Q3 2019 Earnings Call

Greetings and welcome to the retail properties of America third quarter 2019 earnings Conference call.

Well now turn the conference over to your host Michael Gaiden, Vice President Investor Relations you may begin.

These statements are usually identified by the use of words, such as anticipates believes expects and variations of such words or similar expressions.

Actual results may differ materially from those described in any forward looking statements, including in our guidance for 2019 and will be affected by a variety of risks and factors that are beyond our control, including without limitation those set forth in our earnings release issued last night and the risk factors set forth in our most recent Form 10-K 10-Q.

And other FCC filings.

As a reminder, forward looking statements represent managements estimates as of today October Thirtyth 2019, and we assume no obligation to update publicly any forward looking statements whether as a result of new information future events or otherwise. Additionally on this conference call, we may refer to certain non-GAAP financial measure.

You can find a reconciliation of these non-GAAP financial measures for the most directly comparable GAAP numbers and definitions of these non-GAAP financial measures in our quarterly supplemental package and our earnings release, which are available Indian buff section of our website at www Dot RPK I Dot com.

On today's call our speakers will be steep rise chief Executive Officer, Julie Swinehart Executive Vice President Chief Financial Officer, and Treasurer, and Shane garrison, President and Chief operating Officer.

After their prepared remarks, we will open up the call to your questions with that I'll now turn the call over to Steve Grimes.

Thank you, Mike and good day, everyone I'm proud to report that our team continues to extend our streak of above plan performance as seen in the first half of the year.

Our Q path to growth for our shareholders have never proven stronger as we will outline for you on this call.

I cannot be more pleased with the position of our <unk> and our prospects for meaningful growth through our core portfolio performance and within our site to be supplemented by our expansion efforts at our big redevelopment projects.

In Q3, we achieved several all time records as a publicly traded company, including record highs and leasing volumes as a percentage of T. L. A.

Record retail portfolio percentage leased at 95.5% as well as record low in top 20 tenant concentration as our continued diversification effort shine through in summary, our Q3 performance again demonstrated the tangible value our combined high quality platform and real estate can achieve.

Our accelerated leasing volumes, which have driven a record portfolio lease rate of 95.5% for us also bode well for our outlook.

Acute as our trajectory in lease spreads, which jumped to a blended 10.8% in Q3 up from 8.2% in Q2.

We also continue to advance in de risk our expansion and redevelopment projects. It certainly one laden downtown and Caroline as Shane will detail.

We continue to expect rent commencements to begin in late 2020, it certainly complementing the base rent driven growth in our core portfolio.

Our increased operating AFFO guidance of one dollar five to one dollar seven per diluted share highlights that our team is firing on all cylinders and we remain focused on executing in the fourth quarter to deliver on our raised 2019 same store NOI growth assumption of 2.25% to 2.75%.

From 1.75% to 2.75% earlier.

They sound consumer economic backdrop centered on the health in jobs and housing markets continues to aid retail results overall.

Our better than expected third quarter financial results and lower than expected Capex helped us maintain net debt to adjusted EBITDA or eat at 5.5 times in the third quarter.

With our balance sheet and fortress like condition and are abundant liquidity of more than 840 million at September 30, we hold no foreseeable need for external capital as Julie will outline.

Combined with our ongoing operational momentum and expansion opportunities we remain in the driver's seat on the road to continued growth.

Earlier this week, we issued a press release that announced the launch of our all new U.S.G. micro site.

The new state features a summary of successfully implemented programs related to energy sustainability human capital diversity corporate governance and other topics that support our focus commitment to U.S.G. I encourage all of you to visit our new micro site at RP A.I.E.S.G. Dot com.

Our year to date results are firmly validated our thesis on the potential for RP AI to point out and we hold much enthusiasm for capitalizing on our positive momentum over the remainder of this year and beyond.

