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Operator: Good morning, everyone, and welcome to Crombie REIT's Fourth Quarter Conference Call. [Operator Instructions] This call is being recorded on February 11, 2026. I would now like to turn the conference over to Meghna Nair, Manager of Investor Relations at Crombie. Please go ahead.
Meghna Nair: Good day, everyone, and welcome to Crombie REIT's Fourth Quarter and Year-end 2025 Conference Call and Webcast. Thank you for joining us. This call is being recorded in live audio and is available on our website at www.crombie.ca. Slides to accompany today's call are available on the Investors section of our website under Presentations & Events. Joining me on the call today are Mark Holly, President and Chief Executive Officer; Kara Cameron, Chief Financial Officer; and Arie Bitton, Executive Vice President, Leasing and Operations. Today's discussion includes forward-looking statements. As always, we want to caution you that such statements are based on management's assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see our public filings, including our management's discussion and analysis and annual information form for a discussion of these factors. Our discussion will also include expected yield on cost for capital expenditures. Please refer to the Development section of our management's discussion and analysis for additional information on assumptions and risks. I will now turn the call over to Mark, who will begin the discussion with comments on Crombie's strategy and outlook. Kara will review Crombie's operating and financial results, and Mark will conclude with a few final remarks. Over to you, Mark.
Mark Holly: Thank you, Meghna, and good morning, everyone. 2025 was a standout year for Crombie for disciplined execution across the 2 pillars of our Building Together strategy combined to deliver solid results. These pillars, value creation and solid foundation, guide our day-to-day execution and have been designed for resiliency, stability and long-term unitholder growth. 2025 was a year that highlighted the power of this strategy and the operational excellence of the team. A few metrics worth highlighting. Four consecutive quarters of record committee occupancy, ending the year at 97.7%; average annual minimum rent growth of 4.8%; commercial same-asset property cash NOI growth of 3.7%, above our long-term target of 2% to 3%; 6.5% growth in AFFO per unit; a distribution increase; and finally, a credit rating upgrade from Morningstar DBRS, an impressive year. Today, I will focus my comments on 3 drivers within value creation, own and operate, optimize and partner. Let me start with own and operate, the foundation of value creation and the core of our business. Our coast-to-coast grocery-anchored centers sits at the heart of vibrant growing communities, generating consistent traffic and strong tenant demand. Through disciplined portfolio management and deliberate curation of our tenant merchandise mix, we continue to position Crombie as an attractive partner for retailers seeking access to multiple markets on a coast-to-coast basis. In 2025, demand for our space was very strong. Established national retailers and emerging concepts, both sought space across our portfolio, and that demand combined with proactive leasing management drove solid results. Year 1 renewal spreads averaged 10.4% and our weighted average lease term remained healthy at 7.9 years, reflecting the stability of our tenant relationships and the steady growth embedded in the portfolio. Portfolio management is central to our own and operate driver as we always look to high-grade our portfolio of assets. On the acquisition front, we continue to lean into grocery-anchored retail opportunities. In 2025, we added 5 Empire-bannered grocery properties totaling 197,000 square feet for $49.7 million. The acquisition of the Queensway property in Q4 was the fifth. The Queensway property is a 3.6 acre newly constructed 51,000 square foot Longo's anchored site with 2 freestanding bank pads. It was built by Crombie as development manager on behalf of Empire and subsequently acquired for $28.5 million, excluding closing and transaction costs. The property is 100% leased with all tenants now operating. It is exactly the type of necessity-based high-quality asset that strengthens our portfolio and reflects the value of our strategic partnership with Empire. We were equally disciplined on the disposition side in 2025, where we sold 2 noncore properties in New Brunswick, the 140,000 square foot Main Street office in Moncton, which had persistent vacancy, and Loch Lomond Place, a non-grocery retail property in St. John. These acquisitions reduced exposure to lower growth assets and freed up capital to be redeployed towards higher-quality properties that will provide