Q4 2019 Earnings Call

based on more than 30

Mm surveys and the fourth quarter customer satisfaction was 4.3 out of 5 Stars. This is the first time we've achieved this Mark and indicative of our continued drive to deliver it off class president experienced this dedication to customer service means that residents went to live with us longer leading to our lowest turnover on record 43.2% off a 150 basis point Improvement year-over-year as a result. Our average daily occupancy was a name KO best ninety 7.4% Forty Paces wage better than 2018 and we accelerated throughout the quarter from 97.1 in October to 97.9% in December.

This approach translated to solid top-line growth with revenues up 3.3% for the quarter our top markets with growth over four and a half percent or Denver wage help you Washington DC in Boston solid markets with growth over 1 and half percent or San Diego, Los Angeles Atlanta the Bay Area in Miami Friendly Markets with growth of fifty basis points to 1% or New York Chicago and Seattle now turning to expenses controllable operating expenses for 2019 and up 2.1% in the fourth quarter do to lower marketing intern cost from improved retention offset by higher investments in our community wage.

total expenses

2.4% for the year and grew 4.4% in the quarter driven by taxes and utilities as a result fourth-quarter net operating income grew 2.5% in margins were 74.8% for the full year. Our margin was 73.7% a 40 basis-point improvement over 2018 off.

Looking at Lisa's which transacted in the quarter new lease rates were up 70 basis points renewal rates were up 5% in same-store Blended lease rates were 2.4% off 30 basis points better than 2018.

As we look at our preliminary January results. We are tracking towards a solid start to our twenty-twenty plan landed lease rates are up 2.5% New lease is up 1% 120 basis points better than 2019 renewals up 5.6% a 70 basis-point Improvement all while achieving average daily occupancy, 97.8% some 80 basis points better than last year finally 320 Outlook. We see another solid year on top markets with Georgia Avenue growth of 3 and 1/2 to 5% are Philadelphia Seattle, Austin, Washington DC San Diego and Miami, we expect growth of 2 and 1/2 to 3 and 1/2 in Atlanta Denver Los Angeles in the Bay Area in Revenue growth of one and half to two and a half percent in New York and Chicago.

to the operations

Thank you for your dedication to Innovation and a passion for serving our residents. I'll now turn the call over to our executive vice-president Redevelopment West 16th. Today. I'll provide a brief summary of our 2019 portfolio management and investment activities and we'll also discuss our plans for 2020 details on fourth-quarter activity can be found within a release in twenty nineteen M continued with his paired trade strategy reallocating capital from lower rent growth markets such as suburban Chicago and from properties to produce lower operating margins without the opportunity for Value creating reinvestment that Capital was redeployed into higher growth markets such as Miami Denver Cambridge and San Francisco.

While improving Upon Our Geographic allocation and we'll also increased its rate of investment during the past year $230 was invested in Redevelopment and development projects up 30% year-over-year this activity create shareholder value and will lead to accelerated earnings growth when apartments are completed and least in 2019 and go delivered 330i new or fully renovated homes of these more than 80% are currently leased at rental rates ahead of our underwriting now turning the 20/20 into expects the increase in wage you investment in Redevelopment and development between 250 and 300 million dollars creating approximately a hundred million dollars of shareholder value.

during the year we

To complete construction on approximately five hundred homes whose run-rate contribution at stabilization will be 17 and 1/2 million dollars in annual revenues Flamingo Points North Tower will remain under construction through 2020. And when it's 366 homes are occupied and stabilized. They will contribute over fourteen million dollars of annual revenue in the submarket was strong growth prospects. Additionally. We were taking a deep Pipeline and planned to commence new Redevelopment projects during the year and look forward to providing details on those when the time is right.