Our parallel paths to grow your intermarriage in the coming years will be here before we know it is truly exciting to see the vision of ARQ <unk> 2.0 come together before our eyes as our team delivered day in day out with an unwavering commitment the teams enthusiasm in infectious at being in our results we're sharing with you today.

That I will turn the call over did you lead to detail our third quarter financial results.

Thank you Steve today, I will discuss our third quarter results or capital positioning and our outlook for the remainder of 2019.

From an earnings perspective in the third quarter, we generated operating FFO of 27 cents per diluted share up one cents sequentially. As a result of an NOI growth and the up once said as compared to Q3 2018, primarily due to a reduced share count.

To date, we delivered operating episode 80 cents per diluted share three cents or 3.9% above the comparable three quarters in 2018 reduced share count benefited this per share metric by two cents with earnings growth contributing one cent driven by same store NOI expansion and increased net termination fee income.

Same store NOI for the third quarter Rose, 2.3% over Q3 2018 as we previously communicated on her last earnings call. We expected a deceleration in the third quarter from the 2.9% same store growth pace of the first half of 2019.

One more difficult Q3, 2018 comparable period.

Well this deceleration occurred it was lessor in magnitude than we anticipated in part due to small beat across most categories as compared to our internal expectation.

Alert to our first half results based rent expansion continues to power or same store growth, adding to the broader visibility on our business and contributing more than 280 basis points. So same store growth in Q3.

Contractual rent increases in occupancy gain powered the vast majority of the space rent growth with releasing spreads also significantly contributing.

Increased other lease related income also helped our Q3 same store NOI expansion, while expenses net of recoveries and percentage and specialty rent served as the primary offsets as expected.

Our year to date same store NOI growth of 2.7% also has been generated primarily by base rent growth, which added approximately 250 basis points.

Higher other lease related income and lower bad debt also contributing.

Regarding bad debt on last quarter's call I noted that only 20% of our full year bad debt assumption, a 50 basis points of same store revenue had been used in the first half of 2019 in the third quarter. We used another 40% of this full year bad debt and tenant fallout allocation a portion of which is visible in the same store bad debt amount.

$690000 recorded in Q3 that leaves 40% of our full year bad debt assumption available for the fourth quarter if needed.

The digestibility of tenant fallout year to date reflects both incremental health among merchants broadly as well as our ongoing leasing efforts toward tenant credit quality and diversification in our rent roll.

Turning to our capital structure, the balance sheet remains in great shape with net debt to adjusted EBITDA Ari at five and a half times, which sits unchanged quarter over quarter and positions us in the lower half of our peer group liquidity also remains robust with only $24 million drawn on our $850 million revolver.

And over $17 million of cash on hand.

Due to planned spending on or expansion and redevelopment projects, we do expect leverage to tick slightly higher by yearend.

We remain committed to balance sheet health and our stated objective of leverage at or below six times.

As disclosed during second quarter earnings we raised $270 million in the aggregate on July 17 from a 120 million dollar five year term loan and a $150 million seven year term loan we swapped to these variable rate LIBOR based loans to fixed locking in all in costs of 2.8%.

Five year term loan and 3.27% for the seven year term loan based on our current pricing at the lowest point on the leverage grids tied to these borrowing.

<unk> took effect on August 15th.

With this 270 million dollar placement our debt capital raises for the year telly $370 million, placing us well above our initial 200 to 300 million dollar goal.

As a result, we used a portion of these higher than expected proceeds at lower than expected interest rates to prepay for mortgages in the third quarter with an aggregate principal balance of approximately $108 million and a weighted average interest rate of 4.91 person.

These prepayments lowered both her secured indebtedness level and our overall weighted average interest rate.

And following these prepayments we now hold just five mortgages are only secured debt with an aggregate principal balance of approximately $96 million representing less than 6% of our total debt.

Compared to June Thirtyth, our weighted average interest rate improved by 60 basis points to an attractive 3.8% and our weighted average years to maturity increased by approximately one third of the year to five years.

Turning to our raised 2019 operating AFFO guidance.

