Q3 2019 Earnings Call
Good day.
The next point residential trust Inc. third quarter 2019 Conference call Today's conference is being recorded.
<unk> I would like to turn the conference over to Jackie Grant. Please go ahead Mike.
Thank you good day, everyone and welcome to next Mike residential tract conference call to review the company's results for the third quarter 29.
On the call today, or Brian <unk>, Executive Vice President and Chief Financial Officer, and not the Greener Executive Vice President and Chief.
As a reminder, this call is being webcast to the company's website at www dot net like living Dot com.
Before we begin I'd like to remind everyone that this conference call contains forward looking statement within the meaning of the private Securities Litigation Reform Act 1990.
That are based on management's current expectations assumption.
Forward looking statements can often be identified by words, such as [laughter], eight and change and similar expressions any variation or needed before.
These forward looking statements include but are not limited to statements regarding unnecessary keep business and industry in general and expertise guidance for financial results for the full year 2019 and their related assumption.
Asset value and their related to hone in action.
I didn't for the fourth quarter 2019, and their related assumption.
Second acquisitions and dispositions you acquisition metric claims value add program.
Not guarantees of future results and are subject to risks uncertainties assumptions that could cause actual results may differ materially from those.
Right and any forward looking statement.
Listeners should not place undue reliance on any forward looking statements and are encouraged tribute to compete most recent annual report on Form 10-K and compete.
That easy.
For a more complete discussion of risks and other [laughter].
During the campaign.
Except as required by law and it Herky does not undertake any obligation to publicly update or revise any forward looking statement.
This conference call. Thank you now [laughter] funds from operations or [laughter] core funds from operations or or.
Adjusted funds from operations or eight [laughter] and net operating income or I know why all of which are non-GAAP financial measure for me.
These non-GAAP measures should be used as a supplement Sheila.
I'm not a substitute for net income loss computed in accordance with gas.
No more complete discussion [laughter] core [laughter] and I know I see the company earnings release that was filed earlier today I would now like turn the call over to Brian . Please go ahead right.
Thank you Jackie.
Welcome everyone is Nx, Archie 2019 third quarter conference call.
They will discuss highlights for the year present, our quarterly and year to date results third quarter.
<unk> guidance for 2019 discuss recent acquisition and disposition activity as well as the portfolio markets brightness.
By now correct.
Three years or most active quarter to date, so there's a lot of ground to cover.
First I'll start with the highlights the corridor.
We're reporting to same store NOI increase in Q3 or 4.4%.
5.1% same store NOI increase for the nine months ended September Thirtyth.
Consistent with our high growth strategy, we're reporting to 13.8% increasing core FFO per share.
Much ended September thirtyth as compared to same period 2018.
During Q3 or three required for properties 484 million consisting of 2568 units for the year. We've acquired eight properties consisting of 3420 units for 636 million.
We should our exposure on the floor to Nashville, Phoenix markets, and adding approximately 2000 units or redevelopment pipeline.
Total revenues for Q3 were up 28.3% and total NOI increased 30.8% year over year.
Revenues year to date for 2019 were up 22.6%.
Total NOI increased 26% over the same period in 2018, reflecting our acquisition activity.
And why margins remained strong at 55.7% for the third quarter and 56.5% year to date.
We saw solid rent growth in Q3, 2019, both renewals and new leases at 4%, 3.5% respectively.
We continue to execute our value out of business plan.
Well I completely 588 full and partial renovations during third quarter 418 of those units being leased in Q3, achieving a 25.2% ROI during the quarter [noise].
Assumption to date, the portfolio's 930.
Complete we've completed 5842 full and partial upgrades, achieving an average ROI 24.2%.
Additionally, we completed the smart technology installs in 2271 units across eight properties in Q3.
And 6089 units cross Nike property since introduction of Smart Tech package.
Also we completed 130 410, dry washer dryer installs for the third quarter and year to date, respectively.
During Q3, we sold six properties consisting of 2218 units for sale price of 290 million.
Net proceeds were used to acquire the pen Brook and Brent Brentwood properties.
For 2019, we acquired and not a 346 million assets.
The ATM and Q3, raising gross proceeds of 40.5 million before offering expenses.
Average price and $46.69 or 60% premium to the midpoint of our revised and have increased our shares outstanding by approximately 867000 shares.
