Choice Properties Real Estate Investment Trust (PPRQF) Q4 2022 Earnings Call Transcript

Choice Properties Real Estate Investment Trust (OTC:PPRQF) Q4 2022 Earnings Conference Call February 16, 2023 10:00 AM ET

Company Participants

Erin Johnston - Vice President-Finance

Rael Diamond - President & Chief Executive Officer

Ana Radic - Chief Operating Officer

Mario Barrafato - Chief Financial Officer

Conference Call Participants

Sam Damiani - TD Securities

Pammi Bir - RBC Capital Markets

Gaurav Mathur - iA Capital Markets

Himanshu Gupta - Scotiabank

Operator

Good greeting and invited to nan Choice Properties Real Estate Investment Trust Fourth Quarter 2022 Earnings Conference Call. Today's telephone is being recorded. After nan speaker's remarks, location will beryllium a question-and-answer session.

I would now for illustration to manus nan convention complete to your first speaker coming Erin Johnston, Vice President of Finance. Please spell ahead.

Erin Johnston

Thank you. Good morning, and invited to nan Choice Properties Q4 2022 convention call. I'm joined present this greeting by Rael Diamond, President and Chief Executive Officer; Mario Barrafato, Chief Financial Officer; and Ana Radic, Chief Operating Officer.

Rael will commencement nan telephone by providing a little recap of our 2022 capacity and screen nan highlights of nan quarter. Ana will screen our operational results followed by Mario who will reason nan telephone pinch a reappraisal of our financial results earlier we unfastened nan lines for Q&A.

Before we statesman today's call, I would for illustration to punctual you that by discussing our financial and operating capacity and successful responding to your questions, we whitethorn make forward-looking statements including statements regarding Choice Properties objectives, strategies to execute those objectives, arsenic good arsenic statements pinch respect to management's beliefs, plans, estimates, intentions, outlook and akin statements concerning anticipated early events, results, circumstances, performance, aliases exceptions that are not humanities facts.

These statements are based connected our existent estimates and assumptions that are taxable to nan risks and uncertainties that could origin existent results to disagree materially from nan conclusions successful these forward-looking statements. Additional accusation connected nan worldly risks that tin effect our financial results and estimates and nan assumptions that were made successful applying successful making these statements tin beryllium recovered successful nan recently revenge 2022 yearly financial statements and guidance chat and analysis, which are disposable connected our website and connected SEDAR.

And pinch that, I'll move nan telephone complete to Rael.

Rael Diamond

Thank you, Erin and bully morning, everyone. 2022 was different twelvemonth of affirmative momentum for our business arsenic we importantly precocious our strategical agenda. We stay focused connected our goals of preserving our capital, generating unchangeable and increasing rate travel and achieving semipermanent nett plus worth appreciation and distribution maturation complete time.

We delivered coagulated operating and financial results successful 2022 driven by nan spot of our grocery-anchored and necessity-based unit portfolio, nan realization of embedded rent maturation successful our well-located generic business portfolio and our increasing mixed-use and residential platform.

In summation to our beardown results, we further enhanced our portfolio by completing complete $1.2 cardinal successful existent property transactions. We delivered 3.8% NAV maturation successful 2022 driven by nan spot of our business portfolio and advancement connected developments.

On nan improvement front, we transferred $71 cardinal from properties nether improvement to income producing and achieved respective cardinal zoning milestones successful 2022. We now person complete 18 cardinal quadrate feet successful our transformational improvement pipeline pinch important adjacent to medium-term opportunities.

We took steps this twelvemonth to guarantee we maintained our industry-leading equilibrium expanse contempt pressures from rising ostentation and rising liking rates. With ongoing economical uncertainty, we stay focused connected preserving liquidity and maintaining a balanced indebtedness maturity ladder. Both measures trim consequence and create financial flexibility.

This past twelvemonth we proceed to lead nan measurement successful sustainability and made important advancements successful our 2 pillars of fighting ambiance alteration and advancing societal equity which you will perceive much astir adjacent week astatine our Investor Day.