Finally, we will continue to seek a creative opportunities outside of our existing portfolio where we can earn Superior returns as a result of teeth operational excellence value-creating Redevelopment, and I am both any new investments will be funded on a leveraged neutral basis from the sale of communities with lower forecasted free cash flow I ours and with thanks to all of my teammates for their continued work and constant pursuit of value creating opportunities and would now like to turn the call over to Paul Belz our Chief Financial Officer call. Thank you less. Stay. I'm going to give a quick reboot of 2019 results provide details on our 2020 guidance discuss our balance sheet and comment on encodes 20/20 dividend.

first 29

Same store noi growth of 4.3% was 70 basis points better than our guidance of one year ago driven by fifty basis points of better-than-expected Revenue growth the strong same store growth reported by Keith and the accretive Investments discussed by West contributed to full-year a f f o being $0.03 per share ahead of the midpoint of guidance provided at the beginning of the year looking back. It is informative to recall the name cuz you're over year growth for the first three quarters of 2019 was impacted by July 2018 sale the asset management business with the dilution from the sale behind us fourth-quarter grew by 12%

We expect the strong growth to continue in 2028 who expects info to be between $2.34 and $2.44 per share representing fifteen cents per share or 9% growth at the midpoint approximately $0.13. So this growth is expected from vanco same sort portfolio within a y growth between 3.5 and 4.6% The remaining sixth sense of growth is primarily due to a $0.06 net contribution from the mezzanine loan made to the partnership that owns Park Merced enforce sense of incremental go from a Redevelopment and development communities offset by approximately $0.05 of dilution from property sold to fund our investments. Please keep in mind the $0.04 net contribution from our Redevelopment and development communities is expected to increase after consideration of funding costs by another $0.18 per share as you age,

Properties are stabilized over the following three.

Next I'd like to discuss the components of our expected same store in Ally Grove. We forecast 2020 same-store Revenue growth between three and 3.8% Our Revenue growth expectations are based on the following.

Learning from our 2019 leasing activities is expected to contribute 130 basis points to 20 20 Revenue growth. The contribution of twenty-twenty leasing activities is dependent on a number of factors including residents satisfaction and quality retention percentages leased space and lease rates. We expect these factors. They had a hundred seventy two hundred thousand two hundred fifty basis points to your over a year Revenue growth Limited lease rates are expected to be similar to or better than the 3.4% achieved in 2019.

Over the full year, we expect average daily occupancy to increase in 2020, but at a slower Pace than the 60 basis point Improvement achieved in 2019 while January is not complete in January results are not yet fully available. We're encouraged by what we do know, for example, January 2020 average daily occupancy was up by eighty bibs.

Turning the same.

Store expense growth we expect total same-store expense growth of 1.6 to 2.4% of these costs. We expect controllable operating expenses to be up by fifty basis points or less. Aimco is Relentless focus on Innovation and customer service has resulted in no increase in Control operating expenses for more than a decade.

Now turning to our balance sheet in the fourth quarter and who sold or communities generating net proceeds of 201 million another three hundred million a year ended January Thursday were delayed this delay increased our leverage to even our ratio by three tenths of a term, but we expect better pricing this year as a transaction Market remains deep liquid and attractively priced wage.

Our leverage to even our ratio is above our Target of 700 expect us to be temporary in twenty-twenty. We expect to repay approximately $515 of Leverage founded by property sales. And so reduce Leverage The ebitda by approximately one turn looking into the future. We expect continued same store in allow growth and an incremental $27,000 contribution from a Redevelopment and development Investments to further reduce or leverage to eat out ratio by another turn or more.

finally

After a solid 2019 and a strong and with strong ffo growth expected for 2020 same code board of directors declared a quarterly cash dividend of $0.41 per share, Ur 5% increase over the regular quarterly dividends paid in 2019 with that we will now open up the call for questions. Please limit your questions to the two for time. Thank you, Rocco. I'll turn off you for the first question. Thank you sir. And as a reminder to ask a question, please press star than one on your touch-tone phone. Today's first question comes from Nick Joseph of City, please go ahead. Thanks, Rocco. Wondering if we could get a little more color on the decision to delay the acid sales and maybe where were you in the process when you made that decision?

Rocco is Lisa, Thanks for the question. We and we have a number of properties in the market as we did at the end of last year and we're just looking for the best execution in terms of pricing Thursday. We presently have a couple under contract and we're just going to keep looking to get the lowest cost of capital and I think Paul said in his prepared remarks, you know, we have a strong desires and lots of people looking and so markets are deep and liquid and we think we'll get the pricing we're looking for this year.

so when you

Sure to come out to market the pricing. Just want to know what you thought it should be. And is that essentially what you're saying?

