Primaris Real Estate Investment Trust (PMZUN) Earnings Call Transcript & Summary

All right, good morning. Thank you, everyone, for joining us at Primaris REIT's 2026 Investor Day at [ Promendes St. Bruno]. This is a property that we acquired a year ago this coming Saturday. I'm [ Alex], Chief Executive Officer. Around the room, you will find a number of Primaris folks. [ Stefan Laundry ] is our Head of Operations for Central Canada, sitting on the right. [ Julie Moran ] is the General Manager for Promendes St Bruno, San Bruno. I believe she's standing in the back. These lights are fairly bright. And then we've got quite a few other folks here, Patrick Sullivan, who will be presenting after me, our President and Chief Operating Officer. We've got Leslie Buist to SVP Finance, Graham Proctor, SVP, Asset Management; Julian right there, who is our Chief Investment Officer. Claire Mahaney who puts all of our communications and Investor Relations stuff together intimately involved in today. [ Nadia Markova], who is one of our really bright people helping us understand our own business, working on business intelligence, data management and investment analytics. And then, of course, last night and today, we have Tim Pire, who is the Chair of our Board, one of our trustees and actively involved in our investor outreach that our Board does each year. Actually, I think it's coming up, I would think sometime soon. And [ Louis Forbes], who is also on our board, he's the Chair of our Audit Committee, a onetime former CFO of Primaris. And also intimately involved in our investor outreach. So we've got quite a few people here. We're going to spend a bunch of time together, and I would encourage anyone here to approach and chat with all of our team members and ask them any and all questions that you find interesting. So cautionary statements will go right past that. The agenda. So as I said, I'm going to set the stage for a few minutes. We're going to move on to Pat, and he's going to talk about our business, the operations, the management of shopping malls and share a lot of the insights that he's particularly well suited to sharing. We'll have a little Q&A after that because I think we find that investors and analysts find that topic, particularly of interest, given that the mall business is experiencing strong growth, and there was a period of time when people didn't pay a lot of attention to malls. After that, we'll have a little bit of a break Leslie is going to share a lot more about our differentiated financial model. Julian will talk about our investments and our investment strategy. And then I will wrap it up. So we'll have a lunch after that. We'll tour them all, and Pat is going to share some more specific to the shopping center after that. But if you look at where we stand today, this is Primaris by numbers. We have about $5.6 billion worth of assets. That's $3 billion. That was prior to the spin-out. But even those numbers don't capture the full volume of activity, we've completed about $4.4 billion of acquisitions and dispositions in the last 5 years. We built a $2 billion unsecured bond program. We've turned over about 70% of our portfolio is new since 2021. The portfolio quality has changed quite a bit. And we've done all of this while delivering some pretty attractive returns for our investors. So where it all started, and this is something that we review this slide with our Board at each quarterly meeting. I'm not sure I've ever actually articulated this, but the reason that I go over it, it never changes. And it probably seems like we're just killing a bit of time in the Board meeting. But I make sure to go over at each Board meeting because it really is the pillars of our strategy. You've all seen it before, size and scale. We have a $5.6 billion national portfolio of malls. That's important because in the mall business, it's a scale business, for many reasons, relevance with retailers having the internal management capability, access to capital. There's a lot of good reasons for size and scale, proper capitalization. Leslie is going to talk the leader about our differentiated financial model. We harp on it, and I will harp on it a little bit more as well. Affordability for our malls to do well. We need our retailers to do well, and we partner with our retailers to make sure that they're profitable because when they're profitable, we're profitable. Scale and consolidation, this is something that just -- I don't know if it was last week or the week before, we announced the Upper Canada Mall acquisition, the latest in a series of marquee acquisitions, which we're quite proud of, and we see more room for that type of activity in the future. And then our disciplined capital allocation. Julian will speak more about that, but that is very key to our strategy. And as I said, we talk about this every quarter at the Board meeting because these are the pillars upon which Primaris is built. So the portfolio construction, we've been very, very active, as you can see, lots and lots of acquisitions, fairly consistent pace. The number and dollar value has changed, but we've been pretty much in acquisition mode since the day that we spun out even before the day that we spun out. And it has been fast and furious. We continue to have lots of opportunities. And I think as part of a proper disciplined capital allocation strategy, capital recycling is a critical part of that as well. And when you look at all of this activity, we're not transacting just so that we can pay brokerage fees to all of the property brokers. We're doing it for very specific reasons. And at the heart of what we're trying to accomplish is we're trying to maximize the steady state run rate same-property NOI growth in our portfolio. So we're basically trying to increase that steady-state growth rate. Right now, our best estimate once we get through this next 3-year period of leasing up to 96% or so percentage occupancy. We think our portfolio is going to revert to about a 3% to 4% same property NOI growth trajectory. And in the period between now and then, we think we can probably do better than that as we're filling up vacant space. So what that really requires in terms of getting that steady state, maximum or optimal internal growth rate is you need to have market-dominant shopping centers, we define that in a lot of ways. But at its simplest, what we're really talking about is malls that have the largest aggregate sales volume in the market. It's the place where the most retail transactions are taking place in the market. And what that means is that we're relevant to retailers because of the retailer is going to come into the market, they want to go to the place where the most retail sales takes place, because that's where they're going to have the greatest volume, make the most money and have the greatest access to consumers. Similarly, on the consumer side, they're going to come to our shopping centers because it's the place where they can find the most variety and options within their shopping needs. So if you look at our -- how this is translated into portfolio metrics, our aggregate sales on the left has risen from about $1.7 billion to $3.8 billion, which is 121% increase in the volume of retail sales that take place in our portfolio. So pretty substantial growth. Sales per square foot have risen from 589 in the line chart, 589 to 829. That's up 41%. We expect that number to continue to climb over time, in part because of further acquisitions, organic growth within our portfolio and select dispositions. One of the really interesting metrics that we haven't talked a lot about before, but I think really speaks to the market dominance of our portfolio is the average mall CRU sales. So the average per mall of aggregate sales. Before the spin out, we were at $74 million per mall. That is now $151 million. That's up 104%. We have really shifted to being the dominant mall in the market, which, in a lot of cases, we already were, but we've now become the dominant mall in bigger markets with bigger trade areas and more sales volume, which again, really speaks to Primaris being relevant to retailers. Pat flew in late last night yesterday, he was working with all of the retailers at the ICSC conference in Toronto, and I'm sure he'll share some details about that, but I think the punch line from last year's ICSC was that Primaris is very much the sought after landlord. A lot of retailers that we had a relationship with are now more prioritizing that relationship. We have retailers that we didn't have a relationship with that are now very interested in building a relationship with Primaris. So this is our 3-year our 3-year targets that we published in September of 2024. What you'll notice about them is all the way down the right, we've achieved or are on track to achieving all of those targets, even the ones sometimes we say on track, but we've actually exceeded the top end of the range, like the first one, annual same-property cash NOI growth, we were above the top end of the range. Later, I'm going to share the -- well, it's already in the press release that went out this morning, but we'll talk about the next 3 years. We blew through the acquisition target. We blew through the dispositions target and all of the other metrics we've been able to achieve. It's important that when we give guidance or give targets to the market that we actually deliver on them. And so I think the whole team is very proud of this slide and what it says about our ability to execute. In this chart -- so this is a funny slide I think a lot of people have different reactions to it. A lot of our employees love this slide, and they love this slide because a lot of us get paid partially in stock. We also have a unit purchase loan program that's available to anyone in the company below the SBP level where you can borrow up to $100,000 nonrecourse to buy units in Primaris. And so we have dozens of people throughout the organization, a lot of whom bought the stock a couple of years ago and have made a lot of money. They are very well aligned with the Primaris story and what's fantastic about that is when we have town halls. We get a lot more engagement from all parts of the company, lots of questions, and people are genuinely interested with this financial incentives that they have to understanding why our stock price goes up or why it goes down what they're doing in their part of the business and how it contributes to the overall mission that we're on. And so yes, understandably, there's a lot of employees that really like this chart. I think when some analysts look at this, some investors look at this, they might have a thought of maybe this is a reversion to the mean story. The stock has performed tremendously in the first 9 months of 2026, substantially outperforming all of our peers. We can talk about a lot of details there. But I think there are some people that look at it and say, big move, shows over, nothing to see. You can move along. When I look at this chart, I immediately get the urge to remind everyone that our stock is currently trading at a valuation that implies an 8% cap rate which, for the quality of the malls that we own, including the one that we're standing in they're sitting in right now, strikes me as a particularly high implied cap rate. I'll note that, that 8% implied cap rate is also reflective of 86.6% in-place occupancy, which would suggest that our current valuation implies a stabilized cap rate somewhere north of 9%. We have an interest rate tailwind I could get into all sorts of things that as the chief cheerleader at Primaris, I could tell you many great things about Primaris, but we'll get past that. One of the other things that I see in this chart is a superior business model. We've been talking about the differentiated financial model since day 1, low leverage and a low payout ratio and compounding the retained free cash flow provides a structurally higher growth rate on a per unit basis as compared to a higher leverage, higher payout ratio model. And to frame that alternative, consider a REIT with high leverage and high payout ratio, it becomes solely dependent on access to the equity markets to achieve growth, asset growth, create value to be able to reinvest in the business above and beyond sort of the steady state. And that is really, I think, where the per unit growth comes from is having the flexibility to allocate capital to have the ability to invest in acquisitions, developments, buy back stock, you need the financial flexibility to take advantage of all the opportunities that a REIT faces. And when you have high leverage and a high payout ratio, interestingly enough, the only time that you have access to capital is when everybody else has access to capital. And when everybody else has access to capital and you have access to capital, everybody gets that capital and then they go out and they compete for properties. If you're trying to acquire a property, and there are 30 other bidders. You can be sure that the pricing is going to be optimized, you're going to pay for vacant space, you're going to have very limited flexibility to capture any value or create any value. So when I think that the low leverage, low payout ratio model, we talk about it in a lot of different ways, but I think that's one of the things -- one of the ways to think about it is having capital that is available to you essentially at all points in time, allows you to take advantage of opportunities that a lot of a lot of REITs that have higher leverage are unable to take advantage of. I don't really think there should be much debate on this point. If you go into other parts around the world, the U.S. Europe, Asia, Australia, the REITs with the lowest leverage and the lowest payout ratio have consistently delivered above-average returns. And I think Canada has been stubbornly stuck in the old model with the high payout ratio and high leverage. But we talk a lot about it, and I've harped about it probably enough for today. But when I think about this chart, I don't think it's a onetime dynamic with our stock outperforming. I think our stock is structurally designed to deliver superior internal growth, superior per unit growth. And that's why we have both hardwired into our executive compensation, a ceiling of 6x debt to EBITDA and also aligned our executive compensation with relative total unitholder return. I think with that, I will stop talking about the differentiated financial model, which I can talk about all day. And I will turn it over to Pat, who is going to share a lot about the mall business. Pat?

