First Capital Real Estate Investment Trust (FCRUN) Earnings Call Transcript & Summary

Good afternoon. My name is Alison Harnick, and I'm First Capital's General Counsel. Before we begin, I'd like to provide the necessary caution regarding forward-looking statements. On behalf of those speaking today, I'd like to note that their comments may include forward-looking information and forward-looking statements within the meaning of applicable Canadian securities laws. And they may refer to non-IFRS financial measures. Details regarding forward-looking statements and non-IFRS financial measures are on screen and can be found in First Capital's various securities filings, including the most recent MD&A and annual information form. These can be found on SEDAR and on our website. Actual results could differ materially from the forecast, projections, expectations and conclusions in the forward-looking statements made today. All of the forward-looking information and statements that we may provide, which includes all information other than statements of current and historical fact, are qualified by the cautionary statement posted on the screen, which can also be found on our website as part of these Investor Day materials. It's now my pleasure to turn the floor over to Neil Downey.

Good afternoon, and welcome to First Capital REIT's Investor Day. My name is Neil Downey, and I have the privilege of serving as the REIT's Chief Financial Officer. It's really fantastic to see such a strong turnout. I'd like to provide a big upfront thank you to all of our investors. We know you have many demands on your time and many investment opportunities to choose from across the Canadian landscape. So we truly appreciate your attendance today. Similarly, to our research coverage analysts, we realize our event is amidst the busy year-end reporting season, so we also appreciate that you're here in person. Through our regular quarterly conference calls or when we go on the road to meet with investors, it's usually 1 or 2 of FCR's executives that participate. And so the market exposure to First Capital tends to be concentrated with just a few people at the top. This will not be the case today. Today's presenters include a broad cross-section from FCR's functional areas, including speakers and panelists from real estate services and leasing, brand and culture, information technology, marketing and communications, legal, ESG and more. We have a lot to cover this afternoon in our session, which is held under the moniker of discipline, stability, growth. If we take a step back, the fact is these 3 words very succinctly capture our way of thinking about capital allocation, the asset class in which we operate, and what we're trying to achieve for our investors. In late 2022, we announced our optimization plan, which was centered around disciplined capital allocation and a reorientation of FCR's invested capital. In devising the optimization plan, we knew we had the benefit of stability and growth in our core asset base. However, we also recognize that a meaningful portion of FCR's assets, while great for long-term value creation, were also diluting the growth in FFO per unit. And it seemed increasingly clear at the time that we were entering into a new environment, one of higher interest rates, an environment that would make it much harder, harder for all REITs to generate this cash flow growth. But importantly, we knew that FCR had a toolkit that other REITs do not. We also believe this toolkit was not well understood by investors, and it certainly was not being reflected in the trading price of the units. So this leads us to our Investor Day. We have an agenda, and there are several major components to this afternoon's session. The first is called the Current State of FCR. This will involve a lot of material, but it will also set the stage for where we are going, which will be followed by How We Will Get There. And with that, it's my pleasure to turn the session over to Adam.

Thank you, Neil. Good afternoon, everyone. Welcome to First Capital REIT's Investor Day. My name is Adam Paul, and I have the privilege of serving as your President and CEO. Thank you for taking the time and attending today. We've got a lot to cover, and I'd like to start with why we're here, why we're having an Investor Day. Well, over the last 18 months or so, there's been a lot of activity at First Capital. As Neil mentioned, at the beginning of that time frame, we announced our optimization plan. This 2-year plan was widely supported by our investors. However, we were also on the radar of some dissident investors. And this ended up leading to a lot of public attention on our company. Now that triggered 2 things and 2 undertakings for us. The first was doing a deep dive into all aspects of the business, to evaluate what was working and what was not working. That work ended up reinforcing our conviction in our optimization plan. The second undertaking is that we spent a considerable amount of time meeting with our unitholders. Now most of those meetings were done through Neil and myself, but we also held meetings through Paul Douglas, our Chair, and he was joined by many independent trustees in most cases. We have found those collective meetings and investor input to be very valuable. Over the past few months, a lot of investors are now asking us for more clarity on what's next. Where are we taking the FCR business beyond the optimization plan? Well, the main reason we're here today is to provide that clarity. So Neil outlined the main sections of today's presentation. Let's get going. We'll begin with what we have today. Most significantly, we have an exceptional 20 million square foot real estate portfolio. Our properties are located in neighborhoods within Canada's 6 largest cities. Our tenants are Canada's best when it comes to necessity-based retail. 80% of what we own are grocery-anchored centers. We also own a future density pipeline of 24 million square feet. Together, our total assets exceed $9 billion. We also have a fully integrated and aligned operating platform with 365 professionals across the country. So that's a high-level snapshot. But now let's go a little deeper. As many of you know, every successful business is built around 2 things: core competencies and competitive advantages. Starting with core competencies. These are the defining strengths of our business, the things that we do exceptionally well that would be very difficult for a competitor to replicate. And there are 2 major ones that we'll cover today. The first is our ability to acquire, develop, own and operate grocery-anchored shopping centers. The second is our ability to rezone sites for future development. I'll take the next few minutes to elaborate on these. Starting with the business of grocery-anchored retail. This is where our roots were formed and has been something we have always done well. In Canada, there is no one better equipped to maximize the NOI and value of these types of properties over time than we are. We've been doing it for 25 years, it's embedded in our DNA. Our expertise resides in every functional area, from leasing to operations, investments, development, construction, finance, people and culture. It extends to our strong relationships with retailers and service providers. This expertise is the major strength of our operating platform. And our operating platform is an important part of what you own in First Capital. Several members of our senior team are going to take the stage now to showcase some of our operating platform. We're going to start with Carmine Francella, Head of Real Estate Services; and Eric Sherman, Head of Operations. After Carmine and Eric speak, we're going to explore 3 more elements of our platform, being technology, culture and ESG through 2 panel format discussions. And so with that, over to you, Carmine and Eric.

Thank you, Adam, and good afternoon, everyone. I'm Carmine Francella, and I lead the newly created real estate services group. Let me explain further. In 2023, we embraced a formidable challenge to elevate our already robust operating platform to new heights. This pursuit led us to the formation of the real estate services department, where we combined 2 independently successful teams under unified leadership. We merged the pulse of our property management, which is our operations team, with our high-performance leasing team, creating a powerhouse of expertise and efficiency. The impact of this new collaboration was both immediate and positive. By fostering shared responsibilities across key areas like occupancy, like accounts receivable and miscellaneous income, we didn't just combine teams, we forged a stronger alliance. And the results have been very positive. In 2023 our joint efforts yielded the lowest accounts receivable balance since 2016. This synergy not only enhanced our operating results, but also promoted collective learning where challenges are approached with a diverse set of skills and perspectives. The early wins of this new team emphasized the importance of harnessing the potential of leaders within our ranks. And this led us to promote Eric Sherman to Head of Operations. Eric's journey at First Capital is a testament to his capability and his dedication to our business. Starting over a decade ago in our leasing team, he has held significant management roles, most recently as head of our Yorkville portfolio, overseeing leasing, operations, marketing, project management for the past 3 years. In collaboration with Eric, we have continued to make significant strides. I'm now delighted to pass the presentation over to him as he will shed light on some of our additional achievements and future objectives.

Thank you, Carmine. It has been a privilege to both witness and help contribute to the evolution of FCR, and I'm honored to now be leading our exceptional operations team across the country. It is no secret that FCR is well regarded as a best-in-class owner and operator in the retail real estate industry, most particularly in the grocery store anchored shopping center sector. We have always been known for owning properties that are exceptionally well maintained and managed. This doesn't only mean that they look great. It is about how they work for our tenants and their patrons, both of whom we view as our customers. Easy access, convenient parking, functional loading and proximity to public transit are all a part of it. We adopted climate-friendly initiatives well before they became popular, and continue to lead the charge in this regard. Operations is all about getting the details right. Since stepping into this role, I have been most impressed with our team's intense commitment to the details. Our challenge, therefore, is not how to become best-in-class. It is how to raise the bar even higher. With this in mind, there are a few priorities that will be key to driving this success. The first is to optimize resource allocation and technical expertise within our team, making sure that we have the right people and the right roles to maximize performance. We recently realigned the allocation of our portfolio within the department, carefully considering both quantitative and qualitative metrics. We also identified the strongest leaders within the team to take on added responsibility. Together, this has led to a new and rejuvenated structure. This provides for broader oversight and national consistency. It also better defines roles and responsibilities, creating clear and viable growth paths for our employees. The second priority is to continue the evolution of our CapEx program and procurement processes. These functions have naturally improved with the closer alignment of the real estate services team as well as closer collaboration with our asset strategy and construction teams. There is an increased focus on database analysis, allowing our capital to be allocated more strategically, proactively managing the planning process years in advance and better leveraging our national scale, provide clear opportunities. These include, but are not limited to, better pricing, service delivery and project execution. Finally, we are incredibly excited to be launching numerous IT-based solutions to assist with some of our most critical functions such as budgeting and forecasting, accounts receivable and lease transfers. These cross-functional initiatives exemplify the natural alignment of departments within our consolidated real estate services team. Now these are only a few high-level examples of the priorities we have identified and are already actioning. You will note that they all carry a common thread: the fusion of data-driven decision-making with a focus on people. In blending these approaches, we have a recipe to raise the bar of best-in-class even higher. With that, I'll turn it back to Carm to discuss how some of these priorities relate to our leasing function and the associated successes we have enjoyed.

