Brookfield Property Partners L.P. (NYSE:BPY) Q3 2017 Earnings Conference Call November 2, 2017 11:00 AM ET
Matt Cherry - IR
Brian Kingston - CEO
Ric Clark - Chairman
Bryan Davis - CFO
Sheila McGrath - Evercore
Mark Rothschild - Canaccord
Mario Saric - Scotiabank
Neil Downey - RBC Capital Markets
Good day, ladies and gentlemen. Welcome to the Brookfield Property Partners' Third Quarter of 2017 Financial Results Conference Call. As a reminder, today’s call is being recorded.
It is now my pleasure to turn the call over to Mr. Matt Cherry, Senior Vice President of Investor Relations and Communications. Please go ahead, sir.
Thank you, and good morning. Before we begin our presentation, let me caution you that our discussion will include forward-looking statements. These statements that relate to future results and events are based on our current expectations. Our actual results and future periods may differ materially from those currently expected because of a number of risks, uncertainties, and assumptions. The risks, uncertainties, and assumptions that we believe are material are outlined in our press release issued this morning.
With that, I'll turn the call over to Chief Executive Officer, Brian Kingston.
Thank you, Matt and good morning, everyone. Thank you for joining the call this morning. Before we begin, I'd like to take a moment to recognize our operating teams around the world who run our businesses every quarter with the highest levels of commitment, but particularly in this most recent quarter when we were faced with devastating hurricanes and floods in the Caribbean, South Florida, Texas, [indiscernible] and wildfires in California. Despite many of them facing personal losses and property damage at home, their priority remained with our assets and their hard work, preparedness and determination ensured that our businesses in these regions suffered only minor physical damage and we were back up and running within days. Our thoughts are with all of these communities as we continue to rebuild following these devastating events.
With me on the call today are Ric Clark, the Chairman of BPY and Bryan Davis, our CFO. In our prepared remarks, I will recap our initiatives and accomplishments from the quarter as well as provide some observations on real estate fundamentals and the investment environment that we're seeing in our various markets around the globe. Bryan will go through the details of our quarterly financial results and then following those comments, we would be happy to take questions from analysts and investors on the call today.
As you would have seen in our disclosure this morning, we recorded another quarter of earnings growth, another solid earnings growth this quarter. Our company FFO was up 3% on a per unit basis over the prior year. Bryan will provide more details on what drove those results in his remarks. After surfacing approximately $825 million of equity through asset sales in the first two quarters of 2017, we continued to actively recycle out of more mature stabilized assets in the third quarter. Although the transaction has not yet closed, we're under firm contract to sell our European logistics business for a gross value of EUR2.4 billion.
This investment made through our global opportunity fund will deliver a 47% IRR and 4.5 times equity multiple to BPY and other investors in the fund and will return net proceeds of approximately $615 million to BPY when the transaction closes in December. During the quarter, we also sold our interest in 20 Fenchurch Street in London at a 3.5% cap rate, one of the highest prices on record in the city of London.
We also sold a partial interest in Wynyard Place in Sydney as well as select office in multifamily assets in North America. In total, these sales will return approximately $200 million in further net proceeds prior to the year end. With the completion of the above transactions, we will have surpassed the midpoint of our 2017 goal to raise between $1 billion and $2 billion of net equity from asset sales this year. In addition, we are exploring the sale of interest and further assets in the US, which should close in either the fourth quarter or early in the New Year.
I'll now turn the call over to Bryan Davis for our detailed financial report.
Thank you, Brian. During the third quarter, we earned company FFO of 236 million compared with 232 million for the same period in 2016. On a per unit basis, company FFO for the current quarter was $0.34 per unit compared with $0.33 per unit in the prior year. BPY recorded net income attributable to unitholders for the quarter of $168 million or $0.24 per unit compared with net income of $1.3 billion or $1.70 per unit in the prior year. The prior year benefited from a $900 million reversal of a tax expense related to a routine internal restructuring of assets into an existing REIT subsidiary.
BPY realized gains of $235 million in the current quarter, largely comprised of the sale of interests in two London office properties, 20 Canada Square and 20 Fenchurch Street. In the last 12 months, we have realized gains of approximately $1.4 billion, as we continue to execute our strategy of selling all or interests in mature assets where we feel we have maximized value. In addition, as mentioned by Brian, subsequent to quarter end, we sold our interest in our European logistics business that was held within our first global opportunity fund. This sale, which is expected to close in the fourth quarter includes an approximate $400 million of realized gains to BPY.
