Tribe Property Technologies Inc. (TRBE) Earnings Call Transcript & Summary

Thank you for standing by. This is the conference operator. Welcome to Tribe Property Technologies Third Quarter 2023 Results and Corporate Update Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Jennifer Laidlaw, Vice President, Marketing and Communications. Please go ahead.

Thank you, operator, and good afternoon, everyone. Thank you all for joining us today. On our call, we have Tribe's CEO, Joseph Nakhla; and our CFO, Angelo Bartolini. Yesterday after market closed, Tribe issued a news release, announcing our financial results for our third quarter 2023. This news release is available on Tribe's website under the Investor tab, and is filed on our SEDAR profile. Please note portions of today's call, other than historical performance, includes statements of forward-looking information within the meaning of applicable securities laws. These statements are made under the safe harbor provisions of those laws. Forward-looking statements that are based on management's current views and assumptions and that this discussion is qualified in its entirety by the cautionary note regarding forward-looking statements appended to our news release. Please review our press release and Tribe's reports filed on SEDAR for various factors that could cause actual results to differ materially from the projections. We use terms such as gross profit, gross margin, adjusted EBITDA and MRR on this conference call, which are non-IFRS and non-GAAP measures. For more information on how we define these terms, please refer to the definition set out in our management discussion and analysis. In addition, reconciliations between any adjusted EBITDA and net income is included in the press release issued yesterday. The company believes that adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations, which the company can use to fund working capital requirements, service future interest and principal debt repayments and fund future growth initiatives. Adjusted EBITDA should not be construed as an alternative to net income/loss determined in accordance with IFRS. Please note that all financial information is provided in Canadian dollars, unless otherwise noted. Following the prepared remarks by Joseph and Angelo, we will conduct a Q&A session, during which questions will be taken from analysts. And with that, I'll turn the call over to Tribe's CEO, Joseph Nakhla.

Thank you so much, Jennifer. It's my pleasure being with all of you. Good morning, and good afternoon for all of you that've taken time out of your busy schedule to be with us. We had a great quarter. I'm pleased to speak to you today about one of the big initiatives we've spoken about historically about bringing the company to profitability. You'll have seen a 34% improvement in our adjusted EBITDA, which is obviously something that anyone that's been listening to us knows that while we're experiencing national growth across all the different verticals that we play in geographically and service delivery wise. We're very, very pleased with our ability to have improved much, much number of projects that we embarked on from a cost reduction and workflow optimization. That's really helped us, and we believe Q3 was the massively big step towards the right direction. We've obviously made it clear internally for our operations. but our goal of '24 drive towards profitability is still intact. We're still very much looking at the same trajectory that we've communicated historically. We understand that the world we live in right now is really looking for companies, in some cases, willing to sacrifice some growth for profitability. In our case, we're actually driving on both fronts with a very strong stedfast strategy, and I think it's working quite well. Our expectation for next year is that you'll see serious revenue growth both organically and through our M&A activities. Specifically to the M&A side, we have always described our M&A opportunity in North America as a working way through a pyramid, the base of the pyramid is a lot of property management companies that are kind of smaller and perhaps less sophisticated, and our company now, Tribe, has been able to establish itself as a major player in all the 8 markets we operate in. And that is really opening up the door for us to be able to make bigger transactions, work our way up the pyramid in terms of the type of quality companies we want to transact with and bring them to our service delivery model. So look for us in '24 to be very active. We're incredibly close, imminently close to bringing the Meritus transaction over the line. This is by way of reminder our kind of landing the plane and -- our Tribe plane on the GTA market. We've been very active in the GTA on the software licensing side. There's a long list of customers that use our software. They're mainly developers, and now it's -- we've had a lot of interest in getting our ability to deliver full property management services on our platform in that market. And obviously, the Meritus transaction is the one that gives us that base that we can build on from there. And through activities in the past few months, we were able to secure a $50 million load with a major Canadian bank that really allows us to go and be very, very active with our M&A. I've been asked before, and it's no surprise for anybody else that we feel incredibly undervalued at the stock, and we're hesitant to give too much of our stock in any of the deals that we're working on. So senior debt, despite of the interest rates, looking at the accretiveness of the deals that we're looking at, it still actually makes sense for us to be very active with it, and thankfully, a major bank believes in that, be looking at some of the quality of transactions that we've got on the docket. So you'll see us be very, very active in leveraging that essentially load that we will remain available. Another big obviously, news is we continue to be high on the radar of tech companies growing. We're very pleased, and this is really a massive achievement by our team that we were awarded the Fast 50. This is our second year in a row as a Fast 50 company. So we went from a watch -- companies to watch to Fast 50 in last year, and then another award for us this year. Again, it's just a reflection on an incredibly difficult market in the middle of post-pandemic our ability to still continue to grow the business, and then obviously, a big announcement that we've made, and that's an absolute pleasure have added Angelo Bartolini, our new CFO, to our C-suite, Angelo, I welcome all of you that aren't familiar with Angelo's background to go read up at the press release. But to bring somebody within our mix that has the incredible experience of doing 50, 50 plus transaction with Altus Group in addition to obviously back, a quarter back in all of their capital markets activities with the great C-suite that existed in that company. So it's just a massive boost to our ability to execute on the future for us here, which is probably a good segue for me to hand him over the mic so he can tell you a little bit more about our Q3 financial performance.