We are proud of our expertise complete nan past respective years to support our unchangeable distribution arsenic we focused connected improving nan value of our equilibrium expanse and our portfolio. Given nan spot and stableness of our business, we are pleased to denote Choice's first distribution summation since 2017. The summation reflects nan assurance we person successful our business to proceed to present dependable and increasing rate flows, our beardown financial business -- our beardown financial position and nan abilities of our talented and divers team.

Turning to our 4th fourth activity. We delivered different beardown cleanable quarter. In position of operations, we person sustained adjacent afloat occupancy levels successful our unit and business portfolios pinch occupancy astatine 97.8%. Further our business delivered beardown same-asset rate NOI maturation of 3.9%.

During nan 4th we continued to execute connected our superior recycling programme completing $120 cardinal of transactions, including $75 cardinal of acquisitions and $45 cardinal of dispositions. On nan acquisitions front, we completed nan acquisition of astir 90,000 quadrate ft Loblaw anchored unit plus successful downtown Toronto for $53.3 million.

We besides completed nan acquisition of astir 22,000 quadrate ft Shoppers Drug Mart successful an established and increasing mode of calved Ontario. As portion of nan transaction, we entered into a caller 50 caller lease pinch shoppers, erstwhile again highlighting nan use of our strategical narration pinch our awesome tenants.

Subsequent to nan 4th quarter, we completed nan acquisition of 3 stand-alone unit assets located successful Western Canada from Loblaw for $98.6 million. While we scheme to support a balanced superior recycling programme successful 2023, this was an opportunity to get beardown performing stores that Loblaw has committed to pinch caller semipermanent leases executed connected acquisition ranging from 15 to 20 years pinch an mean 2% yearly rent measurement complete nan lease term.

On nan disposition front, we proceed to attraction connected exiting agency arsenic an plus class. And successful nan 4th completed nan disposition of an agency spot successful Halifax, Nova Scotia for $40 million. The aforesaid purchaser waived connected nan acquisition of our past remaining Atlantic agency building located successful Dartmouth, Nova Scotia pinch closing scheduled by nan extremity of nan first 4th of 2023.

To date, we person successfully disposed of aliases nether statement to dispose of 9 of 11 non-core agency properties. We proceed to intimately show nan marketplace and will waste our remaining 2 agency assets arsenic nan opportunities coming themselves. Progress connected our improvement successful nan 4th was dependable and we are connected way to present our 2 progressive residential developments and 1.4 cardinal quadrate feet of business abstraction successful 2023.

With that, I'm now going to walk nan telephone connected to Ana to talk our operational results. Ana?

Ana Radic

Thank you, Rael, and bully greeting everyone. As Rael mentioned, we erstwhile again delivered beardown operational results. We remained adjacent afloat occupancy ending nan 4th astatine 97.8% occupied, an summation of 10 ground points compared to past quarter. During nan quarter, we had astir 1.35 cardinal quadrate feet of lease expiries, we renewed 1.14 cardinal quadrate feet astatine an mean dispersed of 30% and we completed 242,000 quadrate feet of caller leasing that commenced successful nan 4th resulting successful affirmative absorption of 23000 quadrate feet.

Turning to our plus classes. Occupancy successful our astir 44 cardinal quadrate ft necessity-based unit portfolio continued to strengthen, expanding 10 ground points to 97.8% pinch affirmative absorption occurring successful almost each awesome markets demonstrating nan spot and value of our tenants and assets. Demand for unit abstraction remains high. Although user disposable income spending is expected to proceed to tighten successful 2023, postulation volumes astatine our vicinity sites stay constant. With complete 81% of our unit gross rent being generated from necessity-based and worth retailers, we expect our portfolio to proceed to execute well.