As highlighted at our Investor Day, at recent Investor Day, these realized gains combined with our FFO provides strong support for our quarterly distribution. In reviewing what contributed to the $4 million year-over-year growth in company FFO, I will highlight the main drivers by our three business units. First off, in our core office business, we earned $126 million of company FFO compared with $149 million in the prior year, a decrease of $23 million. The main items contributing to this decrease were the impact of asset sales combined with the substantial completion of a number of our active developments.
As it relates to the sale of mature office assets over the last 12 months, we have reallocated almost $1.2 billion of capital out of this business segment and into other parts of our business, most notably our opportunistic investment activity. This reduction in capital has contributed to a $21 million reduction in company FFO as compared with the prior year. As it relates to the recent completion of the Eugene last quarter, Brookfield Place Calgary East and tower two at London Wall this quarter, the accounting impact of moving these properties to income producing was a negative $4 million.
As we are in a transition period where we can no longer capitalize costs but have not yet achieved rent recognition nor stabilization. As mentioned last quarter, with respect to the Eugene, when stabilized, which we expect to achieve by mid-2018, we will earn $10 million in FFO on an annual basis. For 2 London Wall and Brookfield Place Calgary East, which we expect to stabilize by late-2018, we will earn almost $30 million of incremental FFO on an annual basis.
Operationally, we had same property net income -- net operating income growth of 5% or $16 million. This growth was driven by strong rents on in quarter leasing activity on renewals, new rent commencements, particularly in lower Manhattan and in Toronto, an increase in same store occupancy by 70 basis points to 92% and the benefit of foreign exchange. This was partially offset by incremental interest expense due to higher average debt levels and a reduction in year-over-year termination income.
Secondly, in our core retail business, we earned $128 million compared with $108 million in the prior year, a $20 million increase. During the quarter, we realized income of $10 million related to the transfer of title of about 49 condominium units at Ala Moana to the purchasers. We expect over the next two quarters to achieve the revenue recognition hurdle for the remaining income of $13 million related to these sales.
In addition, we had same property growth of 2% or $3 million this quarter, largely driven by higher rents as we continue to lease space at positive rent spreads. We also have an incremental $3 million in company FFO to reflect an increased ownership position in GGP as a result of our decision to cash settle 43 million of the warrants outstanding. Post quarter end, we exercised our GGP warrants, which resulted in a cash payment of $460 million and increased our shareholding by 68 million shares. Our ownership interest in GGP now totals 323 million shares and represents a 34.4% interest.
Lastly, our opportunistic investments earned $99 million compared with $90 million in the prior year, a $9 million increase. In the prior period, we benefited from income of $10 million earned as a result of the successful sale of merchant built properties in Southern California. Excluding this income, our opportunistic investments contributed an incremental $19 million in company FFO this quarter or an increase of 24%. Much of this increase is due to an additional $1 billion of capital invested in this business. We've not had any significant merchant build income yet this year, but going into 2018, we are forecasting to earn upwards of $75 million in such income as we complete constructions and sell off those projects.
In arriving at company FFO, which we detail on page nine of our supplemental, amongst our standard adjustments for GGP warrants and the addback to depreciation of non-real estate assets, we adjusted for $10 million in transaction costs related to the acquisition of an office tower in Brazil and further acquisitions within some of our existing businesses. We had 8 million for capitalized interest on active development projects that we now account for under the equity method due to recent sales of interest to third parties to reflect a consistent methodology with our consolidated development projects and most importantly to be consistent with the return we recognized on these projects in the prior periods.
In comparing our results to the second quarter of 2017, company FFO decreased by $22 million from 258 million earned in that period. This decrease was primarily attributable to a $32 million one-time item earned at Canary Wharf in the prior quarter offset by $6 million in incremental FFO due to the strengthening of foreign currencies relative to the US dollars and 4 million of increase due to the combination of recycling of capital activities and operating growth.
On our proportionate balance sheet, total assets increased by $1.3 billion to 67.5 billion, largely due to a combination of the benefit of conversion stronger foreign currencies, continued investment into the build out of our active development pipeline, and net fair value gains where we saw increases in our office and multifamily portfolios, largely driven by improved cash flows and increases in our industrial portfolios driven by improved valuation metrics. As mentioned previously, we had two developments complete construction in the quarter, Brookfield Place Calgary East and 2 London Wall.