Generally we use the net proceeds from the ATM to pay down a revolver, which on outstanding balance of 107 million into Q3.
Year to date, we've raised 50.7 million under age in at an average price of $45 in 24 cents issuing approximately 1.1 million nextshares.
Based on updates in cap rates, and then why growth, we're revising our NPV per share range upward as follows.
$36 at 72 cents in the low and $43.09 on the high end with a mid point at $40.36.
Compared the midpoint of $37.51 in Q2 or 7.6% increase.
The third quarter, you paid a dividend of 27, how centsper share September 28.
Yesterday, the board declared a dividend per share of 31.25 cents table per share payable on December 31st to shareholders of record on December 17th This represents a 13.6% increase over prior dividend and accumulated 51.7% increase or additional dividend April 2015.
Year to date or dividend payout ratios approximately 59% of core AFFO, we estimate will be 65% of core AFFO for the full year.
Let me go through some of the.
Hi level results for the third quarter of 2019.
Total revenues were 46.8 million as compared to 36.5 million in Q3, 2018, which is 28.3 cents increase.
Operating income was 26.1 million for third COVID-19 versus 20 million last year, which is the 30.8% increase.
Orthoflo was 11.5 million for the quarter 47 cents.
Pershare diluted basis versus 8.9 million 42 cents per share last year, which increased 11.9%.
Same store rent increase for the quarters, 3.2% over last year same store occupancy was down 80 basis points from last year 93.3.
Same store revenue was 30.7 million for the third quarter 90 versus 29.6 million, an 18 or 3.7% increase expenses with 13.8 million for the third quarter versus 13.4 million last year, which is 2.8% increase.
Same store NOI for the third quarter, 19 was 16.9 million versus 60.2 million last year or 4% increase.
Our year to date results.
Total revenues were 131.4 million for 2019 versus 107.2 million for 2018, which is a 22.6% increase.
Net operating income was 74.3 million versus 58.9 million or 26% increase.
Core AFFO is 33.5 million year to date, 2019, which is $1.38 per share on a diluted basis versus 25.9 million or $1.21 per share.
The basis for decrease of 29.6%.
Same store basis for the year.
Same store rent has increased 4.1% same store occupancy was down 80 basis points also deny 3.3.
Same store revenue was 90.7 million versus 87.1 million, which has increased 4.1%.
Same store expenses 40.3 million year to date 2019 versus 39.2 million in.
2018, or 2.8% increase in same store NOI is 50.4 million for 2019.
Versus 47.9 million in 18, which is 5.1 person anchors.
They were updating guidance or revise guidance for 2019 assumes range of 636 to 877 million for acquisitions and a range of 290 million to 340 million for dispositions.
These assumptions were updated 2019 guidance as follows.
Our AFFO per share on a diluted basis.
Dollar an 88 cents the low end.
Well, our 95 cents on the high end the midpoint of $1.92 cents, which is up two cents from last quarter.
Same store revenue is 4.5% increase in the low in 5.5% increase on the high end with a 5% increase at the mid point, which is unchanged from last four.
Same store expenses, we estimate will increase 2.5% of low and 3.5 send the high end was a three cents a mid point, which is also a change last quarter.
And same store NOI.
Is 6% increase in the low end, 7.3% on the high and the midpoint of 6.6%, which is up from 6.3% last quarter.
Should be noted our same store guidance that we believe fourth quarter be very good quarter on a comparative basis.
You all may recall, we had a large tax in the fourth quarter 2018. The response, you budgeted very conservative estimates for taxes across entire year and therefore fourth for 2019 comparison to Q4 2018 will be favorable.
It's just for that reason was not others. So let me turn it over to bite out of filling so these details and then we'll get Accuen Uh huh.
Thanks, Brian .
But to cover some same store results briefly our same store NOI margin continued to improve year over year by 39 basis points to 55.7%.
Same store average rents in revenues each increased 3.7% as Brian mentioned.
Rents were up at least 3% in every market, except Houston, which remained flat.
We saw strength across the entirety of the portfolio seven out of our 10 markets growing in a wide by at least 6.7%, including Houston Nashville, Atlanta, Phoenix West Palm Beach do you see in Tampa.
Notable same store NOI growth markets, where Nashville at 13.4% and continued acceleration of growth in Atlanta to 10.3%.
