Granite Real Estate Investment Trust (GRP.U) 2025 Q3 法說會逐字稿

Good morning. My name is Lily, and I will be your conference operator for today. At this time, I would like to welcome everyone to Granite REIT's third-quarter 2025 results conference call. (Operator Instructions)

Speaking to you on this call this morning is Kevan Gorrie, President and Chief Executive Officer; and Teresa Neto, Chief Financial Officer. I will now turn the call over to Teresa Neto to go over some certain advisories.

Good morning, everyone. Before we begin today's call, I would like to remind you that statements and information made in today's discussion may constitute forward-looking statements and forward-looking information, and that actual results could differ materially from any conclusion, forecast or projection.

These statements and information are based on certain material facts or assumptions, reflect management's current expectations and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from forward-looking statements or information.

These risks and uncertainties and material factors and assumptions applied in making forward-looking statements or information are discussed in Granite's material filed with the Canadian Securities Administrators, and the US Securities and Exchange Commission from time to time, including the Risk Factors section of its annual information form for 2024, Granite's management discussion and analysis for the year ended December 31, 2024, filed on February 26, 2025, and for the quarter ended September 30, 2025 filed on November 5, 2025.

Granite posted Q3 2025 results ahead of Q2 and in line with management's annual forecast and guidance that reflects continued strength in our operating fundamentals supported by strong NOI growth, representing $0.06 per unit of the $0.09 per unit growth in FFO quarter over sequential quarter.

FFO per unit in Q3 was $1.48, representing the $0.09, or 6.5% increase from Q2 '25, and a $0.13, or 9.6% increase relative to the same quarter in the prior year. The growth in NOI this quarter is primarily derived from strong same property NOI growth, enhanced by leasing spreads of 88%, and the lease-up of previously vacant units in Canada and the United States.

NOI growth was further enhanced by the Florida acquisitions completed last quarter. AFFO per unit in Q3 '25 was $1.26, which is $0.03 higher relative to Q2, and $0.04 higher relative to the same quarter last year, with the increase versus Q2 mostly tied to FFO growth and lower leasing costs due to timing of leasing turnover, partially offset by higher capital expenditures incurred.

AFFO-related capital expenditures incurred in the quarter totaled $10.5 million, which is an increase of $2.5 million over Q2, and $5.3 million higher than the same quarter last year. For 2025, we continue to expect AFFO-related capital expenditures to come in at approximately $40 million for the year, and that is unchanged from our estimates previously provided.

Same-property NOI for Q3 remained robust, increasing 5.2% on a constant currency basis and up 8.4%, and foreign currency effects are included. Same-property NOI growth was driven primarily by CPI and contractual rent increases across all regions, positive leasing spreads on lease renewals, primarily in the US and Canada, and the lease up of previously vacant units in the US

and Canada, and the expiration of a free rent period at a property in the United States. Given the continued strong leasing activity in the third quarter of '25, we are increasing our guidance for the year and narrowing the range for constant currency, same property NOI, based on a four-quarter average to come in at approximately 5.4% to 6.2% from the range previously provided of 5% to 6.5%.

G&A for the quarter was $14.1 million, which is $0.9 million higher than the same quarter last year, and $4.1 million higher than Q2. The main variance relative to Q2 is the $4.2 million unfavorable fair value adjustment to noncash compensation liabilities, which do not impact Granite's FFO and AFFO metrics. For the fourth quarter, we expect G&A expenses that impact FFO and AFFO to be approximately $10.5 million.

Interest expense was slightly higher in Q3 2025 relative to Q2 by $0.5 million, while interest income remained flat as compared to Q2. The slight increase in interest expense was primarily driven by the draws on the credit facility to fund last quarter's Florida acquisitions. Granite's weighted average cost of debt is currently 2.7%, and the weighted average debt term to maturity is 3.6 years.

With Granite's next debt maturity in September of '26, we continue to expect interest expense to remain stable over the next approximate 4 quarters at roughly $24.5 million per quarter, barring any new transactions. Q3 2025 current income tax was $3 million, which is $0.3 million higher as compared to the prior year and remained flat compared to Q2.

