Q1 2020 Earnings Call
All participants on the listen only mode. A question answer session will follow the formal presentation. You May press star one if he would like to register a question.
If anyone requires operator assistance. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Now my pleasure to introduce your host director of Investor Relations trip trio.
Thank you Sir you may now be good.
[music] welcome GTR quarterly financial results Conference call a press release supplemental disclosure package were distributed yesterday afternoon.
Customer relations section website.
[music] yard Dot com and this we've reconciled non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements babies made during this call which are not historical may constitute forward looking statements. Although we believe the expectations reflected in any forward looking statements are based on.
Reasonable assumptions, we can give no assurance that our expectations will be met.
[music] risk factors are detailed in our press release and included in our filings with the FTC, we do not give or take a duty to update any forward looking statements. When we get to the question and answer portion we ask that you'd be respectful everyone's time limit your questions to one follow up management will be available after the call.
The question, but did not get answered during the Q1, especially today I'll now turn the call over two yards chairman and CEO Tom Toomey.
Thank you track and welcome to you the ours first quarter 2020 conference call.
The call with me today are Jerry Davis, President and Chief operating Officer, Mike Lazy Senior Vice President of operations.
Fischer Chief Financial Officer.
I will discuss our results.
Senior executives, Harry Alcock and Matt.
Well also be available during the Q and a portion of the call.
[music] already we're pleased with a strong combined same store NOI and FFO per share growth, we produced first quarter executive team and our more gratified.
How our business and dedicated team of associates.
Successfully adapted to the ongoing challenges.
Oh with a cold in 19 pandemic.
We appreciate the position that many of our associates oriented and thank them for continued to show compassion too.
Commendation extend it to our rather than.
And negatively impacted by the chronic virus.
[music] business continues to perform well.
This is a testament to the outstanding work our teams and culture.
The investments we've made in technology over the past decade, our diversified portfolio across geographies and price points.
Strengthen our balance sheet and the defensive nature of apartments.
I'm encouraged by the fact that traffic and leasing trends have steadily improved in recent weeks.
Next generation operating platform has enabled us to continue to deliver high level of service to our residents and prospects.
While providing the tools necessary.
Our associates execute our business in the face from fluid and the changing regulatory requirements.
I'm confident that our next generation operating platform is not only a foundation that enables our teams to meet today's demand.
It's also one that allows to pivot when customers or the environment changes.
And then we'll continue to be a differentiator for UTI are as we make our way through the pandemic.
Back to the new ways, we're all going to new business in the future.
Moving onto a brief update our investors.
Hey, gross cash collections were strong at 95.5%.
98%, our residents paying all or part of the Ray for rent.
Resident retention has been Empire and turnover has declined throughout the portfolio.
Traffic is lighter than we would typically see this time of year, but it has been trending up in recent weeks.
We are encouraged by the prospects.
Number of setting starting to open up again.
And our dividend to secure and our balance sheet remains strong with substantial liquidity.
Our disposal.
Jerry Mike Joe will provide additional details on each of these areas later in the call.
[music] academic and an economic uncertainty.
It has created we're not in our original plans.
Therefore, we decided to withdraw our full year 2020 guidance out.
Oh in 19 like other disruptions, we faced over the decades will eventually path.
And I remain confident.
That we're on the right team.
Right strategy as a REIT portfolio in place to manage through this time of volatility.
Like we currently experiencing.
Companies like you do yard that remain focused on driving operations and innovation, ensuring positive outcomes for the residents and associates, maintaining a strong balance sheet and deploying capital.
Disciplined manner will come out of this much stronger.
With that I will turn call over to Jerry.
Thanks, Tom Good afternoon, everyone.
Combined same store revenue spends and then like growth rates up 3%, 1.7%.
3.5%, respectively. We continue to produce solid operating results during the first quarter.
Our controllable margin expanded by 60 basis points compared to the first quarter 2019.
We reduced control expenses by 1.1% versus a year ago.
Over the past year, we've encouraged those listening to be personnel in our name expense growth in tandem with one another.
Next generation operating platform initiatives push their respective growth rates in opposite directions, but also reduced their combined birthrate overtime. This once again true and the first quarter combined growth rate of negative 2.3% year over year.
But as Tom alluded to in his prepared remarks first quarter results. They come back seat what has transpired over the past two bops we ever nation.
Indeed, a face a challenging situation.
Come in 19 has altered the way we love our lives interact with people that's changed the way you D.R. and the apartment industry approaches day to day operations.
All the negative headlines in the news I'm proud to be collected April rents from 98% of bar Rush, that's with 95% of for us it's painful.
And then and M. inspired to here to positive uplifting actions our associates continue to take to provide quality service to the engagement with our residents.
This would not be possible without our next gen operating platform.
When we originally laid out our vision for the platform three years ago, we understood that a majority of businesses were rapidly transitioning to an online self service model that we could capture first mover advantage or send the apartment industry by doing the same.
Since early 2019, we have reported on a variety of stats highlighted how the next gen operating platform is driving efficiency gains and contributing more dollars short bottom line through controllable margin expansion and self service.
Well, we did not envision a pandemic when embarking on the transformation. We're operating platform. We're thankful for the great people at UTI are as well as the investments we've made to help ensure the ongoing well being of our workforce and the resident base in a world with mandated social distances.
Some other traditional aspects of our business that have changed during the pandemic include.
First 100% end person property tours have ceased and a better placed with virtual and self guided tours.
Our original goals for 2020 was rollout virtual and self guided tours across all of our communities and we weren't great position to accomplish this already having implemented this initiative and over 101st hundreds of our communities pre covered.
Leasing offices have largely gone virtual well understood. The president documents are executed electronically.
Our corporate inside sales and renewals teams have been working overtime turn first notices to vacate capitalize on the traffic we are receiving and nearly all service request to remain online by founder out by other luck electronic means such as attached.
This is a comparison to approximately 8% service request being submitted electronically or by phone freak out of it.
To ensure the safety of associates in resins like it to comply with social distancing requirements. We continue to fulfill emergency request only at this time.
Our next Gen operating platform is clearly demonstrating value by allowing us to quickly adapt to the current environment fully run our business, which keeps us in a position of strength. During this crisis tools, such as zone based leasing and real time update by collections are two such examples.
In terms of operating details on relative market performance.
Mike will provide more information later in his prepared remarks from high level I'm pleased with how well we have adjusted to the situation steps. We have continued to take to drive solid operating results in particular, the $1.9 billion community acquisitions, we've made some stock.