I mean, we just didn't have to sell them at that moment. And there were looking to maximize price and Deals have Ebbs and flows and things happen if people go through due diligence and so we have that opportunity to make that decision.

What does guidance assume in terms of the timing of the asset sales this year?

Yeah, Nick, this is Paul. You know, we expect to sell the $950 of of properties at the midpoint of our range throughout the course of the year, you know, we expect his first sales will occur like the first quarter early second and then the remainder will proceed through the year as we get more of these sales under contract with hard money down will provide more precise timing.

Thanks question today comes from Shirley a Bank of America, please. Go ahead.

Hey guys. Thanks for taking the question. So my first question has to do with your to markets that you highlighted before as far as supplies being Center City in the midwest. So in terms of old seeing now, have you started to feel that impact in terms of concessions or floor velocity and when you really expect to see the full bulk of that provides an impact damage your folio.

surely the Skee-Ball start and

And if Paul wants to add some more more Global Supply insights your particular question around the mid-wilshire portfolio. We feel really good about where we're positioned up there in in most of that Supply it's coming in is actually in Koreatown. And so why are we we're particularly located we think that it's while it'll be impactful in that part of Wilshire. We're for we're further west and we think that we're in a better spot and we'll keep our eye on it, but we're going into the year in a strong position and feeling good about the the look forward in faith like

Probably just to comment on Center City Philadelphia Shirley as I'm sure you you recall Center City. Philadelphia has seen elevated levels of of new Supply since 2016, So the encouraging fact for us is that those levels are continuing to decline and 20/20 is expected to be the lowest year of any of the past 5 and during the previous four years, you know, our faith sets have performed very well in his keys highlighted in his prepared remarks. Philadelphia is going to be one of our strongest markets next year.

Great, that's helpful. So when that question has to do with for redevelopment plans, so you previously talked about Redevelopment for East 88th in New York because you tell us a little bit more about where you are not processed and what that could potentially look like once it's still in the product offering.

Surely, it's West. Thanks for the question. You're right. That that's a project like many that is in our Pipeline and we're actively pursuing that one. We feel great about the opportunity there. It's kind of a perfect case where we've owned property for a long time and high land value and and have the ability to unlock that value when the time is right. It'd be premature to go into details right now. We're still working through the process wage. But as I think we stated before it would be a a higher density development on that site and happy to talk about the details when we're ready to announce that one. Okay. Thanks for taking my question.

Our next question today comes from John, BMO Capital markets, please. Go ahead. Thank you. Good morning couple of questions on your guidance. So it sounds like you believe blend at least growth rates will be higher than a year and occupancy starting off the year higher as well. Get your widen your same-store guidance look at the top end and at the bottom end of the range and basically kept the midpoint the same. Why would there not be an open box on your same-store guidance this year? Hey John, this is Paul. Thanks for the question. You're right that are the midpoint of our guidance that we we issued last night was consistent with our preliminary me look that we publish at the end of September as we discussed on the third quarter call our preliminary Outlook really provided a range of where we thought the midpoint of our guidance would land and so as we were setting guidance for the full year, we continued our historical practice of having about a hundred basis point range around our operating metrics and about a $0.10 range around our earnings metrics, or have to follow any ethical so nothing more than that.

Is portfolio mix part of this and also on a related topic your Capital enhancements guidance is down 30% year-over-year, and I know that's been a driver or one of the drivers the same same Revenue growth is is that potentially, you know, one of the reasons why you've you've widened that range.

No, you know to comment on each of those the portfolio that we expect to have our same-store pool and 20/20 is consistent with what we use to form our preliminary Outlook and in regards to seeing you at the time that we published our Outlook. We were far enough along in the planning process that we were expecting a decline in our spending twenty twenty and that decline is really driven by nothing more than the fact in both nineteen and and 2018. We invested quite a bit of capital and rolling out smart rent and the associated Smart Technologies. Now that we're done with that across the entire portfolio that investment is coming down.

