Edited Transcript of ERE_u.V earnings conference call or presentation 12-May-20 1:00pm GMT

We are proud to report strong operating results in such turbulent times with FFO per unit of EUR 0.033 and AFFO unit — per unit of EUR 0.030 for the first quarter of 2020.

That brings us to Slide 6, which outlines the extensive measures that have been put in place by the Dutch government in order to mitigate the adverse impacts of the COVID-19 pandemic and protect the welfare of its people and their incomes. In general, the focus has been to maintain, as much as possible, people’s incomes by measures which includes employer wage contribution, small business loan extension and government support for international trade, to name a few. Such measures have assisted tenants during these challenging times to maintain their rental payments, even if they have experienced job disruption.

The government’s recently announced a road map for reopening the economy in the coming weeks and months is positive and speaks to the efficacy of the measures which they have implemented in order to safeguard the well-being of the country and its citizens.

Slide 7 provides a business update as it relates to COVID-19, highlighting not only the impact of the assistance measures provided by the government but also the inherent strength of the Dutch multi-residential sector.

ERES received approximately 100% of residential revenue due for the month of April, and residential collections so far in May likewise remains in line with our historical average collection rate. Our residential occupancy also remains high with positive leasing activity continuing to date.

With respect to indexation, we served tenant notices that 95% of the residential portfolio, across which the weighted average rental increase due to indexation was 2.4%. This is in line with the government’s allowed inflation for the 2020 regulated index framework and consistent with indexation increases being implemented by other large property management companies in the Netherlands.

Due to restrictions on suite access and in order to protect the safety of tenants and staff, we have deferred temporarily certain nonresidential repairs and maintenance and non-discretionary capital expenditures where possible. Our 2 office properties in Germany and Belgium continued to provide stable and consistent cash flows under long-term leases with no indication that either will encounter financial difficulty due to the COVID-19 pandemic in the future. We also are working on rental deferral programs with certain retail tenants in our mixed-use property in the Netherlands, which contains a significant retail component on the first 2 floors who are affected by the COVID-19 pandemic as they provide goods and services currently classified as nonessential.

Notwithstanding this, commercial and retail occupancy holds strong at 100% as of May 11.

Moving to Slide 8. Internally, ERES’ organizational structure, via CAPREIT’s IT platform, has facilitated successfully the operational transformation inflicted by COVID-19 with minimal disruption to the business. Due to the nature of Dutch multi-residential sector itself, notably, its customer and tenant focus, our business requires rapidly evolving business intelligence surrounding the pandemic and the operating environment and the ability to communicate the impact to our tenants.

In this context, ERES has been able to fully utilize CAPREIT’s technology platform, allowing its staff in the Netherlands to seamlessly transition to working from home, whilst continuing to maintain open lines of communication with tenants and third-party service providers.

In addition to the benefits of having access to advanced and modern software, advanced ERES also include the pre-existing ability to manage our tenant correspondence virtually and the outsourcing of key functions to third-party, including leasing and servicing our suite.

Despite the COVID-19 pandemic in its pervasive direct and indirect impact, our property portfolio has proven to be robust and stable.

Looking more closely at Slide 9, you can see that our suites are nearly evenly divided between regulated and liberalized, providing a balanced tenant profile and growth potential with rent as well as the opportunity to liberalize more suite. Importantly, about 1/4 of our current properties are located in the high-growth urban markets of the Randstad, including the cities of Amsterdam, Rotterdam, The Hague and Utrecht. The rest of the portfolio is situated in smaller urban centers throughout the country.

Slide 10 provides more detail on our current residential portfolio. Average occupied monthly rents were EUR 828 at the end of March, with a high and stable occupancy of 98.3%. Importantly, our turnover for the first quarter was 4.1%, which is high on an annualized basis compared to 13.2% turnover achieved in 2019. However, this is partly a result of higher vacancy going into 2020.

The portfolio is well diversified by a number of bedrooms, providing further balance while ensuring we meet the demand for smaller units as well as family. You can also see that approximately half of the current portfolio was constructed since 1980, providing an average age of under 40 years, resulting in lower ongoing repairs and maintenance costs and driving asset values higher.

And with that, I will now turn the call over to Scott.

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Scott Cryer, European Residential Real Estate Investment Trust – CFO & Corporate Secretary [3]

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Thanks, Phillip.