As a reminder, we study rental spreads only connected leases that expired and were renewed successful nan existent quarter. We had 507,000 quadrate feet of unit expiries successful nan 4th and completed 415,000 quadrate feet of renewals, resulting successful tenant retention of 82%. These renewals were completed astatine rents 6.4% supra expiry. We besides completed a 131,000 quadrate feet of caller leasing resulting successful affirmative absorption successful nan quarter. Half of our caller unit leasing came from discount, pet food, speedy work restaurants and individual work retailers. As these categories proceed their beardown appetite for Brick-and-Mortar abstraction peculiarly successful grocery-anchored centers.

Given our nationalist portfolio and location knowledge, we proceed to activity pinch our tenants to grow their businesses. Discount retailers proceed to adhd to their shop web expanding to smaller markets. Of note, our 2 caller Dollarama locations that opened successful our centers successful Selkirk, Manitoba and Alexandria, Ontario.

Turning to industrial, Market dynamics stay solid. The nationalist business readiness complaint successful Q4 was 1.6% pinch caller proviso providing small relief. Six retired of 10 Canadian markets proceed to person readiness rates astatine aliases beneath 1.2%.

In Q4 of 2022, different caller rental maturation grounds was achieved pinch nan mean nationalist nett rental rate, reaching $13.71, a 30.9% summation year-over-year. Increases were seen successful each markets pinch Montreal to Toronto and nan Waterloo Region starring nan measurement pinch yearly year-over-year increases of complete 30%.

Occupancy successful our business portfolio is 98.9%. We are adjacent to afloat occupied. We had 757,000 quadrate feet of business leases expired successful nan 4th of which we renewed, 646,000 quadrate feet of abstraction astatine rents 87% supra expiry.

In Ontario, 273,000 quadrate feet of expiries were renewed astatine rents, a 157% supra nan expiring rent. We person important embedded rental complaint maturation successful our business portfolio and proceed to spot leasing opportunities crossed our full business portfolio, astatine rents good supra existent in-place rents. Our existent mean in-place business rent is $8.43 per quadrate foot.

Our high-quality portfolio is chiefly leased to necessity-based tenants -- excuse maine --and logistics providers who are little delicate to economical volatility and truthful supply stableness to our wide portfolio. We proceed to acquisition affirmative leasing momentum crossed our portfolio, and we are good positioned to grip our 2023 lease renewal exposure.

I'll now walk nan telephone complete to Mario, to talk our financial performance.

Mario Barrafato

Thank you, Ana and bully greeting everyone. We are pleased pinch our coagulated financial capacity successful nan 4th quarter. Our results, erstwhile again, bespeak our portfolio unchangeable and increasing rate flows.

Our reported costs from operations for nan 4th quarter, was $174.1 cardinal aliases $0.41 per unit. Apart from non-recurring G&A expenses of astir $1.4 million, chiefly related to severance and task costs. It was a comparatively cleanable 4th pinch nary important aliases different one-time items.

On a per portion diluted ground our Q4 FFO of $0.41 is successful statement pinch nan 4th fourth of 2021. The year-over-year increases successful same-asset NOI were offset by higher borrowing costs and rate travel dilution from nan Allied transaction.

And arsenic a reminder nan foregone NOI for nan waste of our agency properties was only partially offset by distribution and liking income. Occupancy accrued somewhat successful nan 4th and contributed to our beardown aforesaid plus results. Same plus rate NOI accrued by $8.5 cardinal aliases 3.9% compared to nan 4th fourth of 2021.

By plus class, unit accrued by $7.5 cardinal aliases 4.3%. The summation was chiefly driven by higher rents connected caller leasing, contractual rent steps and higher superior recoveries. Excluding nan simplification of bad indebtedness disbursal of $1.2 cardinal unit accrued by $6.3 cardinal aliases 3.5%.

Industrial aforesaid plus rate NOI accrued by astir $900,000 aliases 2.5%. This summation was driven by precocious occupancy and important rent maturation connected renewals, arsenic mentioned by Ana. Mixed-use residential different accrued by astir $140,000 aliases 1.9%.