Great. Thank you. And our next question today comes from Austin were Schmidt of keybanc capital markets, please. Go ahead. Yeah, thank you back to the disposition delayed for those specific to a single Market or was it a broad-based group of assets? And we're any of those assets within the group that was under contract as of last quarter's call.

They were not any of the assets of wondering contracted last quarter's call those we closed at the end of 2019 and they were in a variety of markets and not with a single buyer or anything like that. Okay, I appreciate that. And then as it relates to Park Merced, when was the the mezz investment funded was it at a single. Or or is it being sort of fact over a period of time and then how soon could face to a partner said get underway any restrictions? I guess related to phase one getting complete or otherwise.

Sure, Austin, it was all funded simultaneously as a closing in late November as to phase two. Yeah, it is conditioned on phase one taking place Thursday. They are out right now actively remitting their design plans for Phase One A and B, and we anticipate that they will proceed through development processes that continues

and just

If you did one and half million dollars of investment income in you know, as of the fourth quarter the annualized that it gives you 218 million a little bit shy of sort of June twenty seven and a half if that you might expect what were the offsetting items for that line item?

Yeah, and this is Paul. You're you're correct that are missing income that was reported on our income statement was a million and half and what that reflects is the an interest that we accrued at the contract rate of 10% offset by certain costs that were incurred while originating loans that were not eligible for deferral.

Got it. Thank you. And our next question today comes from Rob Stevenson of zany, please go ahead good afternoon guys. He when you're in your team put together with your your marketview for 20 20 what Market or markets had the biggest Delta in terms of the range of potential same store Revenue growth outcomes for the year and is a driver behind wage Gap anything other than the amount and timing and do supply thank you for that. Really when we put it together there. We had a stronger pick up and we look at the average daily arguments Thursday from from 19 to 20. There's not any particular Market that had any particular change or or outlook on it that drove the difference.

Okay.

And then how is your ABC plus portfolio mix going to change when you factor in the billion-dollar of dispositions this year? And then what you're doing in the development Redevelopment projects under construction in any Acquisitions that are in the pipeline. I mean you're now up to 54% a that's up three hundred basis points year-over-year how significantly doesn't accelerate when you factor in all of these transactions that are coming through for you guys.

Throughout this is Paul. I'll address it and let anybody else supplement my response, you know, you're right currently, we're about fifty to fifty-four percent a switch little bit more heavy. We we prefer and as part of our Redevelopment a lot of times what happens is that will see the greatest opportunity to create value for our shareholders by taking a community that is in a location with a dirty joke but a tabby rental price and so thereby creating value by bringing that Community up to an a price point. And so that has a byproduct increases that allocation but as we look forward to see a greater allocation to that than be price points, and so I think as we go throughout our sales this year, you'll see a mix of sales. We still have a few hundred million of of assets that are at that c plus price point that will be sold likely in in 2020, but they're also be an allocation likely of AIDS so over the longer-term will seek to bring that percentage down.

Okay, so that bill.

Dollars a dispositions isn't primarily just B's and C's that it's a mix as at least a said we've seen a lot of interest in the assets that are in the morning when we expect to see really attractive pricing. So that exact mix will be dependent upon pricing. But we we feel very confident about the the opportunity we have ahead of us. Okay. So in the near-term, you wouldn't expect that took the the A's to get above 60% or anything.

I know. Okay. Thanks guys.

I know next question today comes from the handles the reserve. Oh, please go ahead.

Hey, good morning out there.

And so Terry, can we go back to Park Merced for a second? I guess and then we had a call about it late last year, but I don't think we had all the information that we know now the month cash flow the existing cmbs loan. So I understand the loan the attractive coupon you're getting their the embedded value in the asset and the accretion from the loan, but we've also heard some concerns from investors who took the the latest detour on your road is simplifications as well as concerns about, you know, the cash flow shortfall and the inability at least right now to fully cover the interest obligations on your meds be so I am curious. How do you have you in the board Factor all this into your decision process? And is there anything more you want to share for those who might still have some concerns over the transaction?