Thanks, Alex. Thanks, everyone, for coming today. We have a slide called Slide 4 in our investor deck that most of us usually cringe when we bring it up and talk about it. It starts from 2005 to basically going forward in terms of the evolution of the shopping center. I'm old, so I'm actually going to go back further than 2005 because I think it's relevant to explaining what I want to talk about today, which is the -- if I can get this thing to work. I want to talk about the transformation of the credit profile of the shopping center over the last 30 years because it has actually been significant. But to explain it, I think I need to go back into the 90s. I started in real estate in 1991 as a broker in Vancouver. Office rates were $1 a foot in downtown Vancouver for office space, sounds familiar to a couple of years ago and shopping centers have just come out of a really, really bad time, the late '80s, early '90s high interest rates. Companies when it broke like [ Bramley, Trizec, Dayon], they had land banked and they got caught with high interest rates and declining revenues. When you get further into the '90s, you had companies like Cambridge, Cadillac, Oxford, all were in financial trouble. Cadillac actually filed for bankruptcy and restructured, Cambridge didn't, but struggled to get through the '90s with their balance sheet intact. And along the way, you've got recapitalization of those businesses by the pension funds, the pension funds started buying partial interest in malls. Before actually buying the entire company that case took over Cambridge and merged it with their other company, [ Ivano]. [ Entre ] took over Cadillac and [ Omer ] took over Oxford. During that same period of time, you had department stores that were starting to wane in basically the relevance. By the late '90s, you had [ Edens ] that had gone bankrupt for the most part and was the process being replaced. And then you had Walmart coming to Canada and taking over [ Wilco ] and making it very clear that they had no intention of staying in shopping centers. The interesting dynamic as we go through that part and it couples with [ Sears ] and [ HPC ] starting to become less relevant with the consumer, is that you had a lot of sales migrate from the department store into the small shop space in the mall. And in the '90s and into the early 2000s, you had a lot of locals and regionals in the shopping centers. And we used to have -- every year, we had merchandise meetings at the end of the year where all the tenants would gather, it would be a gala. The marketing manager would put on a big dinner, and you'd explain what happened in the shopping center. And there were so many locals in the mall that the room was full. That was their livelihood. So you had probably upwards of 50% of the mall tenants were locals. And what happened when you had this migration of sales from the anchor tenants back into the shopping center, sales started going up. You had pension funds started buying into these assets and saying, we want to reinvest in them so they started making bigger investments and the small shop guys started realizing their sales were going up, rents were going up too. And you had a lot of expansion going on. National tenants started expanding more. You had Gap come to Canada in the mid- to late '90s. That was the big first American coming up here and taking space. And so there was a lot of interest in shopping centers and expanding their footprint. And over time, you saw locals and regional tenants start to diminish. And I remember, Louis might remember, like we spent the first 4 or 5 years, Primaris having a slide where we talked about our percentage of waiting for locals and regionals versus nationals because it was a lot of concern to people in terms of the creditworthiness of the tenants we had. And I mean I go back as far as 2010 here, and you see our dominant attendance for HBC, Sears for [ Zane ] Group, which by the way, I think, went broke that year, Canadian Tire bought them and [ Reedman's ] and [ Loblaws], I think, is on this list simply because we owned a power center that had a -- or a couple of power centers that had a bunch of large grocery stores. But if you got below this line, you saw a lot more fashion tenants as well. And so there was a real concern for a long period of time. What was the creditworthiness of the mall look like? And in fact, we got into years like 2011, where we had a significant year of bankruptcies driven partially by the financial crisis of 3 years earlier, where you got through a period where these guys were hanging on and then they finally threw in the towel. So we had a lot of bankruptcies in 2011. It cleared up a lot of space, but we had a lot of turnover in the shopping center. So in 2015, when you had -- Target finally failed, we had an opportunity to reset our tenant mix, which we hadn't had before. So after Target failed, the year after Target failed, mall sales went up. We hadn't replaced Target, but kind of going back in history, the sales go from the department store into the shopping center, probably not 100%, but the shopping center picked it up. So you had CRU sales volume pickup. We replaced Target with necessity-based retailers, such as grocery stores, pharmacies, but also fashion boxes like [ TJX ] and such forth, all of which were really strong covenant tenants, which was fantastic. If you go back 15, 20 years, malls have been kicking out grocery stores. They didn't think they were worthy of being in the shopping center. They wanted fashion. They thought it was -- they drove traffic to the grocery store, but not to the mall. People didn't do both. They didn't grocery shop and go to the shopping center. So they were shunned from the mall. But when Target left, we're all looking for large format tenants and it made sense that grocery store. And it's turned out to be a fabulous addition to the mall because people do cross-shop between grocery and the shopping center itself. And what it does is it brings us more footfall in general to the mall. When Sears failed, similar story. Mall sales went up in the year after, we added more box stores. And in the years following both Target and Sears, overall mall sales have climbed up significantly because we increased the regular footfall to the shopping center. We took a Target or a Sears that might have been lost years was probably doing $10 million, $12 million at the time it failed. Target might have been doing $20 million. We placed them with tenants that we're probably doing $50 million or $60 million in aggregate. So you had a significant number of people coming to the shopping center. You created a bigger retail destination node and that, in turn, helped the CRU tenants in the mall as well. So over this time period, local and regional tenants got, a, priced out of the shopping center; b, there was so much demand from small shop tenants because sales were so buoyant that they wanted more and more space. More and more Americans were coming up here. Target kind of stalled that for a couple of years as there was a little apprehension. Why did Target failed, what was wrong with Canada. Nothing wrong with Canada, it was what was wrong with Target. And then we fast forward and then we have the e-commerce start. And with e-commerce, we had a low in expansion with retailers. Did they need to add more stores. surprisingly, the pandemic took care of that because people started to real stores. Tenants got through the pandemic realizing they needed e-commerce, but they made no money on it. So when they had to rely on it basically for 100% of their sales, it was a real problem for them. So they started to realize we need stores. So after the pandemic, they started opening stores. So the example I use the most is Sephora. Pre-pandemic, we had a really hard time getting Sephora to expand into some of the secondary markets. post pandemic, they are like we need stores in all these markets. And what they learned was when they added a store, their overall sales volume combined between e-commerce and their store itself went up. And so now we have a proliferation of tenants wanting more stores because they need an omnichannel network, you're going to see going forward, if you already hasn't really started, tenants are starting to charge for deliveries. They're starting to charge for returns. They really want you to go to the store. They want you to pick it up in the store, they want you to return it in the store. They don't make money online. There are retailers that are abandoning e-commerce because they say, what's the point of doing this if we're just losing money. We don't really need to be there. We're not going to try to compete with Amazon. They can have it. We have a very good business. We need to be profitable. So they're abandoning that side of it. So when we talk about mall sales and the impact of these boxes opening the malls, we always talk about all-store sales volume for the CRU, what we never really get into is the all-store sales volume for the shopping center itself. And there's 2 reasons for that. And the primary reason is if you go back 20, 30, 40 years, the anchors didn't report sales. You didn't get numbers from HBC or Sears or Target. So you didn't really know what their numbers were I can tell you there were some stores. Sears and [ Devicor ] $60 million one point. By the end, they were doing $10 million and a lot of that migrated into the mall. So these guys have fallen off significantly, but that's the primary reason we didn't report a number with the bigger sales volume and now it's just become kind of the standard norm that that's what we report on. If we talk about Bruno, St. Bruno here, we have a mall that's approaching $300 million in CRU sales volume. There's probably another $150 million done in the box stores, and that's without the Bay. And when the Bay gets remerchandised, my guess is we'll grow that number by 10%, and we'll be up to $500 million. So it's -- that's a significant amount of footfall in the shopping center is $150 million goes into the box stores, which helps drive further traffic into the shopping center and feeds the CRU tenants. So at the end of the day, you see where our merchandise mix has ended up. These tenants want to be in the -- in a retail center that drives the majority of sales in the region that it's in. You're starting to see Walmart want to come back to malls. We've announced 2 of them. There may be more. They want to be back in shopping centers. They -- in 2003, '04, they couldn't wait to get out of malls. They thought the ideal format for them, does freestand on the street with parking right in front. And what they realized is the mall has so much activity that they can drive further sales and higher sales by going to the mall and being part of the shopping center, whereas they used to buck having an entrance into the mall. They are now open to having an entrance into the mall. They want to feed off the traffic. Grocery stores, same thing. When we're going through this whole process with the Bay, and I'll get into the base shortly, a lot of the box stores we're getting we're not net new to the market. They're just relocations from other centers in the area that want to upgrade the real estate to be in the dominant retail asset. And that's the kind of tenant we're attracting here, and that's why our merchandise mix and our tenant quality has more so drastically. We're getting the Walmarts, we're getting the grocery. We're getting [ TGX]. We're getting high covenant tenants. And over the last 10 years, our fashion mix in the shopping center has diminished in terms of small shops. So we used to run well over 30% fashion tenants, and we're into the low 20s now. And that was driven by adding TJX, adding H&M adding Old Navy there had to be an offset corresponding offset with fashion. So we reduced the small shop fashion. We got rid of a lot of the smaller local tenants, regional tenants that were fashion-based. We've added a lot of more electronics. We've added a lot more of the health and beauty as well. So tenant mix has changed drastically. So while there was some mall development in the 2000s with [ Ivanhoe ] building their mills concepts [indiscernible], Niagara and such forth, there's been very little. And population growth has grown significantly, but malls have not been developed. Retail space has not been built. And now as we get into today, it's really, really hard to rationalize building anything. It's going to cost $1,000 a foot plus to build a shopping center, which means you need rents that no one's going to pay. So nothing is getting built and it's really become a key topic out there in the retail community because a lot of the smart retailers like TJX, who were really not focused on major store expansion over the next 24 months, they got director from the U.S. when the HBC went down that they needed to ramp up their store count in Canada. And the reason was because I think there's a recognition, this is the last large block of real estate you're going to find for years in Canada. And once it's gone, your expansion options will become very, very limited. And so there's a lot of retailers out there pushing hard, whether it's TJX, Canadian Tire, Walmart, grocery