Turning to Slide 12. You can see that the increase in our size and scale is having a significant and positive impact on our financial and operating results. For the first quarter of 2020 as compared to Q1 of 2019. As well known, however, that for Q1 2019, this period represented before our RTO and before being a public company, and thus are not perfectly comparable.

So for Q1 2020, our operating revenues were up 214% on the contribution from our acquisitions as well as an increase in monthly rents in the stabilized portfolio. This revenue increase from acquisitions, combined with lower operating costs on our stabilized properties, drove a 224% increase in our NOI, with a much stronger consolidated NOI margin of 76%, reflecting the strength of our acquisitions and efficiencies in operating our existing assets.

FFO and AFFO both increased by approximately 175%, however, were impacted by higher current income tax and general administrative expenses during the quarter, both relating to the structuring and growth of the business since inception and partially offset by an increase in NOI on our stabilized portfolio as well as by acquisitions to date, which have been accretive.

FFO and AFFO per unit was significantly impacted by a greater weighted average number of units outstanding this quarter.

As detailed on Slide 13, our portfolio is generating solid organic growth through higher stabilized occupied AMR, reduced operating costs and increased scale. Occupancy was strong and stable at 98.3%. Although lower than the same period in 2019, it represents a strong increase from Q4 2019 occupancy of 97.2%, which is largely due to improved occupancy and properties acquired in the later half of 2019.

Occupied average monthly rents on our stabilized portfolio increased by 4.5%, a result of contractual indexation turnover and the conversion of regulated suite to liberalized suite. Stabilized portfolio NOI for 2019 year-end increased by 4.4%, driven by the higher operating revenues from increased monthly rents as well as reduced operating expenses from lower R&M costs and lower property management fees. While stabilized rental revenue growth contributed an increase of only 2.8%, this was as a result of the higher vacancy we mentioned coming into the quarter.

With ERES having concluded the quarter at a much stronger occupancy, this will drive better rental growth performance in quarter 2 and beyond.

Finally, our weighted average interest rate continued to decrease, down 34 basis points compared to the same time last year, evidencing the strong spreads we are achieving between cap rates and interest costs. Notably, while debt markets are in somewhat fluid times today, despite the current economic circumstances, our latest mortgage financing was secured in April at a weighted average mortgage interest rate of only 1.58%.

As we continue to scale the business, we remain focused on maintaining a conservative financial profile, as you can see on Slide 14. This has been especially important given the recent economic uncertainty onset by COVID-19 pandemic. Despite such uncertainty, in combination with the rapid and significant increase in the size of our asset base, we are seeing conservative leverage, which we expect to keep between 45% and 50%, as we continue to grow down the line, lower interest costs as a result of having secured financing to date by capitalizing on the persistent low rates in the European Union and a conservative 5.2 year term to maturity for our mortgage portfolio.

In addition, we had approximately EUR 87 million of immediate available liquidity at March 31, which increased to EUR 146 million in the subsequent period as a result of our latest mortgage financing, inclusive of EUR 100 million in undrawn lines of credit with the remainder in cash. Even an assumed 60% loan-to-value ratio on long-term mortgage financing, we have immediate capacity to acquire up to EUR 365 million in assets. But we will continue to ensure liquidity and leverage are a priority in these times.

With EUR 46 million of cash, we do, however, the ability to grow our asset base without impacting our leverage. With such ample liquidity during the first quarter of 2020, ERES paid monthly cash distributions of EUR 0.00875 per unit, equivalent to EUR 0.105 on an annualized basis, which we intend to continue declaring, subject, of course, to discretion of our Board of Trustees.

Slide 15 provides more detail on our well-staggered mortgage portfolio, with the nearest debt maturing not occurring until 2022. In addition, the majority of our mortgages are non-amortizing. As we continue to grow, we will ensure we maintain our smooth maturity profile in order to reduce renewal risk.

Thank you for your time this morning, and I’ll turn things back to Phillip to wrap up.

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [4]

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Thanks, Scott.

In summary, the first quarter of 2020 has validated the strength and the resilience of our operating platform, the high quality and stability of our property portfolio and the diverse experience of our team. Our priority during these challenging times has been with the safety and well-being of our staff and tenants. And in this context, we are proud that our operating results this quarter have proven such robustness in the value inherent in our asset class, as well as its ability to withstand such unprecedented circumstances.