Thank you so much for your kind words, Joseph. Since joining Tribe, I've been very impressed by the strong potential within the business and the exciting trajectory it has in transforming the property management industry. Despite market challenges, Tribe, once again, delivered a strong financial performance in Q3 2023, with revenue of $4.8 million, an increase of 6% compared to $4.53 million in Q3 2022. Revenue for the first 9 months of 2023 was $14.28 million, an increase of 9.3% compared to $13.06 million for the first 9 months of 2022. Gross profit for the third quarter of 2023 was $1.87 million compared to $1.59 million in the third quarter of 2022, representing an increase of 17.6%. Gross profit for the first 9 months was $5.65 million compared to $5.12 million for the first 9 months of '23, an increase of 10.4%. Gross margin percentage was 39% in Q3 '23 compared to 35% in Q3 2022. Adjusted EBITDA for the third quarter of 2023 was an outflow of $1.44 million, an improvement of 34% compared to an outflow of $2.19 million in the third quarter of 2022. Adjusted EBITDA for the first 9 months was an outflow of $5.51 million compared to an outflow of $6.1 million for the first 9 months of 2022. I would now like to take a deeper dive into the company's revenues. Q3 2023 revenue was up 6% on a year-over-year comparison with Q3 of last year. However, Q3 revenue was essentially flat compared to prior quarter in Q2 of '23, which was due to the removal of certain lower margin property management contracts. And we saw that as we're really making a strong effort to improve our gross profit and EBITDA margin profitability. When we make an acquisition, we often inherit a wide range of property management contracts from the predecessor company. Over the past 2 quarters, we have been reviewing a number of these contracts, and have chosen to transfer some of the lower-margin-producing property management agreements to other management companies. So we essentially traded off some revenue growth for margin improvement. This is reflected in the company's overall margin improvement over the past year. Moving to the graph on the right. Average MRR, or monthly recurring revenue per community. I'm pleased to note that in Q3, our MRR per community was $2,738, which is an improvement of 21% compared to our MRR community in Q3 of last year. Just as a reminder, when we acquire companies, they often do not generate as much revenue per customer as we do. We basically take these assets, digitize them and onboard them into the Tribe service delivery model, resulting in improved churn and revenue per door. In addition, the increased scale leverages our digital marketplace, allowing us to generate even more revenue per door. And as you can see in the table below, total average revenue per home, or in other words, revenue per door, has increased 18% year-over-year. On to the balance sheet. We continue to have a very clean balance sheet. As at September 30, 2023, Tribe had $1.5 million in cash and cash equivalents. Furthermore, we recently announced an acquisition facility of up to $15 million with Canadian Schedule A Bank. The facility consists of $3 million operating line to support the company's working capital requirements and an M&A facility of $7 million with an additional accordion feature of $5 million for a total of $15 million nondilutive capital. This year, we were also fully dedicated to improving profitability by reducing costs and optimizing efficiencies within our operations. Tribe's commitment to achieving profitability is unwavering as strategic steps are being taken every day to position the company for sustainable financial success. Last quarter, we continued to make significant improvements in additional cost reduction strategies, which included employee process improvements, cost optimizations, headcount reduction and consolidation of back office systems. These expense reductions proved to be effective, as shown by the company's impressive 34% year-over-year improvement in adjusted EBITDA. We expect these reductions to continue benefiting Tribe's financial performance in the final quarter of 2023 and heading into 2024. In summary, Tribe remains in a solid financial position with growing revenue and improving profitability. We remain excited about the company's growth prospects, and continue to be committed to improving our profitability, while increasing revenues and strengthening our market leadership position. That concludes my financial update. And now I pass the call back to Joseph. Joseph?