2019 continue to perform relatively well given the identified upside opportunities relative to private market operators.
Lastly, I would like to express sincere gratitude to our associates in the field and the corporate are continuing to embrace the challenges brought on by the pandemic for accelerating the adoption Nexgen operating platform.
I'm proud to work alongside each of here as we create new and innovative strategies that will ensure continued high levels of service for our residents.
With that I'll turn it over to Mike.
Thanks, Jerry good afternoon, everyone listening, but it's called the where the pandemic divide the unprecedented levels.
One of claims over a short amount of time, which in turn as like the widespread concerns about readiness evaluation rack.
As Jerry mentioned took dedicated efforts of our associates and then for response by the Federal government evil cash collections told 95.5%.
8% Horizons made some level people Randy.
With 95% painful.
Paraffin purposes April 2020 collections were just 4% global 2000 I'd.
Well may not be as well how do those on the call.
Whether granulation federal State County, and local governments have an active or are likely to announce these are wide ranging included victory moratoriums.
Worse.
She got these actions charge.
Freezes on rent increases.
Spray legislation and restrictions on debt collection to name a handful.
Well, we did either they pass our business in one way or another our market asset level operating strategy in response to remain surgical.
As opposed to one size fits all approach by third party now we are working well and accommodating any revenue on that same financial hardship you recovered nicely on a case by case basis, while ensuring our fine. So then regulatory action.
I want to thank all our associates for staying on top of these constantly changing regulation and adapting our strategy as needed.
On the operations from occupancy remains strong and 96.6% April which is approximately 20 basis points well the same period last year.
One of the lease rate growth a month April was 2% driven by solid renewal rate growth approximately 5%.
Retention is higher and annualized turnover in April 720 basis points lower than last year's comparable Perry.
As reported in our release last night, we experienced a 19% decline traffic and a 15% reduction application on a year over year basis enable you to Salem orders.
However, we also saw are these closing ratio improved to 54% compared to 31% a year ago.
I'm encouraged with positive momentum traffic application and signed leases over the past two weeks.
The build on this will now we have implemented at Barclays approaches tiered each community. Our next generation operating platform allowed us to continue to drive traffic execute leases virtually and take a more surgical approach to meeting right preserving our rental.
Well, it's still too early to understand long term impact if any and regulatory action may have on our business. Some recent high level operating trends, we have identified over the past 45 days are as follows.
Occupancy our lead quality portfolio averaged 97% in April and have declined much.
Following the occupancy average 96% April.
Yes, it will likely continue to be pressured by corporate lease exposure and lower traffic into shelter place orders in key markets.
I think the turnover had been slightly better between.
Due to the more suburban HRP BOLI portfolio.
Hi, good rental rate growth has been comparable between hazy Andy.
And we see slightly lower collections across our b quality communities.
Hi, already some specific markets greater Seattle was one of the first markets.
By the commerce, yet our results through April were a pleasant surprise.
However, due to recently enacted regulations the state of Washington that mandate black renewal growth for the foreseeable future, we're likely to season for great growth headwinds.
Certain urban coastal markets, such as New York and San Francisco.
We are experiencing a vacancy and back to the lower demand for short term and corporate leases.
Because of lower levels of traffic in these markets, we are facing reduced pricing power.
Generally competitively priced on rents to increase leasing velocity.
Orlando, Tampa, and Orange County, our largest markets were tied to hospitality and retail or is important and collectively represent approximately 20% of alloy.
These three markets has seen sockets in both rent and occupancy as a result was relatively high exposure to service sector employment, combining a large amount of our portfolio and these markets being suburban b quality.
Finally, having previously worked in the field for a number of years.
I understand LP to extreme change can impact our regional community leaders.
Our associates have all worked well together to adapt to a new operating environment.
Targeted market approach and engage with our current prospective residents.
Each and every one of you.
I continue to exemplify the you your values during this health an economic crisis.
Thank you for all they can do.
And now I'd like to turn cost Joe.
Thank you Mike.
The topics I will cover today include our first quarter results and the withdrawal of our full year 2020 guidance.
And the balance sheet and my question they update inclusive of recent transactions capital markets activity.
Our first quarter earnings results came in at the midpoint of previously provided guidance ranges.
FFO as adjusted per share was 54 cents approximately 9% higher year over year, driven by strong combined same store lease up performance accretive capital deployment and lower interest rates.
Regarding guidance, we have elected to withdraw our full year 2020 guidance outlook given uncertainty around the impact Corona virus pandemic will have on their economy and our business.
As disclosed in our press release and as Mike discussed.
I presented an operational update through April to provide stakeholders with additional insights into trends.
Moving on our balance sheet and next three year liquidity profile remains strong due to the efforts that we have taken over the last several years.
As such we are well positioned to weather the affects of Cowen 90 him at the downturn that has a cup data.
Some highlights include.
First.
Our capital capacity and debt maturity profile put us at advantageous to where your liquidity position.
As of April Thirtyth.
Our liquidity as measured by cash credit facility capacity.
None of our commercial paper balanced with $775 million.
There are 2022, only $106 million or approximately 2% of our consolidated debt outstanding is scheduled to mature.
Quote in France will amortization and amounts on our working capital credit facility.
Please see attachment for B of our supplement for further details our debt maturity profile.
Second we entered into $105 million afford ATM contracts.
On one community and the greater Seattle area on my first for approximately $90 million.
And our under contract with a nonrefundable deposit to sell another community.
Combined is equate to approximately $250 million of capital sources.
While the Ford ATM proceeds were originally raised an anticipation single asset external growth opportunities.
Over 19 has changed this plans and we have elected to focus on capital preservation and the near term.
Third.
To maintain flexibility on previously planned development starts and preserve capital we do not anticipate starting any new development projects until there's more clarity on the macroeconomic regulatory fundamental and cost environments.
Current development and redevelopment pipeline totals only $304 million at cost or less than 2% of enterprise value.
And as nearly 40% funded with approximately $191 million of remaining capital spend over the next two years.
Fourth.
Our dividend remain secure and well covered by cash flow from operations.
Based on first quarter, 2000, 20-F, AFFO per share a 51 cents our dividend payout ratio was 71%.
This implies that our earnings when it decreased by approximately 30% before reaching cash flow parity substantially higher than the losses, we or the multifamily industry experienced during any of the past downward sections.
Taken together, our liquidity position of strong afford sources and uses are very manageable.
Moving forward.
