Choice Properties Real Estate Investment Trust (CHPUN) Earnings Call Transcript & Summary

Good afternoon, everyone and welcome to Choice Properties' Inaugural Investor Day. We are thrilled to have you here with us, either in person or virtually via our webcast. We are excited to show you how we are successfully delivering today and how we are well positioned to grow in the future. My name is Erin Johnston. I'm the Vice President of Finance and Investor Relations for Choice. I've been with the Weston Group of companies for over 11 years and with Choice for this past year. First, we would like to remind everyone that we'll be making forward-looking statements today. Please refer to the disclosure on the screen. I will not read the beautiful pros by our legal team, but this will be available on our website, and I encourage you to read it after today. Before we begin, I would like to acknowledge that the land we are meeting on is on the traditional territory of many nations, including the Mississaugas of the Credit, the Anishinabek, the Chippewa, the Haudenosaunee and the Wyandot people and is now home to many diverse First Nations, Inuit, and Métis people. We also acknowledge that Toronto is covered by treaty 13 with the Mississaugas of the Credit. Today, this meeting place is still the home to many indigenous people, and we are grateful to have the opportunity to live, work and play on this land. As a nonindigenous person myself, I am committed to supporting indigenous initiatives. From coast to coast, Choice acknowledges that we operate on the traditional territories of diverse indigenous nations and communities, whom we recognize as contemporary stewards of the land and vital contributors of our society. The theme for today's event is Delivering Today, Building For The Future, Choice is Canada's preeminent real estate entity. We have delivered consistent and stable returns. We have a proven strategy, and we are uniquely positioned to maximize value in any economic environment. We are positioned to build for the future and deliver growth in the near, medium and long term. With me here today are key members of our senior leadership team, each of whom bring a depth of experience to our business. They will introduce themselves throughout the afternoon. As I said we are Canada's preeminent REIT, and we will demonstrate that today by discussing our business, our competitive advantages and what truly makes Choice unique. We will walk you through our strategic direction, our existing portfolio. We then have a panel with Loblaw, and then we'll have a break. We'll walk through our transformational development, have a panel to talk about how we're leading in ESG, our relationship with George Weston Limited and our financial review, followed by a Q&A. We are excited to have members of the Loblaw real estate team here with us today as well as Galen Weston, Chairman and CEO of George Weston. They will provide insight on how we are collaborating together and building for the future. Although not speaking, also here with us today is Gordon Currie, Chief Legal Officer of George Weston and Chair of the Choice Board. There'll be breaks throughout the day, and we'll end with Q&A. With that, I'd like to hand it over to Rael.

Thank you, Erin, and welcome, everyone, to Choice's first Investor Day. Before I begin, I really want to thank Erin for organizing and planning today's event. She has really helped me and our team be prepared, and we're really excited to share our story with you today. So I joined Choice in 2018 when it acquired CREIT. At CREIT, I was President and Chief Operating Officer for 4 years and Chief Financial Officer for 2 years. Prior to 2012, I was with Brookfield where I served as CFO of numerous of their public real estate identities. I'm supported by a strong and talented team at the back of the room and we really are excited to share our story with you today. As Erin mentioned, today's theme is "Delivering Today, Building For The Future". Our journey over the last 5 years has been focused on becoming the market-leading REIT that we are today. I'm proud to stand alongside today's speakers, and we will demonstrate how we lead the market in multiple areas. This is why we are Canada's preeminent REIT. Looking ahead, our fundamentals are stronger than ever. We have a proven strategy to maximize the value of our portfolio and create enduring value for all stakeholders well into the future. Today, we are a West Block, and this property is a great example of what we do best. We've created a place with businesses, residents and the broader community can come together to live, to work and to connect. This mixed-use property is anchored by Loblaw's grocery store and a Shoppers Drug Mart pharmacy providing essential goods and services to the community. It has a residential component and modern office space that is easily accessible via public transit. Finally, it incorporates both environmental and social sustainability features throughout. For those of you who are joining virtually, there's a virtual tour of West Block on your webcast dashboard. And for those of you who have in person, there's a QR code on your desk for you to scan. I encourage you to take a look and explore West Block during one of our breaks. Let me spend a few moments walking you through our strategic framework by owning real estate that is essential to everyday life, we create enduring value for our unitholders. So how are we going to do this? We're going to focus on 3 crucial financial goals: first, preserving our capital; second, generate stable and growing cash flow; and third, achieve net asset value appreciation and distribution growth over time. Financial success for us means meeting these objectives over a long-term investment horizon. Now we plan to achieve this by focusing our business on 3 priorities. Our first priority is to maintain a market-leading portfolio. Simply put, we want to ensure that our portfolio delivers over the long term. And to do so, we will actively manage our assets and capitalize on opportunities to recycle assets that won't meet our goals. Our second priority is to sustain operational excellence. We have a proven operating platform. With a focus on delivering exceptional services to our tenants. Our team is committed to enhancing our tenant service program and managing our assets to the highest possible standard. Our third priority is to deliver on our development pipeline. Development is one of our most significant opportunities for long-term net asset value growth. Through development, we aim to add high-quality properties to our portfolio and expand our tenant base for increased diversification. Our strategy is supported by an unmatched foundation. This provides us with a competitive advantage that you'll hear about today. Finally, in everything we do, we are grounded by core values of care, ownership, respect and excellence. By remaining focused and continuing to successfully execute on our strategic framework, we have become the Choice Properties of today, a preeminent real estate entity that has delivered, that has outperformed and will continue to do so. Understanding our history will help you understand the irreplaceable foundation upon which our business sits. We have taken decisive steps to position our business for long-term success. It all started in 2013 with IPO. In just 5 short years, we acquired 123 properties and completed more than 60 intensification projects to become Canada's third largest retail-focused REITs. In 2018, we acquired CREIT. In doing so, we became Canada's largest REIT. We expanded our portfolio to other strategic asset classes and we established a best-in-class operating platform. That year, Loblaw spun off its stake in Choice to George Weston. In doing so, we gained a more natural long-term owner that supports our growth and diversification plans. During this time, we have continued to improve our portfolio through active asset management and capital recycling. Finally, last year, we strategically exited the office asset class to focus on opportunities in our core asset classes. Now let me elaborate on a few of these key milestones. Over the past 5 years, we've been the most active REIT in terms of capital recycling. We've completed $3.7 billion in property transactions. This includes $2.3 billion of dispositions aimed at ensuring our assets align with our strategic goals and helping us reduce our leverage to give us more financial flexibility. We've also reinvested $1.4 billion of these proceeds into acquisitions aimed at acquiring top quality retail assets and expanding our prospects in industrial and mixed-use development. Our investment strategy is guided by our ability to achieve scale. Since we did not feel this was possible in our office portfolio, we made the strategic decision to exit the asset class. So far, we've sold 9 out of 11 properties with the remaining 2 to be sold soon. Of these 9 properties, 6 were sold to Allied Properties for $734 million. In return, we received units that gave us an 8.5% ownership interest in Allied. This investment in Allied provides us with the stability and growth from Allied's premier office portfolio and the flexibility to redirect our capital from the Allied units into our core business segments in the future. With a 98% occupancy rate, we have clearly established a best-in-class operating platform. That includes a -- that includes an unwavering focus on maintaining a market-leading portfolio and sustaining operational excellence. We have demonstrated our ability to execute on our development pipeline and have successfully improved the quality of our portfolio and diversified our tenant base by developing high-quality retail, industrial and residential properties. Everything we have done has led to the market-leading portfolio that we have today, the benefits which were abundantly clear when the pandemic hit in 2020. Our business was strong, our business was stable, and we maintained our distribution during this difficult time. Our portfolio is focused on 3 strategic asset classes. They all have strong fundamentals for long-term value creation. Our retail portfolio is the largest and most resilient in Canada. It accounts for 80% of our portfolio, and we are comfortable with its size. Our industrial portfolio has the potential to be 1 of the largest in Canada. It includes high-quality generic assets in key distribution markets that appeal to a wide range of users. It currently represents 15% of our portfolio, but with a 7 million square foot development pipeline, it is expected to represent 20% to 25% of our portfolio once fully built. Finally, we also expect to continue to grow our mixed-use and residential platform over the long term. It currently makes up 5% of our portfolio. One of the key elements that sets Choice apart is the unmatched foundation upon which our business sits. This foundation is a true competitive advantage. Let me elaborate further. Our strategic relationship with Canada's largest retailer provides stability and unique value creation opportunities that you'll hear about today. We've created an industry-leading balance sheet, reducing leverage from 8.9x debt-to-EBITDA at the end of 2018 to 7.5x today. Our balance sheet coupled with our conservative approach to financial management provides stability and flexibility. We lead by example in ESG. We prioritize environmental and social sustainability practices and governance oversight in all aspects of our business. This supports long-term value creation for all stakeholders. Simply put, we do the right thing, and we do things right. We have an experienced and talented team of real estate professionals. We value diversity and our executive team is evenly split between men and women. Our focus on nurturing our workplace culture has boosted employee engagement with scores over 85%. It will become increasingly clear throughout the day that we have a top-notch team, and we are confident that we will continue to attract the best talent in the industry. Our achievements to date demonstrate the power of our strategic framework. We have created an unmatched portfolio and a platform that is set to deliver stable and consistent returns for unitholders in the future. If there is 1 thing that I really want you to understand it is this. It is that Choice is truly in a class of our own. We lead in all the areas that matter most for our continued long-term success. We are the largest REIT in Canada and as I said, focused on 3 strategic asset classes, all with strong long-term fundamentals. We have an unmatched retail portfolio. No one in Canada owns more necessity-based retail than Choice. We have a strategic relationship with Canada's largest retailer. As I said, this is a competitive advantage to Choice as it provides opportunities for value creation. We're 1 of the largest landowners in the major markets of Canada. If you just think about the Greater Toronto area for a moment, we own more than 100 retail properties, many of which can be intensified over time and we own 530 acres of development land. People often ask me what is 530 acres and I translate it into football fields. It's over 400 NFL football fields. We have the strongest balance sheet as evidenced by the highest REIT credit rating in Canada by DBRS. And finally, we have a real commitment to ESG. We were the first public entity in Canada to get our net 0 targets validated by the science-based targets initiative. It's the leadership in all these areas that makes us the preeminent REIT in Canada. Our track record of success speaks for itself. We've continued to provide a stable distribution to unitholders and have done so through some tough economic times. The distribution increase that we announced last week is evidence that we are committed to growing our distribution over time. In addition, we continue to drive NAV growth and done so through a period of significant capital recycling, a pandemic and a rising interest rate environment. Rather than simply taking my word for the -- for our track record of success, consider the fact that we have consistently outperformed the REIT index and our peers over the last decade. This track record demonstrates our ability to deliver superior returns to unitholders. We've achieved so much since our inception 10 years ago and we're not stopping here. We plan to build on this momentum and create enduring value by continuing to execute on our strategic framework. As we look ahead, our priorities remain unchanged. However, our key focus areas have changed to be more reflective of where we are going and where we are. To maintain our market-leading portfolio, we will focus on maximizing the value of our core asset classes and improving quality through balanced capital recycling. Our retail portfolio will remain stable while our industrial portfolio will take advantage of strong fundamentals to drive rental rate growth. To sustain operational excellence, our team will continue to focus on delivering best-in-class property operations through property management and leasing. And to deliver on our development pipeline, we will execute on near-term industrial opportunities to create 1 of the largest and highest quality industrial portfolios in Canada and advance our mixed-use and residential platform through planning and execution. Supporting all of this, we remain committed to strengthening our already unmatched foundation. Successful execution of our strategic framework has resulted in strong and stable returns. And given the stable asset base and our conservative balance sheet, we believe we are positioned to continue to deliver an exceptional risk-adjusted return to our unitholders. Our goal for you today is for you to leave convinced of our status as Canada's preeminent REIT, as I have no doubt, we will achieve that. We have a well-defined and proven strategy, a clear plan to maintain stability and deliver growth and the right team to execute. I think it's time for you to hear from the subject matter experts, the Choice team. They have been instrumental in our success so far and will continue to play a vital role as we build for the future. With that, I'd like to welcome Ana Radic, our Chief Operating Officer, to the stage. Thank you.