We remain confident in our long-term ability to safely and responsibly address and absorb the regulatory economic, social and health impacts of the COVID-19 pandemic that may materialize. We look forward to restarting our growth initiatives and executing on our stated objectives when able to do so prudently. And in this regard, we believe that ERES offers a compelling investment opportunity.

The REIT provides a unique opportunity to invest in a growing and attractive European multi-residential real estate market. Our partnership with CAPREIT brings significant benefits to our unitholders. We are growing our portfolio at attractive yield spreads with strong and highly accretive organic and external growth opportunities. We have established a strong foothold in the Netherlands multi-residential market, and we are building size and scale to drive value going forward.

Our conservative balance sheet and financial position provides the flexibility and resources to drive further growth, and we have in place an experienced management team and a seasoned Board of Trustees.

Thank you for your time this morning, and we would now be pleased to take any questions you may have.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Brad Sturges from IA Securities.

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Bradley Sturges, Industrial Alliance Securities Inc., Research Division – Equity Research Analyst [2]

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Maybe just — I guess starting with the potential impacts from the pandemic. In terms of the ability for the REIT to convert regulated suites to liberalized, does the pandemic delay or kind of put on hold those plans? Or do you still expect it to complete a similar level of conversions this year compared to last year?

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [3]

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So far, we’ve been able to maintain conversions in some of our CapEx programs. The lockdown measures announced by the Dutch governments were under — the phrase that they used was an intelligent lockdown or stay at home if you can, but that still allowed us to do conversions, because we weren’t worried about the impact on our tenants or our service providers because, by definition, those flats are vacant. So that was able to proceed. And we were also able to do some of our discretionary CapEx, like continuing work on the elevator programs and some of our Utrecht assets. So coming out of the first quarter, we haven’t seen a material impact on the conversions yet.

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Bradley Sturges, Industrial Alliance Securities Inc., Research Division – Equity Research Analyst [4]

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Okay. In terms of,- I guess the turnover rate was a little bit more elevated in Q1, but how do you see that trending for the rest of the year? Does it kind of trend back to normalized or historical levels on an annualized basis?

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [5]

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Yes. I mean as Scott has mentioned, that was due largely to the slightly higher vacancy that we came into the quarter with. But moving forward, we’d expect it to be more toward the trend that we’ve witnessed over the last couple of years.

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Bradley Sturges, Industrial Alliance Securities Inc., Research Division – Equity Research Analyst [6]

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Okay. And then from an NOI margin perspective, I guess there was some commentary about lower R&M could be offset by clean costs. So is that — fair to say that expecting fairly stable margins overall?

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Scott Cryer, European Residential Real Estate Investment Trust – CFO & Corporate Secretary [7]

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Yes. I think that — I think that’s a fair comment. Yes, it’s — obviously, it’s hard to gauge the absolute impact on R&M working under this environment. But we think — we still are looking at positive growth with the indexation. And the cost, we think, would stay relatively flat as well. So…

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Operator [8]

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The next question is from Jonathan Kelcher from TD Securities.

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Jonathan Kelcher, TD Securities Equity Research – Analyst [9]

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What are your expectations on acquisition volumes as we get past this? Do you think there’ll be more sellers in sort of the back half of the year?

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [10]

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Well, for the first quarter, there was still a high volume of activity. I think since end of Feb, beginning of March, there’s been announced over EUR 800 million. That’s a little bit concentrated in one large portfolio that traded at about EUR 375 million, but there still has been quite a bit of activity at cap rates consistent with or even lower than what we saw at the end of last year. Some of that process was known coming through the end of the year and the beginning of next year. So as we’re sitting here today, that volume is probably slightly slower, but we still do see activity.

Our primary focus, certainly, for the first 2 months of the pandemic has absolutely been to protect the staff, tenants and liquidity, and we didn’t participate in some acquisitions intentionally. Going forward, I would expect us to lift our pens and look at acquisitions going forward. But again, just given the overall capital markets environment, by definition, they would be on the smaller side. We wouldn’t anticipate doing an acquisition that would require a capital raise, and we would want to do things upsized, that although it would utilize some of our liquidity, it wouldn’t use an excessive amount of our liquidity.