Thanks, Eric. I'm actually thrilled to see how our revamped structure is facilitating collaboration and nurturing future leaders. But now let's shift the focus to leasing, the cornerstone driving the net operating income or NOI for FCR. In 2023, we completed 800 leasing transactions for over 3 million square feet. This level of volume requires an approach as meticulous and data-driven, starting with comprehensive groundwork. In negotiations, knowledge is power. And we harness this by focusing on 2 crucial aspects. One is understanding the property strategy, and the second is evaluating the tenant mix. These are vital for creating long-term value. Our asset strategy team plays a pivotal role, ensuring everyone is aligned with the vision for each property, be it maintaining income-producing status or earmarking the property for future development. This alignment is key, especially when navigating scenarios like property rezoning where securing redevelopment rights may be more valuable than near-term rent. A significant driver of our NOI is our core IPP properties. We invest considerable time in curating optimal tenant mix, understanding that this is not a task, it's a commitment. Given our high occupancy rates, we strategically renew leases, sometimes opting for shorter terms to open doors for emerging tenants we track through our leads pipeline tool. Because of this, our properties are well tenanted, with a deliberate mix of retailers and best to serve the needs of the surrounding community. The tenant mix is typically centered around grocery stores, pharmacies, restaurants, fitness, banks, medical uses, daycares, coffee shops, liquor stores and other service and value-oriented businesses. Getting this mix right maximizes sales for our tenants, which directly affects the level of rent they can afford to pay. Frankly, it's one of the main reasons we have the highest rents in place of all our peers. Another critical element is equipping our team state-of-the-art, in-house developed portfolio management tools. These tools provide real-time data, empowering our team to identify and capitalize on revenue enhancement opportunities. Let me provide an example. We recently undertook a broad review and to identify all undervalued market rents for large tenants with limited tenure, and discovered, amongst others, a high-performing food store paying an under-market fixed rent with about 7 years of tenure. Given the high demand for food store locations, we commenced early discussions. The tenant was also keen to retain its location and agreed to renegotiate lease terms. Now I'll cut to the chase, the final result was a reset to market, which included an initial 85% rent increase and a significant increase in common area charges or CAM, starting in 2025 or 6 years before the natural expiry. Contrary to common industry practice, we don't adhere to chronological order of lease expiries. Instead, we delve into the data, prioritizing lease negotiations based on the potential to generate the highest rents by market, by property, by space and, finally, by tenant category. This approach, which we call the ordered leasing, has been a game changer in driving rents across our portfolio. We research local market conditions, including our competitors, and take the time to carefully review our leases for potential value-add clauses like redevelopment flexibility or CAM adjustments. Understanding tenant sales is also crucial, as a high-performing tenant will pay top-tier rents. Once this groundwork is laid, our leasing team is well prepared, very focused and prime for negotiations, keeping a sharp eye on value creation. Results speak for themselves with industry-leading rents and renewal lifts. Now to wrap up our discussion on the operating platform, we have an upcoming panel that will showcase some of the existing and planned IT tools that are driving innovation. Thank you.

Good afternoon again. I'm Alison Harnick, Senior Vice President, General Counsel and Corporate Secretary of First Capital. As Carm mentioned, we're switching up the format a bit for a panel discussion on our use of technology at First Capital. Now you might be wondering, why is this relevant to an investor? But the way that we approach technology truly is a differentiator. It ups our value proposition, and we look for ways in our core business that we can improve and apply technology when investing in that technology really represents -- really benefits our operating platform. So when we can use technology to enhance the way that we do things that underpin our performance, like leasing, like asset management, and like property management, that's when we make the investment. It's not technology just for the sake of technology. Now of course, technology is only as good as the people who develop and use it. And today, I'm joined by a panel of my colleagues who are leaders from across our business that have embraced this philosophy of technology, that it can and should add value. So without further delay, I'd like to introduce you to our panelists. Starting on my far right, with Marcel Parsons, our Head of Asset Strategy. Next to Marcel, Simon Streeter, our Chief Information Officer; then Charlotte Menzies, Director, Real Estate Services, Data and Process; and finally, you've already met the wonderful Carm Francella, who is rejoining us on stage. Now Simon, I'd like to start with you. As our Chief Information Officer, you've really seen and contributed to the evolution of technology at First Capital over the last 10 years. Can you tell us a bit about that evolution and how things have changed?

Yes, sure, Alison, happy to, and thank you for that introduction. And I must say that I'm just thrilled that technology is on the agenda for the Investor Day. I may be the only one, but I'm thrilled. And this really in itself speaks to how far we've come. IT is no longer just about keeping the lights on, making sure that computers are up and running, that systems are up and running and secure. These are all very important. But it's also about providing solutions that can really change the way we do things for the better. Now our journey started about 8 years ago, we at that point were implementing the best-of-breed software applications that were available within the commercial real estate industry. But we found that there was -- there's still gaps in our processes, they weren't optimized. There were still business problems that we were trying to solve. And we couldn't find off-the-shelf software packages to solve these problems. So about 3 or 4 years ago, we started implementing technologies that have allowed us to build proprietary solutions. And these solutions have helped fill the gaps, they've helped solve some of these problems. And now we're seeing technology really becoming a differentiator. It can really improve the way that we do things. It can improve our operating model by increasing efficiencies, by providing real-time information, real-time data across all of our systems together in one platform. And this is how we're leveraging technology to really drive towards our business goals of increasing NOI, growing FFO, long-term growth of portfolio value, and really enhancing the experiences for our tenants and our employees.

Thanks, Simon. It's interesting. This isn't about Internet speed and e-mail, but we're actually creating solutions in-house that are customized and bespoke to our business needs. So looking forward to delving into that a bit. Carm, from an operations and leasing perspective, how have you found that this is benefiting what you do?

I can add to some of Simon's comments. Our business produces a lot of data. And it's very important for our staff to have easy access to organize data and software. When the staff are well informed, they make better business decisions, they lead with confidence, and they think and act like an owner. We also create a safe environment for people to make -- to contribute to ideas. And we get a lot of ideas. Most of these ideas are centered around process improvements. Because the staff have told us, they'd rather be dealing with tenants, properties and negotiations than dealing with manual processes. So we take that to heart and we really focus on improving our platforms. One in particular is our lease portfolio management tool. It was an idea that came through staff. It pulls together information from finance, leasing, legal, operations, construction, and reduces the amount of time it takes to do due diligence on a lease transaction. What used to take days is now in real time. And the tool is very powerful. The staff received it -- well received it, and I use it every day.

Thank you. So data, Marcel, I assume in asset strategy, there's a lot of data. How are you using technology to unlock the value of our portfolio more effectively?

Yes, Alison. Just building on what Carm and Simon had mentioned, data is important, and how we present that is even more important. It helps us make better informed decisions. That's why we created a new tool. And in my honest opinion, I think it's a game changer for us. I don't think I've seen anything like this in the real estate industry before. This new tool we call Asset IQ, it's a real-time digital asset plan that allows us to make quick decisions much, much quicker than we have in the past. Traditional asset plans for would be static and outdated shortly after completion. But with Asset IQ, we're allowed to make real-time asset management decisions much, much quicker. My team does, however, get a lot of questions around real estate. Sometimes, we take hours, maybe even days to respond. But now with Asset IQ, we can get these decisions to individuals or whoever has requested them much more quicker. And that's really because of the core IT platform that it's built on.

That's a really great point, Marcel. And I think it's worth highlighting, data transparency has become fundamental at FCR and really is top of mind on all of our new initiatives. When we're sharing information between the different functional groups, it really allows us to operate as one team.

Yes. Great point, Charlotte. Everything seems to be interconnected as you're hearing today. It allows us to have data transparency and just one source of the truth, like that's very key that we're all getting the information at the same time coming from the same source. Here, you'll see Asset IQ and -- up on the screen. This is our Rutherford Marketplace asset in Vaughan. Imagine you're in a meeting and you -- you have, in real time, you have your rent roll, you have your NOI CAGRs, you have historical information, occupancy, committed deals, the strategic direction of the asset, all at your fingertips. Well, that's all capable today because of Asset IQ and our core IT platform. Or say you're on a property tour, and we used to make these very large documents, sometimes over 100 pages. Now we can rely on Asset IQ. So if you're out in the field, you don't have to carry around these large documents. You can actually be on your mobile phone, clicking through this information and being able to have it there available for you. Another nice feature of the Asset IQ is the portfolio view. You're able to stack up properties, it doesn't matter if it's by location, it doesn't matter if it's by building area, cap rate, occupancy, NOI threshold. And you're able to get a better insight into how an asset is performing. You can look at it by market, say, like the Ottawa market and say, "Hey, like what's the insights that I'm getting from this actual portfolio?" But in short, Asset IQ is allowing us to get information to people a lot faster, be it on their iPads, their iPhones or their laptops.

Thanks, Marcel. It certainly has been a game changer. I'm not sure if you said this, but it always fascinates me that it updates automatically every single day by pulling data from our other core systems into this system, so that, again, we're all working off the same information and can really contribute our collective efforts to our asset management and other activities in FCR. Charlotte, on the leasing side, I know you've developed something similar. Could you take us through that?

Sure. So we developed a very similar tool to Asset IQ, which Carm actually teased a little bit earlier. But that's our portfolio management tool. And we're calling it Lease the Space or LTS for short. And I did bring some visuals with me today to give you a really good understanding of what LTS looks like and specifically how we're using the tool. So LTS gives us a real-time view into the performance of our portfolio. There's a few insights that I wanted to call out that we have available in LTS, the first being our live occupancy. We've mentioned it once but I'll say it again, it's real time. So it's very exciting. We also have metrics like accounts receivable and CAM and tax shortfall, so that the team can stay focused on keeping them as low as possible. What's more is we've leveraged our deal workflow tool to bring in deal terms, so that we can calculate things like in-progress and executed deal volumes, renewal lifts, even average renewal lift, all available. And this really helps the leasing representatives effectively manage their portfolios, but it also acts as a very powerful performance motivator.

And what I really like is that every year we set aggressive objectives. And a lot of these objectives are shared objectives. So the teams can see real time how well they're doing against those objectives, and this leads to better collaboration and a better focus on team execution.