Thank you, Angelo. It's fantastic having you with us again. Just to -- before I get into the outlook for the company for next year, I did want to just speak a little bit more about the importance of this acquisition we've made with Meritus, I commented on it earlier, but just to give everybody a perspective, it's approximately 5,000 homes under management, with great leadership team and staff that really have figured out the kind of how to navigate through a lot of the new regulation coming into Ontario. That was one of the big areas we were looking for. As for those that don't know, Ontario introduced a significant amount of condo regulations in the past -- in the past 3 to 4 years. It got slowed down a little bit since implementation with COVID. But really, a lot of the property management companies that operate in Ontario have some struggles there in terms of getting their staffing licensed, in terms of catching up to the disclosure requirements, being able to tell [indiscernible] where every dollar goes and the level of scrutiny that financials and service delivery is going to go under. So it was really -- this is something we're accustomed to coming out of the British Columbia market simply because these regulations have been here for almost, almost a couple of decades. Obviously, it's constantly changing. So we were very -- always very comfortable that we will be able to take the service delivery that's required based on the new regulation of Ontario specifically. And actually, I would argue, deliver even better service than what's expected, but we needed that base, and we feel incredibly excited about the ability for that group to be able to help us navigate through these new changes and also attract the talent that's required for us to deliver the service at a high, high level in essentially a greenfield market. Next slide, please. So let me get a little bit more into the business we deal in terms of our accomplishment of the last quarter. It's pretty straightforward, obviously, on the revenue side. And for those that don't know, the overwhelming majority of our $4.8 million of revenue is a monthly recurring revenue. It's a very, very sticky business. We added 4 new property developers that agreed to utilize our software and all the suite of products and services that come with it. These are 4 new property developers that are new to us meaning they were necessarily customers hours before. And this speaks to our holistic approach. There is no property management company/software provider/digital strategy company or data aggregator in the globe that can actually deliver the service that we offer to a one -- a one-stop shop to the property developers. So when a developer calls us and sits with us and looks at the suite of products and services that we offer. But really, it is 1 phone call into us, and we can support them in what would have been historically 10 or 15 calls that we really want to take a massive step towards a digital strategy for the community, especially with the operation costs as high as they are. We've added 15 Home Pro software agreements. These were the existing customers of ours in BC and Ontario. That period was a great quarter for us and brings us to almost 29 for the year. 9 full projects using our Tribe Home are actually operating on boarding and operating. I mean the full communities have been onboarded. And thankfully, we were able to assist the developer in completing and getting people into these communities. And as those people move in, we started generating revenue per door through our MRR service fees. And we have 12 management agreements. This would be for existing or brand-new communities that want us to come on board, but they haven't been onboarded yet. Simply there's 12 agreements. For those that don't know, an existing building that's being managed by a traditional property management company, when they decide to come to us, it's obviously a sales cycle and RFP cycle. But once you go all through that and you receive the agreement, it takes a little bit of time for them to essentially move away from the existing company that they're with. We onboard them, digitize them and then actually get them on board. So we've signed 12 more of those communities in Q3. And we've onboarded an additional 12 that we actually started generating revenue from in that quarter. So they're not the same 12 on the left-hand side. These are the ones that were actually closed maybe the quarter before, and they're actually coming on board now. So to orient you a little bit on how we make money? There's 3 major revenue streams that we have within organization, software and service recurring revenue. In the case of condos, we charge a monthly fee, and that includes all of our software services and all of -- in the case of rental, all of our software services and all of the service delivery commitments that we make to that community. That's what we get paid for there. We also have transaction revenue that you'll see we keep adding to it. This is a long list of items that can actually be in the 10s to think of it as in-app purchases or in-app transactions. Once we are in the community and people download the app, they need to interface with their community, they need to make payments. In the case of rental communities, they need to make rent and, in some cases, upgrade in terms of size or downgrade and there's all kinds of long list of items associated with that. That transaction revenue is, even though it is not contractual, it is contractual in terms of dollars, but it's not contractual in terms of it coming back every month. It's very steady, and it's almost, almost treated as MRR. And then there's the digital services and partnerships revenue. And I do want to pause -- have a second on this because this has been our marketplace. And we -- for us to be