Will be highly selective with where and how which used to invest your capital as we believe it is prudent to preserve capital and the current environment, while retaining value creation optionality for the future.
In terms of credit metrics.
Shown on attachment foresee of our supplement.
We have substantial capacity before we have not been compliance with any of our line of credit or unsecured bond covenants.
As of quarter end.
Our consolidated financial leverage was 35% on Undepreciated book value and 31.5% on enterprise value inclusive joint ventures.
Consolidated net debt to EBITDA Ari was 6.0 times and inclusive of joint ventures was 6.1 times, which looks slightly elevated due to the timing of acquisitions completed during the quarter versus the closing on announced dispositions and in settlement for ATM proceeds.
Do you see attachment 15 of our supplement for further details on sources and uses of capital.
With that.
We'll open it up for Q1.
Operator.
Thank you the park. So open for question if you'd like to ask a question. Please press star one on your telephone keypad at this time.
Confirmation to indicate your line is the question to you May proceed start to if he would like to remove your question from the Q for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star team. Once again, that's star one to register questions at the time.
Our first question is coming from Nicholas Joseph of Citi. Please go ahead.
Thanks.
Appreciate the operating environment is obviously changed over the last two bond.
Ben.
In the process of blowing out your next generation operating platform. So wondering if there's any lessons learned thus far in terms of.
Celebration or any delays or any changes to that extra.
The next few years.
Hi. This is Jerry Yeah, you know we did start working on the next Gen operating platform out three years ago started reporting the efficiencies on the contributions to our controllable margin last year and I would tell you I think we were well well suited for when the pandemic did hit.
It to adapt quickly towards 100% virtual as well as self guided tours, we were doing quite a bit of that before but transitioning to 100% was fairly easy we were also able to.
Shutdown, our offices to physical traffic and accommodate our customers electronically or over the phone that went extremely well and I.
I would say it probably accelerated us a six to 12 months of where we wouldn't expect a tour Ben as far as customer self service. In addition.
Now we've been working on the big data side of it and we continue to learn new things every day, you know I have been working remotely for the last two months and have become proficient at XOMA, even though I never had really use them before and when you look the adoption the U.S. population to ER to that way of doing virtual meetings.
A you know we're starting to utilize that on virtual tour. So rather than just doing face times, where you can just walk around the ability to share a screen such as UTI, our dot com and walk somebody through the entire a website a I think is going to enhance our ability to sell virtually especially as people.
Continued to not want to travel as much at least over the near term a in addition to that.
Matt comes out and our team have developed a a mechanism to track collections really on a minute by minute probably second my second basis. So you kind of see collections as they come through in real time and allows us to direct our resources to do a better job on managing these collection, so I would say.
Say in addition to everything we talk to you about previously accelerating we've also found new opportunities as our customer has adopted technologies and we're going to start using that our business.
So just maybe.
Election trends, thus far and I recognize it's very early in the month.
Did you see relative.
As for our collaborative.
Yeah. This is still Jerry I'm going to turn over to Mike placing in the meant a lot of you know Mike has been running knobs really for us for a couple of years and we thought since he's more into the details, especially as we work our way through this is a a couple of months it would be a good opportunity for him to give those updates, but I can tell you I'm pleased with the way our teams have.
Reacted in both.
April as wells may, but my punch given some stats on how we're doing sure. Thanks, Jerry can hang there.
Based on what we see right now our main collections are actually 87% of May billings, which is flat to our April collection at this point them off and we can see evil today, 96% compared to the 95.5% we had in the press release as Jerry said, we're able to feed us real time, so I just put that number man.
The golf.
Currently today, 96% occupied I expect we end up between 95 and a half the 96%. This month after we take back to more corporate units.
Our main traveling today is trending about where have been last few weeks, which is around 10% to 15% down compared to last year, but significantly better than where we work in March. This time last month, which was down about 35%. We expect our blended lease rate growth were well remain positive in may and we're keeping.
Close I'm regulatory changes, but just to remind everybody. Our April numbers came in at plus 2% Paraguayan and lot of turnover is expected to be flat to down for the month AMAG.
And again credit to our next Gen operating platform team, having this visibility real time to look at collections have been huge for US we can focus our energy, where we need to do it and credit to our genes out in the field because they're able to take this and worked with those that need a mouse.
Thank you.
Your next question is coming from Austin Wurschmidt of Keybanc. Please go ahead.
Hi, Good afternoon, everyone. I'm just curious you referenced some markets that are more exposed the hospitality and I know, it's still very early but.
You know certainly the impact has been swift and some of these markets as far as layoffs I'm. Just curious if you feel like you've seen sort of the the worst than the impact play out in some of those markets.
You now have kind of a better sense of.
Where some of the more challenged submarkets are across the portfolio.
<unk>.
Yeah, that's necessary to get I'm going through its Mike and second to it's hard to tell me, saying the worst of it I think it's going to depend on.
Went back to.
Staying home orders or.
Mandates are released.
We see a lot of that's starting to happen in Florida. So the Orlando market should pick up it's going to be interesting to see how quickly the tourism base returns to.
No one enjoy their vacations, there no Orange county, it started stabilize a little bit.
You know traffic patterns, there are probably pretty stable today, we did have some against some delinquency issues there.
During the month of April, but Mike anything you would add to again, so cal as well as aren't as well South Florida, Florida, just in general what we're seeing right now across the portfolio, New York, San Francisco, and Boston definitely a little bit higher turnover, there given corporate exposure and lower traffic due to stay at home orders.
But on a positive, though we've seen Texas, Nashville, Seattle, L.A., insulate us with stronger retention traffics, increasing and out of the DCF framework.
[noise] that that's helpful. Appreciate the deal that detailed there and then you know what one other question, there's I've been put it out there just curious.
And you think about you know future development and how things have evolved if you were negotiating contract and a construction project you know where do you think hard pop to be versus pre Kogut 19, and then how does that sort of overlay with your strategy or.
Restarting the developmental pipeline ultimately versus you know pursuing additional BCP type investments.
Oh. So this is Harry up we had two projects with plan starts during the second quarter.
We hit pause of these two while we as you mentioned look at pricing it overall economics.
You know, we recognize the metalized likely to decline in the near term, but we also know the multifamily fundamentals.
The strong coming out of downturns, we believed that we will be able some costs out of the projects, which has a permanent benefit.
Or data wide trends, which are inherently temporary or cyclical I think in terms of hard costs and work. We're in the market looking to take some cost out of order existing.