Definitely, and that's a great point. And to take it a step further, we use LTS to prioritize our deals. There are a number of metrics on the board behind me, but what do these mean? What deals are contributing to these numbers and these insights? Well, now we can see we have insight into the individual impact of each and every transaction, which really helps us lease strategically, as Carm mentioned, to the order of leasing, ensuring we're focused on the top of market deals first so that we can use them to drive rents elsewhere in the portfolio. And the last thing I'll say, Alison, before I pass it back, is we were really cognizant when we were building this tool of ensuring we were including all critical data so that we could set objectives, leasing [indiscernible] objectives, prior to even commencing negotiations, really to decrease our due diligence time lines, decrease our deal cycle time line, and ultimately get tenants into spaces faster.

That's great. Speaking of tenants, as we saw earlier, we have a great mix of the best retailers from across the country. And we also complement those tenants with a lot of independent and emerging first-to-market concepts. How are you using technology, I guess, Carm or Charlotte, to make sure that, that pipeline is fulfilling our needs?

Can I go first? At First Cap, we view vacancy as an opportunity, an opportunity to bring emerging tenants into our portfolio as well as independent tenants to improve our tenant mix. There's lots of sources for this information, be it websites, be it tenant...

Social media.

Social media. Thanks. And the problem was getting all this information and trying to organize it, to put it in a format that the team could use and actually have hard core leads. And I think we developed a platform that really addresses it. And I think Charlotte, you're probably best at...

Sure. Yes, sure. So this particular solution took a couple of iterations. We developed multiple prototypes. We really wanted to be sure that we were finding a solution that was best suited for this workflow. As Carm said, there is so much data, and that was probably our biggest challenge. So our objective was to figure out what sources were providing us with the best leads, and then putting those leads that we were generating through a very clear workflow. So we now track and manage every single lead that we receive where they're -- through this platform, where they're vetted and qualified before being handed over to a leasing representative. So this allows us to focus our leasing resources on the leads that we believe have the absolute best deal conversion probability. And what's more is we now have a database of all of this information, all of these lead profiles and contact information. A property may be 100% leased right now, but who knows 6 months down the line, if it is, or if it's not. We have documented all of the interest that we received on that property. And we can also use it going forward as we're marketing our spaces, to cater that individual market or even that individual property to what brings us the most success. And I will say we launched very recently, and we've already completed, executed dozens of deals, and we have a very healthy pipeline of deals in negotiation as well. So I'm excited to see the continued success.

Thanks. These types of tenants are very important to our centers, and it's great to see these deals being accelerated and this information really being institutionalized so that it's there for us going forward. We're nearing the end of our panel. So Simon, I'd like to turn it back to you just for any last reflections.

Yes. Well, for sure. I mean we're always looking for the new technology, what's the next best thing. But it really comes down to working with the business and working together to be able to come up with these impactful solutions. And I will say that it's this continuous innovative nature and the willingness to always want to improve, it's embedded within our FCR culture. And that's really great to be a part of, because we can't forget that it's the people that drive our results through their actions and through their decisions. It's not the technology itself, but the technology empowers our people. It provides tools so that they can perform these actions quicker and easier. And it provides information or data so that our people can make the best business decisions.

Thank you. That brings us to the end of our panel on technology. I want to thank our panelists. That was a great discussion. And it's clear that we're really embracing technology to enhance our results and not just for the sake of technology as we started out by saying. So thank you very much for your insights. People and culture, obviously, go hand in hand with technology, as Simon has just said. And that takes us to our next panel discussion on ESG and culture at FCR. We'd like to kick it off with a short video. [Presentation]

Okay. Well, that was a great video to kick off this next panel on culture at FCR. As you can see, I'm joined by some new faces on stage. And we're going to speak about initiatives like our foundation, like our approach to climate change that are commendable in their own right, but I think it's important to say that these initiatives have been thoughtfully developed so that they are fully integrated into our business strategy. We've made a deliberate and concerted effort not to have social and environmental programs that are distracting from our core business, but rather than enhance the way we do business, that support and enhance our results and our performance. I know our panelists are going to give us some great detail on this. So if we could just do some quick introductions. We all know Adam. So I'll pass it over to Michele.

Thanks, Alison. Good afternoon, everyone. I'm Michele Walkau, I'm the Senior Vice President of Brand and Culture. My team is responsible for our people and our marketing communications here.

Hi, everybody. I'm Noah Parker. I'm our Director of Marketing and Communications here at First Capital. And I also have the pleasure of serving as Co-Chair of the Thriving Neighborhoods Foundation. I'm really excited to be here with you all and chat a bit about our foundation today.

And good afternoon. My name is Melissa Ferrato, and I'm Vice President, ESG, here for First Capital. And my team is responsible for driving continuous engagement and improvement of our sustainability strategy across the company.

Okay. Great. Let's jump right in. This first one is for Adam or Michele. We work in real estate where assets are really thought of as the main event. So why are we focusing on people? And why do we want to talk about our culture with our investors today?

Sure. Yes, you're absolutely right, Alison. Most of the focus for real estate companies is obviously on the properties. But the reality is the properties don't buy themselves, they don't lease themselves, they don't develop themselves or operate themselves. If they did, we could really reduce our G&A. But they don't. And so that's where the people come in. And in a company of our size, what's really important is that our executive team needs to get a lot of things done through our people. And when we go out and we recruit and we attract talent to First Capital, we're looking for diversity, diversity in skill set, in thought, et cetera. But we also need commonality. And where the commonality comes in and ties to the culture is that we're all driving in the same direction in terms of achieving our business objectives. So we need diversity on one hand, but we need commonality on the other. And that's why our people are such a critical component of the business to layer on top of the properties. Michele?

Sure. Prior to joining First Capital, I worked for 2 very large commercial real estate companies. And in that time and the 25 years that I've been doing this work, I've seen what works and what doesn't. And by far, a company is only as strong as its culture. So when you have an engaged workforce that believes in the direction of the company, they bring their skills their talents, their energy. They like the people that they work with. They solve problems, they innovate. You saw that on the previous panel where we had that -- those technology solutions came from our people. So you have that level of engagement. It's a very powerful thing. And then when you align it and you have skin in the game, and what I mean by that is every employee, from the most junior intern to the most seasoned executive, we all have shared financial and cultural accountabilities. So we are growing in the same direction. We are all -- it's that old adage. You have all of your resources, your wood behind the arrow. You've got your resources, you've got your human resources as well as your financial resources focused on those targets. And that is something you have -- when you have that, you've got alignment, you've got -- the other thing that Carm mentioned in the previous panel was we want our employees to think and act as owners. Well, the reality is they are owners. They own FCR units. So they literally have a vested interest in ensuring that we meet our targets. So you've got engagement, you've got alignment, you've got ownership, and you've got a great place to work. You have a highly productive culture. And we've been recognized for our -- for being a great place to work, a top employer as well as a great place for women, and one of the greenest employers. So we're really proud of that kind of attributes or the accolades that we received. And the one thing I'll leave you with, and I think every one of us, when we enjoy the work that we do, we bring our energy and our passion, and we want to contribute even our own discretionary time to make a winning team. And I really believe that's what we have here at First Capital.

That's a great segue speaking of discretionary time. Our foundation has become a really big part of our culture over the last few years. Noah, can you tell us about the foundation and how it's important to our business?

Definitely. So we launched the Thriving Neighborhoods Foundation at the outset of the pandemic in 2020 with 2 goals in mind. The first, of course, was to formalize the charitable giving that FCR has long been contributing to, to the communities around our properties. But more importantly, we wanted to get more connected to the customers of the properties that, as Eric mentioned, are just as much our customers too. We wanted to get more ingrained in these communities and bring more support to these neighborhoods. And so we launched the foundation. So 3 years ago, we launched and since have been quite successful. We've raised about $1 million in funds, food and other donations to over 50 registered charities across the country. And these are large and small charities from our signature partners like Kids Help Phone or Second Harvest, all the way to the local charities like your local SPCA or your local food bank, all of which have been an integral piece in this patchwork of charities we've created and supported over the last 3 years.

Thanks Noah, that's great. And I think one of the special things about our foundation is really how it does support our core business by being in the communities where we operate, where our assets are. Those properties are as strong as the communities around them. And so the work that we do through the foundation is very supportive of our core business as well. Shifting to sustainability, Melissa, could you give us a bit of a primer on how we're thinking about climate change and maybe some of the risks and opportunities associated?

Sure. I'd love to. So First Capital, we do have a long history of sustainability leadership, climate change being central to that strategy for the past several years now. Recognizing it really is one of the most significant issues facing both our planet and society as a whole. And the buildings that we construct, that we own and manage as a company do have an impact. So just to give a little bit of context there, the building sector globally actually accounts for 39% of greenhouse gas emissions, so significant. 28% of that comes from operational day-to-day energy use in the buildings to heat, cool, power them and then the other 11% from construction and materials. So First Capital, we do recognize that climate change poses risks not only to our business but to the communities that we're operating in as well. And we're committed to reducing that impact, not only because we understand it is the right thing to do, but we also recognize that it will create value for our company and it will provide a competitive advantage. I think our climate commitments are probably best demonstrated through our carbon reduction targets. So these are targets that were validated through a third-party organization called the science-based target initiative. They -- our targets were validated back in November 2022 and the SBTI, our science-based target initiative, really has become kind of the gold standard when it comes to corporate climate leadership ensuring that our targets are ambitious and that they're in line with climate science.

Thanks, Melissa. I'd like to just push a little bit on this. Why is being a leader in this area really important for FCR? I know it's the right thing to do, and that's, of course, very important. But what is really the return on investment for FCR being such a leader in this area and having a strong carbon reduction plan?

Yes. I think it comes down to -- kind of 2 ways to look at it. So there's risk mitigation. That's really one of the key drivers of this work. Climate change does pose both physical and transition risks to real estate assets. So by working to future-proof our assets and future-proof our business, we'll ensure that we can remain competitive in what is a rapidly changing environment. And then on the flip side of that, there are a number of very meaningful climate-related opportunities that we'll be well positioned to take advantage of. So some examples there, very significant operational cost savings through implementation of energy-efficient technologies leading to better performing buildings but ultimately also improvements in base rents. Having kind of the strong focus on climate leadership also will position us to attract investors, but also the highest quality tenants that are looking for low carbon real estate options. And finally, I think we are starting to realize some advantages when it comes to lower cost of capital as well. So just an example there, we do have a sustainability linked loan whereby we actually do receive a lower interest rate when we achieve our annual reduction targets.

