Vital Infrastructure (TSX:VITL) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Vital Infrastructure reported 3.5% growth in same-property NOI and ended the quarter with 97% occupancy and over $350 million in liquidity.
The company successfully restructured its debt with a new $500 million unsecured credit facility and a $300 million debenture offering, enhancing financial flexibility and reducing financing costs.
A key operational highlight was the resolution of the Healthscope situation in Australia, transitioning to Calvary Healthcare as a tenant with a long-term lease arrangement.
Vital Infrastructure completed $170 million in North American acquisitions and remains on track for $250 million by year-end, with a strong acquisition pipeline in both Canada and the US.
Despite market volatility, particularly in Brazil, the company maintains confidence in its Brazilian assets, highlighted by strong rent coverage and stable tenant performance.
Management emphasized ongoing cost reduction efforts, achieving a significant decrease in G&A expenses, with further reductions expected to benefit future quarters.
Full Transcript
OPERATOR
Welcome to Vital Infrastructure third quarter 2026 earnings conference call. At this time all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded today, November 12th, 2026. I would now like to turn the conference over to Stephen Hong, Vice President of Investor Relations.
Stephen Hong (Vice President of Investor Relations)
Thank you, operator. Good morning everyone and thanks for participating in our third quarter results conference call. This is Stephen Hong speaking. Joining me are Zach Bowen, CEO; Stephanie Karmarkovich, CFO; Mike Brady, President; Tracy Riddle, COO; and Dave Casimiro. The earnings announcement was released yesterday evening and we posted an updated investor relations presentation on our website, which listeners can refer to during the call. Following comments, we will be glad to take questions from analysts.
Today’s discussion includes forward-looking statements. As always, we want to caution you that such statements are based on management’s assumptions and beliefs. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. Please see our public filings on SEDAR+, including our MD&A and Annual Information Form, for discussion of these risk factors. During this call we will also reference certain non-GAAP financial measures.
A reconciliation to the most directly comparable IFRS measure is provided in our MD&A and earnings release. Unless otherwise noted, all amounts discussed today are in Canadian dollars. With that, I will now hand it over to our CEO, Zach Bowen.
Zach Bowen (Chief Executive Officer)
Thanks, Stephen. Thank you everyone for joining us today. Starting with our quarterly results, we’re pleased with how the portfolio performed this quarter. Same-property NOI grew by 3.5%, excluding a step-up in costs relating to facilities outsourcing. Portfolio occupancy ended the quarter at 97%. We generated AFFO of $0.10 per unit and ended the quarter with over $350 million of liquidity. Our debt currently sits at 50% of book value and 8.5 times EBITDA, well within our target ranges.
Beyond the financial results Stephanie is going to detail shortly, we executed several key initiatives across our balance sheet, our property portfolio cost structure, and our capital allocation strategy. Starting with our balance sheet and capital structure, in August we established a new $500 million unsecured credit facility replacing our previous secured facility, and following quarter-end we also completed a $300 million unsecured debenture offering at a coupon of 4.86%, using a portion of the proceeds to redeem our outstanding 6.25% Series H convertible debentures.
I’m very pleased with this execution. We achieved a credit spread more than 100 basis points tighter than our inaugural bond offering last year and attracted significant new institutional investors to our debt register, a clear reflection of our progress and improved credit profile. Together, these transactions diversify our funding sources, extend our debt maturities, and strengthen our financial flexibility. Turning to our property portfolio, a critical milestone this quarter was the resolution of the Healthscope situation in Australia. As previously announced, Healthscope’s creditors approved the sale of its remaining hospital operations and Calvary Healthcare is expected to become our new tenant across all of our 12 properties. Key components of this transaction include rent incentives over the first 48 months of the lease, an extended lease term that brings the portfolio WALE to approximately 18 years, enhanced annual rent indexation, and a future rent review mechanism tied to property-level profitability.
This arrangement provides long-term certainty and brings in a top-tier operator with an integrated healthcare business that includes retirement living, home care, and residential aged care, all of which are going to further support the performance and profitability of our hospitals. The broader fundamentals in the Australian hospital sector also continue to improve. Currently, the hospital benefit ratio, which is the proportion of private insurance premiums paid back to hospital operators, sits at about 86%, which is still below the pre-pandemic average of 90%.