We'll handle first of all, thank you for the question and thank you for your your your peace this morning. I thought that was thoughtful and and you know, I read whatever fifteen or Twenty of them understood out and and as insightful as as to your question about partner said it is certainly something that that the board and I and and the management team thought about we we feel very comfortable about the balance between risk and reward. We think the downside is dead is fairly limited both as you see from appraisal that also from the the nature of the underlying cash flows of the rent control portfolio. So we we feel we feel very good about Thursday the

Downside didn't and the upside from 6,000 entitled units if it up rent control in San Francisco is is is a big number and so I am pretty good about that.

Okay, and so certainly sounds like over the next five years. There's an anticipation that the re Dev and maybe some increase occupancy or rent increases could help cover the shortfall, but if not you do right to force control Force the sale of the asset, is that correct?

I'm not sure. I caught the question. But but the first part of it I guess I'm completely comfortable that it's natural operation of the rent control business will lead to increased cash flows that will will overtime cover the the cash requirements of our the interest rate of the Nez loan and as as these but there's a second part to your question, which I just didn't hear.

Sorry about that my understanding and maybe correct me if I'm wrong is that if that were not to be the case if there still is a shortfall by your 5. You do have a mechanism by which you can potentially Force the sale of the asset. Is that is that right off? This is John. So so there's not an explicit for sale right in the loan agreement. There is obviously a foreclosure right in the loan agreement. If it doesn't get repaid in your 5 when it comes to then, you know, there's there's a lot of different consequences that will come into play.

Okay.

Fair enough. I'm just one more quickly. Is there anything on Brickell perhaps you could update us on any updated thoughts or plans. I know you've been contemplating a range of options, which is curious than anything new to share on that front. It's West. Thanks for the question. I'd say, you know again in terms of the operating asset there. It's continuing to track Elan ahead of expectations. We feel good about that and in otherwise no nothing new to report, but we like the optionality and and will update you as something comes to be. All right. Thank you.

Next question today comes from how do you go out? Zelman? Zalman Associates, please. Go ahead.

Hey guys. Thanks for taking my question just on the prep. You just mentioned. There's some cost components that couldn't be deferred. I think about the future. What's a good run rate for twenty twenty but on your assumptions, it looks like there's going to be a slight increase in 2021 as well. What like what's the Cadence of including those costs?

We talked about hardik that you know, the contribution to twenty-twenty S is going to be $0.06 and that's net of that the cost of funding and so, you know, looking forward we continue to expect to be able to collect a 10% coupon under 275 million. There's a small amount of costs that we're eligible to be deferred and that will offset is slightly but not to a a massive wage.

But just for just for clarity the 6% is not next that's just the accretion, you know from the considering the cost of funding and then you have an additional cost that comes out of The Sixth Sense know the 16 is all in benefit two twenty20s numbers.

Okay, thank you. I don't know question today customer Sanderson of SMBC, please. Go ahead. Thanks. Good morning. First quit smiling question. I see the same store revenue top-line revenue was about four million dollars less than the fourth quarter than the third quarter. I understand you had some assets sales, but the the same store Revenue sequentially was flat versus the third quarter. I'm curious as to why there was such a major drop in that line item from about a hundred and eighty million to about a hundred and seventy five and half million in the fourth quarter of his teeth. I'll start with the the flat sequential and then I'll turn it over to them to add. Uh, the the broader look so when when you look at our sequential Revenue while it was flat from Q3 to Q4 what's important to know is there's really two significant components in there the first one dead

Arnett rental income which is all of our our occupancy our rental rates in that particular piece actually.

We grew by 1% quarter-over-quarter that was offset by a number of lower transactions in in transaction income from move-outs and move in fees application fee structure that nature we would describe that as good bad news. We we retained more residents and had less of that activity than offset it that flattened it out. But if you go to the core of the business it actually grew 1% off. Um, Paul what would y'all's would yet? That's exactly as I would articulated Keith. The one item that I would add is that that decline was expected and it's consistent with what what key has been talking about kind of too modest to repeat here in that it's really a function of our operating philosophy and the fact that we're getting customers who are staying with us longer and who are less apt to watch charges that are non-recurring and not necessarily good news like late fees and cleaning and damage costs. So well good job lowering Revenue anyway wage

So I a bigger picture question for for Terry and maybe drafting off a handles question a little bit maybe bigger picture. I'm sure you've heard it's just you know, the the mezz deal and Brickell and even Indigo few years ago or whenever it was were are somewhat complex in nature and it goes worked out for you these two authors TD and and people thinking all this is perhaps the inco of old, you know, complex stuff and all that sort of stuff. So I thought I'd give you the stage on this conference call to see how you feel about that that that response and whether or not is there a bigger pipeline of more complicated transactions ahead or these somewhat one off and should not be viewed as sort of a return to a more complicated Revenue stream that that we recall back, you know many years ago.

