Q3 2019 Earnings Call
Hi, likes it might get ladies and gentlemen, thank you for standing by welcome.
You see Q3, 2019 American assets Trust Inc. earnings Conference call. At this time, all participants' lines are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During the session you need to press star one on your telephone.
Please be advised to today's conference is being recorded keep your acquire any further assistance. Please press Star then zero.
I like the hand, the conference over to you speaking today Mr. Adam while thank you. Please go ahead.
Thank you good morning, everyone welcome to American assets Trust third quarter 2019 earnings call yesterday afternoon earnings release, and supplemental information are filed on form 8-K, with the Securities and Exchange Commission. Both are now available on the Investor section of our website American assets Trust Dot com.
Audio webcast of this call will also be available for replay by phone over the next week as wells on the Investor section of our website. During this call. We will discuss non-GAAP financial measures, which are reconciled to our GAAP financial results earnings release, some supplemental information.
We'll also be making forward looking statements based on our current expectations. These statements are subject to risks and uncertainties discussed in our FCC filings you are cautioned not to place undue reliance on these forward looking statements actual events because our results to differ materially from these forward looking statements, which we undertake no duty to update with that I'll turn the call over to Ernest Rady to begin that is.
Gosh and of our third quarter results first thanks, Good morning, everyone and thank you all joining American assets Trust third quarter 2019 earnings calls, we are making great progress on all fronts. As we continue to focus our efforts on for earnings growth combined with gross and net asset value for our shareholders.
The company's board of directors has declared a dividend on its common stock 30 cents per share from their quarterly period, ending December 31st night 2019th.
Which is a two cents per share increase and an approximately 7% increase over the prior quarterly debt.
The dividend will be paid on December 26, 2019 to stockholders of record on December 12.
29 team and we're all delighted to share.
Financially the success that we've enjoyed over the last years.
Hi, I'm also pleased to announce or the borders names Alan Adam while because our executive Vice President and Chief Operating Officer, Adam is and has been a valuable member of our fans my team and this title better describes the breadth of responsibility, yes successfully taken on.
And we'll continue to manage since our IPO as wells the confidence our board.
In here and there is no children change in reporting function and he has been a very important part of our management team and we appreciate what he's done and look forward to working with them in the future. We are fortunate to have such a great management team and a group of employees at 80, all of whom work together as we continue.
As a best in class real estate investment Trust.
[noise] I'm going to keep my introductory comments shorts since Bob is going to introduce our 2020 guidance, which will focus on the growth and resilient strength of our high quality coastal west coast high barrier to entry portion.
Again on behalf of all of US in America.
Thank you for your confidence of allowing us to manage your company and we look forward to your continued support I will now turn it over to ballpark.
Thank you the vice President and CFO .
Okay, Okay from here.
Good morning, Thank you heard us.
Last night, we reported third quarter 2019, EFO up 50 cents 57 cents per share and net income attributable to common stockholders of 22 cents per share for the third quarter.
Third quarter results.
Primarily comprised of the following.
First actual FF both increased in the third quarter by approximately 27% for 11.7% on NFV FFO per share basis.
57 cents per FFO share compared to the second quarter of 2019.
Primarily from the following five items.
First the acquisition of lawyer Commons on June Twentyth added approximately 8.5 cents a bet that FFO per share second the embassy suites, and Waikiki Beach added approximately 1.4 cents AFFO per share due to the seasonality over the summer months.
Third the landmark at one market in San Francisco added approximately 3.7 cents of FFO per share, resulting from the lease commencement on July 1st of the remaining five of the seven floors now occupied by Google under their lease agreement that was entered into in Q4 2018.
Fourth an equal increase in both Gionee and interest expense reduced FFO by approximately 1.5 cents per FFO share.
And fifth a decrease of approximately six cents about that FFO per share as a result of the increase in the weighted average shares resulting from the equity raise in connection with the acquisition of lawyer Commons in Q2 of this year.
Secondly is earned as previously mentioned, we've increased the quarterly dividend by two cents per share beginning on December 26 to stockholders of record on December 12 and approximately.
A 7.1% increase over the prior quarterly dividend.
And third.
Our 2020 guidance range mid point of to 42 is approximately a 9% increase over the revised 2018 guidance midpoint. However, excluding 2019 nonrecurring termination fees of approximately five to 5.2 million.