I know the financial opportunity is modest right now in terms of cost of capital, but definitely view this as the tip of the iceberg, and we're really well positioned for the future when those benefits continue to grow as I'm sure they will. Noah and Michelle, going back to the foundation, I think one of the unique aspects of the charity is that it really is employee-led, employee involvement has been so strong in it. Can you speak to that and how that's impacted First Capital and the foundation?

Yes, definitely. From the outset of the launch of our foundation, our employees and staff have been in the driver's seat, whether it's they biannually elect new pillar of focus or voting to select the charities and organizations we will contribute to, our employees really are leading the charge. In addition to that, on a volunteer basis, they form our subcommittees. They form our membership. They are the ones putting together our $0.25 million raised softball tournaments. They're the ones who are organizing days with their colleagues and their departments to go into food banks or community food centers. And so you'll see on the screen behind me just how fun it is to get with our peers and out into the field, so to speak. But really, our team is driving the bus here. And then the last thing I'll say is it's also a really great way to find new leaders within our ranks. Case in point, prior to me joining First Capital, I had not co-led $1 million charity, but it's an opportunity I've been very fortunate to receive here at First Capital. And then maybe, Michelle, you can speak on that?

Absolutely. So that's an awesome example of latent talent that has been unleashed and we have so many employees that do volunteer and we are able to see them outside of their day jobs. So it's really building a talent pipeline from within and so it's really a win-win-win for First Capital and the communities in which we operate.

That's great. And anything that brings our employee base closer to the communities really, I think, improves the way that we do our work and our productivity. So as you say, a win-win-win. I see we're running a bit low on time, but just a couple more questions. Melissa, we talked a lot about innovation in our last panel and technology, and I know you've been using some interesting software for our carbon emissions reduction planning. Can you speak to that?

Yes. And there should be some visuals up on screen behind me just to help demonstrate what I'm speaking to. So after receiving validation of our targets, the next big challenge for our team was to begin to understand the net zero pathway for all of our assets. We have a large number of buildings across our portfolio. We wanted to think outside the more traditional route of hiring consultants to conduct energy audits at all of our assets because we knew this would be very time and cost intensive, ultimately leading to PDF reports that would soon be out of date and kind of difficult to roll up into a portfolio view. We look to technology as we've done in many areas of our business, and FCR became an early adopter of a first-of-its-kind decarbonization planning software which has allowed us to create dynamic plans that are updated, again, kind of real time as market conditions change. And we did this for all of our assets with speed, scale and cost effectiveness. Through this platform, we've now been able to garner some really powerful insights and information to help with our greenhouse gas reduction planning. So as an example there, we now have estimates for our whole building energy use and carbon emissions, including energy used in tenant control spaces, which is something that in the past has been very difficult to kind of wrap our heads around because tenants are often metered for their own utility consumption.

Yes. Owning so many open-air centers, a lot of the space is tenant controlled, and we're still accountable for those emissions. So having this information and doing it so rapidly has been a big success. Thanks for showing us that. I think we have time for one more, Noah. Could you give us small window into where the foundation might be going next?

Sure. I'll leave it on a high note. So yes, I'm very excited for the future of our foundation. We're kicking off a new pillar of focus which I think speaks to how in tune our staff are with the needs in the neighborhoods around our properties. We're focusing on food and security for this and next year. And so we'll be partnering with the Community Food Centers Canada as our signature partner for this and next year, which allows us to have a very comprehensive national approach to programming and fundraising but localized efforts, local food banks, local community food centers. And the fundraising and the programming that has been so successful thus far. Will continue with my favorite, of course, being the CRE Softball Classic, our third rendition coming up. I have high expectations for our funds raised, even higher expectations for Greg's softball team. But I think there's lots to come for the future of the foundation for sure.

Thank you. This brings us to the end of our panel discussion. I want to thank the panelists for a great conversation. I know it's become clear as we prepared for this, really how much our use of technology, our culture, our ESG strategy is raising the bar on our operating platform as a whole. And how it's all really focused on our corporate achievements and our business results. So thanks again for the conversation. And before we have a short break, we're going to leave you with some highlights from our 2023 softball tournament in support of Kids Help Phone followed by a short break. [Presentation]

Okay. Welcome back. We're going to resume. And as you saw in our 2 panels, technology and culture are clearly having an impact on how we do things. So that takes us through our first core competency, which is our ability to acquire and develop, own and operate grocery-anchored centers is a defining strength of First Capital. It's what we do best. The second defining strength I want to highlight has been 10 years in the making, and it is entitling land for future development. Our grocery-anchored portfolio has always been in large cities. And as these cities grew and densified, it became clear that many of our properties would have a higher value as a rezoned development site. So we've now rezoned many of them to capture this higher value. But we've also rezoned large sites for the development of mixed-use communities, and the former Christie Cookie site at 2150 Lakeshore is a great example. This site is 28 acres of land in the city of Toronto. At the time we purchased it, both the zoning and the official planning designation severely restricted the development rates for this property. We acquired it with a 50% non-managing partner and then First Capital took it through a lengthy rezoning process. Rezoning land with this designation in Toronto is extremely difficult. But we were very successful and the results exceeded even our own expectations. The site is now approved for 7.5 million square feet of development, including 7,500 residential units, 400,000 square feet of retail space, 2 public schools, multiple parks and a major new transit facility that will include TTC and a new GO station. Some 8 years after acquiring the site, it is still undeveloped land. So let me show you some numbers. Our cost base to date, including capitalized interest is approximately $75 million. Our value creation so far is over $180 million, which was validated when we replaced our non-managing partner with a strategic development partner. This net asset value creation to date for our ownership share is $0.85 per unit. This is significant value creation in a single property. And while 2150 Lakeshore is a supersized version, we have many smaller properties in our development pipeline with a similar profile. Jordie Robins is going to highlight the magnitude of these properties in our portfolio shortly. I'll wrap up our core competency as it relates to entitlements by saying that our team has successfully rezoned over 11 million square feet of rezonings. That's at our ownership share. So it only includes half of properties like 2150 Lakeshore. We also have another 9 million square feet of rezonings that are in progress, part of which, Jen Arezes will review with you today. So this is a glimpse into some of the defining strengths of First Capital as we stand today. We're going to move to our competitive advantages. And in this sense, we're referring to what FCR can offer investors today that others cannot. And there are 2 major ones that we'll cover. The first is our core portfolio of primarily grocery-anchored open-air shopping centers. And the second is our density pipeline or portfolio of development sites. One of, if not our biggest, competitive advantages is the size and quality of the portfolio of grocery-anchored centers that we own to date. As you'll hear from Jordie, they make up the majority of our asset base at just over $7 billion, and they provide stable and growing NOI year in and year out. Compared to all of our peers, this portfolio has the highest rents in place, the highest lease renewal rate increases, the highest population density and is the most connected to public transit. As an investor, you own Canada's highest quality grocery-anchored portfolio. Given its size and scale, it would be near impossible to recreate today. Jordie Robins, our COO, is now going to take the stage to talk about it further.

Good afternoon. What's most compelling about First Capital is our incredible portfolio of assets. For more than a year, we've been successfully selling low and no yielding assets in support of our optimization plan. At the same time, we've been focused on what we refer to as our core properties. These assets are mostly grocery-anchored and are the shopping centers for which we are best known. The collection of these assets are really our bread and butter. As Adam had mentioned, these assets are a big part of our competitive advantage. Our core properties have high occupancy, have a steady and growing income and low per square foot valuations relative to their replacement costs. They also tend to be less management intensive. These core properties include a related subset. This subcategory shares all of the characteristics of core properties but presents a value-add opportunity through partial redevelopment. We call these properties core value add. Upon completion of the redevelopment plan for these centers, we will have grown their income and their value. We will share with you some examples of this type of property later in the day when we discuss our development program. As set out in the table on the screen behind me, you'll note that our core assets have an IFRS value of $7.1 billion, representing 80% of our portfolio. They collectively yield a 5.5%, which is supported by strong fundamentals. These assets also possess higher NOI growth profiles with projected 3-year CAGR of almost 4%. To give you better insight into these assets we consider core, I want to share with you a few examples. Leaside Village, located in affluent neighborhood here in Toronto, it's a 200,000 square foot center that we recently expanded. It sits on 10 acres of land, and it's 100% occupied. Leaside Village is anchored by a Longos grocery store, a Shoppers Drug Mart and a PetSmart. The Longos store is amongst the top 5 most productive grocery stores in our portfolio. The property is strong and stable with a fairly low tenant turnover. So it's not time intensive for our platform. Today, we have a waiting list of tenants who are keen for an opportunity to locate at Leaside. McKenzie Towne Center located in South Calgary is also a core asset. It's the principal shopping center for the 5 communities that surround it, providing each with essential goods and services. The 225,000 square foot center is anchored by an incredibly productive 40,000 square foot Sobeys, a Rexall, a GoodLife gym, a BrightPath daycare, a BMO and a Scotiabank. It features a mix of other retailers as well, including restaurants and personal medical service providers. McKenzie Towne is surrounded by a very affluent population. The property is 100% occupied today, and despite its over 50 tenants, it's not management intensive for our platform. Most tenants simply don't want to leave. Brewery District is another example of an FCR core asset. It's a 290,000 square foot open-air grocery-anchored shopping center located in Edmonton, Alberta. We developed this incredible asset in 2016. The center is located on the site that had been owned by Molson. We repurposed the materials from the 100-year-old former brewery that had been located on site. Its red brick facade is a tribute to this brewery and to the history of this site. It's anchored by a very productive 40,000 square foot Loblaws grocery store along with other tenants providing the surrounding community essential goods and services. These tenants include Shoppers Drug Mart, GoodLife Fitness, Winners, TD, Starbucks and a Dollarama. Tenant base also includes a couple of really great local restaurants. The cities in which they are located, the neighborhoods in those cities, the surrounding demographics, the merchandising mix, the availability of parking and, of course, the way they're maintained, these characteristics define our core assets. They also serve to boost tenant demand and the rent ensures the reliability and growth of its income. As a result, our primarily grocery-anchored core assets are the highest yielding in our portfolio with the highest cumulative annual growth rate. Our core assets category make up 176 properties. We, of course, don't have time to cover them all today. Other examples include York Mills Gardens here in Toronto, Appleby Village in Burlington, Strandherd Crossing in Ottawa, Carre Lucerne and Place Michelet in Montreal, Seton Village and Cranston market in Calgary, Old Strathcona in Edmonton, Terra Nova and Pemberton Plaza in Vancouver. I could go on and on. To sum up, I want to reiterate that we see the highest sales productivity in our core assets. We also see the most robust tenant demand. These assets all deliver a stable and growing return. It's for these reasons why this portfolio is a competitive advantage of First Capital. I'll now pass it back to Adam.