Both of these assets were moved to commercial property line item and accounted for an approximate $740 million of that increase. We also moved our investment in the European logistics business to held for sale. During the quarter, we reflected an increase in the underlying asset values in this business of approximately $60 million to $550 million at our share. We expect to recognize another 300 plus million dollars in gains in our IFRS net income in the fourth quarter on transaction closed to reflect the final price.
Our liabilities were up this quarter, primarily due to draws on construction facilities and the impact of currency. We did take steps during the quarter to reduce our floating rate exposure as we saw an opportune time where swap rates declined, which allowed us to execute on $2.2 billion of interest rate swaps to fix a portion of our floating rate exposure at attractive rates. This reduced our exposure by a little over 700 basis points and on average, locked in an interest rate of about 35 basis points higher than our current floating rate, which as an insurance cost we felt was attractive enough to execute at in order to provide more certainty to future earnings.
On a final note, our board of directors yesterday declared a quarterly distribution of 29.5 cents per unit to be paid at the end of December.
And with that, I'll turn the call back over to you Brian.
Thanks, Bryan. As we've mentioned in the past, improving occupancy and marketing rents to market in our core office portfolio are key drivers to our continued earnings growth. During the third quarter, we leased 1.5 million square feet of space in our US core office portfolio at rents that were on average 39% above expiring rents and we improved the overall occupancy by 30 basis points. It's been a particularly strong leasing year for our 7 million square foot Manhattan West development in New York City where we have signed over 1.6 million square feet of leases so far in 2017.
Most recently, we signed leases with Amazon to take the balance of the space at 5 Manhattan West and as announced earlier this morning, EY who will occupy 600,000 square feet at 1 Manhattan West, bringing that tower to 82% pre-committed two years ahead of scheduled completion. As we mentioned last quarter, we've now turned our leasing focus to 2 Manhattan West, where we are in advanced negotiations with a number of potential anchor tenants. It was also another strong quarter for our Canadian core office business, led by Toronto, which finished the quarter at 97.7% leased, our highest occupancy in Toronto since 2009.
Overall, occupancy across the three Canadian operating markets was 94.6%. Occupancy in our Australian portfolio increased 100 basis points during the quarter, closing at 95.8%, largely driven by strong performance in Sydney, which is now over 98% leased. Moving to our US mall Business, as Bryan mentioned, we had positive financial results this quarter and occupancy across the portfolio increased about 80 basis points to 95.4%. These positive results demonstrate that well located, high quality, retail real estate in the United States continues to perform well, despite negative perception in the public markets.
While many retailers continue to face significant challenges in growing their businesses, those retailers that are focused on the intersection between bricks and mortar retail and online sales channels continue to expand and grow. And this growth is evident from the nearly 10 million square feet of leasing we’ve completed so far in 2017, which is up from 9.5 million square feet for the entire 2016. In our opportunistic investing strategy, we have continued to put capital to work this quarter through new acquisitions. In Brazil, we acquired EZ Tower B, a newly constructed 500,000 square foot Class AAA office building in Sao Paulo at a significant discount to replacement costs.
Our returns over the next few years will be greatly enhanced through leasing upside as the Brazilian economy continues to recover from one of the worst recessions on record. We also continue to invest in urban multifamily developments in supply constrained markets, including the acquisition of two projects, totaling 1300 units in the New York City metro area, targeted specifically at millennials and others seeking modern urban accommodations in a live work play environment with good access to public transportation. In our retail businesses, we continue to put capital to work by acquiring anchor boxes owned by department stores in our malls, including 21 Sears locations so far this year.
These acquisitions will allow us to invest additional capital in our existing malls at levered returns in excess of 20%. And finally, subsequent to the quarter end, we closed on the acquisition of the Sheraton center, the largest convention hotel in Toronto for CAD335 million. Consistent with our hospitality value enhancement strategy that’s yielded strong results in other markets, our business plan here calls for a comprehensive $100 million renovation, focused on improving the lobby and overall arrival experience as well as the retail offering, which is directly connected to Toronto’s patent system.
Before we get to questions, I'd like to thank the more than 300 of you who attended our Investor Day in late September. We hope you found the new format of this day efficient and informative use of your time. If you were unable to attend that day in person, the presentation materials as well as a transcript are both available on our website.
So with those as our planned remarks, I'm now happy to open up the line to questions from analysts and investors. Operator?
[Operator Instructions] And our first question comes from Sheila McGrath with Evercore.