Thank you, Rael. Hello, and welcome, everyone. I'm Ana Radic. I'm Chief Operating Officer of Choice Properties. I've been with Choice for close to 8 years and have over 28 years of experience in the commercial real estate industry. You're going to meet many members of our team today, including Nicole Vicano. She heads up our asset management function with respect to the retail portfolio, and Andrew Reial, he oversees our industrial portfolio. Before I turn things over to them to speak in greater depth about these asset classes, I'd like to give you my perspective on our market-leading portfolio and best-in-class operating platform. As Rael mentioned, Choice is Canada's largest REIT. I know you probably won't be surprised to hear that I or a member of my family go to the grocery store on almost a daily basis. Every day, thousands of other Canadians are shopping for groceries at 1 of our sites. Millions of dollars of goods are moved through our warehouse and distribution facilities across Canada. And many Canadians are getting a good night's rest at 1 of our residential rental units. The real estate we own is essential to the everyday lives of Canadians. We are almost everywhere Canadians are. Our national footprint mirrors that of not only Loblaw, our largest tenant, but other national tenants like Dollarama, TJX and Pet Value on the retail side and Amazon and Canada Cartage on the industrial side. This national footprint is supported by our strong regional knowledge. Our buildings are not just located in VECTOM markets. They're in midsize and smaller tertiary markets as well. That's why having specific regional knowledge is exceptionally important to us. It allows us to complement our retail centers by adding best-in-class regional and local tenants as well. We own real estate where tenants want to be and where Canadians live and work. This, combined with our regional knowledge, is our competitive advantage. We are in the asset classes that will deliver strong returns over the long term. Our necessity-based retail portfolio is the core of our business. It has proven to be and will continue to be stable and resilient. Nicole will speak more about this shortly. Our growing generic industrial portfolio is located in key markets. Our proximity to major distribution centers, the functionality of the space we own, and our ability to leverage the size and scale of Choice are competitive advantages, upon which Andrew will elaborate. Mixed-use in residential is a defensive asset class. And our portfolio is located in growing urban markets with a high barrier to entry. Our market-leading portfolio is made up of high-quality and stable assets and we define quality based on several characteristics. First, we're focused on owning assets in key locations, whether those be in primary market, secondary or tertiary markets. Our retail tenants -- our retail centers offer our tenants the advantage of being in the right neighborhood and in the right intersection, locations that are convenient for their customers to get to and that offer our tenants great visibility, a combination that, in many cases, cannot easily be replicated. Our industrial portfolio is in major distribution market with excellent access to transportation routes and strong labor pools, areas where more industrial cannot be added. Second, we own assets that meet our tenants' needs. Our retail centers provide our tenants with excellent exposure and ample signage opportunities. We ensure we maintain efficient shipping facilities, great parking ratios and the right tenant mix. Our industrial portfolio provides desirable clear heights, parking, loading and shipping facilities and as tenants' needs change, our spaces can be demised and combined. And all this drives tenant satisfaction, tenant retention and rent growth. A focus on demographics, both population patterns, employment drivers, customer spending power is another key element of our success. We pay attention to this. It impacts tenant demand and the long-term potential of a given property. And we use this to make -- to help us make capital recycling decisions. And lastly, our portfolio presents redevelopment and intensification opportunities. Since the inception of Choice, we focused on owning sites where we can intensify and have added close to 1.4 million square feet of GLA to our sites. All of these ingredients combine to create a stable market-leading portfolio that enables us to deliver growing cash flow and create value through changing trends and market cycles. Our 10-year average occupancy of 98% and our tenant base demonstrate the quality of our portfolio. We attract best-in-class strong covenant tenants, who know they can be successful with us in each of our asset segments. We've developed superior relationships with our national tenants, not just due to the volume of business we do to them -- do with them because we deliver on our commitments to them. No presentation about Choice would be complete without talking about Loblaw. They are our major tenant. They anchor our centers and our relationship with them is more than the sum of its parts. It's more than the growing and stable cash flows provided by long-term leases backed by an unparalleled tenant covenant. It is more than the strategic alliance agreement, which we will talk about in more detail shortly. Our relationship is collaborative, it's transparent and it drives value. There is obviously a healthy tension between landlord and tenant, as you can imagine, but we also strive to find ways to work together to benefit each other, like working to add more Loblaw banners to Choice sites as well as collaborating on operations and sustainability initiatives. The respect and understanding that exists between our teams enables us to leverage market insights, react quickly to changes and capitalize on opportunities. You will hear more about how this relationship comes to life shortly. We have an exceptional team focused on maintaining our market-leading position and driving operational excellence. Our property management teams provide best-in-class service and operate our properties to a first-class standard. This means an attention to detail with respect to landscaping, maintenance and cleaning, upgrading common elements to meet the needs of our tenants and leveraging the size and scale of Choice to drive cost savings. Our leasing teams build meaningful long-term relationships with our tenants and the brokerage community. With major tenants, we have regular touch points to check in and always to identify opportunities to do business with us across our national footprint. And we have leasing personnel located across the country, who apply their knowledge of specific regions to drive leasing performance. Our asset management teams have ownership of property level strategy and identify ways to increase financial performance. You will hear more shortly about how the asset management function works to maintain our market-leading portfolio. Underpinning everything we do is our approach to ESG. Leadership in this area is key to our operations platform. Our operations teams implement the ESG initiatives, working to improve building efficiency, reduce carbon emissions and divert material from landfill. We partner with Loblaw to monitor and manage resource consumption, focused on reducing energy, waste and carbon emissions. And with our new green lease, we are aligning our sustainability goals with those of our other tenants. We're very pleased with the progress we have made in 2022, and we are concentrating on how we can continue to lead. You will hear -- you will also hear more about our achievements and commitment to ESG shortly. With that, I'll now turn things over to Nicole, who will speak more about our retail portfolio.

Thank you, Ana. Hello, everyone. I'm Nicole, VP of Retail Asset Management. I've been in retail real estate for 19 years. Choice boasts the most resilient retail tenants in the Canadian REIT space. Having resilient tenancy provides our business with overall stability. Why is this important? Because as Ana mentioned, we'll continue to deliver enduring returns through changing trends and market cycles. I'm going to walk you through our retail portfolio while illustrating our stable cash flow and provide you with insight on how we do what we do. We are the market leader with a retail portfolio of 44.2 million square feet across 574 properties in Canada with a fair value of $10.7 billion. Our occupancy is 97.8%, primarily leased to necessity-based tenants. This includes such everyday essentials as grocery, pharmacy, pet stores to name a few. This type of tenancy provides reliable and growing cash flow since the need for everyday living conditions throughout changing times. Our retail tenant base is unmatched. Overall, 63% of our revenue comes from Loblaw banners, such as Fortinos, No Frills, Shoppers Drug Mart to name a few. That ticks up to 67% when you combine it with our other grocery and pharmacies. Now this brings about improved tenancy experience since necessity-based retail directly benefits from the cross-pollination of similar foot traffic. This further benefits smaller-based tenants relying on foot traffic from anchors such as the liquor stores, banks, medical service, discount retailers. Our grocery anchored portfolio, combined with this necessity-based retail dovetails to 81%, which stands as a distinct advantage over all other REITs. The majority of our necessity-based retail is spread across the country, lies within our neighborhood centers. Neighborhood centers have a uniquely strong retail tenants as they benefit both from neighborhood brand loyalty and proximity. It is not so much about whether our centers are in primary, secondary or tertiary markets, it is the placement within the community that matters. 87% of our properties are located at key intersections, giving our tenants exposure to high-traffic areas serving their customers. Now I'd like to draw your attention today to a core fundamental of our entire business. In fact, this singular statistic elevated Choice Properties above all competitors. Choice Properties has more grocery-anchored retail, 37 million square feet to be specific than the square footage of any other Canadian REIT's total retail portfolio. This stands as a clear competitive advantage, preserving capital and driving cash flow and NAV throughout the long term. Our lease portfolio, combined with our strong tenant, provides reliable and stable cash flow. As mentioned earlier, our portfolio is 97.8% occupied, less than 15% of our portfolio is expiring over -- annually over the next 5 years, with the majority of it being Loblaw, as you can see in this graph. Meaning there's a that our occupancy will continue to be healthy, while our sites continue to be attractive to new tenants looking to benefit from high-profile foot traffic consistent with a grocery-anchored site. We are focused on maintaining our market-leading portfolio. Our ongoing strategic review of our assets ensure we are achieving the highest and the best use of our centers. Our teams are improving and portfolio analytics to improve decision-making and forecasting. Some examples. We're reevaluating our assets' performance and executing on strategies to meet our long-term objectives. Whether this be through capital recycling, working with our transactions team or with our leasing team and tenants to grow their footprint, enhance and change their store network and develop ESG. Our robust intensification program is a key way to improve the overall quality of our centers and curate a tenant mix. Our team continues to look for new users -- sorry, new users and new tenants with our leasing team to have a comp -- to complement our sites. We have 26 near-term retail projects and 150 other properties with retail intensification potential. Mario Fatica will talk about this later on. Now we've spoken a lot about our tenant relationships today, which stands stronger than ever. This strength exists with the prime tenant relations -- with prime tenant relationships like Loblaw and extends to our entire portfolio. I'm happy to share some direct testimonials with you now, following which Andrew will walk you through the embedded growth in our industrial portfolio. [Presentation]

Thanks, Nicole. That was a great video. Our tenant relationships truly are exceptional. Hello, everyone. I'm Andrew Reial, SVP Industrial. I've been in the real estate industry for 19 years and responsible for Choice's industrial assets. Our $3.5 billion, 17.4 million square foot industrial portfolio is centered around generic distribution facilities. The term generic refers to a product that is functional for a wide range of users, which ensures that it is always in demand. Our 98.9% occupancy rate demonstrates the high quality of our assets and locations. Industrial assets continue to exhibit extremely high demand and limited amount of supply. COVID demonstrated the enormous importance of having a resilient supply chain and these lessons learned continue to drive growing space requirements. Demand for industrial product is forecast to outweigh supply in the near term, especially for newer generation distribution facilities and those that can support e-commerce requirements. We believe that locations near dense urban centers will become even more scarce in the long run due to the lack of supply of scalable land for new development. With these strong fundamentals, while it is likely that rents won't continue to grow at their current pace, we anticipate that rents going forward will far exceed historical levels. Location is a key factor of a quality industrial portfolio. Our industrial properties are located in major distribution markets across Canada, where demand is the highest. In these markets, we have built a critical mass where we can -- we have efficiencies in management and we can also accommodate our large tenant pools for any other space requirements. As Ana mentioned, our locations are highly desirable for tenants given their close proximity to consumers and labor pools. The price of real estate in comparison to transportation is very low and being close to large dense populations and having good access to highway creates a lot of value for our tenants. Our distribution assets, which make up over 80% of the portfolio, our modern assets with minimum 24-foot clear heights, ample doors and shipping, the truck yards that can allow the large 53-foot trailers. These specifications allow tenants to move their product efficiently in and out of the buildings and earn high demand by logistics tenants as well as many other users. We have critical mass in key distribution markets with 84% of our NOI coming from VECTOM and 50% of our NOI coming from Toronto, Montreal and Vancouver, which are the largest and tightest industrial markets in Canada. We have 30% of our NOI and 5.7 million square feet of industrial in Toronto, which is Canada's largest distribution market. If logistics, e-commerce or any tenant wants to enter for the Canadian market, their first stop is Toronto. With its dense population in connections to the rest of the country, this market will always be in demand. Our GTA footprint is unparalleled in the Canadian REIT landscape. If you look at the map, the majority of our assets are located in Brampton and Mississauga, which are the strongest nodes in the GTA with their close proximities to highways and the international airport. If there is a flight to quality, tenants will want to be in our assets, and this makes it a very resilient portfolio. Our second largest portfolio is Calgary, with 25% of our NOI and 4.7 million square feet. This portfolio is largely made up of distribution assets, which is a benefit as Calgary is the main distribution hub for Central Canada, the Prairies and provides support to British Columbia. As we have seen in all markets, demand continues to grow and new requirements continue to tighten this market. Our strong industrial footprint has attracted a very resilient tenant base. Like our retail portfolio, our industrial portfolio benefits from our relationship with Loblaws, which makes up 1/3 of the NOI. In addition to Loblaw, our other major tenants are incredibly resilient. These tenants, like our necessity-based retailers, are essential to making sure goods move across the country, also a necessity for everyday life. We know that Amazon is an amazing company that most of us use on a regular basis. And if you order anything online, you're likely to see U-line labels on the packaging. Sure there's really a day that goes by when someone doesn't use a Kimberly-Clark paper product and Canada Cartage trucks are pretty well everywhere across the country, moving product for Canada's largest retailers. Our excellent working relationship with these tenants and our large national portfolio of well-located functional product provides a stable foundation for our growing industrial portfolio. There is significant embedded growth -- rent growth in our portfolio without the need for additional investment. As leases expire, we should see mid- to high single-digit NOI growth in 2023. We believe we have an exceptional portfolio and will continue to drive NOI and same asset valuation growth. When combined with our 7 million square foot development pipeline, which you'll hear about shortly, we have the ability to grow our portfolio over 23 million square feet, which will make it the largest in the Canadian REIT market. In addition, there are opportunities to intensify our existing income-producing portfolio in major markets such as Vancouver, Toronto and Montreal. With that, I'll hand it back to Ana.

Thanks so much, Andrew. Our third strategic asset class is mixed-use and residential. It's a small but growing part of our overall portfolio. We believe that mixed-use in residential is a defensive asset class with long-term growth prospects. Demand for our portfolio of purpose-built rental properties will be driven by housing affordability challenges and immigration to urban centers. This 2.3 million square foot portfolio includes both newly built, purpose-built rental properties as well as residential-focused mixed-use communities. They are transit-accessible and located in Canada's largest cities. Next, we have a short video. And in it, you'll learn more about our 2 newest residential developments. They are the Brixton and Liberty House, both located in Toronto. These are developments we're incredibly proud to have developed and just as proud to own today. [Presentation]

I'm very excited about the future. We have a market-leading portfolio and the right team to continue to maximize the value of each of our asset classes. How we measure our success? We're going to remain focused on maintaining our market-leading portfolio and sustaining operational excellence. And we're going to do that by continuing to target near full occupancy of 97% to 98%. Focusing on balanced capital recycling that's going to be driven by active asset management. And we're going to deliver same annual -- same asset NOI growth of between 2% and 3%. These are the things by which our success will be measured and I'm confident that our team will be able to deliver on these commitments. So next, we have a panel, which I'm very excited about. Rael and I have both discussed the advantage of our Loblaw relationship. And so we will have colleagues joining me on stage from both Choice and Loblaw that will be moderated by Simone Cole of Choice.