On the leasing activity from revenue growth continues to be strong with seven out of our 10 markets achieving new lease growth of at least 4.3% or better with our top five markets being DC at 10.8% Charlotte at 7.7% Phoenix at 6.9% Tampa at 6.5%.
In both South Florida in DFW at 5%.
Effective renewals renewals registered at 3.5% with eight out of our 10 markets delivering growth of 3.4% or better.
Turnover and occupancy conversions were healthy 51%.
And on the transaction activity front as Brian mentioned and as previously disclosed quite active during the quarter acquiring approximately 485 million worth of properties and disposing of sunbelt portfolio for approximately 290 million.
Our largest acquisition and the history of the company upon it Pembroke Pines is off to a strong start as being underwriting budget by so far by 81 basis points and sits at a healthy 95% occupied as of today.
Reminder, we purchased this 1500 20 unit community for 322 million for year, one economic cap rate of 5%.
We plan to upgrade 938 units at an average cost of $15900 unit generating premiums of $235 unit and ROI of approximately 17.7%.
We also plan to install smartag packages in every unit and expect to generate monthly premiums of $45 a unit.
The result, our underwritten three year average same store NOI growth for this asset is 8.4%.
Offers of Brentwood acquisition recap briefly.
Okay that in Nashville, and built a 1986, we purchased this 346 a unit community for 62.25 million for year, one cap rate of 5.44%. We plan to upgrade a 147 units at an average cost of $10200 a unit and generate premiums of $166 a unit in ROI.
As of approximately 19.
<unk>.
We also plan to install washer and dryer sets in 200 units and expect to generate monthly premiums of $40 a unit.
We also plan to install smart tech packages and every unit and expect to generate monthly premiums of $45 a unit.
The results of these programs our underwritten three year average same store NOI growth for this asset.
1%.
On the NAV front as Brian mentioned, we've updated our now to $40.36 a share at the midpoint. The drivers of the NAV increases were outsized NOI growth, an updated reflection of market cap rates in Nashville and Charlotte.
While we are trading at a premium so our implied in a b. I think it's important to highlight we're still trading at a discount to what it would cost to build a new guard apartment complex and our sub markets.
Looking ahead to Q4 and the for you for your 2018 results as Brian mentioned, we are boosting our full year 2019 same store NOI growth guidance to 6.6, excuse me six 6% on the low end and 6.6 at the midpoint and continue to be excited about Q4 before your of 2019 in the next 12 months.
Run rate of earnings.
On the asset management front, we're working hard to execute our for your plan outlined at the beginning of the year to push renovations in Q3, and then drive for occupancy with your upgrades. We expect this revenue management plan to bring the total portfolio occupancy to 95% by years end. This increased occupancy will boost total collections and directly influence Q4 seems.
Same store performance, we continue to feel good as a result about hitting our four and a half 2% to 5% revenue growth targets for 29 team.
We also see growth in our other income as we continue to roll out our smart home technology packages and other resident Minis amenity services as Brian mentioned, we have completed over 6000 units across 19 properties to date and the build up on the revenue side of this equation is trending faster and further expect to reach 100% penetration by the by Q3 of 2020.
Finally, the third driver for your same store growth is a favorable tax comp.
For 20 to 2019.
In October 2018, real estate tax expense across the same store pool registered 1.76 million as we trued up budgets and that one month last year October 2019, real estate tax accrual was 1.33 million, creating a 432000 favorable year over year comp.
Again, we believe all these factors and the continued strength in our portfolio will result in strong quarter and a four year for 2019.
In closing I'll, just reiterate that leasing demand for our affordable housing continues to be very strong. We continue to be very excited about our cost of capital as well by 2019 acquisitions and the addition of over 3000 units to our pipeline to upgrade over the next coming quarters and that's all after prepared remarks.
Thanks, Matt Yeah, that's the conclusion of our prepared remarks, we'll turn it over for questions.
Thank you.
This time, we will open the floor for questions. If you would like to ask the question. Please signal by pressing star one on your telephone keypad now.
If you were using a speakerphone. Please make sure your mute function is turned off to allow your signal to reach our equipment and again that was star one if you'd like to ask a question and our first question comes from Buck Horne with Raymond James.
Thanks for taking the call I'm going to start with the occupancy and I think you alluded to your strategy just wrapping up your comments there, but just wanted to.
You know dive and on the occupancy strategy going into year end you know with.