guys, they're all looking for space. And I mean I'll get into HBC shortly. But there's a lot of activity with all of those big banners. So merchandise mix is a concept that we talk about a lot. It's essential for a shopping center. You have to continually bring in new brands to keep the mall reinvigorated we're never going to be 100% occupied, and all likelihood, we're always going to be holding some space to remerchandise because tenants come to malls for the brands. We always hear experiential. We hear entertainment, we here add more restaurants and such forth. But the excitement when you open a new Abercrombie in a mall or a new Lululemon or some of the brands that just opened in here, Uniqlo has been opening stores. They get lineup in the mall when they first open that are 200 people long. And that's just the excitement over the brand. So entertainment is nice. It still comes back to are you branding your shopping centers with the latest concepts. That's what people want and that's what our primary focus is. So as we get into the -- so anyways, the -- some of these tenants we're doing business with, there's a number of Americans. There's some food concepts out of this U.S. We're doing a lot of deals right now with Browns, expanding Lululemons, la Vie en Rose expansions, Victoria's Secrets, Miniso. On the power center side, we've announced some Walmart Canadian Tire banners, there's lots of activity with all of these guys. I'm really bad at following my speech with the slides, so I'll try to keep up. So when we talk about the drivers of our rent kind of fits into this, but the main drivers of a rent really comes from -- there's the straightforward rent structure where we lease space, we charge -- we have a contractual rent. We build in rental escalations. It's typically -- it's migrated from 2% to 3%. Most retailers are now accepting 3% as the new 2% aligning with inflation. And then we get into all the other ways we can diversify our revenue base beyond just straightforward rent that I don't think a lot of our retail peers operating another kind of developments, whether it be power center [ script ] malls have. Percentage rent is very much unique to a shopping center. It represents -- typically used to represent 1.5% to 2% of our revenue. Right now, it's 3% to 4%, and that's driven primarily by the fact that there's been such significant inflation in prices. Sales have gone up. Retail space is not as plentiful as it used to be. So there's a number of factors that have driven sales, but inflation certainly drove that. And that's what percentage rent was originally -- the whole original concept of percentage rent was a hedge against inflation. You entered into these 10-year leases, how are you going to get rental escalations or capture the fact that sales might increase and the beauty of getting sales reported and getting percentage rent as we have visibility into their sales and we can participate in the tenant success throughout the lease term without actually rewriting the lease. And so when it comes to the expiry, we typically try to crystallize that excess rent into a new base rent and create that as the new base going forward. I expect that 3.5% to 4% of NOI to diminish over time as we reset these rents that are midterm, but we'll recapture it in terms of base rent. Our [ CAM ] we have a very flexible at least for the most part, people consider malls very expensive to operate, which they can be at times. However, we recover virtually everything we spend from the attendant. Our lease allows us to recover where we spend -- when we have a capital spend, we treated almost like -- we treated very much like a loan. We spend the money. We recover the money from the tenant, typically, we amortize it. Some of our leases -- the Cadillac lease is a great example. It allows us to actually accelerate the amortization earlier, but we charge interest on the money that we spend. So we recover interest income from the tenants. We also charge an administration fee for running the CAM pool. We charge 15%. So in theory, when you're fully occupied and you're recovering all of your cash from the tenants, you can recover up to 115% of your CAM expenditure. And that's something we've talked about a lot is our recovery ratios and how they're diminished right now. We do have some malls that have crept over 100% at this time. We expect that to keep marching forward. I think our recovery ratios on average are still in the 80s. We have 2 malls that right now are at 104 and that's [ Ridge ] and [ Peter Pond ] and [ Fort McMurray]. They're running at 104%. So we're getting up there with some of our properties as we come full more occupied. Years ago, I think 2017, we kind of bucked the traditional operational position and we went out and hired an accountant to run our asset management group, basically operations, [ Grand Proctor]. I mean nobody had ever hired in the calendar run this division. But the one thing we recognize is we spend such a significant amount of money on our capital at the properties and recovering it from the tenants that it was probably best managed by somebody who understands math as opposed to understand how a boiler worked. And that's really benefited us in terms of making sure that we're recovering our money and maximizing our returns on what we do spend. Especially leasing revenue, which is a slide at the end, I should have had it moved, but it's a slide at the end. We generally generate about 5% to 7% of our NOI through specialty leasing. 30% to 35% of that comes from in-line space, which is a space -- we're not fully occupied, we'll rent held the space, it's not occupied. And as I mentioned before, we hold that space sometimes for remerchandising. Typically for remerchandising or periods when we're buying malls that are very much under leased, there's a lot of [ SL ] revenue. We also get it from various other sources, whether that be branding. It's changed over time. I mean, 30 years ago, you had coin-operated vending machines, you had pay phones, you had storage lockers, you had all kinds of things like that. It's transformed over time. We actually make money off Santa now. Santa used to be a -- Santa used to be a cost center. Now it's something we can make money off. We used to be a marketing event now it's really especially leasing event. But there's all kinds of other things with branding and promotion. There's car shows and such forth. When the online -- when the space gets leased, once in-line space gets leased up when there's higher vacancy like there is now, our specialty leasing people will turn their attention to other sources of revenue. We've gone through periods when we've been really well occupied, and it's -- and our SL as a percentage of our NOI has been maintained at 5% to 7%. It really hasn't varied over 20 years. So it's just a function of their time. Typically, we have one specialty leasing person at every property. They generate, on average, the cost benefit is about 10%. So it pays to have somebody dedicated on site. We've tried before to have one person look after multiple sites. And while it spreads the cost out, you generally don't generate as much revenue. So we felt it was important to have somebody at every site. In terms of marketing, marketing is it's a very important aspect of the property. It's -- but it was one that was really not managed well for the last 25 years. It was -- it's a pool that the tenants pay into -- so we're basically spending the tenant money. About 10 years ago, we -- there used to be a landlord contribution. It was typical. It was built into a lot of the anchor leases with the demise of Target, Sears and HBC. In fact, I didn't even worry about HBC noticing. We stopped making our landlord contribution, which was a nonrecoverable expense. That saved us about $100,000 to $150,000 a year. And then we -- in the last 5 years, we hired someone specifically to manage marketing. And unlike the past where we hired a marketing person, we actually hired someone to actually manage the money. And so marketing people typically spend all the money that you give them at the site. And that's great. Sometimes it's on good promotions and sometimes it's not money well spent. So this person came in to really make sure the money was spent wisely. And so we've now taken this aspect of our company and we've turned it into a department where we're able to use the marketing money to do things like sponsor the Canadian Hockey League nationally. And we did that last year, we're a major sponsor. It's driving traffic to our shopping centers. The Memorial Cup last year was in [indiscernible]. They took the Memorial Cup across Canada. The different shopping centers, the hockey players from the various hockey teams that plan the CHL came to our malls. And in some of the communities, the CHL is a big deal, and it drove a lot of traffic to the shopping center, and that's one of the great things about having a national platform and having someone oversee marketing on a national basis. You can use that money and spread it around and actually drive traffic across the entire portfolio. The other thing about marketing money is -- marketing money there's many things you can do with it. Signage in the shopping center, which was typically a recoverable capital item, you can actually call that marketing. So there's different aspects to how you use the money but having somebody manage the money has been very important from our perspective. What I really love about malls is they're like LEGO. I've always thought you can -- the beauty of a shopping center, you can expand them. You can reduce the size, you can move tenants around. The flexibility is so important for remerchandising. And as I mentioned before, it is so important that we bring in new brands to reinvigorate them all and keep it fresh for consumers and it's really made possible because the mall is so flexible. You might have a power center where you have a space that's impossible to sub device. You don't have enough frontage. You have tenants on either side of them with really long lease terms. You're stuck with what you have. In a mall, we have relocation clauses in our leases that allow us to move tenants. So in Bruno [indiscernible] will talk about it shortly. We're moving the food court. We're able to do that with tenants midterm because we have a relocation clause. And lastly, another source of revenue that we don't talk about very often. We generate about 1% of our NOI from storage rent. And so when you think about tenants, they have their peaks and valleys in terms of seasons. But they -- a lot of them need storage and they like it on site. So we will take dead space, whether that's in a basement or just space that's historically chronically vacant and we'll lease it out to tenants for storage. And there's a tremendous demand for storage and our rents, I would say, in the last 25 years have crept from -- we used to charge like $5 and $10 a foot for storage. We're up to like $50, $60 a foot for storage now and it's not part of our GLA and we don't recover [ Camatax ] necessarily from it. So it's just pure rent that goes to our bottom line. There's no cost associated with it in terms of recovery. So that's about 1% is held pretty steady at 1% over time. So in terms of HBC. We've got a lot of deals we're right at the finish line. We've got Board approval on the majority of our boxes, [ Conestoga Orchard Park, Ashua, Limeridge, Gallery to Capital], they're all well underway in terms of the construction process, the getting city approvals and such forth. We've got the majority of the space leased. I'd love to be able to stand here and make announcements about tenants, but for the most part, they're all publicly traded companies. And because some of these tenants are relocating from other centers, they don't want to talk about it and they'd rather get further along towards their possession date before their landlord finds out they're actually moving and their employees find out that they're actually moving as well. So there's some tenants that we will all announced and there's some that we won't. But for the most part, we are -- we've made tremendous progress. Our rent is going to be significantly higher than HBC. We're still on target with what we've communicated in terms of expenditure. But going back to where I started this whole conversation, it will further enhance the tenant quality and credit quality of our shopping centers. These are all covenant tenants going into our malls. So a mall has typically been about 55% anchor, 45% CRU and we're taking $4 rent from HBC and we're converting it to on average $18 or $19 in base rent from the replacement space on a plus or minus 1 million square feet. That's a tremendous lift in NOI. The majority of that revenue will kick in 2028 and 2029. It's going to take a while to get the construction going and then the tenant fit-out periods take a while. So that's when the majority of the revenue will kick in. But everything we see is proceeding as we've talked about, everything is great in terms of tenant lineups and leasing progress, we're in really good shape. With that, I really don't have much more to say. I will be happy to take any questions if you have them.