stronger long-term FFO growth. We also completed a strategic land swap at Barrington Street in Halifax that strengthened our position on a key urban site and enhanced its long-term development potential. Ongoing portfolio review and thoughtful capital recycling remains an important driver to how we provide long-term returns for our unitholders. As part of our financial results press release last night, we highlighted that we have entered into a binding agreement to acquire a grocery-related industrial asset in Whitby, Ontario for approximately $115 million. The asset is a 42-acre property with 484,000 square foot high bay industrial distribution facility, fully leased to Sobeys under a long-term lease agreement. The facility features 37-foot clear heights with approximately 90 loading dock doors and roughly 240,000 square feet of temperature-controlled cooler space. Located directly off Highway 401 and within a 5-minute walk to the Whitby GO station, the property offers exceptional connectivity and operationally supports Sobey's distribution to its Ontario grocery stores. This acquisition brings long-duration income, serves as a central logistics infrastructure and sits in a tightly supplied transit-connected industrial corridor. It strengthens the defensive profile of our property and portfolio and expands our presence in grocery-linked industrial real estate. The acquisition enhances our long-term cash flow growth and is accretive from day 1. Turning briefly to our Calgary customer fulfillment center industrial asset. In late January, Empire announced changes to its e-commerce operations in Alberta, which included our 100% Crombie-owned industrial warehouse. The long-term lease remains in place. The asset represents approximately 300,000 square feet within our fully occupied retail-related industrial portfolio, and we expect no material financial impact from the announcement. Our second pillar, optimize, is about unlocking embedded value in the existing portfolio through targeted investments and development. In 2025, we continue to advance nonmajor development program. These are shorter duration projects, modernization, intensifications, small-scale redevelopments and greenfield projects. They're typically $50 million or less and often completed within 12 months. We expect targeted yield on cost in the range of 6% to 8%. One of our nonmajor investments is our modernization program with Empire, where we completed more than 60 projects with them in 2025. These projects upgrade the look, feel and functionality of the grocery stores and create a halo effect that benefits other tenants on the site. It also supports our leasing performance across both renewals and new deals. Our nonmajor program is a repeatable lever that enhances asset quality and drive steady growth. Within our major development pipeline, entitlements remain the strategic focus. By securing zoning and planning approvals ahead of major capital commitments, we preserve flexibility on timing and phasing, ensuring we can adapt to an evolving market conditions and build a pipeline of fully entitled properties that can support our long-term value creation. We continue to advance key sites in a deliberate manner during 2025. Of the 26 identified sites in our major development category, 6 are now zoned and 3 have applications in process. The Marlstone in Halifax is our only major project currently under construction. Pre-leasing is underway and the early response has been positive. Our last driver within value creation pillar is partner. As I noted, our strategic partnership with Empire continues to be an important competitive advantage. Our real estate priorities are closely aligned with their operational needs, and that alignment shows up across acquisitions, modernization and new store opportunities. the Queensway and our modernization program are great examples of our partnership in action. Beyond Empire, we stood up 2 new programmatic partnerships in Halifax in Vancouver this year. These programmatic partnerships serve 3 important purposes for Crombie. First, they enable us to share capital and risk on larger, longer duration opportunities, while preserving balance sheet capacity for our core grocery-anchored platform. Second, they provide a stream of management and development fees as we progress entitlements and planning work. And third, they unlock embedded NAV through highest and best use zoning and gives us flexibility on when and how we bring these high potential sites forward for redevelopment. Across the 3 value creation drivers, own and operate, optimize and partner, our capital allocation decisions are guided by our strategy of delivering resiliency, stability and growth. With that, I'll turn the call over to Kara to walk us through our financial results and the strength of our balance sheet.