Alright, well in addition to Oh to the Ford pipeline I mean, it really depends a little bit in terms of a the type of construction in the market you're in.
Theres, a general view that it's somewhere in the neighborhood of bifurcated apart costs is probably a safe number there is some optimistic views that it could be a little bit greater than that.
Perhaps the size 10%.
And then and then how do you thinking about that versus kind of you know when you're looking at potential investment opportunity than at BCP type deal or future development.
Any additional thought there and then that's all from it.
Hey, Austin, it's Joe just in terms of out relates to future investment opportunities as well as external growth.
First off we start with the balance sheet items, or where do we sit today and we spend sometime in the prepared remarks on in the press release talking about.
All of what we've done in terms of building up capacity pushing down maturities.
And really doing a lot worth or in the last couple of years when it gets to the external growth, it's coming similar to what we've done over the last couple of years much as pivot to where the returns takeout. So we've reduced development significantly warmer Dempsey returns we ramped up these would be we really have to go button on equity and external growth on acquisitions last year when I saw the off during those.
So.
I think DC bead developments buybacks acquisitions et cetera, there are all going to end up competing with each other but right now we view capacity of liquidity is kind of at a premium and desire the patient our approach. So we'll probably start to what all the way you're at some point, but right now I'm just trying to be patient with the capital on behalf.
Understood. Thank you.
[laughter].
Your next question is coming from rich Hightower up at Evercore. Please go ahead.
[noise] started at the mute button. Good afternoon, guys. Thanks for taking the question and everybody doing well.
Yeah, Joe or or or anybody really just to follow up on the external growth question talking to others.
Including your peer that sounds like there is not yet a lot of distress out there right. The feds cooperating and business is still holding up but do you envision that.
That scenario changing over the next few months.
As as developer balance sheets or anybody else in the ecosystem as they get stretched and do you think that's where the opportunity.
Might come up a little more favorably for well capitalized.
Owners and investors like UTI art.
Yes, Hey, rich, it's Joe I think for real estate broadly on multifamily specifically, it's probably going to be tough to get into a fully distressed situation. If you go back to the last downturn, we had a fundamental downturn capital markets downturn and real estate was that the epicenter of both of those.
Look at where we're at today the fed the treasury in the U.S. government done then exceptional job in terms of trying to keep businesses and a good liquidity situation. Thank you, Sir consumer survives and making sure that credit markets continue to act pretty well when you look unsecured and secured space. So I don't think we Havent thing ahead of us on the capital markets.
That would be concern in terms of stress well then it just comes down to how do you underwrite the near term analog growth profile and so I think we're also went into that trying to figure that out, but it's hard to see us going into a situation, where we have a lot of distress out there in the transaction market.
Okay.
Got it sorry.
Now you're going to much okay.
Ralph comment.
Yeah, and then just just on the fundamental environment.
Factoring in a construction delays in different in different places versus other places and as we think about the lease up environment over the next few months, where where across your your broad portfolio do you see supply new supply having a the greatest impact on market rents over this you know kind of.
Leasing curve that would that we're into right now.
Yeah, Hey, rich I'll kick it off and some of the others might jump in here, but.
Came ended the year, we've got supply overall in 2020 was to be and Thats flat to up 10% range. When you looked at individual markets.
Boston, La and San Francisco, those where some of the markets that we thought there'd be a little bit more pressure on in terms of supply being up when you look at these stay at home orders and some of the shutdowns in terms of construction activity clearly, it's been a little bit more impacted on the east coast. So Boston, specifically, where we thought there based more pressure probably saw.
Slows down a bit like New York definitely slows down a little bit less of that taking place on the west coast.
Overall, you will see some degree of slippage.
Throughout the country, a little bit more some certain markets, so that flat to up 10% number probably looks more flat to downtime and just drips and a 21 and then if you look I have a more forward picture. If you look at starts activity clearly has come off materially we'll see where April was next week when we get the numbers again.
I'd expect starts permits activity to keep coming off.
Due to credit markets, which on the construction financing side. The that's kind of one area of the credit markets have really shut down a little bit in terms of cost of proceeds and then governmental austin's clearly have slowed their activity and or shut down so.
Part of the positive impact when you get out there later 21 another 22.
Yes, how is that when you look at our portfolio where weve.
I thought the most impact from new supply would be downtown San Diego, No Soma district in San Francisco downtown L.A.
Great. Thank thank you guys.
Thanks Rich.
Thank you. Our next question is coming from Jeff Spector of Bank of America.
Yeah.
Hi, Jeff.
It's just.
I know you guys had been through different cycles and.
Great geographic.
[noise], no discuss or think about longer term.
Some of the different regions and future trends you expected this.
Yeah, Jeff This is Tony.
Let me take a shot at that.
Yeah with respect to variety in the middle of.
If you will have crises of us pandemic him and often I find it why not to adjust our strategy in the middle of a storm what you do adjusted your tactics.
And you can see we like a good foundation with the operating platform to address those tactical opportunities and Mike in the team are working very diligently executing that.
As we've talked about what lies ahead on the back side of this it's interesting when we started looking at the decision trees as well as the opportunity sets and the first Q, we come up with on a decision is well do we come up with a virus.
Vaccine do we come up with adequate testing and do we go back to if we have those two things in hand in the next year.
And we go back in February of 2020.
Or is there something else is going to evolve in that slow progression out a desk and so I think it's just too early for us to adjust our strategy.
Well keep revisiting that question looking at the opportunity sets that come up.
And what we do happen I believe is a very strong foundation to build off of rather that's the team the platform the capital availability. So no adjustment to strategy at this time.
We'll play it through but I think we could be setting here six months from now with a completely different landscape.
And.
Well, we'll be proud of is the tactical execution that we done and probably reached that decision when that time comes best.
Thank you appreciate those comments in does that also go for.
Huh.
How the amenities are what you can offer I guess.
Yeah, I think Jerry and Mike can handle what we're doing on the individual community level about opening those up.
Yeah, you know one of our amenities have closed we will open them up as soon as the city's allow.
There will be lot protocols put in place to comply with spatial distancing.
Cleaning up cleaning standards things like that but I think when you look at amenities going forward.
Over the last.
Two to three years, what we've seen and a lot of our revenue enhancing spend has been.
Placed and converting things like theater, rems, and and spaces like that and to smaller conference rooms, and other types of work area. So I think thats going to be continuing I think you know when Harry is building product in the future you now we'll see how this plays out but theres.
Other things, we'll look to do I think have in high speed wife, I am buildings is also going to become.