Now turning to our equilibrium sheet, our IFRS NAV accrued 2.3% to $13.36 per portion an summation of $220 cardinal complete past quarter. Our NAV maturation was driven by $207 cardinal of adjacent worth gains connected our finance properties partially offset by a downward adjacent worth accommodation connected our finance successful Allied Properties units.

In owed call, we're requiring our IFRS to mark-to-market this finance to its trading value arsenic of December 31st. As Ana mentioned, business marketplace dynamics stay strong. Our adjacent worth gains bespeak nan rate travel maturation nan changes successful rent assumptions successful our business portfolio and besides to a lesser grade our unit portfolio.

Included successful our afloat twelvemonth NAV is $442 cardinal of gains connected our finance properties. The adjacent worth alteration successful our finance properties was driven by beardown business fundamentals and nan accomplishment of cardinal milestones successful our business and mixed-use improvement programs. This was partially offset by nan adjacent worth losses successful our unit portfolio, reported successful nan 2nd 4th to bespeak nan effect of rising liking rates.

We proceed to judge that, our valuations appropriately bespeak nan existent market, including nan unit that a higher superior costs situation is putting connected existent property economics. We are now seeing outer appraisals much successful statement pinch our soul values.

Turning to our indebtedness maturities. We had minimal financing activity successful nan 4th and ended nan twelvemonth pinch $260 cardinal drawn connected our in installments facility. We closed nan 4th pinch beardown indebtedness metrics and ample liquidity. Our debt-to-EBITDA ratio was 7.5 times, and we person astir $1.2 cardinal disposable connected our in installments facility. This is further supported by astir $12.3 cardinal of unencumbered properties.

We proceed to attraction connected de-risking nan equilibrium expanse and leveraging nan various sources of backing disposable to us. Subsequent to nan 4th quarter, taking advantage of nan semipermanent leases connected unit properties acquired from Loblaw, which Roll referred to earlier, we committed to $162 cardinal of owe financings astatine tenders betwixt 10 and 20 years.

The loans transportation a weighted mean terminal for 13 years and an suggestive all-in costs coming of 5.1%. Looking ahead, we person $375 cardinal of unsecured debentures maturing successful nan first quarter. We stay encouraged by beardown request for our sanction successful nan unsecured market, and are assured successful our expertise to refinance these maturities.

Now, rubbing concisely connected our disclosures, we're committed to providing elaborate and transparent disclosure, and we're continuously reevaluating our disclosures to guarantee that we supply capable accusation to our cardinal stakeholders.

As a result, we've made respective disclosure improvements passim our yearly report, including elaborate tenant and lease maturity profile, accusation connected some unit and business segments. So overall, our business model, our unchangeable tenant base, our beardown equilibrium sheet, and our disciplined attack to financial management, position america good for early success, and this has group nan instauration for our first distribution summation since 2017. One of our financial goals is to proceed to thrust increases successful NAV and distributions complete clip and this summation reflects our expertise to present connected this goal.

Looking ahead, we are assured successful our business expertise to deliver, and successful 2023 we expect unchangeable occupancy crossed nan portfolio resulting successful 2% to 3% year-over-year maturation successful aforesaid plus NOI connected a rate basis, yearly FFO per portion diluted successful nan scope of $0.98 to $0.99 per unit, reflecting a 2% to 3% year-over-year maturation and unchangeable leverage metrics.

And pinch that Rael, Ana and I will beryllium gladsome to reply your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first mobility will travel from nan statement of Sam Damiani pinch TD Securities. Please spell ahead.

Sam Damiani

Thanks, and bully morning, everyone, and congratulations connected nan bully quarter, and a distribution increase. That's awesome to see. Just wanted to possibly commencement disconnected connected nan guidance 2% to 3% aforesaid property, akin FFO growth. Just wondering what nan offsets you're anticipating successful 2023 to not let FFO maturation to turn a small faster?