Kara Cameron: Thank you, Mark, and good morning, everyone. Our 2025 results reinforce the strength of our platform, the consistency of our execution and the discipline of our approach to capital allocation. And as Mark said, our focus on unitholder return. That strength translated directly to our bottom line with FFO per unit growing 4.8% and AFFO per unit growing 6.5% year-over-year. The numbers continue to tell a clear story, our strategy is working. In the fourth quarter, we completed 239,000 square feet of renewals at a year 1 increase of 10% over expiring rental rates. As we've emphasized consistently, we focus on achieving growth over the full duration of the lease. And for the quarter, we secured a 12.1% increase when comparing expiring rates to the weighted average rental rate over the renewal term. This leasing activity, combined with contractual rent step-ups and contributions from our modernization investments drove commercial same-asset property cash NOI growth of 4.1% in the fourth quarter, above the upper end of our 2% to 3% long-term target range. For the full year, we renewed 768,000 square feet of space at an average increase of 10.4% over expiring rents. This strength was broad-based with spreads of 11% in VECTOM, 14.5% in major markets and 7.9% across regional markets with a 12.2% increase in weighted average rental rate for the renewal term. We also have added 259,000 square feet of new leases during the year at an average first year rate of $16.67 per square foot. Average annual minimum rent per square foot grew 4.8% year-over-year. The same fundamental drivers of Q4 performance carried through the year, contributing to commercial same-asset property cash NOI growth of 3.7%, again, above the upper end of our 2% to 3% long-term target range. Property revenue in the fourth quarter was $122.1 million, up 0.4% from the prior year. This increase was driven by several key factors. Same asset NOI growth from renewals and new leasing, contractual rent step-ups, contributions from nonmajor development projects completed over the past 12 to 18 months, and a full quarter of income from properties acquired earlier in the year. These factors were partially offset by dispositions completed in late 2024 and 2025. For the full year, property revenue grew 3.8% to $488.7 million, reflecting higher base rents and recoveries from record occupancy, incremental contributions from nonmajor development completions and modernization investments, and revenue from assets acquired through the year, partially offset by dispositions and higher tenant incentive amortization. Management and development fee revenue in the quarter was $2.5 million, up from $1.4 million in quarter 4 of 2024. For the full year, fee revenue was $11.4 million, up 113% from $5.3 million in 2024. This growth reflects contributions from our programmatic partnerships in Halifax and Vancouver as well as fees from various Empire projects. These contributions have become a stable recurring component of our cash flow profile. For the full year, general and administrative expenses, excluding unit-based compensation, represented 4.1% of total revenue, including revenue from management and development services, consistent with where we've been tracking throughout the year. Finance costs were $97.4 million in 2025, up $4.9 million year-over-year, primarily reflecting higher interest expense related to the 2024 net issuance of senior unsecured notes. Turning to earnings. FFO for the fourth quarter totaled $0.33 per unit, up 3.1% year-over-year. FFO was $0.29 per unit, up 3.6%. For the full year, FFO per unit was $1.30, an increase of 4.8% from 2024, and AFFO per unit was $1.15, up 6.5%. This growth was driven by higher net property income, a more than doubling of management and development fees, and contributions from acquisitions and nonmajor investment activity, partially offset by higher interest expense. We ended the quarter with FFO and AFFO payout ratios of 69.2% and 78.2%, respectively. For the full year, payout ratios were 69.1% for FFO and 78.1% for AFFO, comfortably within our targeted ranges even after the distribution increase implemented in 2025. The Marlstone project continues to progress on time and on budget. At year-end, estimated cost to complete was approximately $22 million at Crombie share with expected yields on cost in the 4.5% to 5.5% range. Upon completion, construction financing will convert to CMHC mortgage financing with anticipated financing rates lower than conventional mortgages. Now turning to our balance sheet. Our balance sheet remains a core strategic asset and the source of resiliency, especially in a more volatile capital markets environment. We continue to prioritize liquidity, ending the year with $669.2 million in available liquidity between undrawn credit facilities and cash with an unencumbered asset pool exceeding $3.9 billion in fair value, earning us with ample liquidity and multiple funding levers to address our 2026 and 2027 maturities. We continue to maintain a disciplined leverage profile with a focus on preserving financial flexibility while protecting our long-term unitholder value. Debt to gross fair value was 42.1% at year-end and debt to trailing 12-month