Thank you so much, Ana. Good afternoon. My name is Simone Cole, and I'm the Vice President and General Counsel at Choice Properties REIT. I've had the pleasure of working in the group for over 13 years, including at George Weston and at Loblaws Co. Ltd. And now it's my pleasure to be here at Choice. Now I've got an esteemed panel here, but before we dive in, we wanted to take about 2 minutes and just frame up the relationship with Loblaw because it starts with an agreement that came into effect at the IPO called the Strategic Alliance agreement. I'm not obviously going to give you the full play-by-play of the agreement, but I'm just going to highlight a couple of features. The agreement is meant to be mutually beneficial to both Loblaw and to Choice. Here's what's beneficial to Loblaw or at least -- or excuse me, 1 thing that's very beneficial to Choice. There is a Right Of First Offer on anything that Loblaw sells. So any properties that Loblaw is looking to sell, Choice first has a ROFO. Similarly, if there's a shopping center that Loblaw wants to purchase or redevelop, Choice has a Right Of First Opportunity. Now I said it's mutually beneficial. And on the other side, when there is a property that Choice is looking to develop and there's an opportunity for a supermarket, there is a ROFO to Loblaw. It has the right to have the ROFO to lease for a supermarket store. And similarly, when the IPO happened, a lot of land was transferred with embedded value. As that land was intensified, there are intensification payments. The metrics are set out in the strategic alliance agreement. It is publicly available on SEDAR and Ana will speak a little bit more about how those payments are made and how that structure benefits Choice. So that's just a little bit of a backdrop and now I'll get into the panel. I will ask the panelists to first introduce themselves.

I'm David Muallim, Vice President, Real Estate at Loblaw. I joined Loblaw in 2021 and oversee the growth of new stores, renewal of existing store leases and other strategic real estate initiatives over a 2,400 store network. Prior to joining Loblaw, I was Vice President of Investments at Choice, where I was responsible for acquisition, disposition and other joint venture initiatives at the REIT. I joined Choice after its acquisition of CREIT and have seen a lot of improvement in the relationship over the years. A lot of credit goes to Rael for taking a very collaborative approach. Over time, key members of the Loblaw Real Estate team have joined Choice and my transfer to Loblaw is a continuation of that strategy.

I'm Ana Radic, and you've met me. So I'm going to turn it to Bruce.

Thanks, Ana. So my name is Bruce Mooney. I'm the Vice President of Market Analytics at Loblaw Real Estate. I work very closely with David to deliver our network strategy for our retail business. I've been with Loblaw for over 30 years and I have seen the evolution of choice to be our key landlord, our partner and I look forward to going through that today. So just happy to be here and continue our collaborative efforts with Choice. So thank you for asking me to join.

Thanks, Bruce. I'm Anton Gravets, Senior Director of Investments at Choice, and I manage our acquisition and disposition activity across the country and across all asset classes as well.

Great. So we started with the strategic alliance agreement, and we talked about the ROFO. And my first question is really for Anton. Can you tell us why this ROFO, why this acquisition pipeline benefits?

Yes. So we call it the vend-in pipeline, and there's a number of advantages of these deals versus searching for acquisitions on and off market. Unfortunately, pricing is not 1 of those advantages because everything is done through a third-party appraisal, whether it's setting the rents or valuing the properties, but there's a number of advantages for us. First and foremost, it's just the access of the high-quality real estate. Loblaw owned and continues to own some of the highest quality properties in the country, and that was intentional and curated. And if you look at recent vend in the store that we bought in North Vancouver. That kind of property is just not available on the market. That is a core holding for many institutional owners in the country, and we're very lucky to be able to buy that quality of property. The second advantage would just be the planning and the foresight that we could have with our investment activity. That's pretty rare. We're not reacting to a listing. We're not reacting to an off-market opportunity, but we work together and we plan things out. We line up capital accordingly. And that gives us the ability to be thoughtful about the future and the pipeline of our business, but also react when something needs to change, and we work on that collaboratively and line up our capital plans together. And then the last thing would just be the opportunity to add value to some of these properties. And I'm not talking about just some of the lands that we've purchased from Loblaw over the years. But even on sites like the distribution center that we recently bought in Ottawa, that became an excess property for Loblaw. They vacated the industrial building. And we put up our hand and we said we'd like that. And before even closing on the property, we were able to secure another tenant, and that was Amazon. So we're very, very fortunate to have these vend-in opportunities. And there's we've done a lot there, and there's more to come.

That's great. And so looking at the future, and I'll ask David this one. Loblaws has publicly said that they are going to be disposing of their real estate assets over time. Could you tell us how that might benefit Choice?

Sure. So just to give a background and consistent with the strategy and creating choice in 2013, Loblaw will continue to sell its remaining real estate assets. So the remaining assets are retail, obviously, grocery-anchored assets, industrial like the Loblaw distribution centers and LAN, which is going to support future stores or other excess land that's access to Loblaw business. We estimate the value of this real estate is about $1.8 billion, which is predominantly retail and industrial. In terms of the quality of the real estate, the remaining portfolio is high quality and strategic to the Loblaw business. The assets that we operate in are going to be sold through long-term sale leasebacks. And we believe that the assets that would be most consistent with Choice's investment strategy would be those located in the major markets with assets in smaller markets, being more of interest to third parties. Notable examples of remaining assets of -- in the Loblaw portfolio in some of our major markets include the Loblaw store Bathurst & St. Clair or the superstore Don Mills & Eglinton, both located in Toronto. In terms of how we work together to execute on this. So Loblaw and Choice collectively collaborate to create a pipeline of assets that we're going to work on over the next few years and build into each company's capital plans and overall strategy. Choice also works to collaborate thus to identify strategies that would not be a fit, and Loblaw would then go and sell those assets to third parties.

Yes. I guess I should chime in that when we work through that 1.8 million, we've at this point determined that a little over half would fit our strategic criteria for investments.

So vend-in pipeline to come. So moving on from the vend-in, Ana, maybe you could just talk to the group a little bit about the intensification aspect of the strategic alliance agreement and how that benefits Choice.

Sure. It's a huge benefit to us, and we've used it to grow our portfolio since the inception of choice, having added about 1.4 million square feet of GLA. And as we said, Loblaw is a huge draw. Tenants want to be located at great grocery-anchored centers. And so the benefit of the strategic alliance agreement it gives us the ability to add new tenants when the time is right. We get to wait for the best tenant because as Simone mentioned earlier, consideration wasn't paid at the time of IPO. So based on the strategic alliance agreement, we provide Loblaws an intensification payment. We actually don't have to pay until the tenant who has come in is rent paying. So really, for us, it's very efficient from a cash flow perspective and a capital spending perspective. And the strategic alliance agreement aligns both Loblaws and Choice in that, obviously, Loblaw benefits from the intensification payment, but they also benefit from having new tenants to the site, increased traffic, and Choice benefits from increased cash flow, diversification. And so it's a very effective means of aligning our interest and benefiting both of us.

Maybe just -- Ana, all of us know that the relationship is -- might be the framework is the agreement, but it's beyond the strategic alliance agreement. Talk to us a little bit how in practice management works, how do the two teams work to drive the best for both companies?

Sure. Happy to do that. Well, Loblaw is our largest tenant. And as you heard from the tenant testimonials, we like to stay close to our major tenants and Loblaws is no exception. But obviously, our relationship is closer than with any other tenant. And as David said, Rael has really made it a priority for our 2 teams to work as collaboratively together. And that is the feeling at Loblaws as well. And so we've created a structure where we've aligned the various departments between our 2 organizations and kind of created working groups where they make sense. So we have a group that works to identify these intensification opportunities on Choice sites with respect to adding Loblaw banners. So we've added about 6 or so shoppers most recently to our sites. We're working on deals to add some grocery stores and we're able to get to transactions very quickly because we have these working groups. Anton and David and the transactions teams, they work on vend-in opportunities. That's obviously a key component. We also have our operations and sustainability teams working on initiatives together when we did our LED lighting conversion across the country, we partnered with Loblaws on that as well. We leverage our joint size as well. We did a roof maintenance tender that we decided to partner, not just with respect to Choice's owned assets but also the assets Loblaw owned. So that gave us kind of great buying power and we were able to select a great vendor and we have kind of transparency in that area. So that's kind of how our working groups work. And then we also have what we call partners meetings, and these are meetings where we meet at a senior level, Rael's in attendance, David, myself and the working groups. And we share kind of updates on how these various initiatives are going. And then as you can imagine, we don't always agree. And so sometimes we have to talk things out, and these partner meetings are a vehicle for us to reach decisions and it really expedites execution as a combined kind of landlord tenant partner. So we spend a lot of time together.

And yes, Ana mentions a lot of the initiatives that we execute really well on together. And what I've seen being at both companies, I'm always impressed just how desirable Loblaw and other grocery tenants are to new developments and mixed-use projects. So given the strength of that relationship, developers do constantly approach Choice to joint venture on new projects or other creative ideas that comes from that. And this just leads to more opportunities from both the Choice and Loblaw perspective, new development opportunities and acquisition opportunities for Choice and new stores for Loblaw.

Yes. We've seen that firsthand quite a lot. Like leading developers are very excited about seeing us as a package on their sites or even in our sites when we work together in our projects. So it's a true testament to that partnership.

One thing I forgot to mention was actually having -- I came from CREITs coming to Choice. One thing we really leverage is the market insights, demographic information that Bruce and his team provide. They really have an amazing team, and they're a real asset to us and helping us understand kind of the demographics I spoke about earlier with respect to our portfolio. So that's another really important part of our relationship.

I don't know if the room knows sort of how deep your market insights group is at Loblaws Bruce. So why don't you tell us about that? And then how, of course, compliantly because you're different public companies, but how you sort of share that appropriately at Choice.

Thanks, Simone, and we really enjoy digging into the market in the Canadian marketplace because as a retailer in Loblaws, we have to be extremely responsive to the needs of Canadians. As everybody here knows, we're a food, health and now clinic organization. And the 1 thing we'd like to say and the 1 thing we communicate to Choice Properties very much is that growth is strong at Loblaws, and we need your assistance to, as you mentioned, on developments and sourcing of real estate. When we look at our analytics, we're seeing some very strong fundamentals in the country that, again, everybody here should read in the paper and know. The first thing I'll focus on is where we can see incremental store opportunities due to a lack of share or we want more representation in more existing communities in the country. We're very aggressive in terms of reaching for analytics and using the analytics that we have, including the sales, which as a retailer will tell us in real time what's going on in any given market. And we use that to identify areas of underrepresentation for any of our retail format, because we do want to deliver the best food experiences, value experiences and now healthcare and medical experiences to Canadians. And that's in the existing space. In the new growth space, what you're also seeing is from Stats Canada and the federal government that the immigration rates are accelerating in Canada, now exceeding over 500,000 people a year. This population growth is significant. It's G7 leading. It's about 1.8% growth in the population. And we need to respond to that. And we respond to that in a couple of ways. And 2 key trends that we're seeing that we're communicating with Choice on are the fact that many of the newcomers to Canada are locating in Canada's biggest cities. You've heard the term VECTOM mentioned several times already today. And that's where we see urban intensification occurring, which you'll hear a little bit more from Mario and Joe later on this afternoon. And we are continuing to open retail opportunities there, as immigrants come to Canada and are looking for their food and health options. The other area that we're seeing that's quite fascinating and this resulted a little bit from COVID, but it really is just an acceleration of a long-term trend, is what we're calling the growth of satellite communities, which is those communities that are within about a 2-hour drive of Canada's major markets. And we have seen -- because as I mentioned earlier, the sales data that we receive as a retailer is in real time areas like Picton, Ontario or Mont Blanc, Quebec, where we're noticing the fact that people are moving to these markets. And they're not moving there just as, say, a cottage or recreation. They're permanently moving there. And you can see that in the real estate -- residential real estate market that exists in many satellite communities. What we're doing and what we believe is that this is a long-term trend that will stay because of 3 underlying factors. One of them is the work habits of Canadians have changed fundamentally. The second is the baby boomers, they are retiring. They're retiring with often significant wealth and they want some decent recreational lifestyle opportunities. And the third is it's the cost of living in VECTOM, especially in Vancouver and Toronto will continue to make satellite communities quite attractive. That's where we see continued new store growth. We're also trying to respond to [indiscernible] planning policy, which is encouraging and then sometimes requiring density, especially around transit-oriented developments and adjusting our retail proposition and how we're laying out our stores to correspond to that delivery of new real estate. It's been fascinating to watch and fascinating to work in a highly collaborative environment with Choice on this because 1 of the things with the interchange that David mentioned is they really do put retail first. And as a retailer at Loblaw, that's paramount to us to make sure that our customer has the best access to the retail options in any of these complex developments. And it's been quite frankly, fantastic working with Choice's development team to design projects from the ground up. And that's where our [indiscernible] has driven to the new store program, which you've heard talk about this afternoon from our investors call. So we're very excited about our relationship with Choice.

Great. It's fascinating the market knowledge that you bring. And then obviously, David, you're working with Choice on new store opportunities, which we'd like to talk about and also maybe Anton talk to us. I think we've got time for this 1 last question. Talk about some of the developments you have going on even outside of stores with Loblaw? So David, why don't you start?

So I think the understanding we have of both the Choice and Loblaw business, we really do have this on the pulse view of intensification opportunities, new markets and investment opportunities. And so as Bruce mentioned, Loblaw has really accelerated its new store growth program. And we will see some of that momentum come in 2023 as some of these new stores open. We work with the Choice team with Anton and Ana to share target areas have Choice search for new site opportunities and collaborate to help facilitate that growth. We also work on the intensification of our own sites. And specific examples -- or sorry, land owned by Choice, but specific examples include the new distribution center in the GTA or the fact that approximately 1/4 of our new shoppers -- 1/4 of our new store shoppers development pipeline is actually going to be expected to be on Choice property sites.