Much more of a selling point is probably there will be more remote workers, but is there anything you want to add to building plans that you think about in the future well I think again, it's early as Jerry mentioned.
As we look to particular to build new buildings will definitely look at things such as the quality of airflow and filtration systems.
We will likely further expand pack controls.
To handle increased delivery volume will ensure that we're using antimicrobials surfaces such as.
Worked through Caesarstone those types of things.
Thank you.
[noise] Keybanc. Please go ahead.
But for now.
Taking my call.
The question.
Due to broad question.
Thank you mentioned earlier on that.
Directions, one didn't lighter.
Class B side to be portfolio Im just wondering if the renewal or your blended lease pricing.
At the differential given class b and that they probably.
Kind of thought.
And then second questions more DCB are there any active.
Project.
Good day.
Densely stuff you.
Lost because of.
Delays and are you how how you guys constructed around controlling.
Well, it's meant our funding on those kind of situation.
When type DCP Harris.
Sure.
[noise], so with respect to DCP, we're open to a.
More DCP.
We expect new development starts to slow in the near term, which likely impacts demand.
Overtime, we expect to be able to continue to deploy capital and GCP or that it is a.
The best Mclester, we'd like to we continue to look to deploy capital in that area.
And then maybe just to add onto that in terms of the for debt. The protection that we haven't place for some of those transactions.
As you think about the underlying collateral or real estate Weve underwritten the majority of those to about five and a half the 6% type of yield on developers numbers. So if we do see a drawdown in terms of NOI expectations. I think we have plenty of cushion to get down to our level of basis. If you look at our basis in general or capital.
Thats, what kind of about 55% to 85% of the stack and you had asked about our ability to sign off on draws we do have the ability.
But when you look at our remaining funding up in the developer capital program. We've only got about $14 million left at this point in time primary primarily related to the thousand Oaks transaction, which we recently announced so all of the equity hasn't been invested behind US most of our DCP capital now it's under the construction lender to finish all the funded.
Yes. This is Mike just a touch on the rents.
Our very comparable between eight and be the urban and suburban and I believe you asked about delinquency to again, we're averaging around 4% across our portfolio, New York and box or the high after the corporate exposure, we're working with them right now on rent assistance, L.A., which makes up about 4% of our allies. The next highest given regulatory burden.
There then yes, Seattle often in Nashville thorough the lowest in there between one 2%.
And does it make additional comment there on those delinquencies that Mike referenced a 4% we do have payment plans or financial arrangements in place. We've got about wanting to half percent of that delinquency, which over time, we think that reduces you to 90% to 97.5%. In addition to the fact that we continue to get payments coming in from.
Individuals we can do not a payment plans with so we see those each and everyday coming on so we think that number will continue to go up in terms of cash collected for April.
Thank you.
Your next question.
Yes.
Please go ahead.
Thank you.
Mike or Jerry as you guys ramped concessions in the April were there any markets that just did not respond to the increase concessions whether it be fixed rate looks great.
Hey, John It's Mike.
New York City been the one probably where it's a little bit more challenging right now because I thought stay home orders. So while we did increase concessions to try to increase demand. There. We quickly pivoted and are finding that we're doing more of the virtual tours, they're getting those zoom tour that Jerry spoke to and that's helping us out right now.
Then as far as other markets that in some cases, we did a few log leaders, where we're trying to drive demand and you can see that in San Francisco.
That didnt help us out to some degree a little bit more than say New York City.
Okay.
Sticking with San Francisco revenue growth in the quarter, even pre cobot 19 lag pretty meaningfully could you share April occupancy and new lease growth for San Francisco portfolio.
Sure So San Francisco today.
Looks like we're around 94% in April we were 95.2% and then our blended growth there today is.
Right around 1% to 2%.
Thank you.
Your next question is coming from.
Morgan Stanley. Please go ahead.
Hey, good afternoon, guys I'm two things I wanted to address to address the 11 JV properties that you put into your combined a pool could you just maybe talk through the revenue benefits and the expense benefits I I noted on some of your disclosure that your control of controlling expenses <unk> turned negative I'm sorry.
I loved just understand a little bit more what the benefit of those a of those new additions to pull our.
Sure edge this gerry.
Just think get everybody up to speed that's about a 3600 units mostly was deals we traded for the Metlife transaction last year makes up about 8.6% of combined same store NOI. This year. So when you look at those assets.
They had revenue growth of 3.9% that compares to the 3% blended level. So it benefited.
Total UTI our revenue growth for same stores by 10 basis points, because the legacy assets would have come in at 2.9% lot of that was actually in fee and other income which is really attributable to our platform as you know.
One thing we've told everybody in the past about why we don't combine the.
The Metlife joint ventures, as we don't have full control over that so there we have to run those in conjunction with and asset management function that doesn't always a adopt our entire platform. So.
We we've got those deals 100% back in the fourth quarter of last year put the our platform on them and like I said, you saw revenue growth come in at 3.9% to the first quarter. When you look at expense growth.
Vince growth in total.
Was negative 6% almost at those met deals that compares to 1.7% on a combined basis. So the legacy assets. We're at 2.7%. So we got about 100.
Basis point benefit on the expense side.
And when you look at the Controllables, which is the question you asked and that's where most of the benefit comes from the next Gen operating platform. We've been telling you about all of the benefits for the last year or two to you de our same stores and this was a good opportunity to see how quickly as we get the efficiencies from outsource.
It seems centralization sharing staff between.
Multiple properties that are close by how you could benefit but the controllable expenses at those are 3600 homes was down 9.7%.
That compares to our legacy assets being held that flat, which is still a very strong number and the end result on a combined basis is that they were down 110 basis points.
Hey, Rich was a Joe just one thing for reference.
Everybody on the Gulf within our supplemental on attachment five we did provide substantial amount of due to health in terms of trying to make sure that we remain transparent. So you can see on attachment five we do give detail on combined same store that acquired JV same store portfolio as well as what you could call the legacy UTI, our same store portfolio.
You can see rent expense on the line kind of back into some of the gossip Jerry is talking about on a relative expense an NOI number. So you can work the numbers yourself on that and if you'd like.
Got it and then Oh I'm sorry, if you would you you've already asked this question or to answer this question.
But for April or do you have any updates on the actual leases signed in April and what the rent the wins look like and then what I'm getting at is some of the disclosure we've heard from.
Some of your peers, it's been a little bit mixed but if you. If you had any updates on actual leases signed in April that that would be really helpful.