adjusted EBITDA was 7.69x. Interest coverage ratio improved to 3.39x, reflecting higher adjusted EBITDA. We actively manage interest rate exposure through a balanced mix of fixed and floating rate debt, while maintaining meaningful undrawn credit capacity to fund near-term commitments. Unsecured debt represents about 61% of our total debt and approximately 97% of our debt is fixed rate with a weighted average term to maturity of roughly 4 years. This approach enables us to absorb market variability, support development and leasing initiatives and remain positioned to act opportunistically without compromising credit quality. Over the past 2 years, we have taken deliberate steps to strengthen our debt structure, refinancing ahead of maturities, extending duration, increasing the proportion of fixed rate and unsecured debt and diversifying our funding sources. The credit rating upgrade we received earlier this year is a direct result of that work. This was a strategic objective we set for ourselves, and I'm very pleased that the team's focused execution delivered it. The upgrade has enhanced our long-term funding flexibility and supports our ability to access capital at attractive rates. Turning to capital allocation. Our capital allocation framework remains anchored in driving sustainable per unit growth, while strengthening the balance sheet. Free cash flow and disposition proceeds are directed first towards funding high-return investments, which during the year included redevelopment, intensification and leasing capital that enhanced asset quality and income durability. We continue to recycle capital out of lower growth and noncore assets such as Loch Lomond and Main Street, as Mark mentioned, into properties and projects with stronger long-term fundamentals, while also allocating capital to debt reduction where it improves leverage metrics and interest coverage. As mentioned, subsequent to the quarter end, we entered into a bonding agreement to acquire the Whitby RFC for $115.4 million. The asset is secured by a long-term triple net lease to Sobeys with contractual annual escalations, providing a high-quality, stable income stream. The acquisition is immediately accretive to both FFO and AFFO. We expect to initially fund the transaction through our unsecured revolving credit facility. Overall, 2025 was a strong year. We're hitting our strategic targets, producing consistently solid financial results and managing our balance sheet to support both stability and measured growth. We enter 2026 well positioned to continue generating dependable growth for our unitholders. And with that, I'll turn it back to Mark for some closing remarks.
Mark Holly: Thank you, Kara. To wrap up, 2025 was a year defined by consistent execution and strong performance across our business. Our Building Together strategy is working, and the results this year make that clear. Underpinning our performance is the strength of our people. The people pillar of our strategy is core to our success. And as we look ahead, our focus remains the same, owning and operating essential real estate at the heart of Canadian communities, deploying capital thoughtfully and growing cash flow growth, while compounding long-term value for our unitholders. We have a proven strategy, a resilient and high-quality portfolio, and the team is committed to disciplined execution. This March will mark 20 years as a publicly listed company. And over that time, we have built a portfolio, a balance sheet and a team that is focused on stability and growth. And entering 2026, we are well positioned to continue delivering, creating long-term value that our unitholders expect from Crombie. With that, we'll open the call for questions.
Operator: [Operator Instructions] The first question comes from Mike Markidis with BMO.
Michael Markidis: Good morning, Crombie, and congrats on a strong finish to 2025. I was wondering up on the milestone. I know pre-leasing is progressing. If you could give us a little bit more color on how that looks as a percentage of the total units.
Arie Bitton: Sure, Mike. It's Arie. What I'd tell you is that pre-leasing has been since end of last year. We have been getting a lot of activity on site. The -- I would say, marketing awareness of the property is high in the market. We are getting a lot of inbound. We're conducting touring right now still predominantly within the model suite at Scotia Square. And we're going to actively ramp that up as the building nears completion towards the end of March and take prospects through the building, it's amenities and we'll be able to then start converting applications on site with the leasing office on the premises. So I would say to date, we're pleased with the response we're seeing on the model suite. But we're going to turn that once the building gets turned over to the leasing team towards the end of March.
Michael Markidis: Okay. Sounds encouraging. Just on the Calgary CFC, I know, Mark, you had a press release and you gave some color there about no material impact. I was just wondering if you could remind us what Crombie's basis or total investment is on that property and give us a little bit more, I guess, a better lens into what the remaining term on the leases.