For the fourth quarter in '25, we are expecting current income taxes to come in at approximately $3 million as well. As in prior years, Granite may realize a credit to current income taxes of approximately $1.8 million in Q4, due to the reversal of prior year tax provisions. However, we cannot confirm the certainty of such credit until December 31, and our guidance does not factor any tax provision reversals.

Regarding the '25 outlook, Granite is increasing its 2025 guidance and narrowing the ranges relative to estimates previously provided. Granite's current outlook reflects lease renewals and new leasing of vacant space completed year-to-date, which have increased overall NOI estimates.

The current outlook reflects the Florida acquisitions, but does not include any assumption for a potential property dispositions. In addition, the current outlook reflects year-to-date financing and NCIB activity completed in the first half of 2025 and embeds the year-to-date positive impact to FFO of the weaker Canadian dollar relative to the euro and US dollar.

So for FFO per unit, we are raising guidance from last quarter to the range of $5.83 to $5.90 representing an approximate 7% to 9% increase over '24. For AFFO per unit, we are raising guidance to the range of $5.03 to $5.10, representing an increase of 4% to 5% over 2024. Granite's balance sheet remains strong. Investment properties totaled $9.1 billion at the end of the quarter, which excludes $370.7 million of six assets held for sale, consistent with Granite's messaging last quarter on its disposition program.

The increase in investment properties from last quarter was primarily due to $156.5 million of foreign exchange translation gains on Granite's foreign-based investment properties, driven by a 2.3% increase in the spot US exchange rate, and a 1.9% increase in the spot euro exchange rate relative to Q2, partially offset by net fair value losses of $34.6 million.

The Trust's overall weighted average cap rate is 5.6% on in-place NOI, increased 5 basis points from the end of Q2, and has increased 32 basis points since the same quarter last year. Net leverage ratio at the end of the quarter was 35%, a decrease of 100 basis points from last quarter. Net debt to EBITDA was 7 times, a slight decrease from the 7.1 times in Q2, and consistent relative to the same quarter last year.

Granite's key leverage ratios remained slightly elevated due to the classification of the six assets held for sale as they are excluded from investment properties, resulting in a decrease in the denominator for the net leverage ratio. In addition, Granite has increased unsecured debt due to drawing on the credit facility to fund the Florida acquisitions resulting in an outstanding balance of $78 million at the end of the quarter. Granite does expect these ratios to normalize when the asset sales are completed.

The trust liquidity is approximately $1 billion, representing cash on hand of approximately $109 million, and the undrawn operating line of approximately $918 million. As of today, Granite has $79.5 million drawn on the credit facility and $3 million of letters of credit outstanding. Granite does expect to reduce the balance on the credit facility throughout '26 with free cash flow from operations or with proceeds from disposition of certain properties, barring any other major transactions. I'll now turn over the call to Kevan. Thank you.

Thanks, Teresa. As usual, I'll be brief with my comments and hopefully provide some helpful context to our results. As Teresa mentioned, our Q3 results were in line with expectations, driven by strong leasing momentum and NOI growth. And as you can see from our updated year-end guidance, we expect our financial performance to continue to strengthen over the remainder of the year.

Firstly, strong leasing momentum continued as the team executed on over 400,000 square feet of new leases in the quarter, and extended six leases related to expiries in the fourth quarter of 2025 and in 2026, representing just over 2.3 million square feet. In this quarter, as you can see, the increase on renewals in the third quarter was extremely strong at 88% of 1.85 million square feet of Q3 expiries in the GTA and the US.