As detailed in last Night's press release, we now expect full year operating AFFO per diluted share of a dollar five to $1 seven up another half a penny at the midpoint from our prior dollar for dollar seven range.

This guidance raise primarily results from our updated 2019 same store NOI growth assumption of 2.25% to 2.75%, which represents the upper half of our prior 1.75% to 2.75% range. We remain encouraged by our year to date execution through the third quarter as well as our efforts.

The turn on rent, thus far in the fourth quarter and well confident in our outlook for the balance of the year and noting that 40% of our full year bad debt allocation remains available for Q4 2019, if warranted. We acknowledge that there is still work to be done through yearend, we remain keenly focused as an organization on delivering.

On our hefty operational agenda over the balance of the or.

And now I will turn the call over to Shane.

Thank you Julie in the quarter, we signed 1.1 million square feet in new and renewal leases.

Achieving a new record leasing volumes as a percent of our total geo lay up more than 5% besting our prior record set in Q4 2018.

This metric combined with our 46% spread on comparable new leases, which hold a weighted average term of approximately 10 and a half years underscores the pricing power depth and relevancy of our portfolio in todays retail environment.

Additionally, blended spreads on both new and renewal comparable leases accelerated for the second quarter in a row rising to nearly 11% up from 8% in the second quarter and the broader existing baseline of 5% to 6% and the preceding quarters.

In addition to the accretion of these double digit spreads our aggregate new lease signings in the quarter also contain annual contractual rent increases of approximately 200 basis points on average pushing this key statistics for our total portfolio northward and providing incremental visibility on further expanding our.

Overall contractual rent growth profile.

Our leasing efforts have pushed our retail portfolio percentage leased to a new record high for our company as a publicly traded read at 95.5% up 80 basis points sequentially and 150 basis points year over year.

Our 98.2% anchor lease rate a multiyear high.

Drives this overall portfolio statistic.

For further perspective, I'll be 445 anchor spaces across our 20 million square foot portfolio.

We held just 11 anchor boxes open for lease up at the end of Q3.

This not only provides for compelling growth in 2020 would also provides us continued opportunity to focus on longer term growth through selective merchandising and termination fee income.

At the same time, we continued our first half momentum and starting rents on time during the third quarter.

This operating performance helped power our above plan base rent growth in the third quarter and narrow our lease to occupied spread sequentially by 50 basis points to 180 basis points or 7.7 million as of September 30.

20, $1.44 cents Hbr per square foot of this pool is accretive to our current portfolio Hbr of 938 and should provide further growth as we deliver these spaces in the coming months.

We continue to push for rent roll diversity, and stability and I'm pleased to announce that Ulta beauty entered our top 20 tenant list at number 19 this quarter.

This top 20 add typifies the slate of high quality relevant retailers moving up our tenant roster.

Continue to diversify and solidify our rental.

In the aggregate we have further reduced our top 20 tenant concentration by 200 basis points year over year, and 20 basis points sequentially, 26.7%, a new record low for us as a publicly traded company.

Our proactive stance to watch list tenants and merchandising continues to pay dividends.

For example, we opened our six trader Joe's as shops of Union Hiland and build New Jersey last week Backfilling, a pure one location at a very compelling spreads. We also recently signed our fourth Lululemons location at main street prominent and dumped on Naperville.

Replacing A. J crew there at a positive double digits from.

These upgrades exemplify our teams ongoing effort drive simultaneous improvements in mix Hbr and credit quality.

Turning to our expansion and redevelopment activity Avalonbay continues to progress toward first quarter 2020 initial move ins at the multifamily portion of circle East.

Dovetailing with our expectations for delivery delivery of the retail show in Q1 next year and the expectation of early rent Commencements from our retail portion of this mixed use project in late 2020.

Most importantly, our recent signing of shake shack for prominent corner location on Joppa Road provides excellent leasing momentum and further validation of the project.