Mark Holly: Sure. Total investment is and around $100 million. It is a 300,000 square foot warehouse in Rocky View, which is in an industrial park. And it has got 36-foot clear ceiling height. It's got 90 dock -- sorry, 40 dock doors and was built purposely for Empire for its Voila platform. It's under a very long-term lease, longer than what would be a commercial standard, but all other terms and conditions within that lease are commercial. And in terms of their path forward, we started dialoguing with them about what would that look like on a go-forward basis between subletting or signing, and they do have those rights, but those rights are subject to landlords approval. So we started dialoguing with them. More to come on sort of how we're going to proceed with the asset, but we're under a long-term lease, no material impact to financials at this point, and we'll just continue to work with them as they look for subtenants.
Michael Markidis: Okay. And then just on the subsequent acquisition of the industrial asset at Whitby. Congrats on that. Kara, I know you said that you initially will finance that through your facility. And I know you got tons of capacity from a balance sheet perspective. But it's a pretty significant sizable transaction. Should we be thinking about an increase in disposition volume this year in terms of total gross proceeds? Just wondering how you guys are thinking about that as we move through '26.
Kara Cameron: Thanks for the question. Like you said, we've got a lot of liquidity. We've got nothing drawn on the revolver at year-end. So nothing that we need to dispose of at this point in order to fund that purchase. So I wouldn't link those two.
Operator: The next question comes from Lorne Kalmar with Desjardin.
Lorne Kalmar: Maybe just going back to the milestone because I feel like it was a little bit vague in terms of the lease-up color. To be clear, has leasing actually progressed or has it started yet? Or it's just really still preliminary at this point?
Arie Bitton: Leasing has started. We have signed applications. We have tenants moving in as of May 1. And we have a fully functioning website where tenants are self-starting applications as we speak on that website and coming in to do touring, again, in the model suite. But we have leases in place with occupancy starting in Q2.
Lorne Kalmar: Okay. And then I guess, are there any like direct competitors in that node to the type of product that you have at the Marlstone? Or are you guys kind of on your own with that? Just wondering about increased competition in the face of increased supply in the Halifax market.
Arie Bitton: There is a number of buildings being constructed right now in Darkmouth. I would say that on the Peninsula, there's nothing that matches the quality of what we're building. There's nothing that matches the connectivity with Scotia Square, the parking and all the other features, including the amenities that this building has at this point. So I would say that from a downtown perspective, we're feeling pretty good about the positioning of the Marlstone.
Lorne Kalmar: Okay. So no real concerns in terms of the timing of the lease-up versus what you guys have initially pro forma?
Arie Bitton: That's right.
Lorne Kalmar: Okay. Fair enough. And then just on the acquisition side, you guys are obviously pretty active now when you lump in the distribution center. What does the rest of 2026 look like for the team?
Mark Holly: The acquisition of Whitby is $115 million. And if you kind of step back and look at how much do we allocate in capital on an annual basis, we talk about it upwards of $250 million. So this was a meaningful acquisition. We are still underwriting opportunities. We still want to grow in the core. We want to be a necessity-based, and we consider the industrial portfolio to be necessity-based as it is distributing food to stores. So we're active on it. We're doing a bunch of underwriting. The market is very hot for grocery-anchored, as you probably know. And so we're being very strategic and selective on which ones we're able to buy. We were very fortunate to be able to bring in 5 into 2025, and we're looking to do more in '26.
Lorne Kalmar: Is there a preference in terms of grocery-anchored versus retail-related industrial? Or is it more opportunistic?
Mark Holly: Opportunistic. We're looking at both.
Operator: The next question comes from Golden Nguyen-Halfyard with TD Securities.
Golden Nguyen-Halfyard: Just going back to the Whitby distribution center acquisition, would you be able to provide a cap rate on the deal as well as lease terms?
Mark Holly: On cap rate, no. We don't give individual cap rates. But if you look at our portfolio weighted average, we're in and around that range. In terms of the lease, it's a long-term lease with renewals, and it is a commercially standard lease that you would find at any industrial facility.
Golden Nguyen-Halfyard: Okay. And turning to the residential portfolio. Any plans to sell down a 50% interest in Zephyr?
Mark Holly: Not at this point in time.