Recorded year to date, the majority of which was non cash the 2020 guidance midpoint would be approximately 13% increase over 2019, and we believe reflects the true FFO growth in 2020.
Let's discuss these highlights in more detail.
Our retail portfolio ended the quarter at 98% leased combined with what we believe are the highest annualized base rents amongst our peers. During the trailing four quarters 73 retail leases were signed representing approximately 313000 square feet or 10% of our total retail portfolio.
These leases signed 61 leases consisting of approximately 181000 square feet.
For spaces previously leased on a comparable basis, the annual cash basis rent increased 3.7% over the prior leases and on the straight line basis increased 10.6% over the prior leases.
Our office portfolio ended the quarter at 94.7% leased.
Specifically as it relates to lower your comments, we've made great progress.
As of the date, we acquired that asset on June 20, or it was 88% leased 10 days later on June Thirtyth. It was 95.9% lease and as of September Thirtyth. It was 96.6% lease.
We believe it continues to be in the path of future growth and in a dynamic market, where the vacancy is approximately 3%.
Steve Center, a vice President of office properties has done a tremendous job and overseeing this assets leasing momentum setting what we believe our new high watermarks for office rent in the U.T.C. Submarket.
It's also important to note that we believe our in place rents for the entire office portfolio.
Approximately 18% below market [noise].
During the trailing four quarter 71, New office leases were signed representing approximately 679000 square feet or 20% of our total office portfolio.
These leases signed during the year 47 leases consisting of approximately 494000 square feet.
Sure for space is previously leased.
On a comparable basis, the annual cash basis rent increased 45% over the prior leases and on a straight line basis increased 69% over the prior leases.
The increase in the straight line rent in both retail and office reflects the cash NOI growth that is locked in and we expect to see beginning in 2020.
At first glance overall same store cash NOI was somewhat confusing to expectations, but with a deeper dive into the numbers. It is simply comprised of.
Same store retail cash NOI decreasing in the third quarter by 5% or approximately $800000, resulting from a decrease in retail termination rights fees received in 2019 over 2018 from two Aaron brothers stores, one of which has been released in 29.
18.
And we recorded a bad debt expense for one forever 21 store closing.
We have at del Monte Center in Q3 Night night team that is the only forever 21 store, we have in the portfolio.
When we acquired the Forever 21 building in Q3 of 2017 for approximately $5 million, we modeled our acquisition to reflect the natural expiration of the forever 21 lease as of.
July 30, Onest 2020.
Now we have the opportunity to renovate that building much sooner.
And make it relevant to the current marketplace.
We received their October rent and have reserve their fourth quarter read for approximately $250000. It is already factored into our 2020 guidance as well, which we will share with you in just a moment.
Same store cash NOI increased 10% to 10.5% and the third quarter, primarily due to additional revenue from new leases signed at City Center Bellevue and we received the termination fee of approximately 700000 from a tenant City center Bellevue for approximately 37.
2000 square feet terminating in the third quarter of 2019.
The M. where has since entered into a lease that expands into all of this tenets former space effective in 2020 at higher rates.
Same store multifamily cash NOI for all multifamily properties on a combined basis decreased.
Absolutely, 4.8%, primarily due to a decrease in cash NOI of approximately 8% and our San Diego multifamily portfolio.
Primarily due to a reduction in the occupancy percentage combined with higher repair and maintenance expenses at Loma Palisades.
Cash NOI increased 8% at our hassle, an eighth multifamily property importantly.
Although the occupancy percentage for hassle, an eighth remained consistent.
Add approximately 91% compared to the same property same period in 2018 rental expenses decreased approximately 6% providing for the increase in cash NOI.
Moving onto our mixed use property property as previously announced Waikiki Beachwalk are mixed use property consisting of the embassy suites hotel in Waikiki Beachwalk retail was moved out of same store designation beginning in Q1, 19th.
As of them as the mixed use property undergoes a significant renovation, which began at the beginning of the year, including Spalding work on all outdoor balconies and exterior painting a both towers.
As an update to the renovation work on the first tower is now complete and we're now working on the second hotel tower. This falling work and exterior painting is estimated to be completed before the end of Q2 next year. The room refresh project is expected to began in mid March and be completed for both towers by the end of May two.
20.
As the renovation work is ongoing for the third quarter.
Of 2019 are mixed use properties reported a combined increase in cash NOI of approximately 2%.
Looking at the results separately, the embassy suites cash NOI remain flat despite the ongoing renovation work.