Yes. From a mixed-use perspective, and you'll hear about it more this afternoon, but it's actually a nice way to wrap everything together. The opportunity set vast. We'll talk about 80 active and potential development properties. Many of those will have a Loblaw banner on them. And that's a lot of valuable land. It's a lot of valuable land because of where it is, but also the structure. We talked about how through the SAA, we deferred payment for a lot of those sites. We're collecting income on those properties. We can patiently plan the transition to the highest and best use, right? And that mixed-use transition is not easy for any retailer on landlord to work through. That first condition, maybe moving within the property or even having to shut down the store temporarily, that's a difficult conversation. And the other conversation about what is the perfect urban store look like for you guys to come back to. That's also a tough conversation. We have it all the time. And we're really well positioned to do that.

When you think about a couple of the key projects, Anton. We're looking at Golden Mile here in Toronto, Dundas and Bloor, those are where we're really working hand in hand to deliver a complete reset to the real estate and then the greatest retail offering we can deliver.

100%. And it's like we could do it because we have the frameworks in place, because we have the relationship, open mindedness, we have so many projects on the go. We have the relationships already built up and when it comes to challenges like this, and I think the development world is probably the toughest part for a retailer and a landlord to work through. We're better positioned than anybody else to work through it. And we're already partners with best aligned interests to figure it out together. So I think that's where you'll see it really get exciting for us.

That's great. I think we talked about the richness of the relationships, the opportunities both stores and in developments and Loblaw is looking to keep growing. And so we just wanted to share a little bit about the depth there. There's a whole another topic of ESG that we didn't get into, and there's a deep collaboration, and that will be later in the day. So I think at this point, we're going to probably have a break. Have a 15-minute break and enjoy a coffee and then resume with the schedule. So thank you very much. [Break]

Good afternoon. I'm Mario Fatica, I'm the Senior Vice President of Commercial Development. I hope everybody had a nice sort of break. Listen, I've been with the Weston group of companies for 29 years. For the past 3 or 4 years, I've been with Choice Properties. I came to Choice with the objective of building a team, a team that would allow us to build on our development potential, the pipeline that we're developing in our department. I focused over the last few years on building a team with the appropriate skill set and leadership capabilities to position us for long-term growth and value creation. There's one thing that Rael and I both agreed upon when I started at Choice, I wasn't going to work another 29 years. My objective was to ensure that we had the appropriate succession planning in place and that we had the appropriate successor in place to continue on with the growth of our development pipeline. As a result, I'm pleased to announce that Niall Collins has joined Choice as the EVP of Development & Construction. Niall has over 25 years of experience in retail, residential, and commercial. Niall is going to join us at the end of the presentation. He's going to provide you with a little bit of background on his skill set, his background and also provide you with a little bit of an overview of the goals and objectives of our department going forward. So Niall, congratulations. We look forward to your leadership going forward. Myself, I'm going to continue with my transition in assisting Niall over the next 3 years. And my main goal over the next 3 years is to grow retail and industrial. We've got a tremendous platform on both sides. You've heard a lot of the work that we've been doing on both sides, and that will be my focus over the next 3 years. Today, I'm going to take you through the accomplishments of our team. Retail intensification program, the growth that we have in our industrial program and then our mixed-use residential program. I'm then going to hand it over to our VP of Planning, Joe Svec. Joe is going to provide you with a little bit of an overview of where we are in some of our mixed-use residential projects. Our team is focused on developing across 3 asset classes, retail intensifications, our IPP income-producing properties, we have tremendous opportunity to intensify those properties. Near-term industrial, we have 440 acres of greenfield development that is zoned and ready to move forward and the potential to deliver over 7 million square feet. I'm going to talk about that very soon. And mixed use. We have a significant pipeline of underutilized commercial sites that can be redeveloped for mixed-use developments. There's 6 pillars that support our development pipeline. Land cost. We have a competitive land cost base across all development sites and assets. Redevelopment. You heard a little bit earlier today from Ana on the Loblaw panel. With respect to Loblaw sites that are vended in to Choice, we do not pay Loblaw, the additional density from the redevelopment until that site is actually built and occupied, which gives us a tremendous advantage. Key locations. Again, you heard from Bruce a little bit earlier on VECTOM markets. We're in primary and VECTOM markets. But with respect to our mixed-use residential projects, you'll see us only in Vancouver, Toronto and Montreal predominantly. Transit oriented. When you look at our mixed-use pipeline, we have transit-oriented communities that are going to be built. If you look at our asset class on industrial, we have great locations that are located near the 400 series of highway. And beyond that, we have public transit that allows close easy accessibility to labor pools in the area. The Loblaw advantage. We've talked about that earlier with respect to the panel and what they focused on. But we work closely with Loblaws on delivering their capital plan. We want their food stores, their drug stores on our properties. And we assist them with respect to their supply chain needs as well, which I'll touch on a little bit later. And then across all the 6 pillars we have integrating ESG. We want to maintain -- we want to be a leader in sustainable focused development. So I spoke a little bit earlier about our team. And my goal was to obviously develop a team going forward. I want to give you an update on where we are with the team. Today, at Choice, we can completely provide municipal approved zoned entitled sites. We have that capability internally at Choice Properties. We've also added designers, engineers and architects in our design team. This provides considerable support to our asset management teams, our construction teams and then also to our planning teams that provide guidance to the consultants as we go through development approvals. Construction. We've always had the capability of building retail buildings, building industrial buildings. We now have the capability of building high-rise residential. That skill set now lies within Choice. And then asset management. You heard from Nicole, you heard from Andrew a little bit earlier, we work closely with them as we move the asset towards operations. Our teams over the last 5 years have developed 102 projects and 2.6 million square feet of development. As we move forward, we want to build for the future. We want to maximize industrial. We want to grow retail, and we want to start moving forward with respect to our mixed-use residential. And I've always seen this as a perpetual wheel. Our development pipeline will continue to spin and move forward as we continue to grow. And simultaneously, our group, they've delivered over 100 projects, and they've delivered over 2 million square feet over the past 5 years. We've created this development pipeline. Today, we have over 18 million square feet in our pipeline. We have over 10 million square feet in our mixed-use residential pipeline, of which 3.6 million is actually currently zoned today. Our industrial pipeline, 7 million square feet that is zoned today. So a tremendous pipeline and I just want to take a moment. I want to acknowledge the great work that the team has done in delivering on an annual basis, development projects, but also simultaneously working on this development program as we go forward and develop this pipeline. Turning to retail intensifications. As Nicole mentioned earlier, our development, construction and asset management teams continue to develop at-grade retail density at our existing retail sites. Today, we've got over 150 retail locations that we believe can be intensified. We've got 13 projects that are currently active. We've got 13 projects under planning. It's tremendous opportunity to unlock value on these sites. Just over the past year, we opened, and you heard this from the panel from Bruce and from David, from the Loblaw side, we're closely with Loblaw, but we opened brand-new Shoppers Drug Mart in Bradford. We opened a brand-new Shoppers Drug Mart in Mississauga, Drummondville. Just last week, we opened 1 in Port Hope. Later this year, we'll open new Shoppers Drug Marts in London, Ontario, Calgary and Edmonton. Not that we just opened Shoppers Drug Marts, but we also have bank pads that we're creating for later this year. We've got QSR, CRU, that's being strip retail that's being developed nationally across the country. But again, focusing on that key relationship that we have with Loblaws, we do work closely with Loblaws to assist them in developing their capital plan and delivering their capital plan nationally across Canada. Near-term industrial. Our industrial development pipeline is remarkable, and it's positioned to deliver significant growth. We currently have over 7 million square feet of zoned projects ready to move forward. Five of which are active, and we expect to deliver 1.4 million square feet in 2023. And over the next 5 to 7 years, we'll deliver 5.6 million square feet. Just want to take -- just to highlight a little bit of time with respect to what we're doing today, because it is remarkable the amount of work that we have currently underway. We have 1.4 million square feet of active development projects, $187 million in investment and an average development yield of 7%. Our first project is Horizon Business Park in Edmonton. It's the last phase of a 6-phase development, 1.3 million square feet. Our last phase will be delivered this spring. Choice Industrial Center, 355,000 square feet. We're pushing for LEED certification. It's a spec building. It will be delivered Q3 of this year. And then Choice Eastway Industrial Center, is East Gwillimbury, Ontario, 154 acres of land. It's currently being serviced, but first phase is currently under construction, 100 acres, Loblaws 1.2 million square feet of development. Presently today, 300,000 square feet of structural steel is erected on site. In a matter of 18 months, we've moved that project. And again, it shows you the collaboration that we have with Loblaws and how we can deliver and assist each other. Moving forward, I want to introduce the next video, which is Andrew Reial, our Senior Vice President of Industrial. Andrew is going to provide you with an overview of 2 special projects that we're working on.

I'm Andrew Reial, and I'm responsible for the asset management and leasing for the industrial portfolio at Choice Properties. The industrial portfolio of Choice Properties is in pretty well every major markets in Canada. With the Rice Group, we recently acquired ownership interest in 2 fantastic industrial development sites in the GTA. The sites are Choice Eastway Industrial Center, where we own 75% and Choice Caledon Business Park, where we own 85%. These are 2 large sites holding over 500 acres of net developable industrial land, which gives us 7.8 million square feet of new industrial product in the near future. Choice Eastway is in East Gwillimbury, which is in the east side of the Greater Toronto area. It's a really well-located site with great access to highways and a growing population base. We will be building a 2-phase industrial park totaling 1.8 million square feet. Phase 1 will deliver a 1.2 million square foot distribution facility for Loblaws. This project will really modernize Loblaw's supply chain by developing a fully automated warehouse that has both ambient and temperature-controlled zones. Phase 2 of this project will develop 600,000 square feet of new generation industrial product, which is in very high demand for all tenant uses in the market. Choice Celadon Business Park is in the west end of the GTA in Caledon. This site has access to many urban roadways and 400 series highways, which really puts us far ahead of our competitors. The other really fantastic thing about the site is that it's just north of Brampton. Brampton has the highest concentration of employees in the city and probably the country. We also have great access to public transit from Brampton, which brings employees to the site, and it gives us a real competitive advantage. Choice Caledon Business Park will be multiphase development. We're going to develop 6 million square feet of industrial products. These projects are a unique opportunity for Choice because it allows us to rapidly grow our industrial platform. At Choice's share, we're adding 6.5 million square feet to the already significant industrial portfolio. This will give us greater critical mass and the ability to service large, multinational tenants. We have a commitment to grow the portfolio. We have the means to develop with or without partners, and we have the in-house expertise to manage them and maximize value once they're built. The future is quite bright for industrial at Choice Properties.

Thank you, Andrew. So I'll just wrap that up. I know there's a lot of numbers, but really high level. You've got 2 projects, multiple phases, 430 acres that are zoned and ready to move forward, 5.6 million square feet of GFA. And you've got the 2 projects that I talked about a little bit earlier. You've got Choice Eastway, again, East Gwillimbury, Loblaws, first phase, 100 acres, 1.2 million square feet. Second phase, 500,000 square feet at our share, we are ready to move forward spring of 2024 with respect to construction. And then Choice Caledon Business Park. 380 acres, 5.1 million square feet at our share, tremendous opportunity. We will start clearing and grubbing the site this spring. We will start servicing. Expecting this fall, Q3, we will have a fully serviced subdivision by Q3 of 2024. Two competitive advantages we have with respect to Caledon Choice Business Park. The first is the subdivision itself. And I know this is a terrible sightline that you have up here, but the advantage that we have here is that our subdivision blocks are large blocks, 40 to 50 acres, which provides tremendous opportunity for distribution centers that are looking for areas of 750,000 square feet up to 1 million square feet. Our subdivision allows them to come and actually be located here. I've talked earlier about labor pool. We've got public transit. We're located close to labor pools in the west end. And our second advantage is our low cost base. Our land and servicing costs are approximately $1.1 million per acre. And I want to provide just a quick little case study. Assuming service land is $1.1 million per acre, as noted, which equates to about $60 per square foot, total cost to build an industrial building at Caledon would be approximately $255 per square foot. That's land, that's servicing, hard costs and soft costs all in. Based on market rents today, we would generate comfortably development yields between 6% and 7%. So truly exceptional opportunity for us with the growth that we have on both these sites. Moving forward, I just want a quick little overview. And I'll move through this very quickly because I want Joe to provide a little bit more detail as we talk about mixed-use development pipeline. We have a significant competitive advantage, which is going to create long-term value for our unitholders when you talk about mixed-use development pipeline. And I want you to take away these themes when you think regarding our mixed-use development pipeline. They're income-producing properties. They are in urban centers, Montreal, Toronto, Vancouver. They're underutilized. They are besides transit. We will develop transit-oriented community, master plan communities with purpose-built rental housing, a mix of housing on the site, but predominantly purpose-built rental, which again will drive growth for Choice. And we want them to be anchored by Loblaw food stores and drugstores. So I'll just really high level, Ana talked about 2 of the projects that we delivered in '21 in Toronto, Brixton and Liberty. These are 2 projects that are currently under construction. They're in fixturing right now. They will be delivered Q3 and Q4 later this year. We have Element in Ottawa and Westboro Village, 252 units. And we have Mount Pleasant Village, which is now called [ Unity ], 444 units. Our partners at Element are Woodbourne and our partners over at Mount Pleasant are Daniel. So total 696 units that we'll be bringing to the marketplace, purpose-built rental later this year in Q3, Q4, they'll be ready for occupancy. And then with respect to shovel-ready and moving forward and our plan going forward on residential, I want to talk about 2 projects. And really, this leverages off what I talked about a little bit earlier regarding our development pipeline, 12 projects in planning, over 10 million square feet, 3.5 million square feet that is zoned today the potential to deliver 12,000 units. And our next 2 projects that we're working on right now is Grenville & Grosvenor, which is in downtown Toronto, potential to add 770 units. There's an affordability component that we're adding there. Again, Joe will provide a little bit more detail. We have an opportunity to start construction there. Late this year, probably early next year, we're in design into the final municipal approvals on that site. And then our Golden Mile development. 19 acres, 3.3 million square feet, opportunity to provide over 3,600 units, tremendous opportunity for Choice to build a multiphase development over a period of time. I want to introduce Joe Svec. Joe is our Vice President of Planning and Joe is going to take you on a journey regarding some of our mixed-use residential developments. Joe?