Just on that last point on HBC. Can you just walk through the cadence of the next 3 years? You said majority weighted to '28, '29, what does that mean for 2027, if you had to sort of -- I think it's a total 1 million square feet if you had to lay out the NOI?

Yes. 2027, so the project we have furthest along right now is [ Gallery to Capital]. It's already started and [indiscernible] is basically fully leased. And a lot of those tenants will start paying rent later in 2020 -- or probably mid- to late 2027. There's several restaurants, fashion box, imagine -- [indiscernible] taking a large space in the HPC box there as well. The majority of the rest are all going to be turnovers in late '27 or early '28.

You mentioned the 55 versus 45 percentage. When you think of something like a Walmart, is that not essentially a new type of anchor tenant? And what do the rents look like? I mean they're obviously a very powerful firm. Like are they different than what you're getting on the CRU? Or like what is the trade-off versus putting more investment to get more CRU in?

Yes. I mean Walmart is an anchor. It's -- the overall weighting of the portfolio is not going to change materially just because we've added a Walmart or a [ Sport Chek ] or any of these replacements. It's still going to be in the 50-ish range. Walmart rents depend on the site they're taking and how badly they wanted it. There's one deal that we're working on right now that we haven't announced yet. We're -- basically, it's done where they're paying significantly higher rent than they typically do because they really wanted it. It's a relocation of a store. And then there's others like PDO where it's not a really high rent at all. It's a mid-single digit. And that was just a function of they wanted -- they saw it as an infill location but not when they necessarily need it. For the mall itself, it's a tremendous addition for the shopping center.

Any other questions? No. Okay. We'll take a quick 5-minute break, and we'll be back just before 11. [Break]

Hello, everyone. Can you please take your seats? Thanks again for joining us today. Rag sense his regrets. He really wanted to be here to present today. And I think it's mostly because after every investor meeting, he complains that he doesn't get to say very much. And it's really not because he's a shy guy. It's just because you don't ask many questions about Primaris financial health, take that as a compliment. But since I'm here, I'll give you a quick run-through of the differentiated financial model. Primaris was purposefully built with a low FFO payout ratio. Retained cash flow provides long-term compounding benefits for NAV growth and distribution growth. Primaris has increased its distribution every year. It was built to do so, and we intend to continue to do so. When we first spun out, our FFO payout ratio was above our targeted range of 45% to 50%. 2023 was 52%, 2024 was 50%, and last year was 47%. We've been able to bring this ratio down while providing modest increases to distributions each year. Now that the payout ratio is within our defined range, we anticipate that future increases will be a little bit bigger than the 2% we've delivered in the past. Retained free cash flow provides us with a flexible pool of capital for distributions, redevelopment, acquisitions, and NCIB activity without having to rely solely on our unsecured revolving credit facility. We're also adding to this cash flow by disposing of some noncore assets. Most importantly, we're applying a disciplined approach to deploying that capital, focusing on long-term value growth for our unitholders without sacrificing the strength of our balance sheet. In addition to our low FFO payout ratio, we also have a low debt-to-EBITDA ratio. This is tightly tied to our investment-grade credit rating of BBB high and it's also tied to our executive compensation to things we care very much about. We are often asked if we would reach our 6x limit. And while the answer has always been no, we don't deny that it's very tempting. But leverage is a double-edged sword. It amplifies the gains in the up periods, but it also amplifies the losses on the downside. It's very easy to increase leverage, but very hard to bring it down, to bring it down, entities are forced to sell some of their best properties or to issue equity in poor market conditions. Our low debt-to-EBITDA ratio gives us options. It reduces financial risk, supports access to lower cost capital and provides capacity to act when acquisition opportunities present themselves. It also enhances our resilience in economic cycles, reducing our refinancing risk. When Primaris spun out, we were completely floating rate debt and interest rates were rising. In this environment, we were able to put together a well laddered unsecured debenture program and provide per unit growth. And now it looks like we're going to be entering yet another period of rising interest rates. The average interest for the debentures that are maturing in the next 3 years is 5.7%. We put this debt in place back in 2022 and 2023. This was before -- we completely redeveloped our portfolio and upgraded. And since then, our credit spreads have also narrowed. We actually feel that we're going to have an interest rate tailwind which will allow us to continue to develop our debt ladder as opposed to focusing on short-term refinancing. We view balance sheet strength as a strategic asset and not just a financing tool. Our approach to managing Primaris capital structure is to remove risk as much as possible, maintain our investment-grade credit rating and create flexibility for the business to operate as needed. We focus on preserving our liquidity to take risk out of debt refinancing windows. Our predominantly unsecured debt program allows us to disconnect the right side from the left side of the balance sheet, providing Primaris maximum flexibility to manage and enhance our portfolio without the constraints that are associated with property level financing. And we can make capital allocation decisions based on value creation rather than asset-specific financing constraints. We retain a large pool of unencumbered assets, which provides further financial flexibility. Our low payout ratio, our strong balance sheet and our low debt to EBITDA are not simply defensive characteristics. These are strategic advantages that help us create value for our unit holders over the long term. And with that, I will turn it over to Julian. Thank you.