Embassy suites saw an increase of 3% and revpar for the quarter, which was offset by an increase in room operating expenses at an increase in sales and marketing expenses.
Waikiki Beachwalk retail cash NOI.
Increased 4%, primarily due to increases in base rent and parking income, partially offset by an increase in real estate taxes.
Tenant sales remained high at $1060 per square foot for the Rolling 12 months.
As our tenants continue to benefit from the exit locations and a good economy.
Now if we look at our balance sheet and liquidity at the end of the third quarter. We had approximately 466 million in liquidity Cambrex comprised of 116 million of cash and cash equivalents.
315 million, a 350 million of availability under our line of credit.
Our leverage which we measure in terms of net debt to EBITDA was five and a half times and our focus is to maintain our net debt to EBITDA at 5.5 times are below.
On July Thirtyth, we entered into a note purchase agreement for the private placement of 150 million unsecured 3.91% senior guaranteed nodes with an 11 year maturity.
The effective interest rate net of the settlement of a treasury rate lock contract is 3.88% for 10 years.
As we approach the ended the year, we're updating our 2019 guidance by tightening the FFO per share range to to 22.
To to 24 per EFO share from our prior guidance range of to 18 to 26 per FFO share with the same midpoint of to 22 per FFO share.
Now, let's let's talk about 2020 got.
2020 guidance, we are introducing our 2020 FFO per share guidance range of to 38 to 246 per FFO share with a midpoint up to 42 per FFO share, which is approximately 9% increase in FF FFO over the revised 2019 midpoint.
Or an increase of approximately 13% excluding nonrecurring termination fees received year to date through September 19 that totaled approximately 5.2 million or seven cents AFFO per share.
Lets walk through what makes up the 2020 guidance.
First the same store retail cash NOI is expected to increase approximately.
4% or three and a half cents per FFO share. This is primarily due to increases in cash NOI at Carmel Mountain Plaza as we receive full years rent from the at home lease at rate continues on two new leases recently signed at so lot of Beach Town Center.
Secondly, same store office cash NOI is expected to increase approximately 14% or 14 cents per FFO share.
The increase in same store office cash NOI is mostly attributable to the following.
First at Torrey Reserve, we expect to receive a full years rent from newly signed tenets that is estimated to increase cash NOI approximately four cents per share of FFO.
At Torrey point, we expect to receive a full years rent from newly signed tenants.
The increase in cash NOI is estimated to be two cents per share of FFO.
At the Lloyd District, we expect to receive full years ramp from newly signed tenants, including rents to be received from our newly redevelop Oregon square building as well as rent increases from contractual.
Increases specified in existing.
Lease agreements.
The increase of two cash NOI is estimated to be approximately seven cents per share of FFO.
At City Center Bellevue, we expect to receive a full years rent from newly signed leases as well as rent increases from contractual increases the increase to cash NOI is estimated to be approximately three cents per FFO share.
At first in Maine, we are currently negotiating lease renewals with the Jia say, which we are optimistic.
That it will occur a decrease in cash NOI is anticipated based on current negotiations which include renovate moments and the give back of one floor.
We are estimating a decrease to cash NOI of approximately two cents per share.
What's interesting is that this grows in the same store office cash NOI is not coming from land market one market.
The reason is that Google, which is a tenant at landmark Hess partial rent abatements of approximately 35% of its base rent through the second quarter of 20 2022.
The same store office cash NOI growth in 2020 is mostly from positive momentum at City Center Bellevue Torrey Reserve campus and the Lloyd District portfolio.
Same store multifamily cash NOI is expected to increase approximately 3.5% or one cents per share of FFO.
Number four our net non same store guidance includes the following four properties.
First a full year of operations at 20 in 2020 at La Jolla Commons is expected to increase our cash NOI approximately 18 cents per share of EFO.
Secondly, a major tenants lease at the one Beach Street property in San Francisco is scheduled to expire at the end of 2019.
Beginning in 2020, we will remove one beach from the same store metric as we anticipate undergoing a significant redevelopment project of the interior of the building and adding a rooftop deck with an elevator access and panoramic views of Alcatraz off that north waterfront San Francisco.
The current in place rents of the expiring tenant or approximately $39 per square foot in a dynamic market that we be we believe is in excess of $70 per square foot and justifies the rest reinvestment in the building.