So we will be open to things that are coming. We do have things in our sites now that people are bringing to market in Q2, and we will stay opportunistic and look for deals that we think make sense in the context of managing our liquidity as well.

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Jonathan Kelcher, TD Securities Equity Research – Analyst [11]

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Okay. And then just switching gears a little bit. The rent increases that you’re putting through of 2.4%, is that an average between the liberalized and the regulated suites?

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [12]

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Yes.

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Jonathan Kelcher, TD Securities Equity Research – Analyst [13]

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And do you have, I guess, an average for what you’re putting through for each of those separately?

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [14]

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I don’t — we can provide it to you, Jonathan. I don’t know if I have it off the tip of my tongue. But given that we applied the same cap in both groups this year, we applied a 2.6% cap. I would expect those numbers to be closer than they would have been historically for each.

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Jonathan Kelcher, TD Securities Equity Research – Analyst [15]

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Okay. And just, I think, the (inaudible) how many of those tenants are the ones that weren’t open? How many are now open that the Dutch economy seems to be opening mostly this week?

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [16]

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I don’t have the exact number. But yes, some of them have reopened. We have a dentist there that’s reopened. We have a barbershop that’s reopened. So we’re dealing with the tenants. The vast majority by rent has continued to pay, because it’s large groceries or essentially oriented — or essential goods-oriented stuff, so they continue to trade. We did have about 10 tenants that we’ve been dealing with in terms of negotiating relaxed terms. We have not waived any rent. The most we’ve done is agreed to defer rent. But in some cases, we’ve done simple things, such as simply allowing people to move to monthly payments instead of quarterly. So I do expect some of those tenants to be able to open up the suite. But given that it’s Tuesday, I don’t have confirmation exactly how many of those 10 have opened today.

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Operator [17]

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The next question is from Himanshu Gupta from Scotiabank.

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Himanshu Gupta, Scotiabank Global Banking and Markets, Research Division – Analyst [18]

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So just a follow up on the rental indexation of 2.4% versus 3.5% last year. Was the reduction mainly due to lower growth in the liberalized sector? Or would you say the regulated sector also contributed to the decline?

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [19]

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I mean, we have to keep — again, I don’t have the split. We can provide it to you separately. But last year, we would have taken advantage on the liberalized side of our leases of up to CPI plus 5%, and our regulated would have been a different CPI of plus 2.5% or plus 4%, always subject on the regulated side to the maximum statutory regulated rent. So again, applying the same 2.6% cap to everything this year. My expectation is that would have dampened the liberalized growth more than it dampened the regulated growth.

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Himanshu Gupta, Scotiabank Global Banking and Markets, Research Division – Analyst [20]

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Got it. Okay. And do you expect tenants to come back and request or dispute for lower rent growth? Typically, what percentage of tenants actually fight back against your print indexation letters?

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [21]

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I mean we would typically see something in the range of 3% that would challenge it in some way. Half of those would be incorrect numbers that they would have been using, and they would disappear quite quickly. The other half, we would — it would be a combination mostly of making small adjustments and then there would be a very small few that we might ultimately go to the tribunal on. We’ve never lost the tribunal, as we always make certain we have all of our tools backed up with the right data demonstrating point, et cetera.

This year, they’ve already received their notices, because they needed to be out by April 30. We have not had any incremental number or percentage of tenant requests or challenges. Even — which is a little bit of a first, we had some tenants recognizing through either inbound calls or e-mails that we did take a prudent and socially aware approach this year in limiting our increases.

So I don’t expect us to have incremental pushback from tenants versus any other year, but there’s always some.

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Himanshu Gupta, Scotiabank Global Banking and Markets, Research Division – Analyst [22]

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Right. So small challenges there. So in the context of this 2.4% rent indexation, how should we think about same-property NOI growth profile in the year ahead? And do you expect any incremental operating expenses as a result of COVID or any impact on NOI margins because of that?

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Stephen Co, European Residential Real Estate Investment Trust – VP of Finance [23]

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Himanshu, so as Scott mentioned, we entered 2020 with a higher vacancy at year-end. So rental revenue was slightly below what we expected in Q1, but which resulted in stabilized NOI growing by 4.4%. Given that vacancy has improved since Q1, we do expect the NOI to improve going forward. In terms of your question regarding some of the COVID-19 expenses, I don’t think it’s going to be that material to the business. We — again, you’ve been through the properties. The common area is very small. We’ve set up some hand sanitizers stations in the common area in most of our properties. So they’re not large expenses material to the R&M.