Perfect. So I'm going to spend most of my time on stage talking to this slide, and this is really kind of to explain how we think through capital allocation and or different sources and uses. So before I dive into them, I want to just first start off by saying our whole capital allocation program is generally done with 3 goals in mind: growing our FFO per unit, while also strengthening our portfolio quality and risk profile while also operating within our strategic leverage and distribution guidelines. And so Leslie had talked about those being the 45% to 50% FFO payout ratio that we have in the 5 to 6x debt to EBITDA. And so -- they're laid out in a certain order here, but I'm going to bounce around a little bit in a little bit of a different order with them. But I want to start off with the free cash flow. As Leslie mentioned, we've got a very balanced payout ratio that allows us to provide an adequate and attractive distribution yield to our unitholders but gives us a regular cash flow, which is a very low source of capital. And it allows us to fund kind of more regular opportunities that are in front of us, whether that's doing outparcel developments, whether that's redeveloping some of our space such as [ HCC], And we're not reliant on the capital markets for that. And so we're past the days where REITs were valued purely on distribution yield and payout ratios were maxed out and there were REITs that were borrowing just to fund the distribution. And I think to a certain extent, there still are. But in our case, we have this regular annual cash flow. And so this is a very important part of the business that allows us to, again, fund those opportunities without having to be reliant on the markets and also allows us to be in offense mode in markets that are maybe softer or where capital is not accessible and allows us to be countercyclical, which has been a very key part of the Primaris story. On the debt side, we've got a BBB high rating. We've got a low cost of debt but we're very cognizant of the trouble that REITs can get into if they go too high. So we put a lot of thought into our debt target, which we've narrowed to 5 to 6x debt to EBITDA. And so then working within that narrow range. We tend to fund off of the unsecured programs. Broadly speaking, we can fund off mortgages, unsecured or the revolver. On the revolver side of things, that's not meant to be a structural part of the business, but it does give us flexibility. And so a good example was Upper Canada. We funded $150 million of the $411 million transaction with the revolver. And again, it wasn't trying to gain interest rates or make a call on them. But in this specific transaction, we have -- in our last quarter, we showed $200 million of assets held for sale. And while those don't tie perfectly with the acquisition, we have a degree of certainty that those are going to materialize such that rather than fund off a bond, we could fund off the revolver knowing that, that capital is going to come in. And then as it pertains to mortgages versus unsecured right now, the unsecured is quite a bit more favorable. You've got a lower cost. It's much easier to arrange. And as Rag would mention, you decouple the left and right-hand side of the balance sheet, and that's so important because it gives you incredible flexibility for selling or doing land sales or other redevelopments in there. So we tend to lean towards the unsecured. We have some mortgages in place, but those are largely for the -- some of the partnerships that we have where our partner needs debt to get to the return targets. Those are important too. You never know what will happen with the unsecured market. It can be cyclical and having those relationships with the secured lenders provides a benefit as well. Land sales is another one that I'd say is somewhat new to Primaris and largely off of the HBC bankruptcy that's freed up some of the land to now be sold. And what we really like about this is it's a 0 cost of capital, it's a 0 cost source of capital. And so we're well underway on that. And I'm going to talk about that a little bit more on the next slide, but it's land that we're not really using, as you saw when we were driving by, oftentimes it's pieces of grass that are outside of the ring road, no NOI being lost. In some cases, we're actually saving costs of landscaping, snow removal, property tax, that type of thing. They come with a long time lines, a high degree of risk, and they're going to be more bite-sized, but we're well underway, which I'll elaborate more on. And eventually, it's going to be just kind of a regular small source of free capital coming in and another benefit I'll mention is it really demonstrates the value of the portfolio and how irreplaceable it is, which I'll touch on more. Above that, the larger chunkier sources of capital are the asset dispositions and equity offerings. And so those are more so being used to improve the portfolio but also fund larger acquisitions. And so I'll talk to the asset dispositions first. We are looking to sell noncore assets. And so typically, by definition, that's your highest source -- your highest cost of capital. So you're selling equity interests in your kind of lowest quality assets that should be the highest source and it historically has been, but for us, it's more so our outlook for the future, where are we going to see growth? And you heard a lot about tenants being in expansion mode, but being selective with where they want to be. And so for us, the dispositions are really focused on malls where we don't think there's a strong growth outlook in the future, largely because maybe it's a smaller center, lower traffic center or in markets that we don't see strong fundamentals or growth in. But again, that should in theory be the highest cost and has been the highest cost of capital. But I don't want to get too ahead of ourselves, but we're seeing a lot of strong demand. We ran a process in the summer which had really, really impressive demand, and we're having a lot of discussions with buyers. And with all the shakeup that's going on in many asset classes, negative leverage, low returns. A lot of real estate allocators are seeing them all as one of the few asset classes where you can get outsized returns. And so we're seeing a lot of capital starting to build up around the mall space and the lack of supply. And so I wouldn't be too surprised if you saw us in the future being able to sell some of our lowest tier malls at cap rates that might even be inside of where the overall better quality, more liquid portfolio is trading at right now around an approximately 8% cap rate. And I think that's a really fantastic dynamic that hopefully we'll be able to demonstrate. We're also looking at some of the outparcels as well. And so this is Pat showed you when we were driving around stuff that's outside of the ring road, good investments and good retail, but it's not really core to our business. our platform, our cost of capital, our expertise are really centered around the enclosed shopping center. And so if we can tactically sell off some of these outparcels at cap rates that are meaningfully tighter and for stuff that's noncore, and take advantage of the really strong interest for that open-air retail and also the different buyer pool. So it's sometimes private buyers that have a very different philosophy and aren't focused on the same return metrics that we are. We think that's a really tactical one. So [ Mark Zane], who's with us is going to be launching the outparcels here this month. We think there will be incredibly strong demand. And it will show that while we buy these malls at higher IRRs, we can sell some of the noncore less important stuff that meaningfully tighter ones and that can be a really good source of capital. Another place where we're looking at it as well as some of the malls that we're looking to sell that we're deeming non-core they come without parcels as well. And so the buyers of the malls, the cap rates are coming in, but they're still wider than the outparcels. And the larger you go, the more that buyer pool falls off. And so in some cases, where we have larger malls where the ticket size might prohibit some of the private investors, we're going to sever those out parcels, sell those at meaningfully tighter cap rates and then the remaining noncore mall will be smaller and should price tighter not simply by virtue of being able to attract more competition in the bidding side. The last major source that I'll talk through is equity offerings. That is one we take incredibly serious. We're sharing in ownership of our company. Our management team owns a meaningful amount in the stock. And so we don't do it lightly. It's something we're very, very cautious about. And generally speaking, it's something we'll only do to find a very strategic acquisition. And so the most recent example, of course, is Upper Canada Mall. And we've done it with all the large acquisitions as well. We can do it to the public markets. We can do it to the vendors we were now able to do it public because of where it's trading, but it doesn't mean that doing -- issuing to the vendors is off the table. It's simply another tool in our tool belt. And the way we think through that notwithstanding that we think the equity is a very good investment. It was something that was needed to be able to capitalize on the opportunity that was up for Canada. And to talk very briefly on that, again, that was a low 7 cap but that was -- which is tighter than where our cap rate is, but we see -- it was accretive on day 1 partly because there's no incremental G&A load with it. So you have to factor that in when you're comparing our implied cap rate versus the cap rate we're buying at. But importantly, that was a center with 70% vacancy in the GTA with lots of upside. We see a clear path to it. And we're not paying for the upside. That wasn't factored in. It is immediately modestly accretive. But what's really exciting is where the future is. And again, we don't rely on buying it for where the future will be 2, 3 years from now. We're happy with where it's at now. But we're just very excited for that. And I always say be weary of REITs that I'll tell you, we're really buying it off of year 3. In our case, we're completely fine with where it's at now. But Primaris has a very strong track record. We talked about it in [ Halifax]. How that was bought at a high cap rate, it's now based on the NOI we have implied close to a 9 and will be north of 10% after the sales of the [ Annex ] and the land. And so we do have a track record of doing that. And so we will issue equity in order to get those types of acquisitions that improve portfolio quality, FFO and future growth. And so let me pivot a little bit to the uses. Again, I'm going to bounce around on the orders here. Distribution to unitholders. I mean that's something that's baked in with the 45% to 50%. Again, it's done with an aim of providing an adequate or attractive yield to our unitholders and leaving behind enough cash. I already kind of touched on that, so I won't go too much more into that. But one part of that is that that's very stable. It's recurring. It's