We have now renewed 81%, roughly, of our 2025 expiries at a weighted average increase of roughly 47%. And that excludes the increase on the new lease in Atlanta where the team achieved an increase in rental rate of 58% over expiring rents at the end of the first quarter. Staying on leasing a few comments on relevant market data. Eight of our 16 markets in North America reported flat or decline in market vacancy from the second quarter, and all of our portfolio markets reported positive net absorption in the quarter, led by Dallas-Fort Worth,

Indianapolis, Savannah and Houston. With respect to market rents, asking rents fell year-over-year in four of our portfolio markets in North America and, increased in 11 led by Houston at 10.3%, Nashville at 8.3% and Louisville at 6.3%. Our weakest market was once again the Greater Toronto area as asking rents fell roughly 5.5% year-over-year. So while leasing conditions steadily improve across our portfolio and our leasing performance continues to be strong, net absorption overall remains below the 10-year average and conditions are competitive.

But I would highlight at this time that modern, functional, well-located portfolios are as expected, clearly outperforming the general markets. I will provide a detailed update on our European portfolio markets in the fourth quarter as we receive the data. And in viewing our leasing performance and NOI growth over a longer term, over the past three years, we have generated cash NOI growth per unit of 44%, a CAGR of 12.9% over a period, which most of you would characterize as challenging for our sector.

I provided an update on our last call regarding the publication of our 2024 corporate ESG report. But I did want to mention at this time that Granite was recognized for the second consecutive year with the top ranking in our industrial peer group by GRESB for overall score and public ESG disclosure. I'll comment briefly on the changes to our IFRS values.

As Teresa mentioned, we made minor negative adjustments to capitalization and discount rates broadly across our US and European portfolios, which was partially offset by positive gains from recent renewals in our GTA portfolio. And our overall IFRS value was obviously positively impacted, as Teresa mentioned, by the favorable movement in the USD and euro against CAD in the quarter.

Moving on to capital allocation. I'll begin with an update on the planned dispositions. Of the $370 million of assets held for sale, we have agreed to terms on roughly $190 million of those assets in the US, and the transactions are progressing well, and we expect to provide a more fulsome update on the dispositions with our Q4 results at the very latest. In terms of capital deployment so far in 2025.

We have acquired roughly $145 million in Granite units through our NCIB, as well as funding roughly $10 million year-to-date on our development projects, and $50 million related to our recent acquisition in the Miami market. So to fund over $200 million in these areas and finish the quarter, with only 70 -- I think it's $79 million drawn on our line of credit and roughly $128 million in cash, you can see the power of our low payout ratio and free cash flow. We have also agreed to terms on approximately $240 million in new acquisitions in our target markets in the US and Europe and expect to close on those transactions in late Q4 or early Q1 2026.

Staying on capital allocation. Our $0.15 distribution increase represents the 15th consecutive annual increase since our inception in 2011, and marks the first above $0.10, as we believe the incremental increase is merited at this time and sustainable, supported by the strength of our cash flow growth over the past number of years, and the conservative nature of our capital structure and correspondingly low AFFO payout ratio.

We are able to fund the increased distribution while continuing to reinvest strongly in our business without compromising the strength of our balance sheet and capital ratios. So looking out to the remainder of the year, our leasing pipeline remains quite strong at well over 500,000 square feet currently under lease negotiation.

And although we'll provide specific guidance in conjunction with our Q4 results, we are confident that the achievements made by the team in 2025 have positioned us well to execute on our financial, operational and strategic objectives for 2026 and beyond. Operator, I'll now open it up for questions.

(Operator Instructions)

Brad Sturges, Raymond James.

Hey, good morning. Just on the transaction, I want to clarify there, Kevan. the transactions that you were talking about US Europe, I think that was referring to the dispositions or assets held for sale. Would all that, everything that's held for sale now, could that close by early '26? Or how are you thinking about the time line to those transactions right now?

If you're referring to the dispositions, Brad, I think that -- yes, all of the $370 million would be expected to close as we sit here today by the end of 2026.

Okay. And how is -- in terms of redeploying that cash, obviously, I think you've talked about opportunities -- you're even looking at on the acquisition side. How does that pipeline look today? And how do you think about sort of capital allocation priorities once the cash comes back beyond, I guess, repaying the line?

Well, as I mentioned, we have $240 million in acquisitions that we're currently working on. I would estimate probably another $100 million that we are currently looking at, not pursuing in earnest, but looking at. So that's what the pipeline of acquisitions looks like. And as I mentioned before, particularly in the US, we have to balance the acquisitions with the dispositions or the pace of those. So that -- obviously, the pace of our acquisitions will rely somewhat on the pace of dispositions.