Yes, with some thought around you know are you are you seeing any signs of that there are any pressures or resistance levels to renewal increases.
And how do you want to you know where do you want to get occupancy at before year end I guess, you you mentioned, a 95% target, but what's how does the strategy.
Hold there.
Yeah. So we tried this last year in and a and end up almost rehabbing too. Many units in Q4. This year. We've tried we implemented almost 600 units or upgrade almost six or is this quarter, which is.
Just a little over double our pace I'm on a on a run rate basis for the year. So that was that was purposeful and then going into Q4, we don't expect to upgrade many full interiors, we'll we'll try to do the smart home tax and then washer dryers, where we can the partials, but the goal is to try to.
Renew over 60% of residents for that for the fourth quarter and as it let's say to drive occupancy to 95% a lot of that is focused on Dallas frankly, there is there is a obviously are in Hawaii concentration or you get a concentration is most robust in Dallas and so I think.
That's going to be a key contributor.
Occupancy growth in Q4.
Okay, but your biggest characterization is it simply due to the timing of the renovation schedule and not necessarily price resistance on on the rent increases.
Well I mean, there's seasonality and price resistance in Q4 in general So yeah. We just found in years past that we don't we don't fully get the 10 11, 12%.
Rent increases on Rehabs, and so I think there for us.
And our revenue budget at least this year, we focus on on hitting 95, 96% in Q4, but it's nothing.
Yeah, no resistance so to speak it's just more seasonality in our plan.
Okay, Okay and on the expenses side, just noticing you know it both in the income statement you had about a 10% jump in same store repairs and maintenance and then on the capitalized maintenance side looks like it was up about 15% is there is there any sort of onetime catch up spending in the kind of the repairs.
And maintenance items or or reestablishing, maybe a new run rate for.
Our an m. slash Capex, what do you think the that appropriate spending level is.
Per unit at Great Great question, its not a new run rate or there are onetime items in there specifically, there's a fire inspection or there's three large contributors and fire inspection at.
Taro milling Atlanta was with a big numbers almost $40000. A there was a lot of onetime tree trimming expense a in Nashville, and Atlanta, and then there were dumpster and trash.
Shoes at a couple of properties in Florida that they were kind of Citi code mandated and in our expense policy does those items needs needed to be expensed in the quarter Ah Theres also within the arent M. number about 19% of that Oh that spending in Q3 was contracts.
Contract costs related to revenue enhancement items and resident surface amenity income other income item. So theres, a due to an offset to that to that expense.
Awesome, that's very helpful. Thank you guys appreciate it.
I suppose.
And our next question comes from Tayo Okusanya with Missoula.
Hi, Yes, good morning, guys how are you.
Good how are you good congrats on the good quota I'm back anesthesia looking forward to working with you again.
Question, So fourth quarter, a again when I just kind of run the numbers.
Let's see your same store NOI forecast for the year. It suggests same store NOI growth in fourth quarter asked maybe like 11, 12% and I think you mentioned a three key factor is the occupancy gain the better comps in regards to taxes and you will have more upgraded units, which are better kind of.
I know why.
Groups. So to speak I was just wondering across those three buckets could you kind of give us a sense of how much is coming from each bucket to kind of see the.
Big ramp in same store NOI growth.
Yeah, I think that the two or occupancy and taxes taxes, Texas alone will be probably 300 basis points ish.
On the low end and then yeah. The the occupancy is not to be understate I think I think our revenue management plan, there's going to contribute.
Contribute a lot I think.
In terms of just.
Your Q your cure your fourth quarter for 2018 over 2018.
I think we can hit anywhere from 8% to 11%.
Gotcha Okay.
That's helpful. Then the second question I have is in a fair amount of deal activity this quarter, which is great to see and I. Appreciate the details you provide in the summer just given up some metrics around what you're expecting from the portfolio first of all could you talk a little bit just about you know that cap rates on.
These deals relative to your kind of implied cap rate number one and then number two the.
Great costs of kind of $10000 per unit $13000 per unit seemed particularly high relative to what you've done in the past plus the premium brands also seemed particularly high could you just kinda talk a little bit about those two factors as well.
Yeah, absolutely the I'm the acquisition environment continues to be healthy as everyone knows that multifamily business the.
So the acquisitions that we've done year to date.