We also continue conversations with merchants and other categories like home furnishings.

Digitally native and soft goods.

We'll look to announce these deals in the near term.

And while we continued to advance construction at pads G and H, which will feature 378 multifamily residential units over street retail. This expansion project will enhance our existing mixed use footprint at wasn't <unk> downtown which is currently 96% leased in retail and 100% lease.

In office this multifamily development scheduled to open in late Spring 2021 also will offer the opportunity to extend the existing successful entertainment focused component of our current offerings at one loud.

Turning to our last active projects carillon.

We completed the demolition of approximately 290000 square feet already vacant Julie at the site during the third quarter.

This demolition in turn drove the bulk of the sequential uptick and depreciation and amortization in the third quarter on our income statement and we expect this line item to normalize at lower levels in the fourth quarter.

This mixed use project for which the retail portion is 37% release.

Adjacent to the University of Maryland Capital Region Medical Center, not under construction, which is scheduled for opening in spring 2021.

The other with our medical office joint venture partner Trammell Crow, we already have several active discussions with potential tenants interested.

In our 100000 square foot medical office building, which will compose 44% of the total mixed use geo care along phase one.

We still expect to start vertical construction on the project in early spring of 2020.

We also provided updated information and timing in our supplemental for expansion projects that main street prominence and downtown Crown.

With this update we have further clarified our flexible posture toward our pipeline outside of our commence projects, that's sort of at least one loud and downtown and carillon.

In summary, we will continue to evaluate the optimal start time for expansion projects that mainstreet prominent downtown Crown and several other locations based on size time to stabilization overall risk and cyclical and balance sheet considerations.

Currently we have no set date to commence any projects outside of the current three in process.

Going forward, we will look to greenlight these projects when conditions best dictate.

In the interim we enjoy the increased optionality in our development and capital planning brought by this highly flexible approach and we continue to explore smaller more immediately accretive pad expansion opportunities to enhance our portfolio and earnings growth.

Thanks to our well positioned assets, we hold numerous opportunities to continue to entitle expansionary development and we will look to announce these opportunities in the coming quarters.

Turning to transactions, we remain similarly opportunistic on the acquisition and divestiture front.

Closing on the sale of land and rights to develop the remaining 12 to over to use a one loud and downtown roughly 3 million in the third quarter and acquiring a single user parcel occupied by shake Shack at South Lake for 3 million as well, bringing our total dispositions for the year to approximately 50 million and total acquisition.

Actions to just under 30 million.

In summary, Q3 was one of the best quarters, we have ever delivered as a publicly traded company and both our leasing and development teams continue to build the opportunity set or self source growth embedded within our current operating portfolio and project pipeline.

When combined with our execution strengths, we are well positioned to build on the impressive results delivered year to date setting the stage for a very productive 2020 I will now turn the call back over to Steve.

Thank you Shane and Julie as you can hear our continued Chris execution brings us many reasons for confidence in our outlook over the balance of the year.

Our straight forward investment proposition anchored on our curated portfolio of 100 and for growth oriented operating assets roughly 350 million remaining spend over the next two to three years for three active projects combined with our strong balance sheet abundant liquidity and our opportunistic approach to acquisitions and dispositions prefer.

Hi, this many reasons to look forward to what lies ahead in 2020 and beyond with that I will now open the call for questions.

[laughter] at this time, we won't be conducting a question and answer session. If you would like to ask the question. Please press star one on your telephone keypad confirmation John will indicate your line is another question Q you May press Star too if you would like to remove your question some of the Q.

For participants using speaker equipment, and maybe necessary to pick up your handset before pressing the star keys.

One moment. Please follow me poll for questions.

[laughter]. The first question is sort of Kristina calibrate Citi. Please go ahead.

Hey, Thanks, guys I'm just wanted to follow up on machine your comments and get a little bit more if the rationale in the background behind the decision to hold off on the main street prominent in downtown Crown project Dino and adjusting the optimal start time, what what is that how much of that was your display.