very effective in our marketplace, we needed scale. And anybody who's been following us knows we've done a good job becoming a national player. And with that comes, obviously, the ability to optimize costs, but it also really allows us to negotiate massive deals across the country on behalf of our homeowners and our condo communities. And that number continues to grow, but I anticipate, in '24, we're going to put a serious focus on that. Because that type of revenue is coming through is really -- it's the epitome of traditional win-win-win statement. When we go and negotiate a deal on behalf of the massive communities we're in, we were able to bring in really specific specialized products and services, could be as basic as insurance or lending or service delivery associated with a handyman or you'll see a lot of these types of deals. But really, we don't do a deal unless we can get an absolute guarantee that the cost of that offer to our homeowners will be lower than anything available on the street, that also can generate revenue for us, and we disclose that. We fully disclose that to our homeowners and our communities that we manage. But what also is doing for us is it's actually very, very, very high gross margin business. So even though we may make $2 per transaction, $3 per transaction, whatever the number is, it's really high gross margin simply because there's no cost of goods associated with it. And it is just leveraging our scale and engine. So you'll see us be very active in '24 with this line of business. And we went from trying to explain this to service providers in the past 3 or 4 quarters. Now essentially our phone is ringing and people are coming in with some really interesting products and services. Look for us to be active, specifically with lowering the consumption metrics of the -- and the capital expenditure requirements of these buildings. And you'll see more on that in the near future as we go into the market with some really exciting products. I won't spend too much time on this. We spoke for our goals in 2023 that we want to increase our monthly recurring revenue through both organic and acquired means. Obviously, we've done, to a high level of degree that expanding our acquisition pipeline, and we did want get presence in Toronto. We're very, very close to closing on that transaction that whereby we would be very active there, obviously, drive efficiencies in the business and drive towards improving our gross margin and EBITDA, invest in our products and innovative solutions, and I'm quite pleased with the work that has been done with the team. And you'll see more on that in '24 specifically, as we work towards now taking the data that was accumulated and got hundreds of millions of points of data with the communities we manage and actually starting to drive some really cool solutions there. I do believe AI plays a role in driving further efficiencies. So a lot of efficiencies that you've seen in terms of like being able to drive, we haven't -- we're just piloting some AI solutions, but we're really looking at how AI can do a lot of heavy lifting in terms of the front line associated with the homeowners that we work with. And then obviously, continue to drive additional digital services. Q4 is shaping up to be arguably our best quarter ever when it comes to digital services. And -- but '24 is going to be a fantastic year, which I'll speak to in the next slide here. We may be taken 6 or 7 of those big initiatives, and we're just driving to really towards 3 here. One is to continue to drive towards profitability. We spoke plenty about that today. Number two, leverage national footprint and really start delivering significant digital service revenue, which is high gross margin business, as I just indicated. And then expand our acquisition pipeline, work our way through the permit, work our way through the middle tier and look for high revenue, high EBITDA-generating or cash-generating businesses and that either improve our geographical footprint in Canada or beyond. And the outlook overall is, of course, what everybody is speaking about when it comes to real estate, interest rates and inflation and lack of -- or shortage of trades. And these are all things that are kind of hovering around us. We are seeing these points of pain associated with some of the developers and some of the people that are closing on their communities, whether it's the homeowners, the cost of the mortgage is going a little bit more than they anticipated, or a developer just struggling to get over the line, over the hump of delivery. Because, once again, we're still dealing with some challenges in terms of them getting either occupancy permits, what I hoped '23 was going to be a full ease of that. We're seeing some delays, 30 days, 60 days here and there. But overall, I have no concerns whatsoever about the availability of the addressable market that we can go and win. It's just reflected in the number of proposals. We've never had as many proposals out as we do on deals, whether it's new construction or existing communities that want to come to our service delivery. Obviously, you're going to see going to get us -- we're going to get the Meritus acquisition closed very shortly here, which will provide some boost in Q4 and beyond. And we have a strategy of how to drive a lot of the business demand that we've had in Ontario to our team there that's going to be able to convert a very, very, very healthy pipeline in terms of proposals, as I mentioned earlier. We were laser-focused on a number of projects, on cost-saving strategies and improvement of the EBITDA. And on the M&A side, I've said enough, I think it's pretty evident that we will be very active moving ahead next year. That concludes all the items that I want to share with you today. I'm happy to take any questions.