Thank you, Jordie. Now on to another significant competitive advantage. It's the size and quality of our development pipeline. It includes both zone development sites, as well as the many that we are or will be rezoning through our entitlements program. At 24 million square feet, our current density pipeline exceeds the size of our existing portfolio. This enviable position gives us 2 significant things: opportunity and optionality. The opportunity is to rezone these properties. When we do this, we create meaningful net asset value, and we require very little additional capital to do so. From there, we have options. Our deep pipeline includes several sites that we intend to fully develop through to completion. Jen and Jordie will speak to some of those soon. But there are far too many for us to develop which we'll explain in more detail later today. So we will continue to sell some of them. And in doing so, we'll realize the net asset value that we have created. The competitive advantage is that we already own this real estate that will feed our development pipeline with wonderful opportunities for many years. Jordie and Jen are going to take the stage now to show you more. So Jordie and Jen?

Great opportunities arise when you own great real estate. This is the underlying principle of our entitlement program. We've assembled an incredible portfolio of assets across the country. These assets are typically larger sites in dense urban markets. They're primarily transit adjacent and tend to be single story with very low site coverage. As a result, in many instances, there exists an opportunity to increase height and density when the existing format is no longer the highest and best use. About 10 years ago, as part of our asset strategy work, we began to identify these opportunities. This work was done by a small FCR team of incredibly dedicated planners and project managers who are best-in-class. But locating the opportunity is really only the first step. Designing a plan that makes economic sense and working with municipalities to secure approvals or entitlements is the true art. As Adam had mentioned, the ability to find and secure these entitlements is a core competency, which is why it is also a fundamental part of our strategy. Today, because of our work, we have a development pipeline of zoned and unzoned density of almost 24 million square feet. This pipeline is larger than our built portfolio of assets. It's comprised of our active development projects and density that we've identified, and we're shepherding through the entitlement process. In most cases, the value of this density can be realized without any impact to our portfolio of core assets. Importantly, we'll only recognize the full value of this 24 million square foot pipeline once approvals are secured, any related lease encumbrances are removed and demand for the density can be supported by the market. Today, only 7 million square feet of this 24 million square foot density pipeline and $514 million of its associated value is reflected on our balance sheet. This represents only 30% of the total pipeline. We remain active applying for and managing the approvals of the density pipeline. In 2023, we received approvals for 2.4 million square feet of applications we had filed in previous years, and we submitted applications for 1.5 million square feet of additional density. Since the program's inception, our development team have submitted 37 planning applications totaling 20 million square feet of incremental density at our share. Of this total, we've successfully rezoned 11 million square feet with another 6 million square feet expected to be completed and ready for development within the next 3 years. Based on the current market value for this density, we anticipate an incremental value uplift of $450 million from this additional 6 million square feet of density. This equates to over $2 per unit. As Adam had talked about, we have options once this density is approved, and this is something that we're going to come back to later this afternoon. I now want to introduce Jennifer Arezes, our Head of Development and Construction. She's going to provide some detail on the projects we're currently working on and she's also going to highlight for you the depth of our skill set and the exciting and unique opportunities that lay ahead for us. Jennifer?

My name is Jennifer Arezes, and I have the honor of leading our development and construction teams. I'm going to provide a few specific examples of the properties that comprise the 6 million square feet of active rezoning applications. Let's begin with our Montgomery property. This is an assembly of 13 single-family homes located in Toronto on Montgomery Avenue, just north of the Yonge and Eglinton intersection. Leveraging the density we had approved at our adjacent Yonge and Roselawn project and the positive relationships we established in the local community, we expect to secure zoning approvals later this year for a 27-story residential tower with roughly 240,000 square feet and over 300 residential units. As of Q4 2023, the property is held on our balance sheet at a cost of $31 million which equates to $131 per buildable square foot. That's almost $100 per square foot less than the price at which we sold our 50% interest at Yonge and Roselawn last quarter. So once zoned, we expect to create a lot of value. We will then determine how best to monetize this value by selling a portion and developing it or selling it outright. I'll turn now to our 3.5-acre assembly at Avenue and Lawrence in Toronto. The 8-property assembly began in 2016 with the purchase of the well-known Pusateri's grocery store, along with 3 neighboring parcels. After this initial purchase, we continued over the next several years with the acquisition of 3 contiguous properties. In 2020, we filed our initial rezoning application. The applications serve to motivate the owner of the last remaining parcel on the block to agree to sell. Once under contract, we amended our application to reflect the enlarged and improved development site. The revised plan contemplates roughly 670,000 square feet with 685 units in 2 new mixed-use buildings, complete with a 30,000 square foot grocery store and 20,000 square feet of additional retail upgrade. We expect to have our zoning completed in 2025. This is another example of our ability to create value by assembling lands and securing entitlements. Like Montgomery, once entitled, we will choose how to proceed with its monetization. Moving west to Surrey, British Columbia, at our 289,000 square foot Semiahmoo Centre, we've filed a rezoning application for a mixed-use redevelopment project. This proposal is located on the periphery of our center, situated on an underutilized outparcel that is currently leased to a gas station and a 5,000 square foot dollar store. Approval for the proposed 500,000 square foot, 554-unit development is imminent. We expect a meaningful increase in the property's value once this density is zoned. This is a great development opportunity in a market experiencing high growth. We think the site is best suited for a condo use which will also yield the highest value. So we expect to sell this density outright once approved. At First Capital, we have a deep development pipeline. We also have an experienced and skilled team in place, securing approvals for this density through our entitlement program. Importantly, this density sits outside of our core portfolio and can be developed without impacting our stable grocery-anchored properties. I will now pass it back to Adam.

Thank you very much, Jen, and Jordie. So to recap in covering the current state of the company, we feature 2 of our core competencies. These defining strengths are the ability to acquire, develop, own and operate grocery-anchored retail properties and the expertise to rezone development sites and create value doing so. We've also highlighted 2 competitive advantages that we offer investors, our collection of grocery-anchored centers and our extensive development pipeline. So to wrap up on our current state, I'll turn it to your board of trustees. We have always operated with high governance standards, which is one of the reasons why you have a very strong board. It's made up of 9 independent trustees and myself as your management trustee. Collectively, your board has the skills, experience and tenure to effectively fulfill its responsibilities. Many of your trustees are in attendance today and will be available to speak with you following the formal presentation, which I encourage you to do. So that's where we are right now. I think this provides important context for the rest of today. But now on to where we're taking FCR, and I'd like to start with the key objectives that we're trying to achieve. Our key objectives are to deliver stability and growth in FFO per unit, to deliver NAV growth and to deliver distribution growth. And these objectives must be achieved within a framework that includes a balance sheet that optimizes cost of capital. We know that these are the objectives that our investors want to achieve through their investment in First Capital. I'd like to be very clear on this next point. We have a strong balance sheet today, but we see benefits to our investors of strengthening it further, which Neil will elaborate on shortly. But first, I want to emphasize our key objectives. It's the most important part of today because our strategy is specifically designed to deliver them. Stability and growth in FFO, NAV and distributions and an even stronger balance sheet. In our meetings with unitholders, there is overwhelming agreement that these key objectives are what they want us to deliver. So in terms of where we're taking the FCR business, that's what we're committed to doing. I'm going to turn it over to Neil to cover what this looks like over the next 3 years in the areas of financial metrics, capital structure and debt management. So Neil, over to you.

