, we close on interim. When we get to final closing, we collect the cash. So you'll see that coming through the reconciliation as well.

So the 1.3 in total is still the right number?

Okay, so it's still the right number. so the the total condo i guess uh proceeds frankly to your comments on the receivables the 370 is the cash number that uh should come through like the 370 million is the average number that should have been collected between 2025 and the end of this year yes right okay um and then just in terms of the uh the restructuring charges i mean is this uh do you feel at this point like So there's no further, I guess, any additional anticipated changes coming or charges, or are there perhaps some further efficiencies across the business that, you know, you're looking to, you know, we may see?

No, I don't think there's anything material.

Okay. And then just lastly, I just wanted to come back to the comment around annual rent steps. You know, obviously, we saw this within, we've seen this with the industry now for many years, and certainly in retail, we've been talking about it and seeing it as well. But what range of spreads are you putting in, or sorry, annual steps are you putting in into some of the renewal leasing or the new leases?

Yeah, the objective is always 3%. We are attempting to do the greater of 3% in CPI, but that's, of course, the objective. Sometimes you'll get a little more, sometimes you'll get a little less. Oliver, did I?

Yeah, it's been 2% and 4%.

Okay. All right. Thanks very much. I'll turn it back.

Thanks, Fami. Thanks for your patience.

And I am showing no further questions at this time. I will now turn the conference back to President and CEO, Jonathan Gitlin.

Well, thank you very much. And again, for all those of you who are still on the call, I really do appreciate your patience with the technical difficulties that we all experienced. I'll leave you with this. Our first quarter clearly demonstrates execution of the strategy that we presented at our investor day. We're delivering exactly what we said we would. We have absolute confidence in our people, our portfolio, and our strategy to drive long-term value. Thanks, everyone, and thank you again for your patience.