As this ratio continues to normalize upward, operator margins are going to improve, which is going to allow us to participate in that upside through our future rent review. Onto our cost structure. Our efforts to streamline the business continue to flow through to the bottom line. Stephanie’s going to walk through the specifics, but we remain on track to achieve our targeted annualized G&A run rate by year-end. With a more focused operating platform, we can now scale and support new investments with minimal incremental overhead, creating meaningful operating leverage and driving longer-term earnings growth for unitholders as we reposition our portfolio.
That brings me to capital allocation, where we continue to redeploy capital into attractive investments across North America. During the quarter we completed approximately $170 million of acquisitions across three properties in Brooklyn, New York, Burlington, Ontario, and Edmonton, Alberta. As previously guided, we remain on track to complete about $250 million of acquisitions by the end of the year. Our acquisition pipeline continues to build across both Canada and the US, and we’re well positioned to deploy capital at compelling returns.
Recent volatility in the bond markets is creating opportunities as certain owners face pressure to either refinance at higher rates or sell, and increasingly we are seeing sellers place a premium on execution certainty rather than basing their decisions on price alone. Our ready access to debt capital and asset recycling proceeds, combined with a favorable transaction environment, positions us well to capitalize on these opportunities as we reorient the portfolio.
Now, before concluding, I want to address Brazil. Following the surprise election results, Brazilian equity and currency markets experienced a significant pullback and our unit price was not immune. However, it’s important to look at the fundamentals. Our Brazilian assets are 100% leased under long-term triple-net uncapped inflation-linked contracts. Our primary tenant Regidor continues to deliver strong operational performance both within our properties and at the corporate level.
Now, a critical gauge of the caliber and sustainability of triple-net leased real estate is rent coverage, or what the US peers often refer to as four-wall coverage, which measures the EBITDAR generated within a specific property or portfolio of properties against the rent paid. The higher this number is, the greater is a tenant’s ability to meet its existing lease obligations and absorb future rent increases. For context, Realty Income, the largest US net lease REIT with over 15,000 properties whose credit is A-rated and who has a market cap exceeding the entire Canadian REIT index, typically cites four-wall coverage in the 2.5 to 3 times range.
Across our Brazilian portfolio, our four-wall coverage sits at approximately 7 times. Given that exceptional unit-level profitability and the fact that nothing in the recent election alters the structural demand for private healthcare in Brazil, we have high conviction in the durability of our properties and the creditworthiness of our tenant, and the credit markets agree. Post-election bond spreads for Regidor’s debt have not moved and are in fact down by 20 basis points year over year.
While Stephanie is going to touch on near-term foreign exchange impacts, the underlying operating fundamentals and profitability at our Brazilian assets remains exceptionally strong. So to summarize, I want to leave you with four key takeaways. First, our portfolio is performing well and the Healthscope resolution has removed significant uncertainty. Second, we have enhanced our financial flexibility through highly successful financings while our simplification efforts continue to drive down G&A. Third, we continue to find attractive acquisitions across North America supported by a growing pipeline and an increasingly favorable pricing environment.
And fourth, despite recent market volatility in Brazil, the fundamental impact on our business is minimal and our portfolio continues to deliver strong performance backed by exceptional rent coverage. With that, I’ll turn the call over to Stephanie.
OPERATOR
Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question.
And your first question comes from the line of Himanshu Gupta with Scotiabank. Your line is now open.
Himanshu Gupta (Analyst)
Thank you, and good morning. I have a couple of Brazil questions. So first, on the currency exposure, we saw some volatility. Is there a way to hedge the currency exposure here? Have you guys looked into that? Got it. Okay. And Zach, with the new government in place, any stated policy changes with respect to healthcare which could impact your tenant in a favorable or unfavorable way?
Zach Bowen (Chief Executive Officer)
Yeah, no, nothing that they stated that would have any impact on our tenant, which is primarily private healthcare. I mean, it is a public and private system. And in fact, if you look at everything from broader credit spreads to some of the noise recently now coming out of what will be the new administration, it feels pretty positive. They’re talking about spending limits, spending controls, changes in tax policy. So that’s for the broader market and economy.
But for our tenant, we continue to see very positive results. Their insurance division alone added almost 75,000 members last quarter. So they seem to be firing on all cylinders and just continuing to get better. And there’s nothing out there that would impact that. We think the impact primarily in our units was just pure exposure to Brazil, which is probably unwarranted given the actual cash flows that we’re generating.