Thank you very much. I guess I'd like to start by hooking onto your your Insight that congratulations on Lower Revenue. In fact that comes from simplification wage. And and in fact, it comes from our Focus not on top line or bad activity but on contribution and margin so I think that we're going to stay off completely focused on cash and and value-creation and and optionality and I think that in a market that is as competitive as the current market where there is lots of capital lots of new Supply. It's it's very important for us as a public company to maintain that kind of focus which to get keys. Another pat-on-the-back is is as resulted in in operating expenses job.

excluding taxes

Being flat for more than a decade. So I I'm not particularly worried about us getting off track. Those those are just built into our culture and our discipline in looking at at particular Investments to arrive at those goals. We're we're we're we're going to be opportunistic the amount of lack of opportunity to buy fully marketed deals in in a very competitive market is not is not particularly attractive. And so we will look for deals do have additional option ality to to that will lead us to these these singles that we've been describing.

Okay fair enough. Thanks very much everyone. Thank you ladies and gentlemen, as a reminder. If you'd like to ask a question, please press * then 1 today's next question comes from Drew. Bevan of bears, please go ahead. Hey, good morning.

Question on a question on Park Mosaic is that has recently kind of had first occupancy. How's the The Raid achievement on that and kind of the pace of life that going relatively your expectations and and I guess has there been any change to the expected stabilized deals on that or kind of your development pipeline as a whole based on what you're seeing in the market.

Druids West I'll take a first stab and then turn it over to keep them on some details on the on the lease up there. But we we feel great about part Mosaic in Boulder as you may know it's a market that is contingent to add jobs at a rapid clip and pricing is been better than expectation. And and we feel that as we move into this year. It'll be better yet in terms of the years that I think we've talked about a range between five and half and six but but it's early days and then we're not quite sure where it's going to stabilize but we feel very good about the spread of where that would trade today. It may be a four or something separate Market but keep any additional color through just a share sort of the absorption how it's being received in the market. You know, we we're now three buildings would have been delivered. We're approaching sixty percent pre-leased on on those units were better than fifty percent occupied to give you a context. We just got you know just started.

Covering on the 4th building will be coming soon and the rates have been right on.

A little bit better and we're not we're getting ready to get into peak season where we think will be our greatest strength.

Okay, I guess more generally the rest of your development pipeline the ground up projects where those currently stand on kind of expected yield basis. Maybe give an update there.

But Ruth was again with you know again on all those they're they're in kind of early days. But you know the the range there is generally going to be 150 to 200 plus basis points ahead of whatever the cap rate in those markets is so it's for us looking at the factors of the submarket Fremont for example, which is probably a mid six stabilization, but we think again based on early pricing. It could be better than that the lady which is in Redwood City will be north of five. But again, that's a different market. So I thought I'd say overall we feel very good about where pricing is coming in where the man is coming in and that those get passed kind of a critical mass of lease up will give you a better update and just through this is Paula. I was just getting out of you know from an overall perspective, you know, we we focused a lot on the expected free cash flow and for these projects the the returns are all between nine and eleven percent.

Okay, I appreciate the call around that and and Paul off. Got you here. Just one question on the debt maturity schedule. I guess, you know quite a bit of secured debt.

Suspend prepaid home opportunistically and and given the rates available in the secured market right now. Probably still makes sense. I guess. Can you give some guidance on how much potential debt gets pulled forward to be paid off this year from out years kind of what's assumed in guidance?