Thanks so much. I am so excited to be here. Thanks, everyone. With over 700 properties across Canada, we have the best pipeline and the best people to build the future. We also have 80 incredible development sites in major markets such as Vancouver, Toronto and Montreal. Now let's zoom into Ontario. As Mario said, we have 2 great projects, which are set to complete this year. MPV in Brampton. Here, we offer a full spectrum of housing, including rental, condo and townhouse. We also have geothermal heating and cooling for the rental portion. Moving on to Ottawa, a project we call Element. Here, we are pursuing an accessibility certification to build a community that is inclusive for all. We are proud to be an industry leader in accessible design. Next, I'd like to zoom into the GTA, which is built on 5 key transit lines, the subway, the Regional Rail, a new Eglinton Crosstown LRT in orange, the upcoming Ontario Line in blue, which we have 2 assets on, the Union Pearson Express, which plugs in all of our airports. Now on this incredible grid, we have 51 amazing transit sites, more dots on a map than any of our competitors. I'd like to walk you through our top 3 on transit and planning. Starting with Bloor & Dundas. Our transit trophy is Bloor & Dundas, which is on 3 out of the 5 major transit lines. It is one of the most connected sites in the province, second only to Union Station. It also showcases our commitment to building great communities as you see a full menu of city building opportunities that we've proposed. Next, taking the subway. Of course, it's not delayed because the subway runs very efficiently in Toronto. We take a short trip to G2, Grenville & Grosvenor. Here, we are developing a bold housing initiative, committing to 30% affordable housing. We also have an 8,000 square-foot daycare, which will cement our status as a Canadian leader in City building. Finally, using the [ Yonge ] Line, we head North. It's a bit of a slow day, it's snowy outside, so just be patient. The subway is very accurately a little chugging along. And then taking the new Eglinton LRT East. We hit the Golden Mile, which our site is the gateway to the entire Golden Mile community and is anchored by 2 transit stops. What you're seeing on screen is part of the first phase, which is 3 towers, 2 condo and 1 rental. What is so exciting about this is that we do not have to demolish a single square foot of income-producing GFA to get at this project. To build a community of this quality, we also needed an anchor, and we founded a 30,000 square foot community space, which will be built in Phase 1. Zooming out, I'd like to reiterate that we are Canada's preeminent REIT. With over 700 properties across the country, we have the best pipeline. And as Mario mentioned, the best people to build the future using our own land. I'm going to hand it off to Niall now to talk about the city building opportunities that exist as Canada's, 1 of Canada's largest urban land owners.

Good afternoon, everyone. My name is Niall Collins, and I recently joined as the EVP of Development Construction. Most recently, I was the President and COO of Great Gulf residential platform in Canada and high rise in the U.S. Prior to Great Gulf, I was a Development SVP at Cadillac Fairview, mostly focused on commercial, retail and mixed-use developments across Canada. I'd say in my 25 years in real estate, what I've really enjoyed and what I get the most satisfaction out of is taking a project from an idea to execution, like delivering out end-to-end. That pipeline that Mario and Joe described, delivering it on time, on budget to Ana's operational team. So when I met Rael last year and he described the pipeline that you saw on the screen, I was just simply astonished. 80 development projects across Canada's key markets with this team, which Choice's industrial -- leading balance sheet as a developer, it was simply extraordinary. And that's why I'm here. It was an extraordinary opportunity that I couldn't turn down. So what does that mean for you in the audience. Choice's mixed-use development pipeline is one of its key differentiators and competitive advantages. Combine that with one of Canada's largest land owners over the long term, I'm confident that we will provide a pipeline that will provide meaningful growth and NAV appreciation for unitholders. So how are we going to do this? It's simply the sheer scale of the development platform and pipeline. You can flex and pivot between urban infill, multimillion square foot master plans, traverse market cycles, different types of retail uses over a national footprint. Combine that with the fundamentals of competitive land cost, track record of execution, as Joe described, in-house development expertise and strong partnerships, over time, we will deliver a competitive high-quality real estate assets to support Choice's growth. So how are we going to measure this? Well, we're going to deliver on the development strategy you saw earlier on the screen. We're going to respond to market dynamics. We're going to leverage our ability to move between real estate sectors. We're going to position our developments to be shovel ready for first mover advantage. And we're going to increase the overall scale of our mixed-use residential platform. In the near term, we're going to deliver on our retail intensifications and our industrial developments. We are going to continue to create land value by navigating the planning and zoning process across municipalities across Canada. Of course, we're going to future-proof our new asset portfolio by ensuring that Choice's specification for ESG is combined and integrated into those processes. So to deliver on this, annually, we expect to invest approximately $300 million to $350 million in our overall development program weighted in the short term on industrial and retail intensifications. So to conclude, Choice's leading -- industry-leading development platform is perfectly poised and perfectly positioned for extraordinary wave of developing value creation. Thank you, everyone. And I'd like to hand it over to Ariel and the ESG. Thank you.

Thank you, Niall. My name is Ariel Feldman. I'm the Senior Director of Sustainability, and I'm very excited to be with my esteemed colleagues here to present to you our ESG program an overview, a brief overview. There's a lot of detail in our ESG report online, but we'll give you a bit of the exciting stuff. So we're going to talk today mostly about the environmental and social aspects of ESG on this panel, but governance will be covered later when Rael and Galen have their panel right after this. I'm going to reintroduce our panel because you've met all of them. Erin oversees our social impact team. Mario and Ana oversee their respective divisions and are responsible for integrating ESG into developments and operations. And I oversee the environmental pillar as well as our ESG disclosures. There are 3 things that I'm hoping that you're going to take away from this panel today. Number one, Choice is a leader in ESG. Number two, that leadership is going to translate into leading long-term returns, not just for unitholders but also for all stakeholders, including colleagues, communities and the environment. And number three, that management, some of which are represented here on this panel are very engaged and very excited about the activities that we're doing with respect to ESG. I'll give you a brief overview of our ESG program. We focus on issues that are double material. What that means is that these issues are important to our financials and they're impactful in that way, but we also have an ability to impact the issue itself. And deliver value to society and to the planet. The 2 issues that we focus on that are our ESG pillars are fighting climate change and advancing social equity. So let's launch right into this. We'll start with the social equity side. And Erin, I'm going to ask you to give a brief introduction. We've recently hired a dedicated resource on social impact. And maybe you can tell us a bit more about what we've done in the past, but also. What we can expect in the future?

Yes, for sure. So as you said, our social pillar is advancing social equity. And the objective of this pillar is really to empower equity deserving groups for success, both internal at choice and external and while Ana is our internal lead and she's here today, I'll let her speak to that. I'll focus a bit on our work externally. And so to your point, Ariel, going back a few years, looking at 2019 is when we founded Choice Cares. And Choice Cares is really our community giving program, where our employees either volunteer with various organizations are also donate money. And when we started our Choice Cares, it was really about employee engagement and getting everyone engaged. And it becomes so much more than that and it's really started to be about driving social purpose at choice. In the last couple of years, we've delivered over 5,000 hours of volunteer time to places like Second Harvest and Moorelands Kids in Toronto and Brown Bagging for kids in Calgary. The program has really grown, but it's also opened our eyes and we're learning how much more we can do. And so last year, it was awesome that we committed to building out a dedicated social impact team this team is working on a road map that's going to guide this pillar for the years to come, looking at key objectives, KPIs and right now, we're talking to various community organizations across the country to figure out where can we as Choice have the greatest impact in the communities where our buildings are. A couple of examples of these are: we recently joined Woodward Greens Homeward Bound Industry Council. This council supports women with education and opportunities who are facing barriers to financial self-sufficiency. We also became a member of the accelerating Accessibility Coalition, which Mario will speak to. And in partnership with Daniels in the Black North Initiative, we actually have started an artist and residency program at our development in Brampton. So this is just the kind of the tip of the iceberg of what we're working on, and we're really excited to deliver a plan in the coming year and look at all the ways that we can have a greater impact.

Thanks, Erin. And I'm excited to hear more about it and be able to communicate that so that we can help drive the industry forward. Ana, turning it over to you. Diversity, equity and inclusion has been really -- it's driven up the agenda over the past few years, and you've really been one of the key stakeholders in driving it forward a choice. Can you give a brief overview of what we're doing and some of the accolades that we've received for DE&I.

Sure, Ariel. So I have the pleasure of having a dual role in this area with Choice. First, as a member of our senior leadership team, making sure we hold ourselves accountable to advancing social equity at Choice. We want to have a diverse colleague base, and we want to make sure that we're doing everything we can to, as I said, hold ourselves accountable. And so we do this by tracking this having metrics. We have targets with respect to representation of women and visible minorities at the Board and management levels across the organization, and we're very proud with what we've accomplished in this area. I mean, fundamentally, we really believe in the benefits it gives us as an organization. It connects us to our diverse tenant base. It gives us a leg up in attracting talent. And I think it's really important in terms of driving creativity and innovation and just bringing people with diverse ways of thinking together. So again, it's really core to our DNA at Choice. And we're really pleased because we've been recognized for a couple of things in this area. The Globe and Mail women's lead here benchmark. We're 1 of 84 companies that were named this year. And then we were also 1 of only 18 companies globally who were acknowledged for having achieve gender balance within their organization. So that's -- we're very proud of that, and we acknowledge we have more to do in other areas of diversity across the organization. And then I guess the other role that I play is I'm executive sponsor of our employee-led diversity, equity and inclusion committee. And so that's a committee of volunteers across the organization. And it's a -- it's a wonderful group of colleagues, and I really just kind of get to sit back and watch them go because they're very engaged and they're very creative, and they're coming up with ways to create a better understanding of diversity, both gender, religious sexual orientation and really educate colleagues at Choice. And our goal there is really to create empathy and challenge bias and just to open people's minds. And so that's on through activities and events and just communications to colleagues across the organization. And we had a DI survey recently and really proud to say that we learned that colleagues were really taking a lot from the education we've been providing and events we've been having, and they shared with us that they have taken these conversations to their homes and talking about it with their friends. And so we're really pleased with that.

That's great. And I am one of those people who have had that conversation at home. So I'm excited to learn more from our DE&I committee. Mario, we haven't touched on development yet in this panel, but we talked about it quite a bit. Can you give an overview of some of the things that we're doing to build communities and advance social equity in those areas.

Yes, definitely, Ariel. I mean when it comes to development, to me, it's all about engagement and engaging with the community, engaging with private groups, public groups, special interest groups, and it's something that we do through the planning process, we're relegated to do that, but we engage in that process. And we want to build communities. And I think the perfect example, and you heard me speak about it a little bit earlier today, you heard Joe speak about it. But Golden Mile is a perfect example. We we've been underway with development approvals there for the past 6 years, and we've engaged with the community throughout that entire process. And when you look at that master planned community today. It's 3.3 million square feet that we've got approved, 11 potential towers of residential, a retail node that is going to have food and drug, which was something that was demanded by the community. They want to make sure that they don't lose their food store or drugstore. It's something that came up in our panels and in our meetings. But beyond that, when you look at the engagement, we're building 30,000 square feet of community space. We're going to have a 1.6 acre park that is going to be part of our overall development. We will ensure that our development will be rinsed certified with respect to accessibility. So our first phase, which is 1 million square feet, one purpose-built rental tower two condos, joint venture partner with Daniels. Our first phase has already received preconstruction Rick Hansen Certification. And Erin spoke about it a little bit earlier with respect to being one of the first groups to actually sign on to the acceleration, accessibility coalition group. And we're one of the first. We want to ensure that our developments are accessible. And today, the 2 projects I talked about a little bit earlier, which are Unity and Brampton and also our Ottawa project. At Element in Westboro, both of those will be Rick Hansen certified as well. And it's interesting, not a quote that I thought was quite interesting with respect to accessibility to housing. Over 1 in 5 Canadians lives with a disability. And that number is expected to increase as the population ages. And there is a growing need for accessible housing. So it's something that we're moving on, and it's something that we are implementing into our development. So our next 3 projects will have that. Beyond that, we spoke about engagement and engaging with community groups. So if you look at Golden Mile, we engage with the working women community center. We engaged with ILEO which is a local economic organization for the community at Golden Mile. And then beyond that, we've also engaged with higher education tenants like University of Toronto, Centennial College as potential partners on the site. So that kind of gives you an overview of some of the things that we're doing specifically on that project being Golden Mile. But these type of initiatives, we're also doing them at Westboro and also in Brampton at our Unity side as well.