[Operator Instructions] Our first question comes from Kiran Sritharan of Eight Capital.

Let's start here, just curious if you've seen any changes to the sales cycle with the new contracts, or new contracts that you've signed lately, have there been any commonalities to call out? What have you taken this environment to get a customer over the line?

Yes. No, that's a good question. Thanks, Kiran. Regarding developers, people that are building brand new communities, we've never been invited at the outset of the design of what this community looks like. I'm talking specifically about master plan community. We -- just historically, property management companies used to be called 6 months, 4 months, 5 months before the sales center is getting -- or sorry, 6 -- 5, 6 weeks before the sales center is about to be built, and come in into here is the logo, here's what we need you to do. Give us a cost for this community so we can just go to the street and tell them, if you buy a condo here, your cost will be x per square foot. Give them the number then they call you back and tell you make it lower, lower, lower so it can make it attractive so we can sell those units quickly. And that's pretty much the conversation. It's a complete world -- different world now when it comes to Tribe. They are coming to us, sharing with us everything they've got. We have input on, not only from additional strategy, one of your trips of the data we even give an inflow on the -- given them surveys about the size and what rental could look like and whether it should be 1-bedroom, 2-bedroom, 3 bedroom in the case of rental community in the case of condos. Here's the amenities. Here's the usage. Here's the best way for you to set this community up for success moving forward. In terms of operating expenditure, don't use this equipment use that equipment, and so it's all data-driven. So the sales cycle arguably is a little bit longer simply because we brought in earlier. So when you see all those numbers that I shared with you guys earlier about what we've secured, this didn't happen this quarter. They just -- we were brought in. We came in, we put our digital strategy for them, and how we should manage hundreds of items associated with the community living? And then agreements come and get put in place. So I would say the cycle -- I mean, there's more and more developers seeking our services. But I see the cycle is just longer by way of the fact that we're starting earlier. In the case of existing communities, maybe I'll call out some of our competitors on this call. I don't usually do that at all, but we're seeing more and more and more of our competitors making it incredibly difficult for their customers to move away. And we've been the company -- and I've shared that before, but we've been in the company, it's really easy to do business with, and it's really easy to leave, meaning if you ever came to us and said we're not happy with the service, we let you go. We do not hold data hostage. We do not make it difficult for you to go, thankfully. And people lie, numbers don't. Our churn numbers are very, very low, and we've done -- our team has done a fantastic job keeping our customers, simply not because we have power over them, it's just simply because we deliver the service. And we're seeing quite a bit of resistance in the space. And the reason I share that is because what used to be as quickly as 30-day turnaround for a customer coming to us, we actually now are probably closer to 60. And not all the data is coming across. So our digital strategy in terms of getting these buildings ready to go for a better future just taking a little bit more work. We're not complaining, it's just being honest and direct, and essentially, some of those players are getting called out on it. And it just speaks to the fact that obviously, people are frustrated with our disruption in the space. And for that I make no apology.

That's very helpful color, Joseph, thank you. And then on margins, I mean, there was a meaningful correction on OpEx sequentially and some of the flows in the gross margin. Well, within the historic range, just curious what caused the sequential dip on the gross margin? And then on OpEx, would this be a good run rate for us to model?

Hi, Kiran, this is Angelo.

Yes. Go ahead.