Okay. Just last question, just on the leasing front. I think last call on the -- I guess, within the Indianapolis market, you had the larger facility, you're still looking at lease, you're looking at RFPs, or reviewing them for the entire building there in Indianapolis. Is there any update on that front?

I don't want to update on particular markets. I may sound a little paranoid, but I don't want to do anything that will compromise our efforts on the leasing front, acquisition front or disposition front. So just to say I mean at over 0.5 million square feet under lease negotiation that obviously involves some of our large spaces, and those deals are progressing well.

It. I'll turn it back. Thank you.

Kyle Stanley, Desjardins Capital Markets.

Thanks, morning, everyone. So you've made great progress on the '26 maturities already as well. With most of the expiries happening in the US, is there any kind of early nonrenewal concerns that you might have? And generally, what kind of leasing spreads would you expect overall and then maybe more for the US portfolio specifically?

I think other than the Samsung space in the US next year, nothing that really stands out to us. But I think we've had some very high levels of renewals. We were over 90% in '24, over 80% at '25. I would expect us to be sort of in that traditional range of 70% to 75% renewals for next year, partly because of the Samsung nonrenewal.

In terms of spreads, I think it would be -- look, I wouldn't expect anyone to expect a repeat of 2025, i.e., 47%. I think it would be closer to our range in 2024, which is more in that 20% range for 2026. But I'll have more details on the next call.

Okay. No, that's very helpful. I mean leasing activity seems to have remained quite strong or improved even since our last update. What's changed in the last maybe 4 to 6 months that has allowed for this improvement in demand more broadly in the market? And then specifically, within your portfolio to convert leasing tours to and RFPs to signed leases at this point?

I don't know if there's anything specific. I think the two trends that sort of come to mind to me that I think I've mentioned is, one, I think tenants have put off their leasing decisions for a long time. And I think that, that is -- they're reaching sort of a point in time where they have to make a decision to move forward. And two, I do think we are seeing a flight to quality. I think a strong location and assets are really starting to outperform the market.

I mentioned that in my remarks and I would certainly highlight that. So I think in terms of our portfolio, and I've said this on calls before, look if the market vacancy rate in the US overall or across our portfolio markets is 7%, we expect to outperform that. So our vacancy is expected to be lower than that. And I think we are seeing that.

So I will tell you, I think the activity across our specific portfolio is quite strong relative to the overall market and maybe some of our competitors. But I think that, that's a testament to the quality of the platform and the quality of the real estate that we own. It's starting to show.

Okay. I appreciate that. Just one more question. With the fundamentals across the US firming up, are you seeing any new development start to percolate, particularly, I guess, on spec? And has your outlook towards development changed at all in the last several months?

No, I think we're continuing to see a gradual decline. Like in the US, it's never going to go to zero in terms of new supply. There has been a gradual decline. I think, 2026, if you look at some of the expectations from CBRE and others, they're expecting the lowest, I think, development pipeline in well over 10 years. So it's never going to go to zero.

And I think we've seen pre-leasing in the sort of 30% to 35% range, which is pretty consistent with pre-COVID levels. So we're not seeing an uptick in development, if that's what you're asking or new supply. If there is, it's usually build-to-suit. In terms of speculative, I think it continues to slow down. We expect that trend to continue in 2026.

Okay, thank you very much. I will turn it back.

Himanshu Gupta, Scotiabank.

Thank you and good morning, everyone. So first on capital allocation. Distribution increase was a bit higher than the last couple of years. Just wondering what led to that decision? And is that a reflection of your stronger expected FFO growth next year?

It's a great question. I think -- look, we've been at $0.10 since inception in 2011. And I think our first distribution was $2. So $0.10 represented the first year would have been 5%. And so on a percentage basis, the increase was declining every year. And if we had stayed with $0.10 this year, it would have been sub 3% increase. I think it would have been 2.91. And so I think we thought long and hard about what the right distribution increase was for Granite.