Brian, I was wondering if you could comment on, Reuters reported that you guys were entertaining a large sale -- portfolio sale of your office portfolio and I just was wondering if you could give us some insight on the thought process there, timing and potential use of proceeds?
So without commenting specifically on Reuters because I think it's not all directly factual, as you know, we have been pretty active in looking at ways of recycling capital in our core businesses. That includes both office and retail. And I think we look at a number of different options. I think if I'm remembering the article you're referring to directly, it made reference to a REIT and -- or a couple of other various structures like that, I think there's a number of ways that we're exploring. In some cases, it’s single assets where we bring in partners.
In other cases, really as a result of the relationships that we have with these large institutional investors, sometimes, having an opportunity for them to invest in multiple assets or across a couple of markets is helpful. So, I think the headline number in there was far in excess of anything that we're contemplating. We try to be pretty transparent about the total dollars that we're trying to do and as we sort of said earlier, the plan this year was to do between 1 billion and 2 billion. We’re at about 1.5 billion. We might get to 2 billion by the end of the year and then, I'd expect next year is probably a similar number from some combination of single assets or something a little larger.
And then I was wondering if you could give us some insight on One Liberty, it looks like you're putting that building up for sale, just some insight on that and how that asset is for sale now rather than Brookfield Place?
Sorry, your question is why that one is not put in place.
Yeah. Well, I thought you were marketing an interest in Brookfield Place.
I think we're in discussions with a couple of parties about a couple of different options and both of those assets are on the potential list. I think the overall quantum of capital, as I said, is consistent with what we've been saying. So it would be unlikely that we would do a 50% sale of both of those assets. But we're in discussions with various parties on both of them and it's really just going to come down to pricing and where we think the stronger pricing will be.
And our next question comes from the line of Mark Rothschild with Canaccord. Your line is now open.
Maybe Brian just following up on that, even if some of the articles maybe exaggerated or not, it's actually correct that you have been divesting a large amount of office properties and reinvesting the money in more opportunistic, the way you call the opportunistic areas. How large are you comfortable allowing the opportunistic division to grow and how much will you allow the office platform to be as a percentage of maybe the NOI or the NAV. Like how small would you shrink?
So first of all, I'd say, you shouldn't interpret what we're doing as a call on the office market, in fact a lot of the new investment that we're making is in fact in office including US office. It's more recycling out of stable more mature assets that are fixed income in nature. But obviously we're putting a lot of capital into things like Manhattan West and other development projects that we've got underway. We’ve recently acquired an office complex in Houston for example. So, I think it's some of it will just be recycled within the core office business as opposed to it just being dollar for dollar moving from core office into the opportunistic strategy.
But to answer your question, today we're - it’s about 20% of our capital that's invested in opportunistic investment and 80% that's in core office and core retail. That number could, it may move a little bit from there, so maybe 75-25, but beyond that I wouldn’t expect it to happen dramatically. And as we said a few times some of the recycling you're going to see over the next year or two is going to start happening within the opportunistic strategies as well. So as some of these investments get more mature and Gazeley is a good example of that, 600 million of our say $2 billion this year will actually be capital that we recycled in that portion of the balance sheet. So I don't think it moves dramatically from here - markets, it's probably about where we're comfortable having it today.
And there've been continued articles and reports of financial services firms moving jobs out of London, I don't know if anything has happened yet, but definitely talk of it. You guys are seeing some great values on assets in London. To what extent are you seeing tenants maybe shrink their demand for space or start maybe even putting space up for sale or at least not needing as much? And are you seeing this have any impact on the actual leasing in that market.
I don't know that we've seen a lot of tenants specifically either handing backspace and making that decision to move to Europe. But I do think there's a lot of uncertainty in the market as to what Brexit is going to look like and what that may mean for their businesses and their space needs at London. And so the impact that that's really having is a delay on decision making. And so leasing activity is slow. The leases that are getting done, rents are still holding in pretty well. But the level of activity I think is probably the lowest it's been in over a decade in the city of London.
So at the moment the biggest impact is lack of activity as people understand or start to try and figure out what it means and they are sort of waiting for more direction I think as to what Brexit is going to look like before they can really make those decisions, whether they are going to move jobs or not. I say an overall comment. The idea of moving jobs or moving people from London to some of these other centers is not as simple as just picking up and moving it. London benefits from a tremendous amount of infrastructure including housing and schools and just generally quality of life that many of these other cities just don't - wouldn't be able to turn on overnight. And so I think that weaves into people's decisions as well.
[Operator Instructions] Our next question comes from the line of Mario Saric with Scotiabank. Your line is now open.