No, I'll take that, and then Joseph can jump on as well. Look, sequentially, there's always things that happen quarter-over-quarter. But if you look at the trend consistently from a year ago, we had a really nice increase going from 35% to 39%. The trend we expect it to continue to increase. We're getting into the 40s. I think probably you'll see some flat lining there. But as we continue to bring in the higher-margin type revenue streams that Joseph talked about earlier, we will be able to continue to increase it overall. I wouldn't be so concerned over 1 particular quarter sequentially, but I'd look at it over a number of quarters and the trend that we're seeing. So I expect continued improvement in the gross margin and in the EBITDA as well. I mean you saw a dramatic increase this quarter, where we went from over $2 million of loss last year in adjusted EBITDA to $1.5 million. And you'll continue to see that improved quarter-over-quarter as well.

Angelo, that's helpful. And for my last 1 here, can you just talk about some of the traction with your digital assets outside the core platform? For example, how have the developer tools performed against expectations? And I'll leave it there.

Yes. Kiran, if you're referencing like digital services outside of our service delivery, meaning we do property management, but I think you -- I just want to make sure I understand the question you're asking about our actual digital services, how -- what are we working on that can generate that extra gross -- high gross margin items? Is that correct exact question?

Exactly.

Okay. Yes, we've got a team that's gone out, and it's funny, nobody has really done what we're doing. This concept of creating the -- I mean, a lot of people create marketplaces. So I just want to make sure that [indiscernible]. But nobody has really gone out and actually tried to take the data of the communities we live in and the consumption and all that stuff, and really try to identify the sweet spot from a service delivery associated with the homes that we -- and nobody is doing in condos and few tried it in rental with moderate success. The reason that's relevant is because we don't just want to go and grab like clipable transactional items and keep putting them out there. Some of it is low-hanging fruit, obvious stuff like insurance, as I mentioned earlier, Condos in Canada, 60% of them are underinsured. That's a big problem. It's almost irresponsible on behalf of either the homeowner and/or the community. I'll even call out our regulatory bodies for not making that a complete requirement. You can drive a $2,000 car, and you have to get it insured, but you can have a $2 million condo and you don't have to get it insured by law anyways, which is an issue. So education is a big part of it and what have you. So these are transactional types of stuff. But there's actually infrastructure plays that I think are completely underserved, and I'm incredibly excited about for '24. Very specifically, I find overwhelming majority of communities or buildings in Canada just not running optimally. And I'm not referencing property management. I'm just talking pure consumption per square foot for different categories of what this community looks like. And it's just who is making those decisions? Nobody knows about it. It's not bubbling up. And a fair company like us with the amount of data sets we have and partnerships with other AI companies and/or great solution providers that are coming in with systems that can really catch these anomalies in terms of benchmark and how you're spending way more gas per square foot compared to that building similar to yours in the same neighborhood with the same pricing, and then zero down on that, and then deliver an ROI-centric solution to the community. I am expecting '24 to be the year where we're already on the bleeding edge of what this industry is doing, but I expect us to be massively out there touting these solutions. And actually, they're all revenue generating for both either cost saving for the community and revenue generating for us. So you'll see us be very, very active on that in addition to other financial services products. And I think you'll see a bit of that in Q4, but you'll see a lot more activity in that in Q1 and Q2.

[Operator Instructions] Our next question comes from Fred Blondeau of Laurentian Bank Securities.

Two quick high-level questions for me. Looking at 2024, I was wondering from what you see on the ground? How should we view, I guess, development starts and Tribe's penetration of those projects?