I don't think we would have been in this place if we didn't have such strong FFO and AFFO per unit growth over the past five years. But where we sit today, I mean, obviously, we want to prioritize reinvestment in our business. But when you have a payout ratio, and AFFO payout ratio in the mid-60s, and you have $100-plus million in free cash flow, the $0.10 to $0.15 only represents $3 million in incremental distributions on an annual basis.

And we feel we can do that and continue to reinvest in the business and not compromise our liquidity and not compromise our free cash flow. So that's why we made the decision. What was really important is if we move to [$0.15], we have to be able to sustain it. And I think all of us on the management team and the Board are very confident we can sustain that level of increase. Again, there's no guarantee. We have to review it every year, but the sustainability of the distribution increase was an important consideration for us when we made this decision to move to $0.15.

Got it. Very helpful. And then on the capital recycling. So you're selling in markets like Indianapolis, Columbus and you're looking to buy in core markets. How tight is the CapEx spread now versus historically speaking, which encourages you to make that move from selling these assets and buying on the other side?

Well, it depends on the market, but we -- I think what we've signaled is, look, as we are continuing this rotation into the Tier 1 markets that we believe are going to be the strongest markets over the next decade. A spread of 75 basis points to 100 basis points is probably something the market should expect. It may not be the case all the time, but that's sort of what we're seeing right now in terms of our dispositions versus our acquisitions.

Now keep in mind, that's a year 1 yield. We're certainly targeting assets where we feel we can drive that yield over the next three to four, say, five years. So when you look at it on a year 1 basis, yes, you might see a spread of 75 to 100 basis points. But we certainly expect to eat into that spread over the near to medium term, if that makes sense.

Got it. That's helpful. And then as you kick start the disposition program, did you consider adding Magna to the mix as well? And any of the Magna assets to that list?

Yes. I mean it depends on the market. I certainly think we look at all of our noncore assets as part of this disposition program. So the short answer to your question is yes, we do. And I would think in 2026 and 2027, as we look at further dispositions, certainly Magna assets could form part of that disposition program.

Got it. Thank you, Kevan, and I'll come back.

Tal Woolley, CIBC.

Hey, good morning. Actually, just following up on Himanshu's question. Now that we're sort of 6-plus months out from when the tariff drama sort of began. You've got a little bit of time to assess how things have shaken out. How are you feeling overall just about automotive exposure in the portfolio period?

I think one thing -- I've talked about this, Tal. I think one thing that really gets missed here, and I don't know really it's interesting to me reading some of the analyst reports on Magna and other automotive parts providers is you don't see tariffs mentioned in their analyst reports. You see tariffs mentioned more with respect to Granite. Let's not forget that the automotive parts industry is covered under (inaudible).

And that is an important piece. That's an important trade agreement for sure and something that we monitor. And in listening to Magna's calls and Magna's disclosures. They've been very clear. There hasn't been a lot of noise around the tariff side. So I certainly don't think that it merits any immediate action on our part.

Those assets continue to perform well. And hopefully, the trade agreement that's in place continues in its current form, or as close to it as possible. And if that's the case, then these assets will, in our opinion, continue to perform well.

And actually, you're just sort of leading me into where I wanted to go next was just with the (inaudible) negotiation -- renegotiation coming up, given what you sort of saw this year, do you have any insight for us on how to think about leasing velocity going into 2026? Like how you would expect your clients to respond?

Are you talking about overall in the portfolio in 2026?

Yes.

Well, I think we've talked about Canada. And if there are any changes to the Magna portfolio specifically in our view, it's not related to tariffs at all. For the US portfolio, it's hard for us to see how it's actually hurt our US portfolio at all.

I'm not -- I can't say with any sort of certainty that it has helped the US portfolio. But certainly, we have seen an uptick in manufacturing demand. And not in all markets. If you look at -- looking at a stat the other day, if you look at construction spending on manufacturing facilities in the US

the last 12 months, 80% of it has occurred, the Midwest through the South and Southeast. So there's an awful lot of investment, particularly in the manufacturing side going into those markets. And that has benefited our portfolio for sure. So I have no concerns with the US market.