The decrease in cash NOI is estimated to be approximately four cents per share of FF FFO in 2020.
Third why Kelly Center in Hawaii was removed from same store in 2019 with the demolition of the former Kmart building, we anticipate that why Kelly Center will remain as same as a non same store property as we continue to work with prospective tenants, we do not anticipate commencing.
Instruction on a new building retail building space until we have a signed lease with a lead tenant.
Meanwhile, the new Safeway store at White Kelly Center is scheduled to open before the end of 2019 space, formerly occupied by the sports authority.
Lease revenue from Safeway is expected to increase cash NOI approximately two cents per share of FFO is 2020.
Fourth our mixed use property consisting of the embassy suites in Waikiki Beachwalk retail properties.
We're also taken out of the same store metrics in 2019 due to previously mentioned paintings falling and room refresh work intended to maintain the high level customer experience that keeps our embassy suites. The number one performing embassy suites and the world.
We hope to have everything completed by the end of the second quarter in 2020.
We expect the results of our mixed use property will we remained flat in 2020 with no change to cash NOI for 2020.
Fifth Gionee is expected to increase to approximately 26.2 million, which will de decrease EFO by approximately two cents per share of FFO.
Interest expense is expected to decreased by approximately 2 million, primarily due to the capsulation capitalization of interest costs related to the anticipated development at the low Jolla Commons property.
We currently are actively planning and getting ready for the development of the 224000 construction gross square feet class a office tower mentioned above.
However, at this time Theres no definitive date with respect to the started construction nor is there any assurances of project will be developed.
The reduction of interest expense related to the capitalization of interest costs is expected to increase or FFO per share by approximately two and a half sense.
Seven straight line revenue combined with above and below market revenue adjustments is estimated to remain flat at approximately 20 million in 2020, the majority of which relates to landmark lihue comments in the Lloyd District office portfolio.
Number three in connection with the acquisition of lawyer comments, we did a follow on equity offering in June 2019, as a result, we estimate that our outstanding weighted average shares of common stock used in the calculation of FFO per share for 2020.
Will increase by approximately 5.3 million shares we've estimated that the increased number of outstanding weighted average shares of common stock will result in the dilutive effect of approximately 15 cents of FFO per share for 2020.
These adjustments should approximately reconcile our revised 2019 midpoint revise guidance of $2.22.
With our 2020 guidance of $2.42.
Retail same store occupancy is expected to end 2020 at approximately 95.8% and office same store occupancy is expected to end 2020 at approximately 96%.
Operational Capex in 2020, or again expected to be in the 20 expected to be in the 80 to 85 million range, which is consistent with our 2019 estimate.
Our estimated operational Capex.
In 2019, and 2020 are higher than our historical 30 to 40 million per year due to the increase leasing activity, resulting in higher tenant improvement and leasing commission expenditures.
As always our guidance and these prepared remarks exclude any impact from future acquisitions dispositions equity issuances repurchases future debt refinancings or repayments other than what we've already discussed.
We will continue our best to be as transparent as possible and share with your analysis interpretations of our quarterly numbers operator, I'll now turn the call over to you for questions.
Thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound Keith Please standby boldly compiled acumen a roster.
Sleep.
First question comes from handle Sanchez with Mizuho. Your line is now open.
Hey, good morning gentleman on it so.
I was wondering if you can talk a bit more about the 2020 guided appreciate the color here, but maybe.
Maybe a bit on some of the buttons that can contemplate at the upper end and then the lower end to the value brands.
Well in terms of deal.
In terms of the range of the guidance Haendel.
I think is it's not likely we're going to hit the lower end of the range first of all but we generally put a range at keep in mind were 15 months out.
You know from 20 by the end of 2020, so were making our get our best guesstimate at this point in time, but from our vantage point today.
We didnt.
From my perspective is that I don't think is likely we're going to hit the lower end of the range.
I think we're seeing positive momentum positive leasing momentum.
That will give us the opportunity.
To accomplish the upper end of the range, but.
Theres, who knows what's what the future sees in the next 15 months, but we're we're very positive on the markets that we're in.
Got it got it thanks, maybe a bit more clarity one.
The Waikiki falling project because on the five cents a drag so maybe you could parse out a little bit about what is.
I guess recurrent.
Expectation for the drag in this year and then what embedded in the guide for next year.
And by the way would that contemplated to be can you just need to be completed this year and is now I guess spilling over into next year or was it always the case.