And in terms of how much of that was your willingness to put capital to work sort of in the context of your macro view on the retail environment and economic backdrop versus it being a matter of sort of what your cost of capital looks like today.

If that makes sense.

It does have Christy good morning.

So I think the Optionality is key for our platform right. We've always said, we want Optionality, yes, two starts and we want to entitle everything we can.

And maintain an ability to kind of plug and play based on how we look at the macro and how we look at the specific drivers at the I must say level.

So we pulled these two back specifically based on the macro its just a bit opaque there seems to be some calls building on the horizon.

Just at the macro economic level on non retail specific so that's that's purely what this is a we look at 350 million or solves spending over the next three years on these projects loved the projects everything is on time as we discussed in our prepared remarks, but think it's prudent given lack of visibility here certainly in.

Electioneering election year next year as well, so pull back and kind of pick our shots from here looking at balance sheet integrity as well as demand drivers.

Okay, and then just with those clouds building on the Horizon. You know you said it was non retail specific and you know appreciate the comments you guys made about reducing exposure to your top 20 tenant list, but sort of as you look ahead to 2020, you know between dress barn, and others, where you may have been a you know.

Working out rent reductions in space recapture outside of the bankruptcy process could you maybe give us a signs for what the fallout headwind from a tenant perspective could look like next year.

I think that remains to be seen the watch list hasn't really changed but look we're at.

A couple of things for 2020 without guiding but I think as a frame of reference is important.

So.

We have done Overdeveloped since 15 call. It 75 anchor backfills at 15% plus releasing spreads.

With 51 different tenants and most importantly, those 51 different tenants. There is not one of those tenants that are on the watch list today.

And my point is that going forward, we feel because of that works in 15, we have certainly greater cash flow durability and diversity and hopefully growth through those efforts and secondly, I would point out that the current demand dynamic has outperformed our expectations I think most in the space, we're at 95.5% leased today.

I talked about our anchors were north of 98.

445 locations only 11 available and we actually have half of those and ALOG Ela why or lease today I can honestly see a path to 99% leased in the anchors right now.

And we also have 8 million of annualized rents a turn on the next couple of quarters into 20.

And then I would say lastly, as it relates to our Roland 20.

We have we're running at 6% of GL, a rolling in 20, which is half of our our average run rate. So we're opening the year at a much lower role run rate.

And just to put a bit of a finer point on it and our top 20 tenants, we have six and a half million feet. There. We've only had we only have 65000 feet rolling in that population.

So I think that.

Those points and also the ability to pre lease because of the demand drivers you know we know we have five boxes. They come back next year, that's what we have a handle on.

And for those are watchlist tenants that we were proactive with and those are pre leased and the fifth box. We intend we think we have leased this quarter.

And my point is wanting to put an exclamation point on what we see on the demand side, but also what is a relatively new dynamic is the ability to pre leased two three quarters in advance of boxes. We know we get back which is cutting down from a.

Call. It traditional 12 to 18 month downtime to six to nine months. So even if we take some of those boxes back or when we take some people's boxes back next year, we still conceptually hep right come back online and comp through it.

So overall.

More rent roll diversity higher quality portfolio and platform and I think certainly significant volume and leasing efforts are set us up for a great 2020, and it remains to be seen what the watch list effect will be.

Okay. That's helpful. Thank you.

[noise]. The next question is from Vince I phone of Green Street Advisors. Please go ahead.

Hey, good morning could you provide an update on just the total expected development spend for 2020 and any funding plans I'm currently in place for that amount.

Sure events. So for 20 2020, a we're looking at probably I'd say 150 million. So certainly a ramp the ramp that we've been communicating over the last year or so and that's associated with a as we're calling them. The big three projects in terms of funding I'm you know we've done a lot of work that's here too.

To a free up room on our revolver. So we have this 850 million dollar revolver. It was only $24 million drawn at quarter end. So I would expect to tap into that temporarily next year to fund some of this but just as a reminder, our revolver is our only variable rate instrument. So it's our way to continue.