The Phoenix was I'll start with us because those were done in January I think I feel like we could kit turnaround and sell those and and make 20 30000 unit today, we bought those going it anywhere from a five to five in a quarter. Those are trending more 5657 right now just on on performance. The other acquisitions we've done throughout the.
Sure.
Underwritten cap rates, probably right around a 5%.
But given our our upgrade plan and history of our NOI growth, we think that we can get that five to six six a half over the course of three years and so that's how we're thinking about it not necessarily.
Your wine accretive all the 90% these acquisitions are but by the time, we go through the first wave of interior upgrades, where we're well into the accretion I'm at a higher yield and the than where we're trading at implied cap rate today. So that's that's the answer the first part of the second the second.
Part yeah, the everything's gotten more expensive I will say the deals that we've done recently are a little bit.
More of a premium in quality. So that's why you're seeing a larger capex per unit on the its year side, just frankly the demo support it.
And yeah, we think that going forward.
That's probably what we'll do although that each at each of these deals continue to have value adds were not like straying and going into a.
A minus or a plus we're still focusing on workforce, but south Florida market. For example, the higher in suburbs of Nashville, all support yellow hires a higher spend to a higher quality upgrade. So that's why you see the increase the Smith.
Gotcha, and then just the premium rents are expecting it I mean, some of these numbers out there like $233. A model is that a combination of just premium rents from the upgrade plus the 40 $50 from Smartstack plus 40, $50 from Washington, Dryer is that kind of how I get to that kind of 233 number.
No I mean, I think that those are more of the partials. The fourth spend the larger interior upgrade costs or the $230 as our result of comps in the market, we always I try to identify identify a superior but it's.
Global comp in the market and typically that comp as a new new garden deal that three or $400.
Above where the in place rents are at the acquisition at the deal we're acquiring and so you know if we can spend a little bit more and reach to $300. We feel good about it but that's.
Yes, all these attributes exist in every deal we've done this year.
Got you said I have nothing to do with additional value add from Smartstack, Washington, dry. It's just if I run at the apartments kind of make it look nicer relative to market comps I think that them boost runs $233.
Yep.
Cool all right. Thank you.
Next time, thank you.
And our next question comes from drew Babin with Baird.
Hey, good morning.
On a question I'm on the top line it looks like.
Actually declined quite a bit Phoenix Orlando in South Florida.
During the third quarter, but <unk> was that capex influence in those markets is that sort of a strategic creation scarcity value to drive rate or it was there something going on the supply front. It's important that just give a little more color on that.
Yeah, I think you answered your own question drew pretty well. It was I think part of it was a fair we had a high higher occupancy last year on the same store basis in each of those markets, but the portfolio did try to do we did turn over more units and those in those three markets and.
Third quarter this year.
Correspondingly those where some of the highest rents on on new leases that we that we achieved so as more of just you know as we've been stating try to get as much rent and Rehabs done in Q3, and then in Q4 focus on building and maintaining occupancy.
So the fair to say that you mentioned Dallas is kind of a main driver of that occupancy growth from Threeq to Fourq you would maybe the three markets I mentioned, we are the ones that kind of.
Get more those units online kind of more regeneration with everywhere.
Yeah, I'm I think it's I think it's fair statement, although you know Dallas.
Yes.
From from just a greater.
Supply standpoint has a little bit less rent growth in the market than some of these other other markets. So we'll just try to renew as much as much as we can there and being more of a defensive posture there when when in reality and on the <unk> revenue management side, I think we'll still be able to drive both occupancy and new lease new leases in these other markets.
Especially like the Phoenix's Orlando's.
Okay. Thanks for that and one more for me.
As you transition the same store portfolio from this your same store portfolio to next year [laughter] I guess, how many new properties go into that and sort of is there any way that you can quantify kind of the remaining opportunity value add capex occupancy or things like that kind of embedded and what book on same store next year.
I think on a full year basis.
Everything that Weve.
Bought.
Will not be included so.
That will take a while to catch up but as we finish each quarter.
Yeah that [noise].
Whatever he bought in the prior year the quarter before we'll end up in there so.
For example, we bought this quarter will be part of fourth quarter 2020.
Okay, but as far as how many property and units are entering the portfolio next year. So.
I understand that wouldn't include this years acquisitions, but I guess kind of what is coming same store the can do.
Yeah, I think it's the.
<unk>.
End of 18.
Sorry.