With respect to Europe, it has not affected our leasing that we can see anyway at all. So I don't anticipate any impact on our 2026 leasing as a result of the trade sort of narrative that's going on right now or tariffs, if that helps.

Okay. And just lastly if you look sort of over the last maybe a decade or so, there's been a big change in rent levels in some of your markets. Have you now sort of any long-term kind of implications around, like, for industrial development with occupiers preferring to build their own stuff, given that the rents have risen? Or any sort of changes in terms of whether potential tenants decide to own on their own versus decide to lease?

No. And I mean, we did go through this. There was a period of time where companies like Amazon wanted to own their facilities and then they wanted to not own all of their facilities because they probably have a better use of funds within their own business. So I don't think we -- as I'm looking at the team here. I don't think we've seen a trend of ownership.

Now the legislation in the US, I think, and the pending legislation, the budget in Canada, I think, certainly incentivizes capital spending. I don't think we anticipate that there will be a big impact on tenant decisions regarding ownership of their facilities. And I mean, we've certainly seen it. There's always a percentage of tenants that will want to own mission-critical facilities, but we haven't seen an uptick in that trend, and we don't expect to see it in the next couple of years.

Matt Kornack, National Bank.

Hey guys, Just a follow-up to Tal's questioning there is through this kind of capital recycling that you're anticipating to do, is there a theme that you're trying to play that you currently aren't playing or something in those markets that you see that would be different than where you are? Because to your point, it seems like the markets you're in are actually the ones that have been kind of net beneficiaries of some of the changes in industrial.

Okay. So we should invest more in the Midwest. Is that the point?

Well, just -- is there something outside the Midwest? Or where -- like what are you trying to get at in going into these new markets relative to your --

I think -- look, I'm not trying to be facetious, but I think we've been clear that it was always our intent. We like the markets that we're in. And I agree with you. And certainly, when you look from a tenant demand perspective, [Indiana] and other markets in the Midwest have performed as well as any markets in the US Dallas would be in there.

Houston would be in there. Savannah had a terrific year last year despite high levels of supply. They seem to sort of continue to absorb that. So we like the markets that we're in. But as we said, it was always our intent to continue to rotate into Tier 1 markets.

And there are markets that we feel are going to perform very well, and we like the pricing in those markets as we sit here today. And so it's not so much looking at an Indiana Columbus and saying, we just like the market. It's that we have a relatively high level of concentration in those markets. And if we are very interested in moving into Miami, for example, or the UK or France, or certain markets in the US, we have to use our existing assets to move into those markets.

And that's what we're doing. So I hope that that's coming through clear. It is really more a concentration play than anything else, and this allows us to enter the markets that we've been monitoring closely and coveting for years at prices that we think make a lot of sense to us, both from a ingoing yield perspective and from a total return perspective.

And in terms of the type of industrial building that you'd be getting in these markets, it's consistent with what you own large bay, high-quality taking tenants, et cetera, value-add or anything along those lines?

Well, I mean -- but it has to be modern. It has to be modern is something that we can make modern. We are never going to play in the small bay older generation assets. It's just not what we do. And if you're truly a logistics company, you want to try to the best of your ability to stay with logistics tenant.

It doesn't have to be large-bay. We're certainly looking at some very attractive opportunities that involve some mid-bay tenants in there, but the point is they have to be very functional logistics type of assets for us. So it doesn't have to be large-bay. That's not -- we're rather agnostic about whether it's multi-bay or a single tenant large-bay. It's just the functionality of the asset. That's a top priority for us and location within the market.

Okay. And of course, this is not to say that you need to be there, but have you not caught the data center bug at this point that some of your peers are chasing?

I think -- well when you look at -- if you look at portfolios where companies have converted assets to data centers, we're one of them. We actually have converted an asset in the GTA to a data center. So we have a data center within our portfolio. With respect to the new generation data centers, they are extremely capital intensive.