Golden Nguyen-Halfyard: All right. And then maybe just one last question for me. If you had to say one area or category of leasing that will be different in 2026 versus 2025, what would it be?
Mark Holly: Could you repeat the question? What category would be...
Golden Nguyen-Halfyard: Yes. If you had to say one area or category of leasing that will be different in '26 versus '25, what would it be?
Mark Holly: Different? Okay.
Arie Bitton: I would say that right now, where we're targeting is additional uses for our retail portfolio that are maybe, what you would call, nontraditional, so additional services, additional medical to our shopping centers that really complement the grocery and traditional convenience offering. That is an area that we're focusing in on, and there's a lot of inbound demand. We demonstrated that last year with the opening of a first-class medical facility in Nova Scotia, and we're continuing to execute on deals like that. It's what tenants are asking for. It's what customers are asking for. And it really ties in nicely. And we're talking about those types of uses, medical, library uses, and more of those sort that are really adding to the complexion of our portfolio.
Operator: Our next question comes from Brad Sturges with Raymond James.
Bradley Sturges: Mark, you've always talked about the kind of the long-term target for NOI growth of kind of 2% to 3%. Last year was better than that. Do you see 2026 kind of being above that long-term target, kind of in that 3% to 4% range again this year?
Mark Holly: Yes, 2025 was a really strong year. And as Kara called out on her prepared remarks, renewals, contractual rent step-ups, modernization program that we have with Empire, intensifications that we have been doing on sites over the last couple of years have all been contributing to that in the retail side. We continue to push on all of those drivers of same-asset NOI. We are still holding though to our long-term target ranges of the 2% to 3%. But what we do indicate is that we'll likely be on the higher end of that 2% to 3% range as we look into 2026.
Bradley Sturges: Okay. My other question would just be on property -- the fee income stream. Obviously, you had an acceleration last year and there might have been a little bit of catch-up on deferred fees. Just how should we think about that line item for 2026?
Mark Holly: In terms of the 2 programmatic partnerships that we have, we talked about that stability around $2.4 million on a quarterly basis and then the flow upwards as we do one-off opportunities with Empire and some of our other partners. So as you're thinking about modeling, definitely the $2.4 billion is consistent, and then there'll be opportunities to grow off of that as we do more work with our partner at Empire or some of our JOs that we have in the portfolio.
Operator: The next question comes from Mario Saric with Scotiabank.
Mario Saric: Just coming back to the Whitby acquisition. In terms of the annual contractual escalators, is it fair to say that, that figure is fairly consistent with the portfolio average? Or is there a nuance involved?
Mark Holly: It's fairly consistent. I would say it's a little bit better, slightly better than our portfolio average, Mario, but it's not material.
Mario Saric: Got it. And then coming back to the funding, I know dispositions have been opportunistic, but you're consistently kind of reviewing the portfolio for opportunities. Like in an ideal world, if things play out the way you'd like them to play out, is there a quantum of dispositions that you're thinking about in '26? Or are you conversely okay with the existing portfolio and okay with inching up leverage on a more structural basis on the back of this acquisition?
Mark Holly: That's a good question. Definitely, always looking at the portfolio, always looking to high-grade it. We've been very active in that since 2023, pruning the ones that have low growth or have structural vacancies or have a declining NOI perspective as we look into the future. We are looking to continue to always high-grade. So actioning against some in 2026 is going to be our path and our plan. And in terms of using it as a mechanism to ensure we free up cash flow to high-grade the portfolio, some of it, yes, but we're comfortable with our debt metrics running at 7, 6, 9x ample room in there. We have, as Kara called out, we have no material leverage issues to address. So we're on our front foot, Mario. So we are looking at high-grading the portfolio through dispositions and acquisitions and not using it to shore up the balance sheet.
Mario Saric: Got it. And what -- turning to Broadview -- Broadway & Commercial, what are the odds of some kind of resolution at that site in 2026?
Mark Holly: All of '26. If you had asked Q1, I would have said extremely low. First half, probably slightly better, but still low. The development team is working with municipality and there's a number of contracts that we have to work through, and that's just going to take some time. So I can't give you is it going to happen in '26, but the team is working through it.