<unk>.
[noise].
We can handle both whine about exactly what properties I was just trying to triangulate kind of what the out the remaining embedded opportunity isn't knows that we'll see in same property results next year.
Yeah, it's gonna be Cedar point, Crestmont reserve and Brandywine wanted to.
Okay.
One other.
Okay. Thank you that's over me.
[laughter].
And we ever next question from John Massocca with Ladenburg Thalmann.
Good morning.
Or just on the guidance side, there's a pretty kind of obviously most of the significant increase in what you're expecting the acquisition front was the closed acquisitions occurred in three Q, but there was a little bit more additional kind of increase in what you're expecting or at least until you know putting into guidance number. So I mean is there anything.
Specific driving that need deals are kind of in the pipeline today or is that just generally what you think you could potentially get done between now.
And the end of the year.
You're talking about revenue guidance for acquisition guys, sorry acquisition guidance, you made that clear.
Yeah that nothing.
Concrete today, but yeah, we were still looking at acquisitions across yeah.
He markets I'd say Charlotte Phoenix, its still looking in South Florida evaluating other.
Other markets, including Las Vegas.
As a potential growth market, but nothing nothing concrete today, but we do like our cost of capital and.
Good about the execution of the deals we've done this year.
Okay, and then because the disposition guidance didn't really change is that just a reflection of the fact that you I'd like to cost of capital today, and then ultimately that would be kind of.
The capital markets are more attractive to fund that feature kind of external growth.
Going forward.
Let's say I'd say, yes, but with a caveat that were always willing to recycle capital as we've done for five years, Yeah. We have potentially a couple of deals that can trade early next year, but they're small but that does will obviously be at 10 31 exchange into.
New acquisitions, but yeah, we I think largely.
With with the NOI growth that we see in our existing portfolio with rather fund new acquisitions out of.
Out of our cost of capital than sell assets.
Okay. That's it for me thank you very much.
Thank you.
And our next question comes from Barry, Oxford with D.A. Davidson.
Right. Thanks, guys a building on the.
Sourcing equity.
Could you guys you use the ATM as a source of would that be a now for 2020 planes.
The answer is yes, we could use it isn't enough, but I take it.
It depends on what we see on the acquisition front <unk>.
We do have the the line revolver that weve used in the past.
So if we're not in a great place from a.
Stock price perspective, we can pull down the line, but I think over the course of 2020 I would imagine that we can utilize the ATM to.
Do whatever we need it.
It may just be a timing issue.
When we can win when we can utilize it.
Right and then of course, you'll have dispositions also that will.
Act as a source of equity.
Correct.
Yep.
Switching gears real quick when we look at units to we have you know you guys said, you've kind of pulling back here in the fourth quarter. What can we expect the stores, we have a as far as units in 2020 compared to 19.
Yeah, I think I think it's going to look a lot a lot similar to 50 to 350 a quarter with.
Full anterior upgrades with partials, adding another 100 or so a quarter and then.
Mentioned, the smart home tax.
Which about $1400 to install.
A corresponding 40, our premium of 40 50, our premium you'll see us implement.
But that program across the entirety of the portfolio by the end of the third quarter of next year.
Okay, great. Thanks, so much guys appreciate it.
Yes.
And just a reminder, if he would like to ask a question that is de Starkey phones, but the one key now and our next question comes from Craig Kucera with B. Riley FBR.
Hey, Good morning, guys I think last quarter, you mentioned potentially receiving a property tax refund from an appeal to Terra you have any update there and as a positive resolution about a component of what you're expecting do occur and your fourth quarter property taxes.
Yeah. It's it has not been resolved the taro has not been resolved, we're still I'm working a quote unquote working with the city of Dallas or to resolve it we have our next meeting scheduled in November and the second question.
It is not factored in entirely to the fourth quarter.
Got it and that's there.
I'll, just say that's expected to be maybe 125 to $175000.
That's right.
Okay.
I just wanted to circle back to the two to the occupancy I know you had a lot of questions about it but I wanted to just ask another question its more specifically as it relates to Florida I think the same store pool, there's pressure for a couple of quarters here in a row and I think sequentially rents were were basically flat in a couple markets.
Does that when we think about sort of the the vacancy there is there any skewed towards units that are renovated that that continued to be vacant or is it more of a broad mix across you had said if not been renovated and those that have.