Himanshu Gupta (Analyst)
Got it. And then, given that you have rental indexation linked to inflation in Brazil, has there been any change in inflation expectations post the government change?
Zach Bowen (Chief Executive Officer)
Yeah, I mean, I think there’s been some expectations that it may be slightly higher. If you recall, Himanshu, interest rates were on a downward path there. I think that sort of halted as general global economic issues surfaced. I think now people are anticipating, when they were anticipating rate cuts, they’re sort of anticipating flat interest rates for the next while, so not a cut in the near term. And some of the forecasts have slightly higher inflation, sort of high fours.
Himanshu Gupta (Analyst)
Got it. And just the last question on Brazil here: what does this mean in terms of your plan to exit the country, exit the exposure? Does it push this out further? And anything you’re hearing on investment activity which could slow down or probably stay put, or anything on that?
Zach Bowen (Chief Executive Officer)
Look, I think how we’ve always looked at Brazil is, given some of the characteristics I talked about, these are just incredible assets with an incredible tenant, and they’re just so incredibly profitable. And they are true triple-net lease with a lot of term. Our feeling was, in terms of capital recycling, this was one that was never in our 12-month-ish plan. It was sort of towards the back end to try and figure it out. So I don’t think it changes our view because we hadn’t anticipated doing anything with Brazil in the near term as compared with Europe, New Zealand, etc. So I would say it has not changed our plans.
Himanshu Gupta (Analyst)
Got it. Thank you so much. And I’ll turn back.
OPERATOR
Your next question comes from the line of Jonathan Coucher with TD Cohen. Your line is now open.
Jonathan Coucher (Analyst)
Thanks. Good morning. Just one more on Brazil. Is there an opportunity to put more debt on that portfolio to sort of, I guess, kind of increase the hedge? Okay. And then, Zach, you talked about the pipeline growing, I guess largely because of volatility in global rates. Does that impact—Is that sort of a double-edged sword for you, kind of impacting what you can sell as well?
Zach Bowen (Chief Executive Officer)
Yeah, I think where we’re seeing, you know, it’s interesting, I think it would if we were selling in North America, to buy in North America in essence. But I do feel like given the more leveraged nature particularly of the US markets and how the debt markets work and there’s a lot of assets, there are, it’s just a big universe of assets that are held by limited life vehicles. We’re probably seeing the impact of that more quickly relative to say Europe, New Zealand, Australia, et cetera.
And so it’s obviously it’s somewhat of a double edged sword. But given where we’re trying to place the capital, we’re definitely seeing yields react more quickly in those markets than others. So I guess the answer is I’m probably more bullish on the fact that I think yields are widening. I think you’ll see that in the coming quarters on some of our acquisitions. But most importantly, the property levered buyers are increasingly struggling in this market, whereas nine months ago, a year ago there was a lot of competition from them.
Yeah, I think now that it’s now I’d say settled in that it’s we have a firm contract at some point, either by the end of this year or next year, they’re going to step into the role of start operating these hospitals. I do think that we’re going to need some period of time to just see how those run, which we think will be positive. But I think in terms of anyone’s going to want to look at it and go, all right, I want to see a bit more of kind of how this is working out with the new tenant.
We’ve never really contemplated exiting Australia in the very near term. Our near term focus is really Europe, New Zealand. And so I think in the relatively near term that’s where we’ll be focused. I just think Australia, the new tenant has to season a bit. Yeah. Yeah, I think so.
OPERATOR
Your next question comes from the line of Siren Srinivas with ATB Capital Markets. Your line is now open.
Siren Srinivas (Analyst)
Thank you. Good morning. Everybody has one question from me on Brazil and I’ll keep it in hat. And that’s basically, you know, keeping in mind the cadence of 10, 11 cents of FFO on a quarter to quarter basis. Does that change the impact of FFO in Q4 in terms of what you saw on the real and the translation risk?
Stephanie Karmarkovich (Chief Financial Officer)
Yeah, I mean, what we said is that about a 5% depreciation in the real is about $0.01, so that could be impacted. I mean, it didn’t really change until midway through the quarter. So it’s probably not a full quarter impact of that, but there could be some movement in the quarter based on where the rates end up on average throughout the quarter.