Eric just Mike we signed between a blend on the new in the renewal is around 2% growth.
Well then for leases that are going to affected Matt. So this was that we may have signed an April included news on renewals were not ready to give detail on that at this time, we do think bill remain positive and wanted to get them and so when we get out the gym day rate will provide an update within our disclosure that onetime seeking contract is number sport in terms of.
Collections blends traffic et cetera.
Okay sounds good guys that thanks very much the disclosure.
Okay.
Your next question.
Understood.
So.
Got it that a good or good afternoon. So.
If I get a maybe ask the movement of a clinical question.
'cause, it's more I guess.
So everyone. If all of your peers are kind of you know in that 90 590, 697% range of April collection, which is great.
And.
Finally awesome for all of you you guys included but I'm curious how the reality the those conversations win.
Where where people just you know willing to pay the rent or were there like some negotiations that went on you know along the way for in some in some peace in some.
So a those conversations assuming that you have several levers from which to pole.
You know to get people to to pay the rent or was it just a simple is yeah, here's my rent payment I I feel like that there might have been more.
Reality used to those too many of those conversations to get you to that 96% level.
Yeah. This is Mike I'll tell you is it really go down to the property level and that's why we've taken that surgical approach from the beginning and it's a case by case. So some markets, we've seen a little bit more whereas people coming in and they're negotiating versus others, where it's been more of a business as usual, but for the most part we only have about.
700 payment plans today, so I think there's a lot of pride out there and a lot of people that did come in pay the ramp I.
I think most people.
Have their jobs you now have not been financially impacted too hard in our portfolio and Mike. What did you say may collections were today 80, Brady seven per say, 87%. So that's people that just are normally going to pay on time. So you know if you think that that was roughly the same as last month.
We had to go work to really get the next 9% I guess I would say and in all of those people were the ones that were under financial distress and we entered in these payment plans mikes talking about in some locations CNL, where late fees are not legal anymore people didnt have the incentive to paid quickly and sub.
Those would lag, but I think by enlarge our portfolios as is of such a quality that the majority people are going to pay on their own without a lot of negotiation or being forced to do it.
Rationally, Toby Wann, I didnt pick up overly cynical, but what I found is like I got a second.
Good [laughter] concerns late on the collections negotiating status was intriguing is the off platform. We've talked about a number times. We've got history on every residents for their length of stay there pattern of pay.
Their level of service any issues they've had in so Mike and his team are armed with less than you've been a great resident in bandwidth is 27 month. We understand you have a challenge right now we want to work with you we offer a model of payment plan a lot of unsurprisingly they look at it and they just come back and.
Well I can pay this much and we'll put them on trps others.
I don't have it right now.
What can I do and so he's got a team that arm.
And while we say automation, it's still does require people that have skills and data.
To sit down with people, who try to work out a plant and and I think thats, what you're seeing with respect to the April your here and May seven we're still collecting money from those April rents rather they are unemployment checks government HX or their outlooking framework.
We want to being accommodating towards our residents.
To try to help them get through this im pleased that on the back side of this that goodwill, but also our brand and our image or maintain.
And it's just going to be an individual by individual situation our to throw a blanket over it we shouldn't pro blanket over we should be compassionate and accommodating.
Okay. Second question, we think about you know that type of unemployment that's happened, maybe it's a 20% of the U.S. workforce or something and I don't know pay that number exactly right but.
How much of that has hit you directly.
The.
People, who lost their jobs within your portfolio, it's something a lot of this is service oriented sector I don't know how big that is in your portfolio, but I'm just curious about the the direct hit.
Our yard.
Yeah rich.
Hard to tell if somebody got laid off and didn't come in and assets for rental assistance, we're not aware of it as Mike stated a little bit earlier.
In April we entered into 700 paying 700 deferral plans with individual residents, which is a little bit under 2% of our portfolio. So I would tell you it adds up.
April it wasn't very high we're offering the same type of deferral plans for people that are Ah you know under distress in the month of May you. We do ask them do provide some sort of proof of there being financially impacted.
By the coded virus, but right now it's not that much.
But you read about what their jobs are like when they come in the door you don't have a an understanding of their.
Let me do we just haven't gone back and looked at exactly where they work or if they got laid off as we said you know some of the markets Weve felt more of it is on the and those hospitality markets in Orange County, as well as Orlando.
But.
The as far as I can tell today, they are still have their jobs or they're able to make the rent payments have you rich to realize when we end the application process you do get a degree comfort about what their position as but our average resident staying with US 28 months.
Add Mike what they've moved onto been promoted change jobs, we really do not have mechanism to collect that.
And then soften that efficiency of when people try to report income.
Well, how much of its passive income how much of it of W. Two our 10 99.
If.
Data.
But it's not useful their actions is whats useful their interaction is whats useful.
Okay fair enough thanks very much.
Your next question.
Okay that's capital.
Right.
Hey, guys. Thanks.
It on yeah breaking side.
Gary or Mike I'm wondering if you.
And then make had as maybe shine a light or our.
Expedite.
Move to.
More technology or over the next gen platform or the capabilities and that's the way.
Maybe that changes youre.
Operating cost model on a on a property level.
In other words, you know you might not need money.
People doing door to door no back off at their maintenance et cetera on is that something that that you're kind of thing come through.
Thanks.
Yeah Neel.
I said, a little earlier, we've been working on our new platform for about three years a lot of it was.
Really for the efficiency and to allow our residents to adopt self service I think what we've seen with.
The last two month as our customers were ready for it they adopted it and it's going to allow us to continue moving forward with us and I also said that we're finding new things through technology to even enhance that self service.
Below the where they don't feel it as necessary to show up and a tour at the site. So yeah, I think you're going to see efficiency I think.
Now we've been talking for the last year year, and a half about a contraction to our controllable margin this quarter, our controllable margin.
Grew by 60 basis points as a result of getting controllable expenses being down 1.1%. So that shows some of that efficiency you're talking about.
I would expect it to continue but some of it has been accelerated.
Okay. Thanks, everyone for me can you just maybe.
Juxtapose, the coastal versus sunbelt markets.
The major things you're seeing in terms of you know payback period.
Torreon feed being suspended.
Yes.
No it fits in there or anything along those lines.
What gets out that no understanding really what the economic and political legislative environment looks like between those two.
The country.
Hey, Bill it's Joe.
You're right there has been a little bit of juxtaposition between different regions on stage.
While the federal level, but we've been very very thankful for all the efforts.
It's fair to say that yes, some of the local and state regulations have made operations more difficult to major.