Amazing. Thanks for that. All right. Let's turn it over to environmental. This is an area that I know that we're definitely leading, and I can say that because we were one of the first companies in the whole world to have our targets validated by the science-based targets initiative. What does that mean practically? It means that we have a third party defining what Net Zero means because there's been a lot of discussion around what Net Zero really is. It means that we're going to be leading by reducing emissions by 90% by 2050 instead of focusing on carbon offsets. And it also means that we're going to be including our entire portfolio. We're not going to be carving out sections that are difficult to decarbonize, we're also going to be including not just our own operating emissions, but our tenants operating emissions as well as the emissions from our building materials that we use in our developments or in our retrofits. So Erin, maybe I could ask you to put your finance hat on for a second and just give a brief overview of -- I mean, obviously, climate change is very important to society, but can you give us a sense of why it's also important to our business.

Yes, for sure. So you've heard many times today, at Choice, we're not shortsighted. We're always focused on making the right decisions for our employees, our tenants, our unitholders, the community and the planet. And we really believe that how you're going to drive long-term value is by engaging all stakeholders. We don't want to develop a building just to have it be obsolete in 5 to 10 years. And we really recognize that with our national footprint, we hold a great deal of influence over decarbonizing the built environment in Canada. As a finance team, we treat tackling our ESG targets, just like any other business target. And we're working with the teams to make sure we're incorporating climate initiatives into our budgets, plans and forecasts. And as a finance leader, I'm committed to making sure that my teams can speak to ESG metrics, the same way they can speak to their financial metrics. We're leading on the internal controls team, risk team as well as our own teams to help the ESG team implement new tools, processes and then make sure that we're ready for integrated reporting.

Exciting stuff. Ana, Mario, I'm going to put you on the hot seat. Targets are just targets. We have to actually take action on them. what are -- I mean we're really early in our journey. We have a target for 2050. That's 27 years from now. But we know that we need to be doing some things today. Mario, what are some of the things that we're doing at developments, and then I'll turn it over to Ana for operations.

Sure. Absolutely. I mean we're -- we obviously got an aggressive program, as you heard a little bit earlier with respect to our development pipeline. We've got a series of initiatives that we have underway today, some that are under construction, a number of pilot projects that are coming forward. that we're very excited by. We touched earlier on our Unity project in Brampton, which will have a geothermal system which will provide our healing cooling. It essentially will reduce our energy cost by 50%. Which is great for our tenants as we move into operations and work closely with Ana and Ariel's Group. It's part of collaboration on moving forward on these projects. If you look at some of our retail developments moving forward, we've got a number of initiatives where certain things that we're doing very, very simple where we can reduce embedded carbon going forward, insulation adding insulation below our slab, adding insulation to our building walls, to our roof systems. Introducing heat pumps for heating and cooling. These are all simple things that we're doing. We've got 2 pilot programs that will actually start this year on the commercial side. On the industrial side, I talked a little bit earlier about our Choice asset and Surrey BC will be LEED certified. And it also will have heat pumps so a great initiative. And again, these are things that we're actually building today moving forward. And probably one of the most exciting things that we have going and Ana touched on it a little bit earlier today during the Loblaw discussion. We're working with Loblaw very closely on a new generation of Shoppers Drug Marts and food stores that will be net zero. Hopefully, as soon as 2024, but also looking at certain initiatives that can help us today and looking at those type of initiatives that we can introduce to some of the buildings that we're building today. So part of that gives you a quick little overview of some of the things that we're doing today with respect to development.

And Ana, on operations.

Yes. We're doing many things on the operations side and some things we've been doing for many years, and we're realizing the fruits of our labor. Just this year, I'm proud to say that we've converted almost all of our exterior lighting at our centers to LED and we've also certified over 60% of our properties to BOMA BEST and LEED, and that's been a program that's been going on for several years, and it's involved our operations teams across the country and Ariel's team as well. When we undertake asphalt projects, something very simple, but we always target a use of recycled materials as high as 40% is our goal. So that's something that we do every day. And then in terms of some of the newer things we're doing, we've got several pilots that we're really excited about. We're piloting solar rooftop installations that will actually power the usage that the tenants use electricity. And we also, in some cases, have the ability to feed back into the grid. And as part of this, we're also looking at battery storage. I think that's an interesting way to obviously offset load, but also it's something that tenants could utilize as backup power, which would eliminate or reduce the need for diesel and gas generators, which are high carbon emitters. So those are some of the more innovative things we're doing as well as also piloting dual-fuel rooftop units, and we're doing that sort of as part of our normal maintenance program. So as we are replacing units. We're looking at these more efficient and less carbon-intensive types of equipment. And then really, we're partnering with our tenants because they really drive our Scope 3 emissions. And a lot of our major tenants have sustainability goals and Loblaws, our anchor tenant certainly has done so much already in terms of reducing their carbon emissions and their energy through building upgrades, retro commissioning, controls in their refrigeration systems, which can add carbon into the atmosphere. So continuing to partner with Loblaws, continuing to partner with other tenants. And we're doing that also through our green lease that we've launched, and this will align our sustainability goals with those of our tenants. So we kind of create a road map on how we can achieve our collective goals.

That's great. Well, thank you to everybody for this great discussion. I'm really looking forward to hearing more about it in future years and reporting on it. Speaking on that note, take a look at our ESG report, if you want more details. We make sure that we align with third-party standards like TCFD and SASB. So you're getting accurate information so that you can hold us accountable for the performance. What I hope you've taken away from this panel again, you clearly can see that our management team is engaged and excited about this. Hopefully, what you've heard is that we have these initiatives that are aligned with long -- driving long-term value for not just you -- our unitholders, but also for all stakeholders, and that we are a leader in ESG. So on that note, I'm going to thank our panelists again. I'm going to turn it over to Galen and Rael, who are going to talk about the relationship between Choice and Weston.

So thank you, Ariel. That was a great panel. And as Galen said to me walking up, puts a lot of pressure on us to -- have a great...

You guys are great.

So as you know, Galen Weston is Chairman and CEO of George Weston Limited, which is Choice's largest unitholder and Chairman and President of Loblaw, which is Choice's largest tenant, and Galen used to be Chairman of Choice until I think it was 2 years ago.

Yes.

So Galen, the reason I'm so excited is because it's normally you asking me the questions and I'll finally get to ask you some questions. I think a great place to start would be for you to tell us why you work so hard to make real estate such a big part of George Weston.

Yes, it's a great question. I guess it sort of starts with the concept of us being a family business. We're a generational business, I guess, as a result. And I think our view has been for a long time that there's a really terrific synergy between a generational outlook for value creation for a family and then also the generational nature of real estate itself. And over probably 50 years, my father built an incredible property portfolio underneath the supermarkets at Loblaw. And so a number of years ago, we sort of took a look at this property portfolio. And we realized that there's a lot more that we could do with it, but that set up the way that it was inside Loblaw underneath a set of retailers who were managing it, myself included. It would always be kind of a second sister or brother and it would never get the love that it deserved. And so that was really the birth of Choice and where we thought, look, what we got to do is we got to give this property portfolio, the right balance sheet and the right management with a full-time focus on saying, hey, what can we do with this real estate. And for me, the idea was to create another platform for George Weston that could in a pretty exciting and dynamic way for real estate anyway. Generate lots of long-term, very stable, secure growth.

And one of the things I often tell investors is having George Weston as a unitholder, we can do things that are different. And a great example would be under some of the rental or residential buildings that Mario showed investors on the screen is we've actually entered into land leases, which are great long-term cash flowing assets in addition to having the rental building, and we're unique in that others aren't doing that. So looking around the room, there are probably more than a few people who think you call all the shots. And so obviously, when it comes to choice, can you please provide some perspective on that?

Yes. No, I think it's very inappropriate. You asked me that question. No, no, it's good that you asked that question. Really, it's good because, yes, look, choice is part of George Weston. George Weston is a holding company. It's a controlled company. It's controlled by the Weston family, and so it's fair. And yes, we do control Loblaw. We do control Choice, and we do have an influence, and we work hard to kind of shape the long-term vision for our operating businesses. But if you kind of go back to what I said earlier, we recognized through the creation of choice that we actually needed a different management approach and that retailers per se, we're not the same as expert real estate managers and developers. And that's why we established the Choice entity, so that you guys could run and you guys could bring to life the vision that was actually available to us inside Choice. So I would kind of put it back to and say, look, actually, the reason we created Choice was so that we could put a management team in place who called the shots. And we're delighted with Rael and his management team, all those folks in the back. They were very nervous when they were here for her name the other day, and it was great to listen to them. You all are doing terrifically well. But what's really important is what they do every day in managing Choice. And if you look at what they've achieved over the last 4 or 5 years, it's really impressive and getting more creative and more compelling in terms of the things that ultimately we're able to do with this business.

Sitting at the back of the room and looking at the panels and looking at the presenters, One of the great things is that we can provide career growth opportunities. Having Mario Fatica, he came from Loblaw. Erin came from George Weston. David Muallim went to Loblaw. So that is one of the other big benefits of being part of the group is that it provides that career growth. You announced this morning on the Loblaw call that you are selling real estate, we obviously hope to be a big. We know we'll be. But just from your perspective, can you just share your thoughts on the relationship between Choice and Loblaw and some of the strategic from the vantage point.

Yes. So first of all, part of what we really believe with George is that the operating divisions within that business should have some kind of synergistic benefit being part of the group. And we have a number of shared services that get managed through George, that both Choice and Loblaw can take advantage of. That allows us to create the highest quality in terms of teams, let's say, in a tax department or a treasury department and then leverage that capability across multiple platforms. And that's worked really well for us over the last number of years. But it goes a little bit deeper than just the management system that we use. If I go back maybe 20 years, for those of you who know kind of supermarket retail, you'll probably remember that what grocers wanted at that time and even the mass merchants want it at that time, they wanted big stores on independent plots of land with large parking lots and no competitors around. That was the sort of ideal model for a supermarket. And so we were always working with our landlords to say, look, we don't want anybody else near us. That's why we want to -- but why we bought all this land. We wanted to control completely what we were able to sell in our store, how many parking spots we'd be able to have. Well, fast forward kind of 20 years and the paradigm has shifted. In fact, what Loblaw is looking for now is smaller stores. They're looking for high density. They're looking for more complementary retail to draw traffic to the centers. And so as the retailer sort of changes its needs, Choice becomes enormously valuable as a partner figuring out how to realize those needs. And it could be something as simple as Choice working with a bank tenant and putting that bank in the corner of a parking lot. It could be negotiating with Dollarama or Giant Tiger who would have typically been considered by Loblaw to be devious competitors we've actually now realized that if we put them on the pads with us, we actually create more traffic, and it ends up leading to a stronger retail proposition for us. So even intensification by putting an apartment building up on top of a store or replatforming and rezoning an entire site to get more residential density or commercial density these are all things that strengthen the long-term value proposition of the retail store itself. And so having a partner with whom you can be a bit more transparent, share a little bit more the longer-term needs that the retailer has that you wouldn't typically share with an entire third-party landlord. This is allowing us to do better long-term thinking that works particularly well for Loblaw. Of course, on the choice side, the synergies in some respects, are more obvious, but no less interesting. If we're out there adding new stores, which we are, and we announced that today, we'll continue to put new stores in the ground. Choice is a preferred landlord, and they are out there working to find those sites in appropriate places so that we can work together. And probably the best biggest and most value unlocking example of that Mario mentioned, which is what are we calling it now, East Link way.

East Way.

East Way, okay, East Way, Choice East way used to be called East Gwillimbury, that's how I remembered it. But that is -- that's a fantastic industrial development site with Loblaw as a major anchor tenant with lots of intensification potential around it. And for us, Choice -- we actually had a different site with a different landlord earlier and Choice found us a better site at a better cost for Loblaw to put a very, very important large automated state-of-the-art distribution center. So I always thought there might be some good day-to-day synergies that would be realized between the 2 enterprises and my compliments to again, to Rael and to David, who leads the real estate team who used to be a Choice. There's a good constructive relationship and our governance is excellent on this front, but we are able to realize, I think, mutually beneficial advantage Through that relationship.

Look, it's a huge competitive advantage using East way as an example, knowing you have a tenant to find the land, like it just gives you so much more confidence that you can acquire the land and make money at it and then deliver at a reasonable cost to Loblaw. And then hearing about the new store growth, Mario Fatica is really excited over the next few years, grow your footprint. Again, when we walked in the -- we heard the end of the ESG panel, and we've talked so much about ESG today. And before we let you go, we'd love to hear how you think about ESG and particularly about ESG choice.