Siren Srinivas (Analyst)
And just to clarify, that’s $0.01 on an annualized basis, correct? Okay. All right, that’s great. Okay, switching gears then, probably to Europe. I know that you probably refer to it already, but you know, we’ve spoken about European dispositions and Q4 being something where you could probably dispose more and more probably exit Europe. Is that something still on the cards or is it more of a mid Q1, Q2 activity next year?
Zach Bowen (Chief Executive Officer)
Yeah, I think so. We really have two investments left in Brazil. Sorry, not in Brazil, in Europe. We have a portfolio of triple net lease clinics in Germany and we have an asset outside of Rotterdam. The clinic assets are. Are probably closer to liquidation, but I think that’s probably. We’ve generally assumed it’s kind of a Q2 type of thing by the time it’s all said and done. Having done a lot of stuff in Europe in my career, it just takes time there.
Every transaction just takes longer. And so that’s what I would anticipate. And then we’re substantially exited from Europe. And then the following asset, I’d assume maybe six to nine months after that.
Siren Srinivas (Analyst)
That’s. That’s great, Zach. And maybe just looking at, you know, the Vital Infrastructure units in Australia, obviously the, you know, the units have come down a bit. Does that change your view in terms of the timing of the dispositions there?
Zach Bowen (Chief Executive Officer)
No, I don’t think so. You know, slight movements in the unit price aren’t that material to us on a net proceeds basis, if we’re able to redeploy that at. And so I think what, you know, how we’re thinking about those are those are fairly easy to exit. And so those are probably our first source of capital should we have stuff to deploy it into. And so we’ll be opportunistic. If we’re needing capital for redeployment, that is an easier source of liquidity.
So probably.
Siren Srinivas (Analyst)
Sorry. I guess probably fair to think that it’s more of a acquisition and deployment opportunity dependent in terms of when you could exit those on reinvest.
Zach Bowen (Chief Executive Officer)
I think so. Unless there’s something opportunistic that you know. Yeah, I think, I guess how we look at it is it’s something that’s mark to market every quarter here and it’s a ready source of liquidity when we want it. But we’d probably. That’s one that unlike exiting Europe or doing something with Brazil or Australia, those are tougher to match funds. This is slightly easier in that sense.
Siren Srinivas (Analyst)
That’s great. And Stephanie, remind me, is there any debt secured by these units anymore?
Stephanie Karmarkovich (Chief Financial Officer)
Yes, we do have some debt there. It’s about 70 million Canadian.
Siren Srinivas (Analyst)
All right, fair enough. Thanks, guys. I’ll turn back.
OPERATOR
Thanks again. If you would like to ask a question, press star 1 on your telephone keypad and your next question comes from the line of Giuliano Thornhill with National Bank. Your line is now open.
Giuliano Thornhill (Analyst)
Hey, guys. Good morning, everyone. Just one on Brazil. Sorry, but I gotta ask about it. The cap rate that you guys have in your, in your quarterly report, the 8.9, I’m going to assume that does not have not been adjusted to reflect the recent move. So I guess my question is how do you come up with that 8.9%? Like what kind of rate or inflation outlook does that. Is that based off of? And what would kind of be the impact from the recent election to that?
Stephanie Karmarkovich (Chief Financial Officer)
Yeah, so when we look at our cap rates, we kind of look at them relative to the, what the bond yields are doing there. And you know, I think what we looked at at the beginning of the year is we’re pretty much back to where we were when we look at rates today. Bond yields today versus the year. So we didn’t move them as bond yields were moving over the course of the year and we’re kind of back to back where we were. So we do have kind of look at the spread on our cap rates relative to bond yields.
Zach Bowen (Chief Executive Officer)
Yeah, I think Julian, if you look at it, the implied cap rate sort of reflects a discount rate that is 8.5 ish percent which was definitely wide of where the MTN bonds was before pre election. So that never really got adjusted. And now we’re essentially, we own an asset backed inflation link bond and the NTNs have come down, they’re sort of 780ish now. So we’re definitely wide of that. We’ll be revisiting it with our Q4. Part of the Q4.
Giuliano Thornhill (Analyst)
Okay. Yeah, just the combination of the inflation and bond yield expectations really. So that’s what we should be basing it off of. Mm, yeah. Okay. I guess the other question I had was, as you kind of unwind this portfolio through Brazil or Australia or the units, is there any like nav risk here from a tax perspective? I noticed the Vital Infrastructure deconsolidation in the management contract buyout that led to a little bit of. So I’m just wondering if that risk relates to anywhere else in the portfolio.