Mid point 20 completion.
It's really spilling over to next year.
In Hawaii.
Things take longer because you have to ship everything to the island. So I would say it's our goal initially was to have that finished by the.
The end of Q3, and the furniture is coming from Vietnam. The for the room refresh I mean, theres, just a whole lot of logistics and timing trying to get that done. So we were hopeful that by the end of Q2.
That will have this finish so to answer your question yet spilling over into 2020.
But if you compare this to comparable jobs, we think we're making very good progress and very good time.
Okay. So and then back first of all my question the full year estimated impacted that dragged that project this year I.
I guess, but as a matter how did the hotel perform.
During during the year versus your expectations. When you said that slides that drag outlook. This year and then.
Maybe quantifying.
There were dragged the embedded within the guidance on that business, so that probably next year.
Yes.
We've we've put a put a reserve at the beginning of the year and that part of that may or may rollover, but.
Well, what's what's happened is that.
The embassy suites hotel the sweet spot is to run that at about 88, 87% occupancy with a revpar.
North of 300.
Significant north of 300.
And what we've experienced is we've we've had to increase the occupancy on that and tried to make up for that because the 80, our has been reduced somewhat because of the Spalding keep in mind. When we say Spalding you have scaffolding on the exterior of that building and when you go to Hawaii.
You are on vacation and you don't anticipate opening the curtains and seeing scaffolding out that you expect to see palm trees and water.
So we've had to adjust the rate.
It's it hasn't been the impact to the NOI hasn't been as significant as we thought it was but there was some adjustments to that.
Okay Fair enough and then maybe color on Loma Palisades weakness there.
Asset specific submarkets with the big issue and what the otherwise strong.
Multifamily market in Southern California, and then expected for that asset into next year. Thank you.
Sure.
Almost palisades.
In need of a facelift and we're in the process providing that in the meantime, the market has been a bit softer than you would have liked for apartments in San Diego.
And are still think it's a great piece of property right.
Looking to see World Mission Bay.
Yes.
Tired.
Needs some improvement and we are providing that improvement.
Do you want to add something in that.
Just.
Didnt put or center finger on.
[laughter].
But it's a great piece of property had extremely valuable adjust in order to maximize the returns from it we've got to give it a facelift and we've we've done the rooms.
Where we started work on the landscaping.
We've done the.
The plumbing to sewers.
And that we're doing in one of the time and it'll happen that will be a beautiful property wins finished.
Needs a facelift.
And just to be clear is that.
Within your same store multifamily presents for next year on that.
I think Bob yes. It leaves we've not taking that out of same store that's still the same store.
Okay. Thank you.
Thank you in the next question comes from Richard Hill with Morgan Stanley . Your line is now open.
Hey, you've got you've got wrong on for Richard.
The first question just learning looking at the the morning, just looking at the present the investor presentation.
You guys had out with the potential.
No. It looked like it was to 45 for 2020.
Well I guess I'm I'm, just wondering thinking about the guidance for next year and appreciate a lot of the color that you provided by.
It feels like it's a little bit conservative.
You know.
Coming in better than expected and you're going to have sort of a benefit from interest expense as well maybe you just talk about maybe.
Said another way.
As it is it possible that that that high end of the range, maybe may even be too low.
Well the.
First of all good morning, Ron.
As always that possibility, but keep in mind. So we had that question from several investors along the way. So during 2019, we've been on the road meeting with investors and in our presentations through August .
We.
We had the bridge, which reflected a midpoint or what we thought was.
Realistic at that time.
That we were comfortable with the 242, so through eight months of the year, we showed to 42.
In September and our September presentation, we increased that mid that mid not midpoint, but we increased that to to 45.
And through our guidance and our budgeting process, we rolled it up.
And when we take a look at the ranges in the possibilities, we always like to put a range around that thats just prudent to do in your 15 months out from the next the end of the next year.
So while we're not.
Saying that you can achieve to 45, well it was more important to have a midpoint that reflected the midway between the rock bottom and in and the potential way up.
Up above and I think the to 45, we put the upper range. It to 46 I think there is.
Hi were very positive.
The potential in this.
[noise] portfolio and so that's not to say that we can achieve the to 45, but we think the right thing to do was.
To put the midpoint at 242, which is what we had shown throughout most of the here. If we had our choice of a strategy it would be under promise and over deliver in this case, it's our best guess and we certainly hope to over deliver.