Thanks, Adam, and good afternoon again. So over the next 15 or 20 minutes, I intend to focus my remarks on 3 areas. Firstly, I'll provide an overview of FCR's capital structure and our approach to capital management. Secondly, I'll outline several of our expectations relating to 2024 operating and financial performance. And thirdly, I'll provide a longer-term view, more specifically, I will discuss several of FCR's important 3-year financial objectives. These objectives can serve as guideposts that we believe will be helpful to your assessment of our performance over time and the intrinsic value of FCR's business. Turning first to capital structure and our approach to capital management. Our business employs $9 billion of total capital. This includes $4.2 billion of debt and $4.7 billion of equity. In focusing specifically on debt capital, I'll focus on our 3 key principles of management, which are: number one, funding diversification and staggered maturities; number two, low variable rate exposure; and three, significant enterprise liquidity with meaningful term. Starting with our first principle, diversification of funding and the debt ladder. FCR's $4.2 billion debt capital stack is comprised of $1.6 billion of fixed rate unsecured debentures, $1.4 billion of fixed rate mortgages, $1 billion of unsecured term loans and $109 million of drawings on secured credit facilities. So as you can see by the percentages on the right, we have good diversification across our debt sources and our debt capital stack has a weighted average interest rate of 4.1%. Now diversification of funding in itself is important for 3 key reasons, including the fact that it strengthens FCR's overall credit profile. Secondly, it also mitigates against the potential issues related to single lender concentration limits. And finally, history has shown that not all components of the debt market move synchronously. So through the cycles, there have been instances where mortgage spreads are very favorable relative to unsecured debt spreads. And on occasion, we've seen precisely the opposite. Therefore, through diversification in our debt funding sources, we strive to advantageously use these ebbs and flows in credit pricing. With respect to FCR's debt ladder, we aim to spread maturities over time such that the REIT's exposure is limited to no more than 20% of total debt coming due in any single year. And ideally, we like this annual exposure to be 15% or less, particularly on a next 12-month basis. Staggering the debt ladder is a key means through which we manage both refinancing risk and interest rate risk. As you can see on the slide above, FCR currently has 12% of its total debt due in 2024. Looking out to 2025 and 2026, maturities are at the upper bounds of our desired exposure. So we have a bit of work to do on that front, which I'll come back to in a moment. The second element of our debt capital management strategy is that we limit exposure to variable rate debt. Well, FCR does not have a formal or hard cap on variable rate exposure. Our expectation is that it will not exceed 15% of total debt at any point in time. Now even before interest rates began to increase in early 2022, FCR had low variable rate exposure, as we recognize there was more upside risk versus downside opportunity in the rate environment at the time. Currently, FCR has $323 million of variable rate debt. This equates to a low 8% of total debt. But notably, FCR also has variable interest revenue exposure. This is through cash balances of $92 million and through $77 million of variable rate loans and mortgages receivable. Thus, if one nets income against the variable rate debt, you can see that the effective exposure is only about 4% of total, again, very low. The third element of our debt capital strategy that I'll touch upon is liquidity management. FCR has approximately $800 million of unencumbered liquidity. This includes cash balances and authorized but undrawn capacity on our revolving credit facilities or RCF for short. This liquidity can be sourced on an overnight basis and it has no restrictions on how it can be used. FCR's primary source of liquidity is 3 RCFs. Each are unsecured and they have terms ranging from April 2025 to June 2028. So you can see there's a theme here. We also stagger the maturity debt dates of our credit facilities. The largest RCF is a $450 million syndicated facility that includes 7 Canadian lenders. We seek to extend this facility each year so we maintain a substantial 5 years of availability. Regarding the 2 smaller facilities, we typically seek to extend those for 12- to 18-month terms as they approach their respective maturity dates. Notably, FCR's unencumbered liquidity exceeds the totality of all debts that is contractually due in 2024, plus our expected development expenditures this year. As it relates to development, however, we have an additional $156 million of ring-fenced liquidity. This is the form -- in the form of authorized but undrawn amount on secured construction facilities. These are an important source of funding in their own right because they mean that many of our construction projects have no cash draw upon FCR's general liquidity. Over and above funding diversification and staggered maturities, low variable rate exposure and significant liquidity, I'll highlight 2 other important credit attributes. The first is that 66% of FCR's total assets are unencumbered. This represents $6 billion of total assets that have no debt. The second is FCR's low secured debt ratio. The totality of all secured debt equates to only 17% of gross assets. Having a large and regularly financeable pool of assets, along with a low ratio of secured debt, enhances FCR's overall credit profile. Both attributes are viewed as major credit positives by unsecured bondholders. Now before I finish on the topic of debt capital, I want to touch briefly upon the subject of debt duration. FCR's mortgages, senior unsecured debentures and unsecured term loans have a weighted average term to maturity of 3.4 years. This term is shorter than our preference. For more than 4 years now, FCR has been reducing its total indebtedness. Since mid-2019, total net debt has decreased by approximately $1 billion. This means that FCR has been issuing or extending significantly less debt than has been maturing each year. And it's precisely this phenomenon that has resulted in a shortening of the debt ladder. Our midterm objective is to move FCR's weighted average term to maturity to approximately 4 years. And eventually, we'd like to see it extended to closer to 5. We value the unsecured debt market. And beginning in 2024, we anticipate a return to the market as a regular issuer of longer-dated bonds. The second topic that I will touch upon relates to some of our 2024 expectations. My comments here will be brief and they expand upon the disclosures and the discussion from our fourth quarter and year-end conference call from 2 weeks ago. So for calendar 2024, we expect: number one, same-property NOI growth within a range of 2% to 2.5%. This is lower than our long-term expectations for FCR. And there's important context here. We've generated some tremendous leasing success at our One Bloor East property over the past 6 months. However, through the first half of this year, we will collect no cash rent on these new leases. As such, the lost NOI on the 40,000 square feet of space that was formerly occupied by Nordstrom Rack will continue to be a drag on our results. More specifically, the cost of carry will hurt our total same-property NOI growth by nearly 140 basis points in the first half of 2024 and close to 70 basis points for the year as a whole. Secondly, we plan to complete more than $400 million of dispositions this year. We've made great progress on the optimization plan. Through to December 31 of last year, we had completed nearly $500 million of asset sales under the plan and we've got a good start on our 2024 objectives, with $157 million of closings slated for Q1. You should expect the profile of this year's asset sales to be very similar to recent dispositions. There'll be a mix of development in density sites and some low-yielding income properties. On a blended basis, we expect the lost NOI yield on 2024 property sales to average less than 3%. Turning to development. We expect expenditures within a range of $125 million to $150 million this year. Fourthly, we expect all other CapEx, including maintenance CapEx, TIs, internal leasing costs and revenue enhancing CapEx, to be within the range of $65 million to $85 million. The comparable amounts in 2023 totaled $73 million. It's important to note that this year's investments will include leasing costs for some very high-value, high-rent space located at 1 Bloor East. Number five, we expect general and administrative expenses that are charged to FFO, to be within a $42 million to $44 million range. And finally, we expect FCR will end 2024 with a net debt-to-EBITDA multiple that's in the low 9x range. This is an improvement relative to the target that we established with our September 2022 optimization plan. And we expect to achieve this while also delivering FFO per unit that exceeds $1.20, which is consistent with the plan. The third topic that I will address is some multiyear objectives. Adam referenced this in his earlier remarks, we spent a lot of time on strategy over the last several years. The optimization plan that was announced in 2022 was the product of a meaningful amount of that strategy. So we did not stop there. In the latter half of 2023, senior management and the Board also invested a significant and collaborative effort in this regard. And the 3-year targets and objectives that I'm about to outline are a direct outcome of that strategy work. So as we look ahead over the next 3 years for FCR, out to the end of 2026, we expect the following: number one, same-property NOI growth to average in the low 3% range. We expect contractual rent steps and lease mark-to-market through new and renewal leasing to contribute by roughly equal amounts. Now as I indicated a moment ago, we also expect a somewhat uneven growth rates in the next 2 years. This year, same-property NOI growth will be below average. But looking out to 2025, we specifically expect an outsized increase in cash NOI growth, in large part, from leases that have already been signed. On the disposition front, we plan to complete approximately $1 billion of property dispositions over the next 3 years. By value, the split of this $1 billion is to be roughly equal-parts density and development sites and low-yielding income properties. And like the dispositions from the past 15 months, we expect the blended NOI yield on the entirety of this program to be less than 3%. Later, you'll hear more from Jordie on this subject. Thirdly, turning to development. We're planning for a cumulative investment of approximately $500 million over 3 years. The total amount includes an expected investment of approximately $300 million into the development and redevelopment of future income properties and approximately $200 million to advance condominium developments that are currently work-in-progress. Looking ahead, I note that there are no new condominium projects contemplated in our business model. We also expect development completions to be approximately $200 million over the next 3 years. And there's two components to these completions: The first is income property development and redevelopments coming online. And on this front, we expect approximately $100 million of completions providing a yield of 7% or better. These developments coming online will be weighted towards 2026. Also in 2026, we expect to deliver Edenbridge condos at Humbertown. At FCRs, 50% share of the estimated gross proceeds from this project will be slightly more than $100 million, and we anticipate the sales will result in a modest contribution to FFO. As we continue to make progress on our capital allocation and balance sheet objectives, we also intend to pivot towards asset growth. In this regard, we're planning for a cumulative acquisition profile within the $100 million to $150 million range. With FCR's national operating platform and investment teams, we expect there will continue to be select opportunities to acquire high-quality income properties over time. In addition, we have several small tuck-in investments within our sites. These will be modest, yet they'll be important to long-term value creation within the business. And just as we've been doing for the past 3 years, we intend to continue to drive improvements in FCR's credit metrics over the next 3. So point number 6 is that by the end of 2026, we expect FCR's net debt-to-EBITDA multiple to move into the low 8x range. We know this is important to our unitholders and our bondholders. And we believe it also has the potential to materially improve the trading multiple of our units and lower FCR's overall weighted average cost of capital. And finally, we believe First Capital can deliver FFO per unit growth of at least 3% annually over the next 3 years. For clarity, we're referencing FFO per unit prior to other gains, losses and expenses and excluding future profits from condominium sales, which we expect to be additive to 2026 results. We see this earnings growth target as achievable and a worthy objective. For some context, we know the entire real estate sector faces headwinds related to the current interest rate environment. Our business plan assumes no decline in interest rates in the future. Secondly, we're aiming to deliver this growth while simultaneously reducing total debt and improving credit metrics. And thirdly, for some historical perspective, over the past 10 years, the actual annualized growth in FFO per unit from FCR's large-cap retail peers averaged less than 2%. So to conclude, looking 3 years hence, we expect FCR will have higher NOI, higher EBITDA, lower net debt, lower debt to EBITDA and higher total FFO and FFO per unit. We'll now take a pause for another 10-minute break. And when we return, you're going to hear more from Adam and the team on how we will achieve our targets.