You to take advantage of the very attractive interest rate environment right now its incurring interest at 2.85% and that's been coming down in recent quarters and if it would continue to go down that didn't even better story for us. So I'm very affordable in that regard and and that would be again a temporary use.

For next year.

Well good asset sales potentially be on the table for funding or is the line of credit is the most or another maybe debt placement if interest rates are low are the most likely option.

I think another debt placement wood.

I don't want to sit on idle cash, which is not going to earn a whole lot sitting in the banker and interest bearing funds and we don't have any debt coming due in 2020, and even if I look I had to 21.

There's 350 million coming due and just even a thing to prepay that early one one instruments at 3.2% and others just over 4%. So so that's not feeling.

Like it makes sense from my standpoint.

So those have prepayment penalties those those are those maturities and 21, yeah there'd be an element one's a term loan and it's a fixed with interest rate swaps through maturity. So you'd have to consider a hedge accounting implications as well, but again the rates are not.

You know so high that I would look into pre paying them early especially with any penalties.

Okay got and then just just to just drilling down a little for like wire asset sales not part of the plan. It seems like you know the bids dinner the market's pretty liquid still for you know all qualities of strip centers. So why not you know sell some lower quality assets. There maybe some no single or some you know stable outparcels, even that you can get lower cap rates on.

Like why not.

Supplement the debt with with asset sales.

Vince This is Steve there's there's multiple aspects of our strategy I've alluded to it on the call earlier, where we have the operating portfolio that essentially should carry the day through this development around from an earnings perspective, we want to keep that it's pure and complete as possible and embedded in that is some assets that are non core to us for a geography reasons, only but are still very well.

Performing assets, we think a prudent, especially given what we have in that rising for development spend in our funding availability for the development spend to preserve those disposition proceeds for acquisitions for further growth in our target markets and if you were to look at the math and what we're able to do in terms of what we're able to sell add even.

In the future and what we're able to buy at assuming cap rates move directionally in the same direction for what we're buying and what we're selling we're in a very good position to preserve that capital grow in those markets.

From the development perspective again, if we were not in a situation, where we weren't essentially self funded either through a small expansion in the line use or potentially further monetization through JV proceeds or air rights sales a it would be a different story, but for right now to sell income producing assets to find her prefund development.

Instead on idle cash is not prudent from an earnings perspective, and it makes all the sense in the world for Us to view these two pads separately and when they converge or when they merge in 2021, it's going to be off the charts. So that's the plan and it seems to be working and it will continue to work, which again bodes well for 2020.

And our ramp through 2021, when these two things ultimately merge.

Great. Thank you that's all I have.

The next question is from Jerry Derrick Johnson of Deutsche Bank. Please go ahead.

Hi, everyone.

On the new lease spreads, which were very healthy you know what drove to 46% versus I think it's a mid twentys on average range T.I.s were basically kept in check so.

So what drove it and how should we think about new lease spreads going forward.

Hi, good morning, and Shane.

It was a big anchor quarter, you can feel in the T.I.s, which are bit elevated, but specifically we talked about in the beginning of the year.

Where we recaptured a couple of boxes, we thought were compelling and we wanted to get to this year and they showed up this quarter. So we had 68000 foot box in the mid Atlantic <unk>.

That was.

Mid single digits, and we comps north of a two X on that deal a and then we also had a deal we recaptured in Seattle, which continues to be one of the strongest if not the strongest rent growth market, we have which was also.

Call It 30, 40% Radcom.

So those two deals specifically were large in square footage and drove the CCI spend as well as the comp.

Okay, and then just shifting to leasing trends. So I guess, how is retailer interest stacking up in the redevelopment projects in general and versus underwriting.

So talison would be our first indicator.

We talked about shake shack.

Which was a great lead a restaurant to sign I think is a great prominent corner, we have four or five other deals teed up.