That's a broad mix and it's really its way one property I think that's been the larger contributors park, a 500, which had but a couple of supply a.
Newer supply comes and that's a that's a higher price point, you'll and then give me habit renovate as many units as we wanted to their for for a whole host reasons, but I think it's that's.
That deal in particular has been the driver, which I get at least the good news to report there is now trending 95% as we sit here today. So we do expect that's not to snap back here in the fourth quarter.
Got it and I think just based on your overall commentary it doesn't sound like you're looking to slow down Youre. Your value added spending certainly slowed down from third quarter, but but just basically moved throughout 2020 to more normalized space that maybe 250 to 300 units a quarter.
Yeah, no no slowdown at all <unk> again, we think that are actually the ROI that we've been getting on the existing rehabs, especially in the fourth quarter excuse me the third quarter had been the highest ever since inception. So they continue to be strong and we'll continue to spend it.
Spend the money because we're getting the returns and a yet we're in Aspen.
Okay. Thanks.
That's correct.
And our next question comes from Rob Stevenson with Janney.
Good morning, guys. So I think that Matt you talked about a couple of little deals on the disposition side. That's the South point Reserve, It's Tony Creek, and Woodbranch assets that are being held for sale on the financial.
That's right.
And how significant are we looking I mean, if you don't want to give a dollar values then sort of what type of an ally is coming off those properties to figure out how significant that number could be.
Yeah, I mean I think.
So Mike, giving it to you I think the Woodbridge is 30 $31 million type type or.
Gross sale price and south points to 20, 323, and a half ish.
Okay. So little over 50, Okay, and then in terms of acquisitions under contract today for you guys.
Well anything that you got to talk about there.
Under contract that we have nothing under contract at the moment.
Okay, and then so I guess the question and I know you talked about it a little bit before on the on how to bridge the sort of same store, but if I think about it sort of you did 47 cents of core FFO in the third quarter and the midpoint of the guidance ranges.
Before and I think the bottom end of the ranges 50 easily see the three cents there to get a seven cents sequential change is that almost all basically if you're not adding additional acquisitions into the mix is that almost all the occupancy left.
And the contribution from the remaining contribution from the third quarter acquisition.
Absolutely Yep.
I mean, if things or anything else. Besides in there in terms of that that's sort of closing that quarter to quarter gap.
So those are the those are the main components and yeah. Obviously like you know, we say acquisitions, but you know a bought in of itself is $320 million <unk> acquisition. So that's a big yeah, that's a big driver as well.
Okay.
And then just last one for me, Matt what are you spending on smart Tech per unit.
And versus what you're getting back I think you said it was like 44 Bucks a month or something like that but what's the outlay per unit on that and has the composition of that package. What's your offering in their changed at all or or is likely to change as we head into 2020, you, adding new things getting rid of some other things that are dependent on finding helpful.
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Yeah, the competition isn't changing much the prices around $1400 with our the the premium to be.
About 40 to $50, depending on where you know where the communities located the residents really love. It. It provides a you know more sense of security yeah. The nest thermostat people like more energy efficient yeah, we still do from time to time to Bluetooth shower speakers that I've joked about pass.
But nothing's really changed in terms of the composition of the package and out of.
Everything other than say the washer dryers that we do people pay for this that's why that's why you'll see it never you that.
Every single year.
We now in the.
Into the Q3 next year.
Oh, it looks like and I guess or dollars spend per units, that's kind of a 40 to.
50% ROI Angela.
Okay, and I mean in terms of both this and you know reap have program are you seeing any material.
Cost inflation on on labor and I guess to a lesser extent materials, but also but most probably labor. These gains versus you know three or six months ago has that continued upward pressure is that pressure abated, how should we be thinking about that.
Yeah, our labor spends up about 7% to 10% you over really the the whole entire portfolio. So it is the materials not so much at all or frankly, but the labors seven to 10 and then.
Good news as we've been able to pass that on it still getting the corresponding ROI is that we that were used to.
Okay. Thanks, guys appreciate it.
Rob.
And just a reminder, if you would like to ask the question. Please signaled by pressing star one on your telephone keypad now.
And once more that was the starkey followed by the one key for questions and or comments.
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Great well.
Well wrap up the call thanks for everyone's time.
You're talking later thank you.
Thank you ladies and gentlemen that concludes today's teleconference. You may now disconnect.
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