Mario Barrafato

Hey, Sam, bully morning. Well, really correct now, we conscionable – we're conscionable cautious connected nan liking rates. Effectively, we're seeing correct now there's still volatility. And while nan rates were to beryllium projected to diminution astatine nan extremity of nan year, you're seeing that pinch ostentation numbers and occupation numbers that that possibly that's nan pace. So we're conscionable being cautious connected liking rates. But we're very, very bullish connected NOI. And we've done a batch of activity successful nan past twelvemonth to guarantee that immoderate of nan exposures would person had aliases gone and pinch nan business now we're starting to rotation up nan rents there. So, assured NOI, but cautious connected liking expense.

Sam Damiani

Okay. That makes sense. And connected nan aforesaid spot guidance, is location a breakdown by unit and business that you'd beryllium consenting to stock astatine this point?

Mario Barrafato

I guess, directionally business will beryllium overmuch higher. So we would say, for illustration pinch nan unit astir apt successful I'd say, nan two’s but business will beryllium higher to bring that mean to adjacent to three.

Sam Damiani

I see. And conscionable past 1 for me. The bully disclosure by nan measurement breaking down nan business and nan retail, Ana, you mentioned nan mean in-place rent of $8.43 connected nan industrial. Do you person – hap to person an estimate of nan wide mean marketplace rent for your portfolio?

Ana Radic

You know, Sam, we deliberation marketplace to marketplace we person astir 40% embedded maturation wrong our business portfolio.

Sam Damiani

Great. That's adjuvant and I'll move it back. Thank you.

Operator

Your adjacent mobility will travel from nan statement of Pammi Bir pinch RBC Capital Markets. Please spell ahead.

Pammi Bir

Thanks. Good morning. Just connected nan properties that were acquired successful nan 4th and successful January from Loblaw, immoderate colour you tin stock conscionable successful position of nan headdress rates aliases possibly moreover a scope connected those transactions? And past besides connected nan agency disposition successful [indiscernible]?

Rael Diamond

Pammi, acknowledgment for nan question. We mostly don't disclose headdress rates. But nan ones we acquired successful nan 4th was, telephone it mid-5s. Office astatine nan infinitesimal particularly suburban agency is really trading connected a value per port. I don't cognize nan nonstop headdress rate. I judge it was astir 7%. And past nan worldly from Loblaw, I don't person it useful correct now.

Pammi Bir

Okay. We tin possibly circle backmost connected that. Just connected nan -- I deliberation you mentioned a 2% rent average, I guess, yearly rent escalator connected nan Loblaw properties that were acquired successful January. I deliberation that's a spot amended than your emblematic benignant of 1.5%. Is -- was that -- is that possibly nan anticipation going guardant aliases was location -- was this much of a unsocial transaction?

Rael Diamond

Okay. I think, it's each going to beryllium limited astatine nan clip we're acquiring an plus and it's each done astatine marketplace pinch Loblaw. And truthfully, it's each a usability of nan starting rent, nan headdress rate, nan maturation and that's adjacent to some sides. So, it is higher than nan existing portfolio. But again, it was done astatine a different clip to nan existing portfolio pinch IPO [ph]. And we do expect maturation arsenic we rotation nan Loblaw leases.

Pammi Bir

Got it. Just possibly reasoning astir nan business portfolio. Clearly, there's immoderate charismatic maturation ahead, but it's still a mini portion of nan wide business. Over nan agelong term, is nan volition to support this successful nan REIT aliases would you see perchance possibly spinning it disconnected astatine immoderate constituent down nan road?

Rael Diamond

Yes. Look, erstwhile we deliberation astir our business platform, we person astir $3.5 cardinal of income-producing assets and we person this tremendous opportunity to turn it some done embedded rent steps which and embedded rent maturation which Ana referred to successful nan first question. And past secondly, connected our improvement pipeline of astir 7 cardinal quadrate feet. And we are going to attraction connected making nan best, strongest business level that you tin bargain successful nan Canadian REIT scenery wrong Choice and past we will measure it astatine that time.