Yeah assumed in guidance is expectation that we have about a two hundred twenty million of our 2021 maturities that can be repaid at Park during 2020. So we have a room that that that will actually be repaid. That's one of the factors that is lowering our our leverage. But we also continue to have ongoing dialogue, you know every week with our lenders and we look for other opportunities to make money to pay other high-cost debt if we can do so in a manner that is net cash positive tank so far interest savings between the time of the debt is prepaid with a prepayment penalty and Thursday, which that that can be paid off at par. That's a net-positive TV. We will undertake additional refinancing.

Okay, so to be clear guidance system applies that 220 million nothing else. Anything else would be opportunistic, correct? All right, that's all for me. Thank you. And our next question comes from John pawlowski of Green Street advisors, please go ahead.

Thanks Keith. Could you share what you're budgeting for Revenue growth in 2020?

John thanks for the question. We don't wouldn't give you the exact number but that falls into our 2 and 1/2 to 3 and 1/2 percent range. And we that we believe it'll fall in there.

Okay, maybe a bit more color that market. I know supplies getting all the headlines right now. But what are you seeing on the demand side foot traffic? And then what's the concessionary activity off the market? It seems to be slowing pretty rapidly and your sequential number. So just curious what you're seeing in the early Innings of twenty-twenty. And so John let me just I'll walk you through it. First name is broken into two pieces. So we have our Ventura portfolio Simi Valley and then of course our mid-wilshire must not not much supplier concerned that really comes out of the VIN or appease as we think about the mid-wilshire. We we saw occupancy Bill through the fourth quarter and into January. So just as an example, we started in October at 96,000 and finished January of 97 and one and so we believe that it's actually we're seeing good demand. There's plenty of sufficient demand to meet our needs in the fundamentals for us have a game.

We've been pretty good.

Okay. And then last one for me Tere just want your thoughts on obviously the balance sheet how it's structured. They'll never be huge financial distress to aimco but you would be an outlier versus your peers in terms of being able to play offense in the next downturn if we ever get one so curious how you're going to de-risk the company a little bit. So I'm not as much of a laggard because you know the ads and meds and the Diversified portfolio resonate but some steps like buying office building in Miami am EZE Loan in the Bay Area. That's not fully covered those seem to go against the safe low beta profile that does resonate well with em codes or any steps in terms of geography or or off balance sheet that you're going to take over the next few years to de-risk the company a bit more.

John thank you. That's that's a that that that's not only a big question that several big questions. So I'll try to be responsive if I miss one month, please please remind me on the question of Leverage. Let me just say I feel very comfortable with our leverage today. I feel very comfortable with our goal which is expressed in polls guidance to bring it down by a turn by this time next year and I feel very good in the point about the point he made which is just took delivery of these additional units that are in the pipeline brings it down another term. So does the natural operation of of the business will bring down to a number in the middle low-fives which I have no idea where their peers will be at that time. That's a little bit of a moving Target, but but I think in terms of birth

Running the business is not to be.

For both appears, but to to be safe and de-risking I feel I feel good about that particularly, of course with with our longer-dated and non-recourse leverage off the the second part of that is remind me what the second part was in terms of logo beta I I don't know that that we would say that our Target is a little wage. I think there's elements of our business that are quite located and and their elements that that have have great opportunity for Value adds and I I would think that in general what is is I think Wes said in his remarks we we've looked for ones where you get both that you have the opportunity for Tales. You don't lose which is low beta Bap. You have some extra opportunity or potentially leads to heads you win and I think I don't think there's anything hi Bata about Thursday.

One Rebel, which is a very stable asset in a very stable.

Market with good demand and so forth but it has the extra factor that it could turn out to be worth a multiple in terms of land value as opposed to that may be the asset and so I would I would communicate to our shareholders that we we think that they're they're expected returns are quite secure life and yet we also think there's an opportunity for something better to have

Thank you. Thanks. The question answer session. I'd like to turn the conference back over to Terry considine $25 box office. Thank you very much, and thank you my friends for your interest in in Co if you have further questions, please do call many of us will be together in just about a month and Flamingo and and and Don Rickles to look first hand and whether these are safe and low beta or or not. I think you'll be delighted of what you see, and of course many of us will be together at the city conference in the following week. And so we want to be transparent keep you posted and what we're doing, and we look forward to being together. Have a great weekend. Thank you, sir. Today's conference has now concluded only thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.