And so it's an area that our team has been paying more attention to, both from a converting existing assets at some point to data centers, if feasible, or looking at new builds. But I would just -- they're very capital intensive and certainly not something that I think would be in the immediate radar of Granite as we sit here today.

Okay. Fair. Last one for me. Wayfair moved up your tenant list, which presumably was part of the really strong leasing spread that you got this quarter. Can you give us a sense, obviously, the Toronto market, you said, has been a little bit more challenging, but why they would have needed to stay in that space and pay a much higher rent relative to what they were paying?

Yes. I think that that's one of the top three assets in the country, to be honest with you. 40-foot clear excess trailer parking, literally across the street from the GTA. It's on two bus routes, Mississauga and Brampton, large labor pool. It is just an absolutely fantastic asset.

And so I don't think Wayfair had any intentions of moving. And we certainly -- although we were confident in our ability to re-lease the space, it's a large base, and we are happy to keep them in that space. So I think there's a lot of things that were going for that billing that Wayfair recognized in terms of value. And so we were able to get a very strong renewal done in a relatively short period of time.

Okay, sure. Thanks guys.

Pammi Bir, RBC.

Thanks, and good morning. Just back to the $240 million of acquisitions in progress. Are these all stabilized assets? Or are you perhaps willing to take on some vacancy, maybe create some value in that way?

For the most part, there's stabilized assets. One that we're looking at would be a redevelopment play with income in the short term. I just don't want to provide too much more detail than that, Pammi, but all of them would be stabilized assets at this time.

Okay. And sort of the mix between the US and Europe. Can you provide some context there? And what sort of cap rates are you kind of seeing these deals come in at?

Well, it is a mixture of the US and Europe, predominantly in the US And as we've said, I think we're targeting ingoing yields in the low to mid-5s.

Okay. And then just -- sorry. And just coming back to, I think, one of the earlier questions on Samsung. Have you started marketing that space? And any color you can provide in terms of where the re-leasing prospects are?

Yes. No, there was -- we have started marketing the space for lease. The only thing I would say is I would remind people that the in-place rents, or the expiring rents are roughly 25% of the market. And we don't have anything to update you on at this time.

And is it fair -- and can you remind me, when does that -- that lease is due a year or so, basically before the end of Q3 in '26?

At the end of Q3 '26.

Great. And I guess it would be fair to assume that there's going to be some downtime there, probably if it does get re-leased, let's say, to 2027?

Yes, I think that's fair.

Yes. Okay. And then just lastly, on the 500,000 square feet of leases that I think you mentioned were in progress or in discussions. Whats the mix there between new leasing versus renewals?

It's all new leasing.

Sorry, can you repeat that?

All new leasing.

It's all new, okay, all new. Okay, thanks very much. I'll turn it back.

Sam Damiani, TD Securities.

Thank you and good morning. So obviously, most of my questions have been answered, but I just wanted to get your sense, Kevan on -- at this point in the cycle, if you see cap rates more likely to be moving in a meaningful way in the next year or so? And if there's any markets in particular where you see potentially some bigger moves?

I don't want to discuss specific markets. Those would be markets that we're paying a lot of attention to. I can assure you of that. Certainly, we've seen more capital come off the sidelines. There is still more of a focus on value-add assets. And by the way, we probably put ourselves in that category with a probably a more refined focus on modern assets.

So core assets are still -- they're catching a bit, but it's not that deep. But looking at the dispositions that we're going through, it does feel like momentum is picking up. And if you were to ask me, do I think that there's -- is there a greater chance that cap rates are rising and falling? I would say absolutely not. Our expectation is cap rates will fall in 2026. Just based on the activity that we're seeing, the competition that we're seeing on our acquisition targets, et cetera. It certainly feels like it's going in a favorable direction.

That's great, Kevan. Thank you very much, and I'll turn it back.

There are no further questions at this time. I will now turn the call over to Mr. Kevan. Please continue.

Thank you, operator, and thank you, everyone, for joining us on our Q3 call, and we look forward to speaking to you in the new year on our fourth quarter results. Have a good day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.