I want to circle back on this optimistic versus core discussion with evaluations or with returns like 47% IRRs and 4.7 MOCs. No one can argue there should do more of that. So kind of 20% of your capital is committed to that segment. Today, it might go up to 25%. At the Investor Day, you indicated that you’re no longer pursuing a restructure which I guess that would be one concern in terms of increasing your exposure to asset class materially. I'm just wondering how you kind of find the balance between the two, given the very attractive returns that you've been able to generate on the opportunistic side and given the low cap rates on core today.
Well, Mario, if we could make 47% and 4.5x our money, we should have 100% of our balance sheet invested in those types of investments. So I think it's really a - obviously, there's risk associated with those investments and that won't earn out very well. And I think it's really just finding the right balance between our core office, core office and core retail businesses, which earned good returns. And not every single asset in there, the stabilized assets that we need to work out of.
So I think having 75% of our balance sheet in relatively low risk, stable, cash flow generating assets that support our dividend and 20% that gives us exposure to things like Gazeley in that where sometimes you realize these fantastic returns. But it takes time and they're typically IRR-driven investments. Meaning, they don't necessarily generate a lot of cash flow over the whole period. We just feel like that's the right balance. And it could move up a little bit, like maybe the 20% becomes 25%. But we're very conscious that we're in a cyclical business here and we're at a point in time where those valuations and returns are very good. There'll be times when they're harder to come by.
And it also seems with the capital allocation that you're shortening your lease duration on average, is that a fair comment. And is that a specific exercise today given where we're in the cycle in terms of [indiscernible].
I’d say we have a bias in that direction. I think our view on, you know, I’ll see the macro picture is that growth is relatively low, but positive and should be strong over the next couple of years, particularly in our larger markets like the US. And along with that you're going to get interest rates move up modestly from here and that probably has some impact on cap rates. And so if you have very long duration leases without an ability to mark them to market, interest rates are a bad thing if you have shorter duration assets or opportunities to either mark leases to market or lease up vacant space, you're going to benefit on the revenue side as the economy continues to grow and expand and that helps to offset some of that impact. So I don't - it's not a dramatic shift I'd say on duration, but certainly some of the new investments that we're making are more focused on shorter duration and the dispositions we're making are on the very long-term fixed income like investment.
And then perhaps like stripping valuation aside, which asset classes or geographies do you see the most cash flow growth potential in over the next five to seven years?
I guess, it's hard to say it's specifically about a particular sector. A lot of our investments are asset by asset. So if I use Houston as an example, we think there's great cash flow growth profile in office - in that office acquisition that we've made there. But a number of the other sectors like self-storage and some of these other businesses that are growing pretty rapidly, multifamily and manufactured housing, et cetera, we're seeing very strong rental growth really as a result of lack of supply in many of those - many of the markets that we're in. But it's market by market, it's very difficult to make sort of a generalization about the US market overall.
And then maybe my last question just with respect to your GGP IFRS NAV. I think it was about $29 a share in Q2, where is that figure today?
Mario, it’s Bryan, it's about $30 per share. What we saw this quarter is just continued pick up of our share of their earnings. And as a result of that it picked up a little bit more than it was in Q2.
And sorry, Bryan, one last question. On the Gazeley, the $300 million expected increased IFRS in Q4, is that your share? Or is that...
Yes, that's our share, Mario.
And our next question comes from Neil Downey with RBC Capital Markets. Your line is now open.
Brian Kingston, you are advancing quite nicely through the value creation cycle at 100 Bishopsgate. Is that an asset that you might consider selling a piece of in 2018?
Yeah, you’re right. I mean, now that we’ve largely got the anchor tenants put away and are a long way into the construction phase including now being out of the ground, a lot of the value as you say has been realized. Prices in London have continued to be strong. So notwithstanding my comments earlier about leasing markets, when you do have assets that have long-term leases in place in that market the values have held up pretty well. So it probably is an opportune time for us to look bringing in partners. Similar to the way that we did in Australia with the Wynyard project, where the leasing put away, the construction started. And it's really in the sort of large capital requirement phase. So it is likely that we'll look at that over the next six to twelve months.
And presumably the anchors have some options space that they have to make a decision on. How soon does that occur and I guess when that occurs they either exercise the option and take more space or it frees you up to actually proceed with additional leasing?