Mario Saric: Okay. And then just maybe last question on fundamentals. You're continually hitting record high occupancy levels at some point. Presumably occupancy can't go any higher. But relative to the Q3 call, given that we're kind of 1.5 months into what could be characterized as maybe a seasonally slower retail leasing period relative to Q3, what's your level of confidence with respect to achieving continued double-digit blended lease rents in '26? And has anything changed in terms of watch lists and so on as we're heading into the spring?
Arie Bitton: Mario, the outlook is still similar to what it was as we closed out 2025. So tenant demand remains high and supply remains constrained. The -- some of the, I'd call it, anomalies, Q4, we historically have some strong temporary leasing in some of our malls. So we typically see that fall off a little bit in Q1. And we also had Toys "R" Us announced the CCAA proceeding. But what we've done with that one is we terminated Toys "R" Us in January, and we are now working with a receiver to get them reopened with the receiver on a temporary basis. as of tomorrow potentially. So our watch list, really, that was probably the biggest occupier space that we were keeping an eye on. And I would say that we've mitigated that in the short term, but we've been working on backfill options throughout. And I'd say that from an additional tenant perspective, we don't have any Eddie Bauer or any of the other potential tenants that of concern right now. So I would say that our occupancy is going to remain roughly where it is. It might go a little bit up, a little bit down, but we're talking a few basis points here and there.
Operator: The next question comes from Giuliano Thornhill with National Bank.
Giuliano Thornhill: Just turning -- or sticking with the occupancy kind of question. I'm just wondering on your regional markets, what is the remainder kind of occupancy uptick left in your portfolio? Is it market specific or just kind of broadly and really like your ability to get to the higher levels is kind of what I'm asking?
Arie Bitton: We have a number of properties that are older and closed assets that still have some remnants of vacancy. We're working our way through those. In the quarter, we leased up, as an example, 19,000 square feet in Newfoundland that was historically vacant. So I would say that those are the properties that are most affected. Again, the demand is there and there's not supply. So we are having tenants come in now that we haven't seen previously. But I would say, they're not in our grocery-anchored portfolio. They're more so in the former enclosed properties.
Mark Holly: One item that I would add on that is just when you look at the 3 market classes, regional markets versus our total of 97.7%, regional markets are running at 97.1%. And if you kind of go back 36 months, that was probably 5 percentage points lower. So Arie and the team have done just an exceptional job of catching the wind that is in retail demand and doing the things that he talked about of the medical uses and some of the local government opportunities to kind of create that hub around that grocery anchored to inflate it even more. So there is still a little bit of opportunity in it, but I'd say we've moved that needle significantly over the last couple of years.
Giuliano Thornhill: And the renewal -- the leasing renewal maturity for next year, would you see that broadly consistent with what you saw in 2025 in terms of location and tenant type?
Arie Bitton: It is.
Giuliano Thornhill: And then just lastly, on the Toys "R" Us, how large was the exposure there?
Arie Bitton: About 35,000 square feet.
Giuliano Thornhill: Okay. So pretty small.
Operator: The next question comes from Tal Woolley with CIBC.
Tal Woolley: Good morning, everybody. Just with the Empire restructuring of Voila in Western Canada, does that you think portend anything in terms of changes, modifications that Empire wants to make to its retail footprint in Western Canada? Like should we expect maybe more banner conversions, more interest in modest redevelopments? Or is there a desire on Empire's part to sort of -- I think when they acquired Safeway, they really started to get moving on remodeling a lot of the older stores in the urban markets too as well. I'm just wondering if you can sort of talk a little bit about how all this maybe changes the approach.
Mark Holly: I can't comment on Empire's business or their strategy or the things that they're looking to execute against, Tal. But as a very long-term strategic partner of theirs, we intersect with them on modernizations and land use intensifications. We're buying the Whitby warehouse from them. And so we're going to -- that is our strategic competitive advantage, and we're going to lean into it. But I can't speak to sort of their strategic intent as you're asking about their wind down of Voila and does that change any of their dynamics around store deals or units. They have talked about growing more stores. That's not new. And we're actively working with them to build more stores. We did the Queensway last quarter. We have a few others that we're working on with them. So -- but I can't comment on their operating business.