We don't want to make promise.
As a point sooner make promises and.
Meet them and perhaps exceed the results.
Of that promise.
Great. That's helpful. Maybe can you give an update on what what the acquisition environment is like maybe cap rate that you're looking at what what property type.
Look most interesting.
Thanks, Ron there is so much money around that to value properties that we look to acquire has.
Hi.
And.
We had a run that several mostly office properties.
Come to realize that if you own good office and the path of growth can be very significantly profitable.
By the competition for quality properties, such as ours is intense.
That would lead to the conclusion that what is the value, but we have if what we acquire is so expensive. So we're very pleased with what we have and we continue to beat the Bush's to try and find more of the same quality with this upside as well.
Great that's up my aunt thanks.
Thank you Ron I say Hello to Richard.
Yes.
Thanks, Ron.
Thank you and our next question comes from Michael Carroll with RBC capital markets. Your line is now open.
Hey, guys, Michael just from my.
Well who's on.
Jason on for Mike, Okay, Jason sale of Michael.
Well there so just wondering given all the noise around we work are you guys feeling about that lease.
They also continuing to build out the space today 30.
Yes.
Yes.
Where we're watching it I'm not concerned about it.
The work seems to have a path for at least mid points recovery. We do have security for the for the leases. We have they continue to work on upgrading the building that we provide them and so we also believe that God forbid something happens to we work that we have an excellent and improved property.
In a market that has interest in this product and.
Frankly, I'm not losing any sleep over it Steve you, losing sleep no I can add to that that is a 55000 foot building in there now marketing 14000 feet for lease facilities.
For all of that 14000 feet six small spaces. So it appears that they're doing very well even prior to completing two guys.
Yes.
And you asked about the other building that were also in the process of beginning to upgrade it and should we were not to be present for some reason or rather well managed that ourselves.
So it's not the seventh on.
Yes, it's money well as money well spent in a market where the demand seems to be there for the project we are producing.
Got it and then I was also wondering if you guys could just brought on an update on the Torrey point offer them, what kind of leasing activity you're seeing there.
Steve I'm going to leave it at that leave that to you. It's we're making some progress but certainly it's been slower than we asked for now we recently signed a 15000 foot lease Wittner LS, which is life science company. They were an existing customer and 3900 and grew up to 15000 feet and we've got proposals out for another 12.
2000 feet. So we're chipping away at at the markets coming in our direction UGC and Torrey Pines are virtually full UGC is class a vacancy direct is 2.3% at the end of Q3. So we're seeing a lot of life science process not only at Torrey point, but also at Torrey reserve as well so the market.
It's improving and.
We feel good about the future it seems to be in the path of the growth.
And.
We are.
Hopeful if not optimistic.
Got it. Thank you guys. Thank you Jason.
Thank you and our next question comes from Mitch Germain with JMP Securities. Your line is now open Hi, Matt.
Hey, good morning, how are you.
Yeah.
So the UGC development.
I'm curious where that stands from a planning slash entitlement perspective number one and then number two.
What does it take for you guys to commence it and then I guess number three how are you planning to funded.
Okay, I'm going to ask Jerry Gammieri who's in charge of.
That entitlement and he knows the answer because I ask that question almost daily.
[laughter].
Good morning units.
We are in the process right now with the city of San Diego to protect our entitlements and submit under the code.
There is a code change coming in 2020.
We are.
We expect to be into the city this year to basically protect ourselves for the next four years. So we have some runway in front of us, allowing us an opportunity to pre leased the building before we go to construction.
But our hope is to be permit ready by the first quarter of 2020.
Yes, let me, let me just be clear to those.
Those people listening is at the end the entitlement to build.
It's a changing it's a changes yes. There is an upgrade the change in Cote changing Coca leaves more time delays, yet right, but the best but the title meant is vested.
And then whether were going.
I'm just talking about just footnote enough from Threeq to Fourq, what just I guess, just a couple negatives in the number right. There's a couple of.
Well how much was the charge you took for forever 21.
No nothing nothing to really sticks out on that.
Hey, good thanks say hydrocracking for us, we will and congratulations to Adam.
You have either he deserves it.
Just a quick question because there's a lot of moving pieces in and out of the same store pool, how should we think about that cash same store NOI.
As you reporting as you think you will reported coal in the end of 2020.
For the entire portfolio.
Well in the remarks Elvis.