Stephanie Karmarkovich (Chief Financial Officer)
Yeah, I think what we said is that there are, you know, inherent tax leakage as we exit these things depending on how things are structured. Vital Infrastructure units. No, there’s no leakage there anticipated from the tax perspective. But I think when you think about exiting full regions, there is bound to be some, you know, kind of in that 15% range I think is probably safe to assume, depending on how it ultimately gets structured with the, with the buyer.
But there definitely is, there will be further movements. Into IFRS NAV. Yeah.
Giuliano Thornhill (Analyst)
Right. And then just my last one, just on the G and A run rate. You guys have done a good job bringing it down over the balance of the year. I’m just wondering if Q3 is a good run rate for going forward. Obviously you’re tracking kind of, I mean, pretty much at your next year target. So I’m wondering if there’s any more room for that or if there’s going to be some normalization.
Stephanie Karmarkovich (Chief Financial Officer)
Yeah, we saw the real benefit this quarter because again, the team that was supporting the portfolio in Europe fully left with the portfolio. And so that was a big impact of the G and A savings that we saw this quarter. The other things that we have left to realize are probably going to be less material and probably will trickle in over some in Q4, but maybe, maybe even into next year because There are things like licenses that we had bought that kind of have to see out the end of their life or audit fee, like those types of professional fees and whatnot that kind of have full year impact that then probably won’t reset until we renew next year.
So I think in the fourth quarter you could see a little bit more reduction, but it’s going to be very much more modest than what we saw this quarter.
Giuliano Thornhill (Analyst)
Okay, thanks, Stephanie. I’ll turn it back.
OPERATOR
Your next question comes from the line of Pami Bir with Capital Markets. Your line is now open.
Pami Bir (Analyst)
Thanks. Good morning. Just given the comment here around the acquisition opportunities and the pullback in the units here, of course, what are your thoughts with respect to maybe getting more active on the NCIB versus, I guess, balancing that with, you know, keeping some dry powder for acquisitions?
Zach Bowen (Chief Executive Officer)
Yeah, well, like I think you used the right word, balance. I mean, it is. Look, I’d say they do compete, right? To the extent, like I think when you see something happen to your units, that’s, you know, a reaction to a macro factor that really doesn’t have an overly material impact on the sustainability of your business. Obviously, you start to look at that. We did renew it. We were active. We were trying to be as active as we could on the Series H converts.
We can do the I’s and now we can do the equity. So I’d say, look, it’s competing with new acquisitions. I think what we are seeing though is people that need to sell in the current market, particularly in the US we’re definitely seeing a much more favorable environment. So we just want to be conscious of that and our leverage metrics that if we’re going to lever up slightly for a period, we also want to keep that in mind. So I guess what I’m saying is we’re being flexible and we’re trying to have every lever available, but it’s certainly something that’s going to compete.
Pami Bir (Analyst)
Okay. And just maybe on that last comment with respect to the US how much has maybe pricing moved relative to, or even I guess maybe the opportunity set. But how much do you think it’s increased in terms of where valuations are or cap rates relative to, let’s say maybe six, nine months ago?
Zach Bowen (Chief Executive Officer)
Yeah, I would say in the U.S. probably even though bonds are up, I don’t know, 100 basis points in rates, I’d say you could probably say on average, the statistics would tell you it’s sort of, it always lags pommy. And so it’s probably like 50 basis points or so. But that being said, the levered buyers that have started to enter the market in a bigger way with institutional levered capital, private equity capital in this type of environment are just struggling that you know, again if you’re trying to generate a certain levered total return, you have to generate a certain amount from net levered cash flow and it’s harder in this environment today.
And so we do have an advantage given that we’re recycling out of lower yielding stuff and we don’t need property level financing. So I guess I’d say, you know, we’re sort of when we were looking at initially when we were first talking about redeploying in the U.S. i think we were sort of thinking in the sort of low to mid six range. I mean I’m targeting 100 basis points wide of that today.
Stephanie Karmarkovich (Chief Financial Officer)
Yeah, I mean, I guess probably I’d sort of look at it a little differently versus kind of the, which is the, sort of, I just call it the short-term rate, which is right now sitting at under 13.5%… ish. Sorry, 13.75%. I’d sort of look at, like, what we really own is an inflation asset-backed, inflation-linked bond in Brazil. And those inflation-linked bonds started the year at seven and a half. They dipped to sort of 6.8. Now they’re back to 7.8.