baked in there in a world where we're seeing distribution cuts throughout that -- this is done with the goal that it will never go down, and we have an annual cadence of increasing it, and that will always be part of it. Debt repayment, we have a narrow band that we mentioned there. Again, the difference between the debt -- the cost of debt and the IRRs is quite strong. So debt repayment is not a huge part. We just want to operate within 5 to 6 -- you'll see us sometimes lower in advance to give us flexibility for redeployment later, but we're happy with the targets we set. Redevelopments and expansion. This is investing in our own portfolio. And this is one of the lowest risk, highest return ones. We do it tactically. We want to be careful. We don't want to add too much retail and oversaturate them all. But where we do, do it, whether it be HBC, putting up bank pads or restaurants, it's we typically target yields that are over 10%. We typically do it with leases in hand, so it's quite derisked. We've got a construction team that knows very well what they're doing, and this is kind of what they live and breathe. And so -- we're not doing -- we're not going to be building master plans or apartments or anything we've seen enough of our peers get in trouble with that. And so it's really just kind of small within our snack bracket, high-yielding stuff that makes good sense on the math on its own and also just adds to the mall's quality and experience. And share buyback that's been less of a part of the story right now. We're not -- like it doesn't mean it's turned off, and we still think the shares make a wonderful investment and to be able to -- again, in the light of being able to potentially be selling some of our lower quality assets at cap rates that are tighter than are implied with less growth. It speaks to how attractive the share buyback is on our end, but we have to manage that with strategic acquisition opportunities, our debt profile -- but we have been one of a very active REIT on that front, and that will continue to be a tool that we can use in the right opportunities. And then asset acquisitions, again, I did touch on that again. The goal with those is we're buying ones where we're improving our portfolio overall in terms of quality, whether that's through long-term growth, whether that's through higher traffic, higher sales productivity, exposure to major markets. The main idea is we want to look -- we want to buy stuff that Five years from now and similar to what we said with [ Conestoga ] and [ Halifax], everyone's untesting what a great deal that was, what an amazing investment that was. And so we think Upper Canada fits squarely in that and we're going to continue to look at opportunities like that. So diving a little bit more into the land. We published this in June. We went through the entire portfolio. Our 25 malls, which is soon to be 26 later this month. The typical size of our mall is about 50 acres. We've got typically between 25%, 30% site coverage. And so there's a whole bunch of other restrictions that are in place, but we came to around 120 acres of land with value of $275 million to $375 million. It's -- we -- again, we view that as a very low cost of capital and -- in many cases, it not only does it not have any harm to them all by selling it, but actually, it even helps them all by bringing additional traffic. We're not just looking at multiyears. I think people think because of my background that we're going to be heavily focused on multi-res, but we're actually talking to everyone. We talk to hotel users, student housing. We're talking to the seniors housing, long-term care, even self-storage in some cases. we're really looking across asset classes. And we do think it will help support them all. We're not going to be, again, doing these crazy master plans that will be ripping up the parking lots and making a concrete jungle, where you can barely see them all. By and large, it's stuff outside of the ring road, so not disruptive to the mall. And that's where we're focusing first and where we'll just be adding kind of traffic in customers. And so I want to give tiny update. These do take quite a bit of time. Oftentimes, they're tied to rezonings and development is extremely fickle -- it's very, very levered. You've got a huge amount you have to spend to build and a huge amount of value and a small tweaking assumptions can kind of make your residual land value go away. But so all that's to say, it will take time, and there is some degree of execution risk, but we've got under APS that's wave conditions, 2 under APS that we're working through the due diligence. We've got one under LOI that hopefully we'll have under APS very soon. And then we're negotiating 3 other LOIs. So we're well underway. It's exciting. And we actually got -- I'm not going to give too many details on it, but I got -- we got one unsolicited offer on one that we know is, Jim, but it's not [ GTA ] or Montreal or anything, but there's something special about the site. The offers that I'll take as much as I can get and the value per acre of land on that site, if you apply that to the entire mall, the value would be twice what we have them all on at our IFRS value. And this is, I would say, semi noncore mall. And so it really speaks to like the value of the land bank that is not given any value. And even further, I'll say it speaks to the replacement cost. When the land in that site and specific, and that's not typical that it's that strong. But when the land is worth twice as much as them all, it really shows you, a, how hard it's going to be to a mass that type of scale of land, but you can never really replace it. And so that's one of the really strong moats around the business. And so give us a bit more time and we'll have more and more updates. And eventually, you're going to start seeing a cadence of just free cash flow kind of pumping back in the business that we can reinvest in our strong opportunities. So I'm going to talk more specifically about this mall. I've just got 2 more slides. One of them is on the outparcels. Mark talked about it yesterday, and Pat pointed them out as he was driving through. There's a Tesla dealership. And then there's some other outparcels you've got Best Buy, Old Navy, [ Lacaze], a few other tenants in there. And so this is subject to a lot of demand. Mark said, there's not enough supply out there. People are -- investors are very, very hungry for this. You can underwrite with incredibly strong fundamentals that we may not even believe in ourselves. But -- and it's -- they're smaller in size, so they draw like a much broader capital pool than pretty much, I think, any -- almost any other asset class in right now. And so you might even say that they might be somewhat overvalued. And so if it's not core to us, it's not part of what the platform is directed to do. It makes for a really good opportunity to sell. And so -- we've got a lot of those. We're excited about this one. We've been working with Mark's team over the last couple of months, and we're going to be launching that this fall. And again, just given the simplicity and smaller size of that, that shouldn't be too controversial of a process and should be able to sell and really show that we don't pay -- when we buy these malls, we don't ascribe a separate value to the outparcels. We value them with the same high IRRs that we're using for malls. But then if we can flip and sell those for lower, and we talked about the Annex at Halifax for those of you that were there, it's a very similar story. We'll take advantage of that. And then the last piece is the land. We're sitting on over 100 acres of land here. St. Bruno is an affluent area in the South Shore. It's exciting, and we've got a lot of land on the outparcels. The first area that we're going to be targeting is going to be what we've got highlighted in green here on the screen. -- that's the grass area that Pat was pointing to. So there is no other use for us with that. And with the proximity to the highways, the highly affluent area, the brand-new airport that just opened -- and the most -- the best mall in the South Shore, this is as good as it gets for land in the South Shore and it's very attractive. And so I'm not talking to all different developers of all different asset classes across the country. And what I will say is this one right now is the one I get the most questions about. There's a lot of interest. The seniors housing folks love it because of the demographics, the affluent and older population. The hotel folks love it because of the new airport that just opened there couldn't be a better spot. You're by the highway, you're by the airport and you've got all the shopping in retail in there, especially the [ Keg ] one, right? So you think for a hotel developer they don't have to build out or operate a restaurant. You've got a perfect hotel restaurant beside it as well. The multi-res folks are quite interested in it as well. And so bit of a frustrating one. The reason this one is not front of the line in terms of the list that we've said -- I was kind of walking through an APS and LOIs the municipality has expressed that they want to see more density here and that's very encouraging, and we think either they're going to rezone it for us or they will facilitate rezoning that we would do on our end. But as great as that sounds, they said, okay, well, we got to sit down and think about this. And we're going to come out with a project charter that outlines the uses and the densities. And by the way, you're frozen from selling anything until we do that. And since I joined over 6 months ago, it's been coming in 2 to 3 weeks. Pretty much that's the update we get every 2 to 3 weeks. And so they've said it's coming this month, we mean it for real, but I'll see it when I believe it. But once we have that, it will allow us to go to developers and say, look, this is what you can do with this. The city is supportive. There's a clear path to it. And we've got a long line. This is one I get asked quite a bit about. So that will be very exciting for us. I've outlined, call it, approximately 7 acres that would be really easy to sell that grass that's outside of the ring road and working with Mark and another land broker [ Daniel Garen], who specializes in this -- we've talked about what we're going to do. We've walked through values. I think $4 million an acre would be not controversial at all to say and so on 7 acres. You're talking plus or minus 28%. And then I'll go even further than that. We haven't outlined it, but there's more land outside of the ring road. You can see the red dotted lines is what we own -- so there's quite a bit more that we could do outside of the ring road. That will have a little bit more complications, which is why it's not first. And then even within the ring roads, whenever we run out, if there are areas that aren't disruptive to them all, we would consider that we take piercing the ring road a little bit more seriously. So that's kind of the last line of opportunity. But again, all of that value was something we didn't pay for. So with that said, I'm going to let pass it back off to Alex.

