Artis Real Estate Investment Trust Q3 2020 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jonathan Kelcher - TD Securities Equity Research - Analyst : First question just on the asset dispositions, could we maybe -- especially the 2 large ones, the Concorde portfolio and Shoppers Delta, could you maybe give a little bit of color on them in terms of who looked at them? Who the potential buyers were? And who ultimately bought them? Armin Martens;President and CEO I'll let Kim weight in here.

Question: Jonathan Kelcher - TD Securities Equity Research - Analyst : Okay. And Concorde, was that -- that's a stabilized 5% cap rate, it's a full building?

Question: Jonathan Kelcher - TD Securities Equity Research - Analyst : Okay. In terms of -- now that you're deferring the retail spin-off, and you're still looking to sell a fairly larger number of assets next year, will you sort of tailor that more towards retail asset sales now? Is there any change in plan there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2020 / 6:00PM, AX_u.TO - Q3 2020 Artis Real Estate Investment Trust Earnings Call Armin Martens;President and CEO No, you're right. It will be a combination of retail and more office. A year ago, before this pandemic came upon us, we shifted the paradigm. And while we were doing it, we thought we can sell all -- down our retail in a 3-year period. We don't think that anymore because we don't want to give it away, right? But we can continue to sell some retail and improve our balance sheet and improve our portfolio, streamline our portfolio. And then we'll sell some more office as well and we'll grow industrial.

Question: Jonathan Kelcher - TD Securities Equity Research - Analyst : And when -- how much of the quarter was it in?

Question: Jonathan Kelcher - TD Securities Equity Research - Analyst : Okay. And then the bad debt recovery you got, that was included in Q3 NOI, correct?

Question: Matt Logan - RBC Capital Markets, Research Division - Analyst : When we think about some of your asset sales, you had mentioned there would be tax consequences or potential tax consequences. If the REIT sold all of its assets today in a hypothetical, what would they be? Like how much could we see in terms of value erosion through tax leakage? Armin Martens;President and CEO I can give you my answer because I'm not a CPA. So look at me, he said he's going to give me a warning look. "Look, don't say this stuff in the public domain." But in theory, Matt, if we sold all of our assets that are now at $15.35, that would be the equivalent to selling the REIT at $9 a unit, for example. It's just a killer. That's why, when we conducted this strategic review, the deal was to do a unit-based transaction. That was the whole goal. As far as -- and if the pandemic had not come, we wouldn't be having this conference call today possibly, we were that close to a strategic transaction for the whole

Question: Matt Logan - RBC Capital Markets, Research Division - Analyst : Fair enough. Maybe just changing gears, during the quarter, you put out a press release which outlined the outcome of the strategic review with over 100 investors that were reached out to. Have any of them come back to the table, given what would have been very solid operating results here over the last 2 quarters? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2020 / 6:00PM, AX_u.TO - Q3 2020 Artis Real Estate Investment Trust Earnings Call Armin Martens;President and CEO So the answer is yes, some ongoing dialogue does -- is taking place and interest continues. But there's nothing much more we can say on that front.

Question: Matt Logan - RBC Capital Markets, Research Division - Analyst : And with the leasing that you've got on the horizon, together with improving rent collections, do you think we could see a return to positive same-property NOI growth in 2021? Armin Martens;President and CEO It will happen. If for no other reason, we hit the bottom this year with our retail, right? It will happen, for sure. The end of the year as a sign sounds right. So things are looking up for us, and we'll get back to that positive. We are so proud with the -- was it 7 or was it 9 consecutive quarters, we had a positive same-property NOI growth. We're proud of that. And now we just hit 2 consecutive negative. But it's a 100-year pandemic, we'll get through this, and our numbers will improve including the same-property numbers for sure. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 06, 2020 / 6:00PM, AX_u.TO - Q3 2020 Artis Real Estate Investment Trust Earnings Call