Welcome back. We have now talked about our objectives. Neil gave you the punchline first by walking through some key metrics we aim to achieve this year and over the next 3 years. Now, we're going to talk about how we're planning to achieve them. It starts with our real estate and having a portfolio that will deliver what Neil presented. In order to do this, we need to continue to make some adjustments to our portfolio. This is not about quality. It is not about good or bad real estate. This is about having the optimal mix of stable NOI-generating properties and those that don't contribute to FFO yet. We're now going to dive a little bit deeper into our portfolio and how we'll continue to adjust it as required to achieve our objectives. There are three main elements that are important to cover: The first is focusing on and growing our core grocery-anchored portfolio. Second is our development program; and third, divestitures. So starting with number one, we remain focused on continuing to grow and maximize the NOI we generate from our grocery-anchored assets, our core portfolio. On our conference call 2 weeks ago, I talked about how population growth, a lack of supply and the impacts of inflation have strengthened and underpin the fundamentals for this asset class. We'll invest in more of these over time through both acquisitions and development. This portfolio will be critical in contributing to achieving our key objectives. Turning to our development program. Making sure it is appropriately sized and focused on specific types of development is also a critical element in achieving our objectives. So Jordie and [ Jen ] will now take the stage again to break down our development program further.

As we look ahead, our development program will be made up of three main components: entitlements, development and redevelopment of core retail assets and mixed-use development. We've already covered our entitlements program. So now let's take a look at the other two important elements. In many cases, our core retail assets represent a compelling place to allocate capital. In instances where we can accretively add retail density to an existing core property or acquire adjacent land and expand, we will continue to do so. Leaside Village is a very good case in point. We acquired and rezoned to commercial 2 acres of contiguous land. We then added 70,000 square feet of retail to accommodate 2 new anchor tenants. By incorporating the new property, we now had exposure to 3 public roads. This allowed us to create an important new entrance to the center, which eased movement through the site. Other opportunities include the redevelopment of some of our core value-add assets. As Jordie had referenced earlier, these form a subset of our core assets. I will now take you through some examples of these properties, so you can better understand a big part of the development work we are focused on. Today, considering its age, it's physical condition and our plan underway for its improvement, Humbertown Shopping Center is categorized in this subset of core. Humbertown is an excellent example of how we can profitably reposition a well-located asset to ensure it delivers both growth and stability. Humbertown is a grocery-anchored shopping center, located in the west end of Toronto, situated in a neighborhood with some of the best demographics in Canada. We have redevelopment rights and so control the property. We had various redevelopment alternatives for Humbertown. These alternatives included a full demolition of the existing shopping center and the construction of a large mixed-use development in its place. This was a viable option that we had zoned almost a decade ago. But now, we've come up with an even better plan. We're completing a major renovation of the existing retail center, creating more value with less risk. We anticipated that based on its location, our improved design and our capital commitment, tenants would be very engaged with the remerchandising plan and be prepared to pay substantially higher rents. Based on the overwhelmingly positive response, we were right. The average rent per square foot of new leases in the redeveloped center will be more than double the previous rents. We'll also benefit from improved recoveries of CAM and tax across the center. Consistent with our objectives, these changes will deliver secure and stable cash flow with growth. Our plan creates a more functional, modern and valuable center from a customer and tenant perspective. We're eliminating inefficient enclosed spaces and adding more functional exterior-facing access for tenants. Importantly, we're delivering more space, appropriately configured for key tenants, including our grocery anchor. We're also executing a full-scale facade upgrade to modernize the exterior with high-quality materials and improved street scaping and lighting, making it consistent with the high standards we have set across our portfolio. We know that renovations can be disruptive to tenants and to our NOI. That's why we're completing this redevelopment in 3 separate 12-month phases. These are short cycles that allow most tenants to operate through the redevelopment period without interruption. This ensures most of the current cash flow remains in place. We will invest roughly $45 million in total and earn an unlevered development yield well above 7%. Phase 1 of the redevelopment of Humbertown is now well underway. Portobello Center, located in Brossard on the South Shore of Montreal, is another example of a core value-add asset. Portobello is a large 485,000 square foot mall, situated on 40 acres of land. The site is anchored by a 50,000 square foot Loblaws grocery store, a 100,000 square foot Rona, a Jean Coutu pharmacy and a Royal Bank. It's located adjacent to a brand-new REM transit station, which is the first stop on the South Shore from Downtown Montreal. Based on its population growth and its transit connectivity, Brossard is a market that is only getting better. In light of this growth and our position in the market, we came up with a plan to convert Portobello to an open-air center. This will eliminate all the inefficient common area and dramatically reduce operating costs, which will, in turn, allow us to significantly increase base net rents across the center. As part of our entitlement program, a portion of the property, highlighted on the screen behind me, will be rezoned for mid-rise residential development. Once approved, we will sell this newly created density. When we're done, we'll have a stable and reliable lower-cap-rate, higher-value asset. This will be better for our tenants, better for the market and therefore, better for FCR. As you can tell, we are focused on creating value by allocating capital to core assets like Leaside Village. We are also focused on our core value-add assets like Humbertown, Portobello and others like Westmount and Edmonton, where we have designed and will implement a similar redevelopment strategy. Not only will the plans for these assets improve them qualitatively, they will also increase NOI and in turn, the value of these centers. When our work is done, these properties will be stable, grocery-anchored core assets, with an income profile consistent with our objectives for growth. I will now turn it back to Jordie, who will provide some additional color on our mixed-use development program.

Thank you, Jen. While a tremendous source of value creation, our density pipeline has become too large, relative to the size of our total assets. But make no mistake, even as we sell some of this created density, we'll still retain one of the most desirable pool of development sites in the country. This gives us the ability to construct and complete only the most strategic and financially compelling development projects. In these instances, where we do elect to develop, we'll retain optionality. Specifically, we'll maintain 100% interest in some projects like the retail redevelopments Jennifer has just discussed. However, for larger mixed-use properties, the longer development timeline and the longer-term return profile make them more challenging in the context of our key objectives. To manage these requirements, we will sell partial interest in select mixed-use projects that we do wish to pursue and will retain a 25% to a 50% interest. We'll serve as the development manager, earning fees which will supplement a return through the unproductive phase. The sale of a partial interest helps to balance the required capital as well. A great example of this recent sale -- excuse me, a great example of this is the recent sale of an interest in our Roselawn project, located at Yonge and Roselawn here in Toronto. You'll recall, we sold a 50% interest of this development to Woodbourne and Bouwinvest, a sizable Dutch pension plan investment manager. The project is a mixed-use retail and multifamily rental property. It will have a total of 552 residential rental units and approximately 65,000 square feet of retail space. This project is strategic for FCR, considering the location of the property, the scale of the retail component and the market demand. It's exactly the type of project that we wish to develop. To deliver the required qualitative components necessary to differentiate it, we felt it was impaired to find a strategic partner like Woodbourne, who specialize in residential rental. We sold this co-managing interest in the property for a price in line with our IFRS value. The price was also favorable in the context of comparable transactions in the market. This is a rare example of a mixed-use project in today's world in which the anticipated project returns work. Given legislative changes, we've submitted a revised application contemplating increased height and density, which on approval will further improve the return metrics for the project. Upon completion, this development will be positioned in the market as a sustainable rental building with a well-designed amenity program and curated retail at its doorstep. The building will have front door access to Yonge Street, and it will benefit from excellent high order transit, including both the Yonge-University subway line and the soon-to-be-completed Eglinton Crosstown LRT. In Q1 2024, we expanded our strategic relationship with Woodbourne. We sold to them a 60% interest in our 1071 King Street West residential rental project, located in Liberty Village. The total sale price for this 225,000 square foot development site represented a 35% premium over our Q3 2023 IFRS value. Like Roselawn, the sale of an interest in 1071 to Woodbourne reduces FCR's capital requirement for the project. It's also accretive with respect to our key debt metrics, our net asset value and our FFO and preserves upside through our retained interest. This is a model that works well for FCR to best take advantage of existing opportunities while still achieving our key objectives. To conclude, our development program is comprised of three principal elements: entitlements, development and redevelopment of retail assets and mixed-use development. We remain focused on all three, but we're balancing on how we elect to proceed with each. I'll now turn it back over to Adam.

Thank you very much, Jen and Jordie. So I'm going to touch on asset divestitures. Earlier, I highlighted the significant value creation in properties like 2150 Lake Shore. I also noted the long timelines, during which these properties don't contribute to FFO and hurt our key debt metrics. . As well, the full value of these types of properties are often overlooked by investors when they assess FCR. Understanding the size of them isn't easy, given how the accounting rules require us to present them in our financial statements. Largely due to the success of our entitlements program, the amount of assets that we now own that are not contributing to FFO, has grown very large, too large for a publicly traded REIT of our size. Even after our recent asset sales, we have $1.7 billion or 20% of our portfolio in low- or no-yielding assets. So achieving the right balance in terms of asset mix is critical. We strongly believe that our investors are best served if we continue monetizing some of these and reallocating the proceeds. And that's exactly what our optimization plan is doing. We're just over halfway through our 2-year plan. So far, we've announced asset sales totaling over $630 million, with an average in-place yield of less than 3% and an average premium to IFRS carrying value in the double digits. We sold these assets for a great price in a market that many described as challenging. We've used the proceeds to pay down debt, make real estate investments and to repurchase our units last year at a heavily discounted valuation. It's important to note that each asset that we have sold and continue to sell under this plan has the dual benefit of simultaneously increasing our FFO and strengthening our balance sheet. It's very rare to increase your FFO when you sell a property. Dispositions are not typically accretive to earnings, but ours are, given how low the yields are. This in itself is a short-term competitive advantage, and it remains an important part of our strategy in terms of how we will deliver on our objectives. So now back to you, Jordie, to cover asset divestitures to give you a sense of how we decide which properties we do sell.