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [24]

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And just on the other — just — Himanshu, just to address the other part of your question regarding overall growth. I think if you look back in what happened in 2019, our growth was broken up into multiple components. One is the indexation. One is the uplift on the conversions to liberalize flats and the other is turnover.

Coming out of Q1, again, that isn’t a promise looking forward, but the uplifts from turnover and the uplifts from conversions are consistent with what we’ve seen in the past.

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Himanshu Gupta, Scotiabank Global Banking and Markets, Research Division – Analyst [25]

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Got it. Okay, okay. And maybe last question from me on the debt financing. Obviously, chameleon financing is very attractive. Has the mortgage spreads or cost of debt gone up since as a result of COVID crisis? Or has the appetite for European banks to lend to the residential sector or real estate sector change setoff?

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Scott Cryer, European Residential Real Estate Investment Trust – CFO & Corporate Secretary [26]

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Yes. We’ve been obviously in contact with lenders, but we’re not actively pricing anything. So it’s a little bit more conversational. They still seem to be very keen and have liquidity for multi-res asset class at fairly similar leverage levels to kind of the 60%, what we were doing before. So we would expect maybe a little bit of conservative on leverage and a little bit of a liquidity premium today in the debt markets as far as pricing, but they still seem to be pretty close to where we’ve been doing our deals. So I don’t think it will negatively impact our weighted average effective interest rate. So — but obviously, it’s a fluid situation in Canada. We saw spreads blow out pretty hard. We didn’t actually see that in Europe. But there is a little bit of pressure there.

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Operator [27]

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The next question is from Matt Kornack from National Bank Financial.

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Matt Kornack, National Bank Financial, Inc., Research Division – Analyst [28]

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I just wanted to quickly go back on the margin front. This quarter was pretty good from a year-over-year standpoint. And it sounds like there was maybe some deferral of maintenance. Is the anticipation that margins will remain higher throughout the next few quarters as a result of some of that ongoing deferral? Or should we expect it to be somewhat similar to what we saw last year?

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Stephen Co, European Residential Real Estate Investment Trust – VP of Finance [29]

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I think you’re going to see us — look, what we provide in the range, I think, we’re going to see a 75%, 76% margin overall. I mean, a lot of the — there was a bit of deferral in terms of the COVID-19. But I think as the economy starts opening it up, we will expect some R&M cost to come back. So I think leaving it at that margin is the right choice.

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Matt Kornack, National Bank Financial, Inc., Research Division – Analyst [30]

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Okay. And then with regards to income taxes this quarter, I don’t think you adjust for the EUR 1 million of current taxes, and the bulk of that seems like it was a capital gain. So what would be the sort of normal FFO impact from current taxes going forward for the rest of the year?

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Stephen Co, European Residential Real Estate Investment Trust – VP of Finance [31]

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So I know we provided some guidance at year-end. And we just like finalized a lot of the transfer pricing arrangements. So I would expect it will be on the higher end of the range with that guidance. Obviously, we looked through the guidance given the COVID-19 pandemic. But if we continue the same path as year-end and with the transfer pricing arrangements in place, I would expect it to be on the higher end of the range.

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Matt Kornack, National Bank Financial, Inc., Research Division – Analyst [32]

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And sorry, can you just refresh me on the range?

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Scott Cryer, European Residential Real Estate Investment Trust – CFO & Corporate Secretary [33]

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Yes. I think we provided EUR 300,000 to EUR 600,000, but I would say it’s going to be on the higher end.

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Matt Kornack, National Bank Financial, Inc., Research Division – Analyst [34]

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Okay. And when you calculate FFO though, you don’t strip out the capital gain tax that you paid in current taxes, correct?

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Stephen Co, European Residential Real Estate Investment Trust – VP of Finance [35]

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We did strip it out, the component of the capital gain for the current tax.

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Matt Kornack, National Bank Financial, Inc., Research Division – Analyst [36]

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Okay. And then with regards to acquisitions and looking at geographies beyond the Netherlands. Can you speak to whether you’d still entertain acquisitions outside of the Netherlands? And then maybe also speak to whether there are opportunities to use your currency as opposed to issuing equity, but maybe share-for-share deals with potentially beat up companies? I don’t know if there are many. It seems like multifamily has held them reasonably well. But are there any scenarios that you’re looking at on that front where you could maybe grow the company by merging with another public entity?