We are still call. It mid 40 to 50, not a tausome. So we're very comfortable from a pro forma rent standpoint.

We did move.

Costs up a bit as we come to the end of raw construction completion.

As well as a few approved deals through lease committee, but the rents are holding and in some cases out running pro forma which is why we are still very much in the range.

But what we've seen from a demand standpoint continues to be robust on the small shop space, which is basically what talison is.

And we continue to expand with those concepts and genres that we think will carry the day from a long term demand standpoint, both for space and through merchandising digitally native specifically, we have picked up the cadence there on leasing quite a bit in the last couple of quarters. We now have 15 digitally native deals within the portfolio.

We think that sector alone provides for 850 new stores over the next five years Talison, we expect to have one or two.

And with Artix expansive and expanding a mixed use footprint. We certainly will continue to build our brand with that category. So overall rents are spot on right. Now early demand drivers are considerable and we're very happy with the progress.

Thank you helpful.

The next question is from Hong sang of JP Morgan. Please go ahead.

Yeah, Hi, guys I was just wondering how much further do you expect to push commenced occupancy by year end, especially given the large growth curve in threeq.

Hi, good morning.

I would expect based on the deliver we don't habit, a significant amount of deliveries left I would expect assuming we don't move the topline.

Another maybe 25 basis points of compression on the spread by year end, but I think we assume that we can move the topline as well so.

Maybe 25 this compression on top end, we hold the gap at 180.

And just to add some color or context around the least occupied spread thats about $7.7 million a navy are.

And it looks like close to half of that would be starting in Q4 in terms of being rent paying so little different than the occupancy question, but the rent paying portion.

Got it thank you.

The next question is from Floris Van Dyke unless Compass point. Please go ahead.

Great. Thank you.

A quick follow up question on on something that has been I guess talked about a little bit before but as you look at your your cost of capital and Youre.

Your spend particularly if you look at your 330, roughly a million of additional spend you will have on your three big projects.

Clearly your leverage will tick up a little bit how do you think about buying back stock.

Relative to other investments going forward.

Hi, fluorescent, Steve well Weve, I think Ben and have proven that we're willing to buy back stock at prices that are pretty compelling we bought back in the high 11, and I think we probably on a relative basis have bought back more shares then many if not most in this in the space.

But as it stands right now in terms of how we look at the leasing momentum that we have in the capex required with that as well as the development of being very very additive in terms of what could be earnings growth starting in 2021 or the math is really just penciling out for us to earmark any additional dollar of.

Equity or proceeds if you will towards either the redevelopment or the leasing efforts that we have on the play right now, but you know that's not to be said that if the stock where to hopefully not retract hopefully we're on a good progression going forward that we wouldn't consider it again, but at this time, it's pretty much off the table given what we're trading.

And just as Steve mentioned in his prepared remarks that 330, the 350 million or so over then is it is over the next two to three years. So it's not coming all at once.

It over that same period of time I would expect to EBITDA to continue to grow so both it numerator and denominator would be moving and again, we've stayed committed to we review leverage projections, all the time and stay committed to staying at six times are below and five and a half times today feels very very healthy relative to pay.

Here's an relative to where we think we ought to be.

And just a follow up on on the on the leverage because clearly you leverage will kick off over the next call a 12 month likely until Youre your investments start to produce income.

You will be monitoring that closely but it should not go above six six times in your view.

That's correct.

Great.

That's it for me.

Thanks, Laura [laughter], we have reached the end of the question answer session I will now turn the call back over to Steve Grimes, Chief Executive Officer for closing remarks.

Thank you operator, and thank you all for joining US today I think it's a very very busy time for all of you I know there were a couple of calls yesterday three today in another three tomorrow and that's only if your covering the strips. So I. Appreciate the time you spent with US today look forward to seeing many of you a in L.A. and they reach.

And just to show a couple of weeks, so take care and have a great day. Thanks again.

This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

[noise].