As you've heard today, having the right balance in the composition of our assets is essential. So as Adam mentioned, asset sales are an important element in achieving our key objectives. As I had discussed earlier, our core primarily grocery-anchored centers represent 80% of our portfolio and our First Capital's highest-yielding assets. These core assets are very well aligned with our stated goals. . It's the remaining 20%, classified as other, however, that serve as a shorter-term drag on our current return and on the growth profile of our FFO. Specifically, these assets, characterized as other, represent $1.7 billion of current value that collectively yield only 2.2%. So they create a 60 basis point drag on the yield of our entire portfolio. They also cause a drag on the growth profile of our FFO. To compound this issue, the value of these unproductive assets is getting larger, given the success of our entitlement program. So consistent with our optimization plan, we'll continue to sell some of these other assets as our value-enhancing objectives are achieved and their related increase in value is realized. As Adam has stated, this is not about good or bad real estate. We believe virtually every property we own is a high-quality asset. Instead, the categorization of core or other reflects how each asset in our portfolio fits with our objectives for stability and for growth. These unproductive other assets come in multiple forms. Almost 50% are low- or noyielding properties with development density. As I've mentioned, we manufactured this density through our entitlement program. The $514 million of development density sitting on our balance sheet represents 6% of our $8.8 billion property portfolio. Today, this density generates no NOI. While incredibly valuable, these properties with density are a primary contributor to the drag on our overall yield. As a result, we're going to sell a meaningful portion of these properties. I want to provide you with a couple of specific examples of these low-yielding assets with development density as they form the largest part of our sales strategy. 5051 Yonge Street is a low-yielding longer-term development property. It had a long operating history as a multilevel retail center. However, it's located in the transit connected North York Center, which is experiencing significant development activity today. So 5051 Yonge is an ideal candidate for redevelopment. In December of 2020, we submitted an application to rezone the property. Today, based on the market, condominium use has the highest per square foot value. So this density that we received approval for, while valuable, didn't fit well with our strategy. We marketed the property for sale in Q2 of 2023 after we had removed the last of its lease encumbrances. We entered into an agreement to sell the property a month later. The sale price was at the high end of the market for zoned sites. It was also 17% greater than our carrying value. Royal Orchard is another low-yielding asset that sits in our density pipeline. It's a 50,000 square foot retail center located in Vaughan. In 2021, together with our 50% partner, we submitted an application for 3 residential towers and 1.6 million square feet of density. Municipal approvals are expected this quarter. It's a condominium development with limited retail density, given its size and the contemplated absorption period. Royal Orchard is a development project that will take more than 15 years to complete. This development is not strategic for FCR and does not meet the objectives we've set out. As a result of this misalignment, last quarter, we entered into a binding agreement to sell our 50% interest in the property. The sale price for the property exceeds its Q3 2023 IFRS value by over 200%. Now this outsized premium to our carrying value is a result of our internal valuation policy, which doesn't reflect value uplift until we formally secure the zoning. 5051 Yonge and Royal Orchard are just two examples of low-yielding properties with density that we monetized. Since we started with the optimization plan, we have sold or contracted to sell $300 million of density at a 35% average premium to our carrying value. If you go back to 2019, when the monetization of our density pipeline began, we have sold or contracted to sell $500 million of density value at a 60% average premium to our carrying value. The remaining assets in our other category are typically low-yielding income properties. This includes non-grocery-anchored assets like some of our Yorkville portfolio. It also includes residential properties. For many of these assets, we don't expect that will contribute to our key objectives over the foreseeable future. Again, this is not a good or bad real estate. It's about delivering on our key objectives. Some of these assets are primed and ready for sale today. Others have visible growth potential that we wouldn't be paid for today if we were to sell. So with this in mind, we'll be methodical to make sure that we maximize value on sale. The Yonge-Davis center is a great example of this type of property. It's located in [ Newmarket ], 25 kilometers from FCR's next closest property. This asset is not considered strategic for First Capital. While stable, the property is not grocery-anchored and its historic growth has been meaningfully lower than our portfolio average. Given its location and its tenant base, the future growth profile of Yonge-Davis Center is also quite low. While [ Newmarket ] is anticipating significant residential intensification over the next 20 years. Yonge-Davis cannot be redeveloped until 2032. Now for certain investors, properties like Yonge-Davis Center are appealing in the sense that they have some yield today with perceived long-term upside through development potential. So we entered into a binding agreement to sell the property for a 50% premium to our carrying value at approximately a 4% cap rate. This is a good asset. But to be clear, we will sell these other assets if we can get a big price and we can create value from the reallocation of their sale proceeds. Some of our residential rental assets also fall into this low-yielding category. And so we've been actively selling these properties as well. You'll recall, in Q4 2022 we sold our remaining 50% interest in the 506-unit King High Line residential property for $149 million. The sale price equated to a sub-3% yield, based on its income. This past quarter, we closed on the sale of our 68 unit Circa residential property located in Richmond, BC. The in-place tenancies at Circa are all subject to rent control. Therefore, turnover is exceptionally low, and income growth at Circa is muted. The sale price for Circa equated to approximately a mid-3% yield. Some of our Yorkville portfolio also fits into this low-yielding category of assets. We will sell these properties to the extent we can get a big price. But these assets are not homogeneous. Some, where we can capture maximum value, are ready to be sold; while others, they're not. For those properties in Yorkville that are not yet ready, there remains a lot of visible NOI growth potential. This near-term growth contributes to our near-term goals. We also believe we won't get paid appropriately to the extent we sell these assets with short-term growth potential. So we'll continue to be deliberate, and we'll sell the assets that are ready, and we'll wait for those that are not. I hope this overview has helped to provide insight into how we think about and how we characterize our properties. Our goal is to deliver stability and consistent income growth to our unitholders. To achieve these objectives, we will continue to sell our low- and no-yielding assets and will reallocate this related capital. I'll now turn it back to Adam.

Thank you, Jordie. So good news. That brings us to the home stretch here, which Neil and I are going to take you through. So Neil, if you can join me. So we've covered a lot today. We've covered our core competencies. We also reviewed our competitive advantages. We discussed our real estate strategy and how important it is to have the right mix of assets. This is required to achieve our objectives of FFO per unit growth, NAV per unit growth, distribution growth and a stronger balance sheet. We have overwhelming consensus from our unitholders that these are the objectives that they want from their investment in First Capital. We can achieve these by focusing on the strong performance of our core grocery-anchored shopping centers. We also walked through our exciting development program. And finally, we highlighted the importance of selling some of our low- and no-yielding assets and reallocating that capital. We've been successfully executing our strategy, and it is making First Capital a more valuable company. As Neil will show you, unitholder return since announcing our optimization plan have been strong. Now to be fair, we were starting from a low base. We still have a lot of work to do, but we're making good progress, and we are significantly outperforming all our peers. We're also narrowing the gap between our trading price and our NAV. Closing that gap is very important to us. Neil is going to expand.

Thanks, Adam. So I intend to provide context and indeed, a framework as to what we see as the compelling investment opportunity inherent in FCR's units today. . The units currently yield just over 5%. Now I'm not a baseball fan, but I am aware that spring training has just started. And to use a baseball analogy, if the investing business was a baseball game, then the cash distribution yield of more than 5%, well, that basically places FCR on third base without even a swing of the back. Here's what I mean. The 10-year annualized rate of return from the S&P/TSX Composite Index is 7.6%. Over the same time frame, 10-year government of Canada bonds have delivered an annualized return of a little better than 2%. And as you heard earlier, even in the context of the current interest rate environment and are in drive to improve key credit metrics, we believe FCR can grow FFO per unit at an annualized rate of at least 3% over time. Assuming the valuation multiple on the units remains unchanged, a subject that I'll touch upon a bit more in a moment, with an unchanged multiple, this means the combination of monthly cash yield plus earnings growth offers a base case total return of more than 8% annually. To reiterate, I see this as the base case. But the real opportunity lies in the potential for multiple expansion. FCR's current unit price of approximately $16 equates to a 25% discount to the net asset value of $21.95 per unit. It also equates to a multiple of 14x FFO. While FCR's multiple is at the top end of the retail REIT peer group, it's actually low by FCR's historical standards. Up until early 2020, FCR's units traded at an average multiple of 18x FFO. On several occasions, the multiple reached or exceeded 20x and the valuation floor was 16x. Now we acknowledge that the COVID era and higher interest rates have impacted the sector, but at FCR, we are taking specific steps to address this. Since announcing the optimization plan, FCR's units have generated a total return of 22%. This exceeds the 10% return from the S&P/TSX REIT Index by a wide margin. It also massively tops the performance of our 5 larger-cap retail REIT peers, which have generated an average return of 3% over the same time frame. So we see strong evidence that our recent actions are delivering an improved valuation and they are providing strong total returns for unitholders. But we see a lot more potential. We are focused on driving FCR's premium multiple and closing the gap to net asset value. We believe continued and consistent execution of our strategy is the means to do so. So we're focused on rebalancing FCR's asset base by monetizing assets that do not -- they're not fully valued by the market by continuing to lower financial leverage and further improve FCR's credit profile and through generating growth in FFO per unit. Driving FCR's FFO multiple to 16x to 18x, which will remain below the pre-pandemic average, has the potential to lift the unit price to the $21 to $24 range over the next 3 years, thus materially narrowing or eliminating the current discount to net asset value. For investors, this offers a very compelling annualized return of 14% to 18% on a multiyear basis. And we think there's the potential to do even better. So to conclude, we see FCR's units as an exceptional risk-weighted investment opportunity. Adam?

So to close, your Board and your management team are fully committed to building a great REIT. Embedded in that commitment is an obligation to maximize unitholder value. Given the current environment, we believe the most predictable way to do so is by successfully executing our strategy. Since announcing our optimization plan, we have demonstrated success, and we continue to have very good progress. What we've outlined today is a clear extension of what we've been doing. So as we wrap up the formal presentation, we have a short video for you. It's featuring some of our key partners and what they have to say about FCR. And after it plays, I'll close out with a few closing remarks. [Presentation]

In case anyone who's wondering, the horn was not part of the video. So look, we really appreciate your time and attention today, so we could map out our path forward. I want to thank our incredible team for putting together today's event, and I especially want to thank Noah, Lucas, Suzanna, Michelle and [ Jesse ], who did not have a family day long weekend this year. All of today's content was actually produced in-house, and you guys did an amazing job. So we have cocktails behind you, and we invite you to chat with your management group and Board, answer any questions, we'd be happy to. That concludes the presentation. Thank you again for attending.