Yes, it's a great question. It's -- Fred, I know you cover a lot of real estate and -- look, the more basic fundamentals of housing needs in Canada are pretty evident to everybody. We're bringing in way more people into our country than we are making homes available to them. I won't spend any more time on that issue with all its affordability complexities on this call because I think everybody is pretty well aware of the problem. We are still seeing serious activities around -- or at least serious planning around people bringing in communities. But we can't put our hand at this time and act like these interest rates have not introduced some headwind towards new starts specific to developers. You should think of developers, and again, this is just 1 man's observation, a bit of an educated observation. We should think of developers as twofold. One is old school been around, bought land over the years accumulated it. Cost per square foot on the land is really, really low. Those guys will continue to build. The guys that came into most recent years that bought the land that are really high level buildable costs, it's going to be difficult for them to stay competitive. And I think those guys are going to start slowing down some of the projects. What I -- what we're seeing more and more of is -- hasn't fully translated into action yet by the government. But what we're seeing is developers that are saying, look, we're in the middle of construction. I happen to be a multifaceted developer. I do have condos. I do have some commercial real estate that, frankly, in some cases, empty or not being used. And I am contemplating going to a legacy mode so I can leave something for the kids and the grandkids, "hey, government, can you help me out and give me a path towards churning some of these assets that I started instead of needing to sell all of them as condos? Can I go out there and convert some of them into rental for 5 years, 10 years." And we'll do an agreement with the city or the county or with the province to ensure that our rates are reasonable. But as long as you give me a chance to pick some of those assets and convert them into sales in 5 years or 3 years once the interest rates kind of come back to normalization, we're seeing more and more of that. We're seeing in British Columbia -- actually, nationally, we're seeing some, obviously, GST deferrals. And in British Columbia, we're seeing finally a push towards these cities to approve a lot of new -- give the rezoning and give the new construction permits a lot quicker than they've given them 1.5 years to make changes, which is somewhat laughable, like I don't know why it takes 1.5 years to 2 years to make changes, they can give permits quicker. But -- so to summarize everything I just shared with you, this is just color on my takeaway. This country is in desperate need for new homes. And we, in our view, do not see anything really affecting that massively other than just construction cost, loans that are going to be worth a little bit more, but we're not seeing a softening of the pricing. So the developers are going to be okay. It's just those that developed and acquired -- developers had acquired massive, expensive land, they're probably going to put the brakes on it for a while.

Okay. Got it. But last time I was in Vancouver, that market is absolutely on fire. Like I assume this last comment that you just made does not apply to Vancouver. Or you're starting to see cracks in Vancouver, too?

Yes. Listen, I am nobody to give an outlook in Vancouver, have been somewhat wrong in Vancouver for the last 20 years. It's just proven to be a complete bubble of its own behavior. I mean, look, the bottom line is an incredibly desirable market. The comment does apply to those developers that bought incredibly expensive land here in Vancouver, and that is a long list. But there's also some massive anchor developers in Vancouver that have just bought those lands in the '70s in the '80s and early '90s, and I don't need to tell you like they'll be fine. Whether they're selling at $2,000 a square foot or $1,200 a square foot, there's -- the math will still work for the overall majority of those. So we're not really feeling any slowing down in...

Okay. And then very quickly, in terms of your growth profile in Ontario, how would you qualify your pipeline today? And in parallel, how would you qualify I guess, vendors and your own appetite for VTB type of transactions?

The Ontario market is, for us, is just absolute greenfield. It's massive. There's a handful of sizable players in the space. I mentioned earlier the regulation headwind that came towards some of the existing operators there and their need to be able to navigate through it. We think we have a monstrous advantage with our technology and our processes. We're not a perfect company but we're really good at what we do. So I'm incredibly bullish on our ability to get bigger in the Ontario market. In terms of M&A, it's no surprise. We really like that market. There's opportunities there. The appetite for vendor to take back is there. Our appetite to give away stock is not. So we're frankly structuring deals that require very little stock on our hand, if any. And thankfully, we were able to negotiate a proper senior debt deal that gives us quite a bit of muscle to be able to navigate through the deals that we're working on, and you'll see that reflected in the next couple of transactions that will announce.

That's fair. Is it fair to say also that at the margin, your focus will largely be on Ontario and then the U.S. is absolutely not a focus right now. Is that fair to say?

I wouldn't say absolutely nonfocus. We do keep a very, very close eye on it. I am still, I don't know if happy or surprised. You couldn't name a single player in the U.S. that's playing in -- or taking our approach to service delivery. You could name maybe 3 or 4 that are tech back services around the rental space, but on the condo side, it still hasn't been sorted, and I think it's just a pure function of how difficult it is and how [indiscernible] tech stock has to be. Don't count us out for '24 in the U.S., but we're just a fraction of Canada market. We love the Canadian market. We're very good at it. We'll be very active here, but we're -- with a very close eye to the U.S.

This concludes Tribe's Third Quarter Financial Results Conference Call. A replay of this conference call will be available on the Tribe website in the coming days. Thank you for attending today's call, and enjoy the rest of your day. Goodbye.