But, like, our yield today is still pretty wide of that. That being said, we never really anticipated we’d probably exit in the very near term. But I’m not sure, given the caliber of the assets, that this has materially changed anything. We’re thinking about it because it’s not like we were saying we were going to exit in the next six months, and if that were the case, we’d probably hold off a bit. So I think we’re pretty comfortable right now.
OPERATOR
Your next question comes from the line of Giuliano Thornhill with National Bank. Your line is now open.
Giuliano Thornhill (Analyst)
I just had one follow-up on the same property from North America. Was there anything one-time related to recoveries or driving that quarter-over-quarter increase higher?
Stephanie Karmarkovich (Chief Financial Officer)
No, I think there was a little bit of lease-up, and I think parking is starting to impact our numbers fairly materially. And that’s just because we’ve been more focused on parking operations. We’ve put in a new parking operator and equipment and are starting to see the benefits of that. Costs are coming down, revenues are slightly up. And so, yeah, I think that trend will continue.
Zach Bowen (Chief Executive Officer)
Maybe I’ll just add, Giuliano, in North America in general, that when I started, it was pretty glaring where the Canadian portfolio sat. I think it’s a reflection of when you end up in periods where you have to throw back on capital. Sometimes that happens—leasing capital and other capital. We have made an effort in the past year to reinvest in our space, in our leasing and our marketing, and we’re starting to see that come through. And so I think in terms of same-store growth, particularly in North America, most of our U.S. stuff is longer-term fixed.
But in Canada in particular, I think you could see that. Tracy, do you want to make a few comments on that?
Tracy Riddle (Chief Operating Officer)
Yeah, sure. I think just what Zach referred to in terms of our renewed focus and efforts to drive performance in the Canadian portfolio. So after a period of time where we’ve been diverting capital to other preservation needs, we have started to invest again, both in the team and in the portfolio itself and the assets. And so what we’re starting to see is those efforts coming to fruition as activity across the portfolio has increased over the last quarter.
And we’re seeing future commitments achieved in early renewals coming through with some of our strategic tenants, such as Albany Clinic in Toronto, where we secured an early extension of 15 years, pushing us out to about 49,000 square feet with them. So those are the types of things we’re now starting to see come into the portfolio and is what we’ll start to see in our results as we move forward.
Giuliano Thornhill (Analyst)
And the renewal expectations for that segment, they’re still mid single digits or so?
Zach Bowen (Chief Executive Officer)
Yeah, I’d say. Sorry, you’re talking about renewal spreads?
Giuliano Thornhill (Analyst)
Yeah, yeah. Like, is it case by case?
Zach Bowen (Chief Executive Officer)
So I sort of split it between Canada and the U.S. in that what we see in Canada is a very stable, high-renewal environment. In fact, a lot of our tenants have just fixed 3% increases. We recover our capital. Plus, a lot of tenants have just auto renewals. So although you look at our lease term, a lot of tenants just automatically renew for five years, and rents just keep growing by 3%. I do think that the bigger spread opportunity could well be in some of the U.S. multi-tenant assets. And Dave, I don’t know—do you want to…
Dave Casimiro
Sure, sure. Happy to touch on that. And to your point, when we see the multi-tenant outpatient buildings in the U.S., given that there’s a consistency on the reimbursements from state to state, we do see near-end or closer-term expiry that opportunity to hit those higher rent spreads on a mark-to-market basis.
Zach Bowen (Chief Executive Officer)
Yeah, I think you’re seeing that in some of the U.S. publics that sort of focus on outpatient, and it’s one of the reasons we’re pretty excited about it because it has been an area where, with some knowledge of the sector and some proactive leasing, I think you can do quite well over time in that space.
Giuliano Thornhill (Analyst)
Okay, thank you everyone. I’ll turn it…
OPERATOR
back. Thanks. That concludes the question and answer session. I will now turn the call back over to Mr. Stephen Hong for closing remarks.
Stephen Hong (Vice President of Investor Relations)
We appreciate your time attending our Q3 conference call. Please feel free to reach out to me directly at Steven doll@reid.com. Have a wonderful day. Thank you.
OPERATOR
Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.