Would you just start with the shelter at home orders as they look at the sequencing of when those come off overtime, how about 10% of our markets are actually open at this point in time those been here in Denver Nashville, The Florida markets, Texas started open back up. So you are seeing more of a sunbelt opening and that's.
Where we're really trying to figure out how do I worked through the operational reopening of the assets when you get into some of these other restrictions such as the banks are moratoriums on other things.
The infection moratoriums generally are lasting longer when you get into the coastal markets again, no, California, Seattle, Massachusetts.
Oregon, All those are longer New York, just recently change there's I think last night of this morning to August Twentyth. So you do see longer but some more times on the coast. Similarly, with the payback periods, which say most of the payback period restrictions, taking place and California markets, San Fran I always said Diego.
Costa Mesa, and then out on the East Coast DC proper.
As a more restrictions on payback periods as well so it is a little bit more coastal a major at this point in time.
Don't out that Thats part of the reason when you hear the commentary from Mike and Jerry on delinquencies and what we're seeing there probably are few bad actors that are taking advantage of those vixen moratoriums, but.
If and when they open up we'll continue to work with them and trying to get payments to be compassionate towards them, but also utilize the a lot on our side as well and trying to get those collections are contractually outdoors.
That that's super helpful. Thank that Oh I got on that question are you are you willing to come in you know get that I believe.
You know kind of letting them go maybe taking a lot to get control the unit back how do you kind of way that.
No I think a lot of it depends on how much demand we have at that particular property. If there are significant demand.
We would probably consider it.
If there's a limited traffic coming and then low demand at high exposure, we're probably going to hold until at least.
Okay. Thank you guys.
Right.
Your next question is coming from John.
Your both capital market. Please go ahead.
Thanks, Good afternoon, I guess my question on geography differences.
On renewal rate and are you just keep them flat.
Where is mandated like California, New York.
And.
So what percentage of your markets are you at.
Premarket impairment versus government mandated renewals staying flat.
Hey, John It's Mike. So yes, we are taking this again property by property market by market and pricing at market. So when we're looking at renewals today. We're worried we've already priced out through July and were anywhere from 4% to 4.5% that being said we are working with those that are facing a hardship and we do have regulatory pressures.
In a few counties and states, so, we'll see where they come in but that's what we've been sending out of the now.
Hey, John This is Joe if you look at.
We're right in terms of regulatory restrictions.
I mentioned in terms of the run stabilizer assets are subject to Costa Hawkins on California.
We do see then sell in San Francisco, Jose, where they required zero percent renewal increases for certain durations of time depend on margins are periods or otherwise DC proper.
It's through the emergency Beard, plus another 30 days after that and then.
The state of Washington.
As well of renewals of zero percent here for another month or so.
Obviously caveat that that could change at any point in time so.
When you kind of look through the portfolio overall, we're probably just around 10% of our runs right now that are subject to flat renewal increases with the rest banbury market and asset specific as Mike Mike talked about.
Okay, and then looking at your April uptake and it looks like me starting more new leases that they brought the master card application.
Like closing ratio.
Is that just because your portfolio bigger or incentives that are being offered are.
I can come in that.
Yeah. When you really look at our closing ratio Mike why don't you go through the math on of closing ratio because it's our supplement doesn't quite reconcile sure. Yes. So we look at qualified traffic as somebody who is either calling us are hitting our web site and then we really look at visits.
And applications and that's how we can toward closing ratio based on visits so what we've been seeing over the past few weeks is left people, obviously coming to our properties, where we have more of the stay at home orders in place, but those that are coming to our properties are more likely to rent and so we've seen that go upwards of 50% to 60% as a point.
That ratio.
By the that's not applications or traffic.
Right.
Okay.
Thanks very much.
Thanks, John.
Your next question is coming from Robert Stevenson of Janney. Please go ahead.
Hi, Good afternoon, guys, Joe what are you gonna be accruing for bad debt now 20, Twond, what's been your bad debt cost running you would a typical year like 19.
Hey, Rob So I'll give it historical first.
Typically when you exit a month, you've got about wanting to have 2% of rents outstanding that you build.
So over that subsequent period of time when all the weapons all election process you typically continue to collapse. So thats why when you look in our press release Q1 2020, we have 99.6% of runs collected so you can see we had about 40 Bucks there were still outstanding waiting to be collected.
As we go forward.
We're going to be able to assess each individual tenant in each bucket and try to determine collectability at that time, So I can't speak to how we are going to recognize revenue and therefore, what the collectability in bad that's going to be as we move throughout the year, because it's really going to depend on each individual circumstance. So do they have a payment plan in place do they have a good payment history.
And then come to us and spoken about their ability to pay for that they're worth waiting for a governmental Chuck. We will then received or have they simply skipped and they're going out with some point in time and all of those have different collectible probability. So we're going to assess that as we move there to do and continue to get more information.
So hopefully a little better up in July when we get therefore, you know I would tell you add historically when you look at our portfolio. We look at net bad debt. So thats what have you write off this month offset by whatever you've collected from previous write offs. So Joe talked about the delinquency, sometimes it carries over sometimes people move out, but they come back to pay us but.
When you really look at that net bad debt as a percentage of out of gross potential rent. It typically runs in the 0.12, 0.3% range. So it's a fairly small number.
Okay, and then what do you guys thinking is the it's going to wind up being that sort of lost revenue drivers from you know the lack of renting Brian the spaces, you know for corporate a band for parking all the other sort of you know.
It's probably less application fees et cetera, what does that sort of all down ups to when you guys think about that you know today, the what you sort of lost thus far.
Sure I can give you little bit more color on what we saw a month of April and just take all your first question on the common areas that wasn't initiative that was starting to ramp up for us it's about 1% potential of our total other income or roughly $1 million over the course of year.
Right now we have had to shut that down but as commodity space to start to open up we expect that we can start to gain some momentum there again.
To to late fees admin fees and fees things like that they were about 55% to 60% of our total mass in April and I'd tell you in total fees were off by close to a million dollars.
Okay.
We think about operating expenses are there additional operating expenses that we need to be thinking about of any material nature to deal with.
Co bid in the challenges with the the eviction bands and all this other sort of stuff that you're gonna have to be dealing with throughout the remainder of 2020.
That's quantifiable Rob.
Rob as Gerry there are some common expenses you know we ended bison pp any some cleaning materials, we actually we did.
There are providing a bonus to our site associates for all of the policy changes they've had to endure over the last couple of months as well. So next few coming forward.