Yeah that's right. It's obviously closer to and we're a little over two years from completion of the building. So some of those options run closer to completion of the building, although there are notice periods ahead of time. So some of the vacancy that exists in the building today are potential vacancy we're not really able to deal with. But we'll be able to deal with it closer to the time. And I think that's really just a reflection again of what I said earlier in terms of uncertainty in the market I think giving tenants some flexibility to flex up or flex down really made the difference in getting a base level of commitment into the building. But this is still, there is still unencumbered space in there that we can work on leasing right now and it will be those last couple of floors that we’ll have to deal with closer to the time.
And Bryan Davis, I believe I heard you suggest that merchant building gains or profits could be in the range of 75 million next year. Is that a number I heard?
Yes that is correct. Yeah there is a potential for some to come in the fourth quarter, but its timing is could leak into the first quarter of 2018. But in aggregate that 75 includes all of those that we're forecasting to execute on over the next say 14 months.
Okay that number would be a little higher than I might otherwise have expected. I know you've got a pipeline of multifamily assets that would be described as a merchant building operation. Is that all multifamily or are there some other asset classes that would add up to that potential 75 million.
That is all multi-family. That is all multifamily. And if you recall and I know we talked a little bit about this last year when we started to see our first glimpse into these merchant build gains. We have a program in place that effectively goes through 2021. And there's probably an aggregate 20 projects that we're looking to execute on. And the timing of those change a little bit and so what you may see here, Neal, is a few more of them are getting pushed into the 2018 timeframe and out of the ’19 and ’20 timeframe that we might have had before.
And we do have a follow-up question from Sheila McGrath with Evercore. Your line is now open.
Brain, on Manhattan West it seems like you’ve a lot of momentum there. I was just wondering if you could update us a little bit more on specifics at Eugene, where you are in lease up there. And also as you look towards leasing to Manhattan West, what percent lease do you want there before you go vertical on the construction of that tower?
Hi Sheila, it’s Ric, maybe I'll take that one. So just on the Eugene specifically, we're about 60% leased at this point. We had an incredible summer far out exceeded our projections as far as leasing goes. At this point we're in the slow season, so we're probably doing around 20 apartment a month or so, a little off the pace that we'd like, but totally natural pace given where we are in the season. So the expectations are by the middle of next year, we should be pretty close to having it leased up. So that's gone very well.
As far as to Manhattan West, clearly we've had a big year of leasing, Brian, mentioned 1.6 million square feet of leasing done so far this year. We're now at a 100% leased at 5 Manhattan West, about 82 or so at 2 Manhattan West. The Loft building is largely spoken for. So, overall we're in excess of 90% leased on the commercial space in the project. When we get to the Loft building lease finished, so we've turned our attention to 2 Manhattan West. We’re exchanging proposals with a little over 3 million square feet of tenants. So a lot of activities there and have other interests as well. So, we're going to keep working. As far as what percentage leased before we stick a shovel in the ground that’s undetermined, but our typical pattern is we’ll get the building a third leased or half leased before we go.
And then just another follow up. Bryan, the shares are still trading at a discount to IFRS value as most public real estate companies are now. But I'm just wondered if you're still your view is still to continue on stock buyback or would you put more towards dividend. Just give us some insight on what else you're thinking about in terms of closing that gap.
I'd say as an overall comment not a - no real change in our thinking here at all. Obviously part of our strategy going forward is the growth in earnings of the business will support a higher dividend. And so some of that capital will go to increasing the dividend in line with the sort of growth rates that we've been talking about. But you're right, this stock does continue to trade at a discount. We think it's a good use of our capital to buy back shares. I think the level of activity in any given quarter is partly dependent on the share price and partly dependent on volumes and I'd say availability for us to do.
Larger blocks or not, so we try to stay active in each quarter, but number of shares each quarter move around a little bit. But no real change in our strategy there. And then as I said in my comments, we do still see good opportunities in our core businesses whether it's reinvesting into office and retail or some of these more opportunistic strategies in other places. It's really no change in the strategy. It's finding a balance between all those three things.
And then on the asset sales, equity from asset sales, should we assume most of it is towards new investments or should - is a portion to reduce leverage.
Both. As we sort of said, we do have a stated goal of getting some of the corporate leverage in the business reduced, and so we are allocating some of that capital towards that.
And I'm not showing any further questions at this time. I would now like to turn the call back over to Mr. Brian Kingston for any further remarks.
Thank you everyone for dialing in again this quarter and we look forward to providing you an update on the fourth quarter early in 2018.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program and you may all disconnect. Everyone have a wonderful day.