Thank you, Julian. One thing I forgot to do when I first came up here at the beginning was [ Eric Picor ] is the marketing manager here at Promendes St Bruno. He's in the back. He joined us 6 or 8 months ago from the [ Montreal Allaettes]. So lots of diverse marketing experience. And I would highly recommend you chat him up as we walk around the mall because he has lots of interesting stuff that's going on at this shopping center. So this is going to be shorter than my earlier ramble, and it's going to be just about what we've been talking about. This is management's focus and if you just look at through those 4 different buckets, that's really what myself and Pat and Leslie and Julian have been talking about maintaining financial strength allocating capital with discipline, driving NOI within the existing portfolio and growing FFO and AFFO and distributions per unit. I think we've mentioned a few times, we've been very thoughtful about our executive compensation, creating alignment between our management team and unitholders. I think Julian mentioned there's a lot of -- the executive personal net wealth tied up in Primaris. We're very aligned with unitholders. And so this is the stuff that we're focused on. When I think about the future of Primaris, this is -- and I think the team thinks about it this way as well, our June 29 press release spoke to the lease-up of a lot of the HPC but also the CRU leasing that we've been doing. A lot of that CRU leasing was from legacy portfolios, but a lot of it was from properties that we've acquired over the last few years, leasing up vacant space, still some remnants of the pandemic in terms of legacy vacancy within the portfolio. I think [indiscernible] had asked earlier about the timing of the HBC rents commencing. That will be, as Pat was saying, late 2027, 2028. A lot of the CRU leasing that we've been reporting on, particularly in Q1 of this year. A lot of that is going to be sort of filling some of that gap through 2027. Those leases typically take less time to build out the space, and they tend to be at higher rents. And so our ramp of growth, even in 2026, if you look at our same property NOI growth in the first half, we're expecting it to pick up in the second half as is implied in our guidance for 2026 and we'll see that ramp go through 2027, 2028, 2029. And as we think about the next phase of our growth, once we get to 96%, 97%, the growth will come from a different source, but we're pretty optimistic about the scale of that growth for the last few years as we've been filling space, there are a number of tenants within our portfolio that we have allowed to persist. Some of them are not terribly productive or they don't pay very much rent, but they were filling space. And as we were trying to fill the space beside them, we let that be. When our shopping centers are full, every tenant has to fight for their space. And that means they need to be more relevant for consumers. They need to pay higher rent, they need to sell more stuff. And so once we get the malls full, the next phase of growth is really around going back and optimizing the tenant mix, which is something we do on an ongoing basis, but there have been a number of retailers that we've let sort of persist in the portfolio. So that really, I say, 2029, 2032. But when you think about when that's actually going to happen, the full tenancy that we're talking about in the June 29 press release and in this slide, most of that will contractually be done in the next 12, 18, 24 months. And as soon as we get to that committed 96% is when you start to work on the tenant optimization. So a lot of that work will be even in the latter half of 2027 and a lot of it will be and then the operational efficiency side of things. I think it's fair to say that when you've got a portfolio that is 70% new in the last years, including $1.6 billion of acquisitions in 2025, another $400 million that we just announced. We're still wrapping our arms around a lot of these properties. Sometimes it takes a little bit of time to figure out exactly what you have and where you can take it. And so as our business has been very fluid and dynamic in terms of the portfolio construction, there is a lot of opportunity in operational efficiency. Some of it comes back to AI and the optimization of some of our processes, other things, our lease structures. We have a group of people in our lease administration group that basically calculate the recoveries from all of the tenants. I think we can utilize some technology, some to improve the efficiency there. But then that group sort of shifts its focus from sort of the rote calculation of the recoveries. All 3,000 tenants have a slightly different calculation of that recovery. And as you can, I guess, sort of better wrap your arms around exactly how all those calculations are done and utilize technology, you can also analyze that portfolio of leases and figure out ways that you can feed back to the legal team to say, when we're writing these leases, this is a little tweak that the tenant doesn't really care about but it will improve our operating margin. It will improve our efficiency. There's a dozen different things along that line. And that's something that from a platform perspective, we're really excited about being the next phase of growth for Primaris. I mentioned earlier that we have a new set of 3-year targets out, 96% in-place occupancy. That is what our prior target was before we revised it due to the HBC bankruptcy. Interestingly enough, if you exclude the HPC space, we're at 96% committed. We'd like to get the in place back up to that level as well. We think over the next 3 years, 2027, 2028 and 2029, we've got a 3% to 5% same property NOI growth range. I think that's sort of a compound annual growth rate. We're not exactly sure where it's going to land in each year, but it has the potential to exceed the top end of that range in some years. And we think that the average will be somewhere in that range. Dispositions, $500 million. Julian just spoke about some of the land and outparcels. We do have some noncore malls as well that will be selling as well. Hopefully, some of that news will be available in the near term. Capital expenditures. We've got $200 million-ish around the HBC, and then there's another $100 million of projects, which once we wrap up the webcast portion of this Investor Day. Pat is going to speak to some of the projects that we have going on in this mall. There's a $50 million project that's not HBC related that will go into that $300 million just here at this property. FFO growth, 4% to 8%. As Leslie was mentioning, our payout ratio has dropped into with the below midpoint of our target range and our FFO growth, we believe, is accelerating over the next 3 years. And so we're expecting distribution increases in the 4% to 8% range as well. That's up from the 2% to 2.5% that we've been doing for the last 4 or 5 years. Leverage. We tightened up the bottom end of the range. This isn't terribly strategic. It's just sort of an acknowledgment from us that -- what we've really been doing when we think about the last 5 years is we've been trying to optimize the amount of equity in the business, dropping leverage to 4x, doesn't really add a lot of advantage over time and we are comfortable with our 6x ceiling. So in practical reality, we've really been optimizing for that 5.5% to 6% range really, but we're comfortable going down to 5%. And the payout ratio is -- remains unchanged. One thing you'll note about this is we don't have a target on acquisitions, and that's not to say that there has been any change in our ambition or our opportunity set. We still remain very focused on acquiring malls that we think elevate our platform in terms of the quality, the internal growth rate of the steady-state same-property NOI growth. It just is a very difficult thing to handicap because the acquisitions are $400 million, $500 million, $600 million. And when we do 4 acquisitions like we did in 2025, it's $1.6 billion. We've got one so far this year at $400 million. We're not super, super focused on growing specifically to grow. It's really about getting the right properties. And we think that there's a significant opportunity there, but we just decided not to put out a specific target because -- it's just a tough one to wrap your arms around. But we do remain very interested, and we're in active discussions on a number of properties. That is a really good quote. I'm not sure who it's attributed to, but that's probably a collective Primaris team quote. So we're pretty excited about what lies ahead. I hope everyone has found this very useful and productive. And we're looking forward to touring everyone through the mall after we have some lunch, but we have a little bit of time right now for some Q&A and it can be for myself, it can be for Leslie or Julian, for Pat. Any questions that anyone has, we'd be happy to field at this point.