Operator: We have a follow-up question from Mario Saric with Scotiabank.
Mario Saric: Just one more for me, maybe for Arie. The lack of new supplies, as you referenced it a couple of times in the call, it comes up consistently in the industry in terms of what's driving kind of the strong rent growth. Like if you were to add a small pad on good quality site, like what would you guess or what would you estimate is the gap between kind of market rent today and then like the rent required to achieve a good development yield on that pad?
Arie Bitton: So yes, I think on that point, Mario, the new pad opportunities, the reason a lot of them aren't getting built is not because of the lack of demand, it's because of the construction cost. So where we've been able to get around that is by working on some land leases or prep pads to overcome some of those. I would say it's hard to pin down an exact number on what that delta is on a traditional basis, just given many of these, we're not building on spec, we're building for specific uses. But these days, you're probably looking at $50 to $60 or more to construct a pad. So that gives you a rough idea of where that would place us versus our in-place $19 portfolio rent. I think that's guidepost for you.
Operator: We have a follow-up question from Mike Markidis with BMO.
Michael Markidis: Just following up on Mario's question there. Arie, the $50 to $60 a foot for a pad, is that a net or a gross figure?
Arie Bitton: Those are net rents.
Michael Markidis: Okay. And then I think last quarter, you guys talked about 2 dozen properties where you actually had expansion capabilities. So I'm just wondering and trying to reconcile that comment with the comment on rents don't work.
Arie Bitton: So I think you can see in our disclosure, we opened up a number of pad opportunities over the years. So again, the QSRs that are looking to grow are willing to pay the rents necessary in order to support their growth. So we saw that in our -- in both Nova Scotia as well as BC. So I would say that the demand is there. We're working our way through them. And those 2 dozen aren't just solely rents. There's entitlement, there's some zoning, but we're working our way through all those 2 dozen opportunities as we speak.
Michael Markidis: Okay. And then if the construction costs don't work, can you -- I mean this might be a rudimentary question, I'm missing something, but how does the land lease work? I mean, I get how land lease works for you, but how does the land lease make it more amenable for the person paying the rent?
Mark Holly: Michael, so in a land lease scenario, they're taking on the risk of the capital deployment and they're not getting a rental structure increase over it. So from their lens, in some cases, they like to take on that and not have to pay the longer-term rent obligations. We're doing it in some cases and not all cases. We did the 2 bank deals at the Longo's plaza that we just acquired. We're slightly structured differently. We've done QSRs, McDonald's and Wendy's and Dairy Queen's that are slightly different. So where Arie is getting to is it's not one-size-fits-all. So when we look at our entire portfolio of 308 properties, we're always looking at what the optimization of those properties are through intensification or modernization. On intensification, where we can pump out on the existing CRU, that's 3 walls. So that works a little bit better. And if we're doing pads, there are usually 5,000 square foot buildings, some have drive-through, some don't. So the costs there do creep up. I would say what we are seeing in construction cost, though, is stabilization. We're seeing lower cost on the front-end divisions, which is the underground and earthworks. And what we haven't seen is some of the finishes. We've seen them stabilize. We haven't seen the finishes come off. But that said, it's not escalating the way it was. So there's more certainty around what the going-in costs are going to be, which is giving the retailers less of a pause to greenlight projects. So those 2 dozen that we've talked about are the ones that we see potential near-term opportunities to build out, and that's where you're going to start to see them show up over the next number of years in that nonmajor category. So $50 or $60 square foot rent is depending on what you're going-in costs were for land, how much underground earthworks you're doing, how much you're prepping the pad versus building the asset, shelling it. So it's really difficult just to give you a blanket number of $50 because every deal is unique. But the opportunities are real. The retailers are looking to drive more incremental units, and they're finding stability and cost and ability to run a pro forma that meets their P&L.
Operator: There are no further questions. This concludes the question-and-answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.