Yes, yes, for sure. So look, you guys used up all the good stuff in the panel, which is terrific. So maybe I'll just say this to sort of go back to the point that Erin made. We are looking to create generational value. That fits very well with the family outlook for business. And we've always believed for certainly my entire professional career that if you were going to look out into the, call it, the medium distant future, then you really needed to understand what are the social, demographic, environmental long-term trends, and you needed to find the right way to get just a little bit in front of them or make sure that you're not falling behind them. If you're a big enterprise like we are, whether it's Loblaw, whether it's Choice or whether it's George we have a responsibility to make a positive impact in the communities in which we operate. Whether that's an industry segment or whether it's a local community, where we're building development or opening a supermarket. So -- how do we do that? I mean we've been doing it since long before ESG became the frame for communicating and thinking about these things. Today, it's absolutely essential to have a top-notch ESG report. We need to have our disclosures in the right place. We need to communicate it in our targets in an effective and credible way, just like our science-based target initiative here with Choice. You guys are asking us questions. Institutional funds are asking us questions or just taking boxes with their algorithms around ESG. So it's really important for us that we get appropriate credit through those kinds of disclosures because we believe that we are doing the right things. And at one point, I think Loblaw was put on a list of top 5 world's worst carbon offenders, and that was kind of shocking. And it was a result of an algorithm error, and we had to have some European institution, and we had to correct the record, but it really helped us realize that we can't just focus on doing the good things. We also have to focus on how we disclose it and how transparent and effective we are in communicating that information. So we've done a lot of work on our ESG reports with Choice and with Loblaw, and I think they're both at a really elevated standard. But it's not just about ticking the boxes. It's also about determining where are the places that the unique characteristics and aspects of our businesses can make a bigger difference. Where can they impact change in a more meaningful way? Where do we have an elevated responsibility to show certain forms of leadership. And so what's the expectation that we set for Loblaw and for Choice at the George level say, look, you have to have a gold standard ESG report, and you have to identify a very focused list of initiatives or sort of, call it, almost strategic themes where you want to drive meaningful change. And it can't be on everything that you have to tick the box on with ESG. So that was the challenge that we set for Ariel and for Rael and for the team. It turns out that the 2 focus areas at Loblaw and the 2 focus areas of choice are pretty much identical. They're both social inclusion and they're both around fighting climate change. And it should, I think, make intuitive sense as to why, ultimately, both companies landed in this area and particularly in the case of Choice. In construction is one of the biggest carbon emitters in the industry today. We have this fantastic pipeline and as we realize the potential of that pipeline, we're going to be pouring a lot of concrete. We're going to be putting up a lot of steel. We're going to be building a lot of buildings. And so in these buildings he'll be around well past 2050. So we have to be thinking now about how to construct these buildings in a way that meets the moral test and the regulatory test because the regulations still have to catch up to the climate targets. And we need to be very, very forward thinking in terms of our approach to that. The second one, I mean, Erin talked a lot about the importance of diversity and inclusion inside our operating businesses. Mario started touching on the importance of building the communities in our developments in a way that enrich the communities in which we operate. And I think most people here know, there are good ways to build buildings that fit into the local community, and there are bad ways to build buildings that isolate the buildings from the community. And so over and above having good DE&I targets, we want to think about or the team, Rael and the team want to think about building communities whether they're single stores or whether they're large, complex multiuse developments in a way that there's going to be a social fabric to them. And that's going to mean that they live in a vibrant fashion for many, many, many decades. We want to collect rent from those communities. And so they can't die on the vine. It would be bad business if we didn't think that way. And so if you imagine, we're the largest REIT in Canada, we have as Niall said, if not the best, one of the best future development pipelines. And we want to make sure that we are driving the right social cohesion and the things that we build, and we want to make sure that our carbon footprint meets the highest test for the community between now and 2050.

I couldn't agree with you more. And we really look forward to sharing what we are going to be piloting with investors in the future. So that's it for my questions. I really appreciate you joining us. And I'm sure everyone found your perspective very helpful.

Wow, who did the order of this presentation? Hi, everyone. My name is Mario Barrafato, I'm the Chief Financial Officer. I've been in the real estate industry for over 20 years, all with publicly traded companies. The last 8 years I've been here with Choice. And part of that, I was the CFO for several public companies managed by Dream. So today, you've heard the strategy, and you've seen the potential. But we all know what brings it all together. It's the balance sheet. So today, I just want to talk to you a bit about our approach to balance sheet and then share with you some and talk to our financial performance. So when developing our financial strategy, we really try to balance risk and opportunity. And we try to prioritize being disciplined and conservative, but we also want that capacity to act on opportunities. So we're always making choices. But the one thing that's consistent is whatever choice we make. It has to lead to a balance sheet that can support the business and clear the way for us to achieve our goals. And we internally say, we always want a balance sheet that will never get in the way of the business. And with goals that center around preservation of capital, stable cash flows and long-term growth mean we need a very conservative capital structure for stability. We need safeguards in place to weather a storm or pandemic. But we need the capacity to support growth as well. You heard of all the development opportunities that we have at our fingertips, and so we want to take avenge of that too. So how do we do that? We focus on 5 key areas. So first, liquidity, that means having a large safety net. So you can endure varying economic cycles or you can pay down your debt when capital markets freeze. We like low leverage. Low leverage reduces the stress off of business but also gives us that capacity to grow. We love a balanced debt ladder, and we love to spread out our debt maturities over a long period of time. It minimizes annual interest rate exposure which is valuable in a high interest rate environment, which we're in right now. And then next, investment-grade credit rating. And this just exemplifies credit quality, and it provides us access to many sources of low-cost debt. And then lastly, a large pool of unencumbered assets, and this gives us a lot of financial flexibility. So as I read these, I mean, it sounds really simple, but execution is hard. And so our ability to execute and maintain these qualities really differentiates us and makes our balance sheet industry-leading. So we have an industry-leading balance sheet. I think we all agree. Thank you. But it wasn't always the case, and we come a long way. And so over the last few years, we've aggressively paid down debt, and we continue to operate at a low debt level. We also pushed out our debt maturities tenants with long-term leases are very attractive to lenders, and they're willing to provide long-term debt. This includes 30-year debt and making us the only public REIT with access to this market. And then just last week, we had another successful bond offering. We raised $550 million for a 10-year term. And in addition to the long tenor, the pricing was very attractive and it actually included some investor pricing concessions not seen in the last few years. And now today, we have a very manageable debt ladder where only 10% of our debt comes due in any 1 year. We also operate with $1.2 billion of liquidity, which this effectively covers 18 months of debt maturities. And so if the lending environment tightens, we're protected. So we've already actually seen a return on our investment on our balance sheet, and we recently received a credit rating upgrade during the pandemic. So overall, we are very pleased with our current capital structure, our ability to stay focused and deliver in these 5 areas is really important. And with that $550 million deal I referred to earlier, our balance sheet just gets stronger. And you can see, we've paid down our line and we further pushed out our average time to maturity to 5.9 years. So the key takeaway, again, our balance sheet is well positioned to support our business and our growth. In addition to a strong balance sheet, we value stability and we think stability generates confidence and supports opportunity. And sometimes, that road to stability gets a little bumpy, but it's definitely worth it. So Rael spoke earlier about all the activity we've done over the last 5 years to stabilize and improve our business. I refer to it as our under construction period. And this is where we've prioritized a few things: one, rightsizing the balance sheet. We [indiscernible] focused on improving portfolio quality. And then most recently, we're investing in growth. And I guess 5 years later, there's a few takeaways I just put a draw to. One is we always have allocated our capital with a long-term view. And even if it means incurring a short-term financial cost, as was the case when we delevered. Second, we saw the benefits of some of our improvements as early as 2020. The pandemic had minimal impact on our financial and operating performance. And third, when you go through a construction period, you expect volatility and you can see we kind of delivered stable financial results. And during that period, our investors had an annual return of 11%. And then lastly, the quality of our earnings is much stronger today and it puts us in a position to increase our distribution and potentially attract a higher earnings multiple. So looking ahead now, we are so well positioned to deliver strong financial results and superior returns. We have a clear strategy, a solid portfolio, and tremendous opportunities. So when it comes to financial performance, we just wanted to share what the success mean to us in the near term. And so it means delivering the stable cash flows that one has come to expect from Choice. Complemented with NOI growth from the strong fundamentals embedded into our industrial portfolio, as Andrew talked about. And the overall quality improvement we've made where we sold high risk or low growth properties and reinvest it in more stabilized. So they both should contribute to NOI growth. It also means driving AFFO and NAV growth as we execute on the commercial opportunities we have and by growing NOI through our retail intensifications. It means doing all this while still maintaining a conservative and flexible balance sheet. And it means sharing our earnings and growth with our unitholders over time with further distribution increases. So if we go back and go back to what you heard today, I mean, we are definitely on track to meet what we call success. So operationally, we're targeting 2% to 3% same asset NOI growth. You heard Ana say the fundamentals are strong, and we expect to operate at near full term occupancy. Nicole noted that our retail portfolio was bolstered by national necessity-based tenants will continue to provide stable cash flows with annual rent escalations. Andrew was very enthusiastic. And yes, that was enthusiastic for Andrew, targeting outsized organic growth in our industrial portfolio. And lastly, we'll continue to improve the quality by recycling properties and acquisitions being funded by dispositions. Then you heard Mario, Joe and Niall talk about our developments. We expect to increase our development spend to an average of $300 million to $350 million annually. This will primarily focus on commercial projects, including retail intensifications and to build out our 7 million square feet industrial pipeline. Spending at this level will ramp up over time with '23 see it at the lower end as we wind down our current residential projects and then spending increase later as we advance our industrial projects. Beyond 2023, in the near term, we expect 80% of our development spend to be on retail intensifications and commercial development. We're still going to advance our mixed-use and residential projects through zoning and planning, but we won't build until the market is right. With strong growth in our core business and our anal contributions from development, we expect that we can fund the $300 million on a leverage neutral basis. So not with the company at more risk. And then we also expect that these projects will deliver a yield consistent with our historical average of 7%, resulting in significant contributions to NOI growth. And should we need additional capital we have the depth of our balance sheet, and we have strong partner relationships to allow us to fill any funding gaps. And going a step further beyond our active projects, we have 80 potential development sites, meaning we don't have to look outside of our business to fill our annual development pipeline over the long term. So looking at our financial performance for 2023. Last week, we released our 2022 results. We again delivered strong financial performance improved our portfolio quality, advance our development pipeline and secured long-term debt at a reasonable cost. And building off the momentum of 2022, we expect growth in most of our KPIs for 2023. The 2% to 3% same asset NOI growth outlook, plus development completions will translate into FFO growth per unit of 2% to 3% or $0.98 to $0.99 per unit. We'll be able to fund all our development commitments and still maintain an industry-leading balance sheet. And with the higher quality cash flows, we're going to operate with a strong and resilient payout ratio. So this is the guidance we released in our annual report. This is the first time we've reported set guidance, and we look forward to updating you throughout the year. We are very proud of the company we're building. We're pleased to have delivered superior returns during times of transition and pandemic and inflation. And we are well positioned to continue to deliver strong risk-adjusted returns in the future. So looking ahead, say, over a 3- to 5-year horizon, we're committed to delivering a stable and growing distribution, which today is at 5% through active asset management, we could have to deliver AFFO and NAV growth from our income-producing portfolio of 2% to 3%. And we think with all our development spending, we can deliver an additional 1% of NAV growth from our developments. So overall, it's our commitment even in this current environment that we're going to deliver stable returns consistent with our historic returns, our performance. But we'll do it with a higher quality portfolio in a more advanced development platform and a tested balance sheet. And so with that, I'd like to welcome Rael back to the stage.

So thank you, Mario. I really hope that you enjoy getting to know some of our team members today and gaining greater insight and appreciation into everything that we have achieved so far. So as you heard, our business is delivering today, and we are well positioned for the future. Our portfolio is market leading, and our operating platform is set up to ensure that we maintain this position and drive operational excellence. I hope you have a greater appreciation for the quality of our portfolio and the unique competitive advantages of each of our asset classes. Our retail portfolio is located at key intersections in communities across the country where Canadians live and shop for their daily needs, as Ana told you. Our national footprint with a regional focus sets us apart, our tenants of the highest quality. And as you heard, our relationship with them is strong. Industrial footprint is in the right product, in the right markets and has significant embedded growth potential. Our mixed-use and residential platform is well positioned to provide inflation protector growth. We will deliver on our development pipeline in the near term, in the medium term and in the long term. We have a huge competitive advantage with the ability to develop across each of our asset classes, providing us with the flexibility to adapt to market dynamics. We will continue to drive growth through our retail intensifications. As Mario and Andrew said with a 7 million square foot industrial pipeline, we aim to create one of the largest and highest quality industrial portfolios in Canada. And finally, our pipeline for mixed-use and residential development consist of more than 80 sites that can be developed further. Since we already own the land, we have the potential to sustain growth of our net asset value over a very long period of time. Supporting all of this, we have an unmatched foundation that is a true competitive advantage. That includes our industry-leading balance sheet that Mario just spoke about. This is often overlooked, but not today, Mario and what it means for you is we are lower risk, and we are able to pursue those growth opportunities we spoke about without ever putting our business at risk. So we won't put our business at risk, and we'll not put our distribution at risk. And I hope today provided the clarity that we really are Canada's Preeminent REIT. We have a well-defined and proven strategy, a clear plan to maintain stability and to deliver growth and the right team to execute. Thank you. We're going to take a very short break, not 30 seconds just to set up, no break, sorry. We don't just set up, and then we're going to do Q&A for about 20 minutes. Let me invite the Choice team up to -- for Q&A.

As Rael mentioned, all of our presenters are here with us today to answer your questions. We're only going to take questions from those of you in person. So let's get started with our live audience. Could you please state your name before your question as well and someone will bring you a mic.

Sam Damiani with TD Securities. That was a great presentation today. It was wonderful to really get a sense of the team and the strategy. I guess one question I had was with the plan over the long term to start to do mixed-use residential development, which does include putting a store at the base of the building. For those stores that have been converted in such a way, how has the performance been? Is there any hesitancy to aggressively pursue that transformation due to the perform? Just wondering how the performance of the store is impacted by those developments.

So Sam, we can't speak for Loblaw, but we're going to give you some insight. Mario Fatica has built more grocery stores than anyone in this country, both urban and suburban. So maybe he can comment in a moment. But like I do want to comment on we've been very thoughtful over the last few years at building the right team to be able to execute on it. So obviously, we brought [indiscernible] from Loblaw he, as I said, has built more grocery stores than anyone in the country. We hired an individual who runs our construction group who actually worked at [indiscernible] who built AURA and then we've recently hired now. So we've clearly been building the team methodically with the skill set to be able to execute on these mixed use developments. And then, I don't know, Mario, if you maybe want to just comment on how those stores -- how are we thinking working with Loblaw?