Pammi Bir

Got it. Maybe conscionable past one. Just pinch respect to nan Allied units. What's your reasoning astir that finance arsenic nan lockup play originates to unfastened up complete nan people of this year?

Rael Diamond

Look, we spectacular financial style and Allied successful our mind is nan champion agency usability successful Canada. So, we’re nether nary unit to waste nan units. We get a unchangeable and successful fact, it grew past twelvemonth distribution from Allied and we'll waste nan units complete clip erstwhile it makes sense.

Pammi Bir

Thanks truthful much, Rael. I'll move it back. Thank you.

Operator

Your adjacent mobility will travel from nan statement of Gaurav Mathur pinch iA Capital Markets. Please spell ahead.

Gaurav Mathur

Thank you, and bully greeting everyone. Just connected nan agency dispositions, tin you talk nan extent of nan bargain support and nan appetite that you're seeing from imaginable buyers?

Rael Diamond

Thanks for your question. So nan assets that we person remaining are mostly smaller. They mostly considered non-core assets. So nan purchaser floor plan is mostly backstage and it's not that heavy astatine nan infinitesimal conscionable fixed immoderate of nan pressures connected nan plus class. But arsenic you've seen we've been very successful astatine executing nan dispositions of nan non-core. As we said connected nan telephone we person 2 remaining and we'll waste them erstwhile nan clip is right.

Gaurav Mathur

Okay. And past my adjacent mobility is erstwhile you're reasoning astir superior allocation successful 2023 and arsenic nan twelvemonth unfolds has nan return floor plan changed betwixt acquisitions improvement and nan NCIB erstwhile you're comparing it to 2022?

Mario Barrafato

I deliberation successful wide correct now our attraction is allocating much superior to development. We person this opportunity pinch business it's growing. We've been beating capacity arsenic we beforehand our modeling. And fundamentally others, I think, can't create thing to nan yields we tin for industrial. So we still proceed pinch recycling. I deliberation it's conscionable prudent guidance and judge it will beryllium much balanced. As Rael said, we were repositioning nan portfolio complete nan past fewer years but now we tin support conscionable immoderate equilibrium superior cycling and allocate much superior to development.

Gaurav Mathur

Okay. Okay. Great. And conscionable lastly connected caller and existing leases. Can you conscionable supply immoderate much colour connected really you're reasoning astir rent escalators crossed different plus classes fixed nan persistent inflationary environment?

Ana Radic

Yes we're pushing arsenic overmuch arsenic we tin pinch respect to our renewing tenants. I deliberation successful business evidently that gives america a awesome runway to turn nan rents and you'll see, benignant of, stronger rental complaint maturation there. And again pinch unit that abstraction is besides very beardown peculiarly successful nan vicinity centers wherever we person awesome request particularly arsenic there's very fewer caller developments being built and that's helping america summation rents. So you'll spot rental complaint maturation successful excess of what you've seen this year.

Gaurav Mathur

Okay. Great. Thank you truthful overmuch for nan color, I'll move it backmost to nan operator.

Operator

[Operator Instructions] Your adjacent mobility will travel from nan statement of Himanshu Gupta pinch Scotiabank. Please spell ahead.

Himanshu Gupta

Thank you and bully morning. So conscionable connected nan equilibrium sheet, I think, you person astir $400 cardinal unsecured ventures coming due. I mean do you person a penchant for secured financing aliases unsecured financing astatine this constituent of time?

Mario Barrafato

Hi, Himanshu. Good morning. We are successful fortunate successful a position that we person entree to each sources of capital. And I deliberation we conscionable demonstrated, we conscionable tapped into nan secured marketplace and took advantage of our semipermanent leases and took advantage of these slender for churn. So we're coming retired astatine today's complaint is astir apt astir 5.1%.

The unsecured marketplace is unfastened for us. We're getting calls each time connected demand. I deliberation our spreads are if not nan tightest 1 of nan tightest successful nan industry. And truthful we person entree to aggregate sources and we're going to usage them all.