Alex, the $500 million disposition target, you had the same target 3 years ago. Are these assets that you always wanted to sell? I assume they're not from assets you recently bought. So it's just continuing to trim from lower quality, lower sales?

Yes. So the noncore dispositions is a combination of the land, which is Julian very clearly mentioned, has essentially no cost of capital for us. We do have some outparcels, which aren't strategic to us. And when it comes to the malls, again, what we're really trying to optimize for is the steady state internal growth rate, so we have some malls in our portfolio that are very good, steady performers. And what we're really trying to do is optimize around the high-growth part of the portfolio. And embedded in your question was are these the same ones that we've always been looking at? I would say, as our portfolio has grown and the averages that we spoke about earlier, have improved that sort of -- that line for noncore tends to move up a little bit. As I mentioned a couple of minutes ago, hopefully, we'll have some news on that front in the quite near future. And you'll see some of the examples that would be noncore.

Alex, it's Sam. Great presentation. Thank you for doing this today and look forward to seeing the mall. I just want to understand what's in the same property NOI growth guidance of 3% to 5%, and this might be for Leslie, but clearly, it's 96% occupancy is where you're targeting over the next, I guess, 3 years, but what properties are in and not in that same property asset pool in terms of maybe some recent acquisitions that might not be part of that? And also, you've talked in the past about getting to a mid-90s recovery ratio. Is that embedded in your 2029 target at this point and included in the same-property NOI growth guidance?

Yes. Leslie, on the same property, would the 2025 acquisitions be in our 2027?

Yes. So next year, everything we bought in 2025 will be in 2027. So that will be in St. Bruno and Upper Canada will be the only ones at [indiscernible] property next year and then St. Bruno steps in, and then Upper Canada steps in. And yes, we would consider the growth in the recoveries as part of our same-property growth predictions as well.

So really, it's only Upper Canada Mall that won't be in the same property for 2027. But after that, everything else is in. And your recovery ratio question. So on that point, one of the things that we found, there's been a little bit of confusion about it is when we talk about the drivers of same-property NOI growth, lease-up is a big driver. We've also talked about the recovery ratios going up as being a driver but those 2 are really overlapping. As the occupancy goes up, the recovery ratio improves. I would say absolutely, we're expecting our recovery ratio to get into the mid-90s or mid -- low to mid-90s for property taxes and ideally in the mid-90s to even the high 90s for the CAM and the CAM we can charge an administrative fee, which gives us the possibility to be over 100%. I think Pat said that [ Peter Pond and Park Place ] have both been at 104, both very well run shopping centers. And we're hopeful that we'll be able to get the whole portfolio up into that mid-90s blended recovery ratio.