Yes. No, absolutely. It's a great question because it's something that retailers in general struggle with. And it's -- you've got the urban, suburban debate that goes back and forth. And it's a struggle at Loblaws. The Loblaw team does struggle with when do you go to urban because urban is a different type of shop. And if all your competitors or at grade surface park, and you are the first to go urban, which is below-grade parking and being dependent on transit. It's a different shop. And the ability and the advantage that we have is that we don't have to do that upfront. We can let all of Loblaw's competitors actually go urban, and we can actually delay Loblaw from going urban. So we have that choice on our income-producing properties. The other thing I'd suggest as well, we work very closely on Loblaw. So Golden Mile is a perfect example. How is Golden Mile, a project that you can move forward on? Well, it's 19 acres. So we can actually build around the food store. We can actually build a new food store while the existing food stores actually continues to operate. And from that point of view, when that food store opens, we'll also have some vacant lands that we can provide surface park. So we can educate that customer slowly to start shopping from an urban point of view. So there's a number -- each project is a little bit different. There are some stores that will close. And that asset class is probably dated. So it needs considerable investment. And we work closely with Loblaw is that that's a good candidate for redevelopment based on the density that's being built in the area and also the infrastructure that Loblaw has to put into that asset itself. So there -- each case is a little bit different, but it's a great question because it is something that not just Loblaws, but I would say a lot of retailers do struggle is that urban, suburban, where we're all customers. We all want to drive to the store and whatever is convenient is probably the location you end up going. So convenience is a big factor for a retailer, particularly for Loblaws.

But as Mario said, that parking lot at the Golden Mile example will likely be the last phase of the development because we'll build around it.

But I was just going to say that this store is actually a really interesting example when it opened because we have a large parking field below, and we have the dedicated click and collect and so forth. But what we learned when the store opened was like over half customers were coming on foot to here at 500 Lakeshore. So I think the nature of the shop has also changed where people instead of going once a week or twice a week, they're kind of going every day and using the grocery store is a refrigerator. And so that's kind of what we're experiencing, what we learned from the store manager talking to them here at 500 Lakeshore.

It's Mike Markidis from BMO Capital Markets. Just looking back a few years, on the capital recycling initiative, you sold out of office or you're almost out of office, I guess, but you've made that strategic decision. You also sold some significant Loblaw tenant industrial centers on a credit deal out in nonmajor markets. We've seen a pretty significant shift in population growth trends. I think it was noted that there's more -- I think it was Mario that mentioned there was more stuff going on in nontraditional urban markets going forward. So with your balanced capital recycling plan, how are you guys thinking about that going forward?

Yes. So look, over the last few years, as you said, Michael, we haven't been balanced. We've sold more than we purchased. But we do intend to be balanced. It's going to likely be across all asset classes. So we will sell -- we'll continually sell what we perceive to be the assets they will meet our goals across retail and industrial, and we've got those 2 remaining office assets to sell. But it will -- I would say the bulk of the sales will likely be in retail over time. I don't know, Anton, if you want to add anything.

I would just say we're getting more and more granular and you announced [indiscernible] assets to sell like -- we're looking at the -- the job is not getting partner everyday, which makes it both less fun, more fun for me. But I would say, we really look at a global fundamental we target all of the metrics that we also early [indiscernible] to say our portfolios are strong. Ones that don't be -- don't help those metrics are the ones that would be less important position. So I would say that portfolio is shrinking and overall, quality exception...

Yes. And when we speak with that and Nicole and we say, what asset could potentially hurt us? There's nothing in our portfolio that worries us or scares us or that we think could even hurt us.

Maybe just a follow-up. If you could just speak to the knowledge sharing that happens between Choice and Loblaw and how that impacts decisions on capital recycling going forward.

Look, I'm going to ask Ana and Anton to speak to. We have -- as you heard on the panel, very transparent relationship I think the biggest knowledge sharing at the moment is on the acquisitions where we try and to assist them with the growth plans. On store performance, we often get the same information that other landlords get like maybe slightly better. But really, I would say the best stores are within Choice. Those are the ones that Loblaw owned and were previously vended into choice. I don't know, Anton or Ana and want to maybe expand on number?

Yes. No. I mean we have some insight into performance. It's not -- we don't get all the detailed financials and nor do I think we should. But we have comfort in speaking with our colleagues at Loblaws that the stores that we have are performing well. And there are instances where -- and I think it was alluded to in the Dollarama when Joe was speaking where we work with Loblaws and we help them rightsize a grocery store box. So what we're trying to do is figure out how to give them the optimum box and then what we can then do is reach out to those other tenants that we work with nationally because they're really anxious to co-locate with Loblaws. So that's kind of how we're approaching kind of helping each of us giving them the Optima box and then we can attract more retailers to our portfolio.

I would say our disposition is rarely or completely off the table when it comes to fixing a store that may have some sort of issue like we have a very strong asset management platform. And we have a way of improving the real estate that could be temporarily struggling. The times when we do sell the occasional store, it's usually because the pricing is so attractive from local group or somebody who's not fully priced in growth or something to do with the site that we see an opportunity to capture a little bit of arbitrage and it's not one of our core holdings. So that's more so where we'll actually work with Loblaw and say, is this one that we should sell. And most of the time, they'll say, it's we could keep in the portfolio, but there's no real job to be done. There's no value add for us on this one. So we'll go ahead and sell it. So it's very collaborative that way. And usually, we try to just find opportunities where someone overpays a little bit, frankly.

Pammi Bir, RBC Capital Markets. I think earlier you mentioned $1.8 billion of assets that were left in Loblaw to, I guess, eventually that they would look to monetize at some point but only half of that would fit within the Choice portfolio. So can you just talk about -- first, I have 2 questions really, what does the time line look like on those vend-ins over how many -- whatever years? And then secondly, kind of ties into, I think maybe the earlier question, but what are some of the attributes of the assets that choice would not look at that you would pass on what makes those assets not suitable for the REIT.

So I'll start and then hand it over to Anton again. So Pammi, as you said, roughly half we will purchase. And the ones that we will purchase as was alluded to on the panel, on the retail side, it would be, call it, the more major markets and the areas that we believe have strong demographic growth. And then industrial and when we look at industrial has to be in one of the markets we're operating, and then we also look at the characteristics of the building and say, can we convert this if a major tenant wasn't there. Assets that don't have those characteristics, we would generally pass on. As far as -- I don't know, Anton, if you want to expand and maybe just touch on size for this year?

Yes. I mean it's generally you heard from Bruce earlier on what they look at for growth areas and where they see population growth. And I think our thinking overall, is very consistent. So if there are stores in areas that are more flat than growing and we don't see the long-term potential of population growth, employment growth, all those factors, then I just think it's less of a compelling opportunity for us, and we end up passing on those. Critical mass in certain markets also factors into it somewhat. Like we do have to manage all this real estate, and we think about generally where do we have clusters that we could capture the best possible value for every property. So that's a consideration as well.

And then the final consideration is just the amount of capital we can put out in a given year. And as we said, we're trying to be balanced now where historically, we were willing to be, call it, a net seller. So it's a combination of the amount of capital we're putting out with our developments, how much can we do in acquisitions and then we look at what we should be selling in our existing portfolio, which is, as I high quality already.

This is Himanshu Gupta from Scotiabank. My question is on the industrial portfolio. Obviously, you own a very large industrial portfolio, high quality as you mentioned as well. Do you think you're getting the right valuation multiple within the choice entity and would you consider spinning it off as a separate entity? And I mean, apart from the obvious benefit of getting a higher multiple, what are the challenges in spinning it off as a separate entity?

So Himanshu, I think you've already named the industrial REITs. But look, when we look at it, we just think there's phenomenal embedded growth in the existing portfolio. And then we have the balance sheet and the land and the team to execute on growing the portfolio through the land we already own. So we want to continue executing on that plan. And as we said in, call it, 5 to 7 years, we believe we will have the highest quality, largest industrial platform that one could purchase in the Canadian landscape. I don't know if you want to maybe -- like in the future, it's something we may think about. But right now, we are very focused on executing on our growth plans. Do you want to expand?

Yes. I think right now, it fits in nicely with what we're trying to do, and it's a letter of growth that complements the stability of the retail, and it's in between the development. So it fits nicely with what we're trying to do here. A spinout gets complicated. We have to do the value analysis, but then there's structuring taxes and stuff like that. And so if there's value opportunities in the future, we have to look at it. But right now, it fits in nicely with what we're trying to build, which is having 3 layers growth in our platform.

And the last thing I'd add is, and always reminds me the big revenue synergies between industrial and retail. You saw Andrew put up a slide, we spoke about our major tenants. Many of the major tenants or actually our retail tenants. And Ana and Andrew and Nicole, have great relationships with those tenants, like using Canadian Tire was on the screen as an example. So Ana speaking to -- or Andrew and Ana are speaking to a tenant in Vancouver who's currently retail tenant in our portfolio. And they're dealing with the same real estate folks on the retail and industrial side. So there are big benefits by having deep relationships with those tenants. So we do like to think that there are big revenue synergies as well.

It's Tal Woolley from National. In your comments just about how the development pipeline was sort of balanced going out near term. I think you're sort of trying to signal that, it's going to more filled with retail and industrial projects than with residential, at least in the short run. Obviously, the market need right now in a lot of the cities is for resi. What do you guys think needs to happen in order for you to get more aggressive on the residential front?

Look, there are a few short-term zoning things that we need to finalize that we believe by the end of this year, we will actually be in a position to be shovel ready on a few sites. So partly, our guidance on how much we're going to spend, especially in the short term is driven by, call it, site-specific constraints, less so than the market. The biggest thing is, I would say, I'm going to look to Joe and to Mario now. But the biggest thing at the moment is just stability of costs. Once you have that stability of cost, and you can actually forecast a pro forma out you have the confidence that you can go ahead with the project. I don't know, maybe I'm going to look to the others to chime in. But I think for us, given where our land cost is to that really that stability of cost. And then as I said, we've brought on the team that now we believe we have the capabilities to start overseeing this ourselves as well.

I just add next year '23, there's a lot of projects that have continued to be a legacy of the last 4 years. And I'd say the competition in the market for new projects from a builder construction perspective, I think it's going to change in '24. They don't have the -- their books are not as full with the quantity of projects that they had previously and that's going to create a more appetite so I'm not saying there's going to be a cost decrease, but certainly competition for projects, time lines and durations of build-out will become, I think, will become more competitive.

I guess just [indiscernible] side, a lot of the Industrial REITs have been talking about how difficult it is developed and yet somehow you've managed to assemble a $7 million or 7 million square foot pipeline and some of that coming relatively recently, too. This isn't land you had banked for decades or something like that. I'm wondering how you guys are able to do that when some of the other guys are.

So we have a mezz loan program that we've always had great relationships with developers. And we've used this mezz loan program to help fund developers and in exchange, they bring us opportunities. So that's call it one avenue. The second avenue is just given the size of our entity. We've bought how much do we spend now on the land purchasing the land with -- so our cost is I'm looking to someone who knows the number, call it $400 million of our costs. There are very few entities who actually could make that size of investments in Warland. So given the size of our entity, those relationships and the fact that we were strong during COVID when others were retreating, those factors allowed us to lean in and make the investment. And it's turned out to be a spectacular investment, just given the continued rental growth on the industrial side.

Okay. And then just lastly, I appreciate the target return expectations and things that you're looking to deliver to market. The one thing I thought was maybe missing from the package was a distribution policy and how you're thinking about that? So maybe you can give some commentary around that as well.

Look, as we said, over the last few years, we've been -- Mario said, we've been under construction. We haven't grown our distribution, but we aspire to grow distribution over time. And we'll provide clarity when we can or more we can say.

Yes. I think we've said is we're in a position that where we've had growth. We've reinvested it in balance sheet in quality. And so now we're going to give that growth back. And so the view is where there is growth, we will share over time. We're in an environment where how volatile and if there is no growth, then -- so the policy just really says, as we grow, we'll share it with our investors.

Lorne.

I guess sitting at the back, it's tough to get noticed, that was my add. Lorne Kalmar from Desjardins. Obviously, there's been a lot of focus on the developments and a big part of your pipeline is industrial and mixed-use of residential. Is there a point when it starts to make sense to shift the focus to building more pure retail assets? Or is that day kind of gone with the cost environment being what it is?

No, I think we're in that environment right now, like you heard with -- on the Loblaw pattern, we're actually trying to help Loblaw with their growth needs. And we have been building we actually have been building retail on our own sites, and we're actually looking for, call it, greenfield land to help them with their growth needs. So I think with that market knowledge of Loblaw, I believe we're in a position to actually start developing more. The issue is it's never going to be of the size that the others are at we gave you the range of $300 million to $350 million. That's always going to be, I don't know, Mario, how much is in the near term on retail?

This year, I think we're going to be probably around $250 million to $275 million. But on average, over the next call. On retail, I think we're around Erin? Is it about $50 million this year, I think, is what we're based on the capital plan that we have.

So it's just never going to be of the same size as the other asset classes, just given the nature of the buildings.

Okay. Great. Thank you for your question. That's actually all the time we've allotted today for Q&A. Anyone who has any additional questions, please reach out to myself, and I will make sure you get an answer. Today's presentation and materials will be available on our website for anyone interested. And we hope all of this helped you really gain an appreciation for how Choice is delivering today and building for the future. And lastly, I just want to thank my amazing team and everyone who welcomed you today and help to make this event possible. So thank you.