Himanshu Gupta

All right. So Mario for illustration information is astir 5.1% location you opportunity nan unsecured would beryllium -- for illustration mid-5 aliases moreover higher?

Mario Barrafato

It'd beryllium a spot higher but nan gaps are narrowing. The secures are getting higher. So correct now I'd opportunity based connected coming conscionable apical of my caput by 5.4% astir apt for an unsecured compared to 5.1% for secured.

Rael Diamond

But I deliberation Himanshu nan important point to statement successful nan underlying bonds person risen a bit. So arsenic Mario said, nan spreads person tightened connected unsecured. And past besides retrieve connected unsecured, we person a existent tenure versus owe arsenic nan amortization. And arsenic Mario said we really are successful a fortunate position fixed our in installments standing to beryllium capable to entree each forms of indebtedness and spell agelong connected each forms.

Mario Barrafato

And Himanshu, nan different facet successful play is nan short-term portion of nan curve is very steep. Our in installments installation is astir apt nan astir costly root of indebtedness correct now. So having semipermanent leases and being capable to push retired to longer-term is really much beneficial and we're fortunate to beryllium successful that position arsenic well.

Himanshu Gupta

Right. Thanks for nan colour there. And conscionable sticking to different follow-up connected nan distribution summation announcement. So do you person for illustration a target if for payout ratio successful mind aliases is it much a reflection of really do you spot your FFO maturation going forward?

Mario Barrafato

Yes. No, that's a awesome question. We for background, arsenic we've said a fewer times we've been rightsizing nan equilibrium sheet, improving portfolio value investing successful maturation opportunities and we felt we're successful a position to commencement sharing immoderate of our maturation pinch our investors arsenic opposed to putting it backmost into nan business. And we besides deliberation that nan payout ratio, which we calculated for illustration our net are sovereign conscionable betterment during nan pandemic. And you spot it correct now our abilities to sorb liking rates and worldly for illustration that. So we're focusing connected arsenic we turn sharing that. So it will beryllium trying to support a accordant payout ratio is wherever we are today. And conscionable -- but nary circumstantial target conscionable stableness and launching our leverage metrics and stock that business astatine risk.

Himanshu Gupta

Got it. That's helpful, Mario. And past conscionable shifting gears connected nan business portfolio. I mean intelligibly a batch of mark-to-market opportunity there. And it looks for illustration you are expecting thing person to 3% same-store NOI maturation this year. Would you opportunity this will further accelerate successful nan coming years arsenic much lease expiries coming -- travel owed particularly successful Ontario region?

Mario Barrafato

I tin jump in. I mean, yes. I mean, for illustration nan retail, if we were talking a twelvemonth ago, we say, our unit flows betwixt 1.5% and 2% and steps are getting a spot higher, but it is stable. And you're correct nan adjacent 3 aliases 4 years arsenic we get entree to nan business portfolio, particularly pinch GTA, we should beryllium astatine nan precocious extremity of that scope of -- that's really we get to nan 2 to 3 scope arsenic nan business will complement nan retail.

Rael Diamond

But to Mario's constituent Himanshu business is decidedly higher than nan 3% that you quoted.

Himanshu Gupta

Thank you. Thank you, Rael and convey you, Mario. And I'll move it back.

Rael Diamond

Thank you.

Operator

We person nary further questions astatine this time. I'll move nan convention backmost complete to guidance for immoderate closing remarks.

Rael Diamond

Thank you, Regina. So to summarize we're very pleased pinch our 4th fourth and 2022 operating performance. We are genuinely successful a position of spot highlighted by our industry-leading equilibrium expanse and supported by a distribution increase. We look guardant to sharing much pinch you adjacent week astatine our Investor Day connected February 23rd astatine 1:00 p.m. and accusation to subordinate nan webcast tin beryllium recovered connected our website. Thank you for your liking your finance successful prime and for joining america this morning.

Operator

Ladies and gentlemen, that will reason today's meeting. Thank you each for joining. You whitethorn now disconnect.