I think we said it was 4% growth in retail and is at 14% growth in office.
And frankly.
When I look at the office into the next couple of years, we're expecting.
Excess attended than in the office percent office sector on same store I mean, that's that is a strong.
Strong sector for Us and then multifamily.
Should be about 3.5%.
So Bob the 9% includes redevelopment excludes redevelopment.
The.
It excludes redevelopment.
Okay, so including redevelopment where would that be trending you think call. It 20, yet it's not going to me I mean multifamily isn't impacted.
Retail would be impacted slightly.
If you look at it what it is today on the supplemental.
Excluding developed redevelopment and including it it's not that it's not that big of and we break it out in there so I'll be glad to answer.
Any more color on that after the call.
But I don't think does that big of an impact all right and that be that'd be helpful. And just another question. So as you.
Commence or potentially commenced Lonelier project.
You're going to probably trend to be more than 50% office.
How do you think about your diversified portfolio going forward and.
Will you rebalance in the future with more multifamily or retail or his office sort of the stock that you think you'll have longer term.
When you when we tell investors.
You guys don't pay me to come to work to build an office.
Hey shopping center read or residential you're paying me to build win.
And if the opportunity to build wealth is in office, we're going to emphasize that at the same time, we're going to try and build well to the other categories too. So we don't think of ourselves as.
Okay.
As one character only we think of ourself as well filters right now the opportunity.
It is in office and we're fortunate to have begun that to be able to take advantage of this opportunities.
Elvis just add to that so.
I think thats, a great way that artist.
Stated about creating wealth.
Where we are right now we're not looking to add retail, we're looking to add office and.
And more multifamily to a lesser extent.
And if you look at this strategy since we went public over the last years, we've increased our dividend every year and our compound return has been.
Teen or 14% year.
I do apologize for being multi.
Strategy Reid.
After apologizing because the statistics are was going as anybody in the industry and better than the vast majority, we hope to able to continue that track record.
Great. Thanks, guys. Thank you Sir.
Thank you and our next question comes from Todd Thomas with Keybanc Capital markets. Your line is now open.
Hi, Hi, good morning.
Just wanted to circle back to acquisitions, you had talked previously about doubling the size of the portfolio over over what's now I guess, a four year timeframe and you commented that it's a competitive environment, but your cost of capital is also improved so im just curious if your appetites change then and Bob I'm curious if theres any.
Thing in 2020 guidance for investments or capital raising.
Our appetite hasn't changed it's a question of the month number of calories and Emil we'd have to.
So we're going to continue to try and achieve those objectives, but we don't have to achieve them to produce superior results and Bob you want to take it in Hey, Todd.
In the 2020 guidance, we've not factored in any acquisitions at all we're actively looking.
Our job is to create value for shareholders and that's why we're out looking where we're not looking to get big for the sake of getting big we're looking to do it.
Accretively and then if we find something and bring it to your attention it's going to be accretive it's going to be good for every shareholder.
That's well put.
Okay. When you when you had discussed that that plan.
A couple quarters ago, what's changed since then is it just that others.
Bin bin some cap rate compression and more capital coming into the markets that you're targeting.
What's changed over the last couple of quarters specifically.
Nothing's changed except that we continue to look and we make acquisitions that are significant to make acquisitions are different significant it's not like going in the grocery store and fill in your basket luck with groceries shot to find something that makes.
Makes sense.
Yes, I think regardless, so, whereas if we are in the economy, we still underwrite we're very consistent on our underwriting we look for Unlevered IR ours greater than six we look we focused on any JV and we focused on earnings growth.
Earnings growth is really important and we want to make sure it's accretive but maybe you could you could make an acquisition and get big and you do financial engineering, you could destroy shareholder value or destroy earnings that's not what we do and if you look at our history, we've been pretty good at it the other thing too is that.
Our our.
Cost of capital, which I think you mentioned.
We're in a.
We continue to enhance our cost of capital and not everybody is that that vantage point, so I think.
It's our job to look for those opportunities and we are actively looking.
Okay, and then and then going back to the multifamily portfolio.
We saw occupancy decrease a little bit.
No more meaningfully in the quarter across the portfolio.
Portland, as well not not just in San Diego.
But you are projecting pretty solid recovery in 2020, and I'm just wondering if you could.
Shed some light on what what happened in the quarter.
More broadly and what gives you confidence that youre, you'll see the same store growth materialize that you're forecasting.