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [37]

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Yes, I mean — I think addressing the first question first. We continue to believe that the CAPREIT platform and the ERES platform is suited to going outside the Netherlands. That — I think when people have asked me that in the past, it was — there’s still enough runway for us in the Netherlands that, that was probably a medium-term goal or expected strategy. And so I would still characterize that as medium term. There’s nothing pressing that would see us going into another geography.

When it comes to using our shares as currency, it requires a willing buyer or a willing issue of the shares and a willing acceptor of the shares. So I think we’re still quite early into seeing what the long-term or sustainable impact is on people’s share prices and their discounts to NAV. We’re not engaging in any of those conversations yet. I think everybody is still trying to digest what it really means on some sort of more long-term basis than the 8 weeks in which we’ve all been grappling with the COVID pandemic. But it’s always a possibility if people can’t issue equity to consider other strategic opportunities, but nothing that’s immediately pressing.

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Operator [38]

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We have a question from [Stephen Sandler], private investor.

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Unidentified Participant, [39]

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Phil and Scott, I’d like to congratulate you. I think it’s a great place to own real estate in this environment, and it’s working out for you.

I have a question about the Dutch. Do you think that they will comply with the way that they want to reopen the country to prevent a second outbreak? In other words, are they the type of people that are going to follow all the rules?

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Scott Cryer, European Residential Real Estate Investment Trust – CFO & Corporate Secretary [40]

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Again, this is a horrible generalization, but I think it’s a positive generalization. So nobody will hopefully take offense by it, but the Dutch tend to be rule followers. Their lockdown was probably more open — well, not probably, it was certainly more open than you would see in other places in Europe, whether it be France, Germany. It was intelligent lockdown, stay at home if you could. There wasn’t a mandate that you cannot go to work. They just encouraged people not to go to work. We actually had our office open on Tuesdays and Thursdays with a very skeletal staff to deal with urgent things that we couldn’t do from home. And I think the Dutch did follow the rules, and that tends to be more in their nature.

And my expectation is things are opening up now, and they will continue to do that similar to — people always wonder about moral hazard and government support and whether that gets peoples — puts money in people’s pocket and do they actually turn out to use that to pay their rents. The Dutch culture is a culture that we find, and confirmed by people on our Board that are Dutch and people in our local offices, that the Dutch people generally follow rules and do what they say. And you can see that in March and April, where people paid their rent. So I’m optimistic that they will follow the rules. And there’s been reasonable support for the government in terms of how they’ve handled it so far. It’s a coalition government, as it always has been, very consensus-based. So in the context of how people are struggling with it right now, I think the Dutch government and the people are doing reasonably well.

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Unidentified Participant, [41]

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I suspect that the shape of their curve supports what you’re saying, because they’ve done a great job bringing the number of cases down.

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Operator [42]

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(Operator Instructions) We have a question from [Matthew Gabriels], a private investor.

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Unidentified Participant, [43]

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Yes. Congratulations, guys, on a great quarter, especially in these trying times. I was just wondering if you could give us any updates in regards to the REIT possibly graduating onto the TSX later this year.

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [44]

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Yes. I think that continues to be a strategic priority for us. I would say what we’ve done is we’ve put ourselves in a position, as far as additional requirements, regulatory, live and engaging with counsel, et cetera. We feel that we’re in a position that we can do that. There’s some advantages when you are growing to some of the more lax rules about being on the TSXV. But we’re still moving forward on the basis that the TSX is our priority for this year or early next year. So…

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Unidentified Participant, [45]

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I thought that would be great. Yes. I think it just opens up to a whole new class of investors, and I look forward to your second quarter. Thank you very much.

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [46]

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Great. And we’ve couldn’t agree more. Thank you.

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Operator [47]

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Thank you. There are no further questions registered at this time. I would like to turn back the meeting over to Mr. Burns.

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Phillip Wesley Burns, European Residential Real Estate Investment Trust – CEO & Trustee [48]

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Well, again, thank you for joining us this morning. And if you have any further questions, please do not hesitate to contact any of us at any time. Thank you again. Stay safe, and goodbye.

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Operator [49]

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Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.