You know you're going to have utilities expense go up as more people are staying in their homes youre going to possibly hopefully not have higher insurance claims as people, saying their homes more you should have.
A you're going to have a higher level of cleaning costs for common areas.
As time goes on ideally a lot of those costs are going to be offset by lower turnover. So when we kind of bundle all of our expenses up together today, we don't think it's a material difference from what we originally guided to.
Okay. Thanks, guys.
Thanks, Rob.
Your next question.
Okay.
Okay.
Hey, good afternoon.
Got going after the close.
Two questions really well.
First up in Boston what percent of your portfolio traditionally occupied by overseas.
Okay.
I've been bought I don't think it's very high we got some at our 345 Harrison.
I will have that number on top of May.
Fingertips, but.
We can get that back to you after the call Alex but basically Gary if you don't know it off and it sounds like it's a pretty small number it's not material okay great.
Got you is on New York <unk> have your.
Property managers and getting a sense of what People's thoughts are for this summer, whether they're going to renew with you know or move out.
I mean, certainly we know what the rumbling is here, but obviously our samples that is gonna be different than yours. Your resident sample set.
Yeah, Mike, we're still seeing really low turnover in New York right now and as we've said now renewals we haven't seen much of an increase in notices yeah. We are seeing it a little bit more on the corporate side, where we've had some exposure there, but as far as our traditional residence theres still.
Taking a place for most part.
Okay. Thanks, Mike.
Next question.
Dominant associates please.
Hey, Thanks for taking my question really quite quick.
No I know you talked about this a little bit on the call, but if you could just right what we see or what you perceive a going to be the bad news of the beauty our capital.
In the coming here, you mentioned developer capital program, something where you thought that.
If you could highlight how you've got to thinking through that.
Yes of course, so I think at this point in time, we talked about being patient we're still trying to look for opportunities because we do believe with capacity given the strength of the balance sheet.
It's tough to really rank them given that there are some opportunities that are out there in sand the transaction market really shutdown at this point in time development. Obviously in terms of starts is coming off which impacts land opportunities impacts DCP opportunity. So the only opportunity we have to really look at day in and out as our stock price so trying to compare.
Near term returns cash accretion that long term I are ours, it's pretty difficult in this environment.
So it's tough to commit to any one class of assets other than to say that we'll continue to pivot where we can pick the best risk adjusted return.
Hi. This is a quick follow up deals you did.
Don't look as good right now I'm, not saying that you know you're going to lose money on them, but the returns are lower than you would have thought.
I mean, obviously, we were incredibly active on the acquisition front using equity last year and while it's possible the near term return might be lower given the rental rate environment that we're in today. The reality is that we used a source of capital that was priced attractively, we locked in that cost of capital put to work.
The assets to add typically 5% to 10% upside due to the operational initiatives combined with the platform.
So I think that opportunity still exist. The current environment does not take away from those opportunities that we saw to expand margin to expand and why you have by 5% to 10% the near term market rent growth yeah that may have come off but it came off for our entire portfolio. So the fact that we utilize cost capital match funded that locked on the accretion.
I don't think with any sense of regret other than probably what should we went down a little bit more.
Okay, that's great backlog going forward.
Thank you.
Yes.
Hello.
Thank you.
Please go ahead.
Hey, good afternoon out there.
So I guess my first question is that there's a bit of a twist to follow up an earlier question.
You guys on the unique position relative to your peers that have reported thus far to give a broader perspective by market price point product side. So you know that gives you I guess the unique perspective to give color on the debate over a higher price curbing cosla partner with greater Kobin movement Mr.
Ericsson's, but offset by greater proportion of white collar workers with greater work from home flexibility.
First is the Sun belt, which has left the cases.
Friction but.
Lower incomes and less flexibility to work from home. So I guess I'm curious on what your early read it here urban coastal high rise versus Sunbelt garden lower price point, what are the two what did you have seen recently that informed view, but more importantly, what do you thinking over the next several quarters, which of these.
Groups and potentially outperform and why.
Yeah. This is Jerry mendell.
Right, so it to Mike and potentially to me on more of a long term I would tell you. It's too early as Tom said earlier to make us a real call on urban versus suburban I'd tell you right now when we look at Mike referred to this earlier.
As we look at the Delta between AMC in pricing power in April whether it was on the renewals side or the new lease side, they're almost flat really not much of a differential.
Thank you packet right our.
Our sunbelt in some of our B properties had a residents that we're probably at a higher risk of being in the service sector and kind of lost their jobs I think a those those and but I would say this traffic is probably picking up in those locations more rapidly because the cities are opening up the urban.
Core markets I'm traffic is slower as stay at home is still a widely in effect I would tell you. We also had some corporate exposure in a few of those markets that we felt some impact.
But it wasn't material, but that's where the impact was was in those San Francisco.
Boston, New York City locations, but I would tell you right now when I look at.
How it all works out for the year talk in a urban be suburban.
They've all been impacted in some way, but it's a different ways.
Traffic is perking up more rapidly in suburbia.
But you know.
Right now, we're just playing a property by property they'll have a little bit of a different story I think Mike and his team are dealing with the well.
Tom I don't know if he would add anything to what he said earlier about the long term aspects of.
These and again like I said, it's it's just too early to tell what this means for future quarters. If it depends on when do cities lift stay at home mandates.
When do employers expect people.
Let's come back to work, but also when did they start rehiring for some those.
Jobs have been laid off and then when do consumers want to get back out there and start buying things. So I think it's been a lot. It's just too early to make call anything you want to into no I think you got it right Debbie.
Sure just right in the middle of this storm and as the city to open up people start getting out there patterns are going to start gravitating back to where they were before with the constraint.
The constraints can go away with immediacy testing.
From transportation.
Vaccine.
If those are six months or year off our people going to make a decision and live with six months of discomfort until late long term cure is on the horizon.
Well they make a decision in that window of time that impacts them for years to come or will they hunkered down and deal with the inconveniences and then when they're lifted come back to normal. So it's just too early to overlay that re winding up the economy.
On to a portfolio strategy and draw conclusion.
Okay fair enough going up but thank you pray for your comments, though.
Maybe you got to talk a bit about the brick workforce.
You mentioned earlier in the call being a handy to you obviously in a political goodwill releasing effort.
Can you serve perhaps what percentage of your tours.
I could maybe in the month of April or during that timeframe had been conducted virtually versus conventional and then maybe some comment on the differential in conversion rate between these virtual and the more traditional in person.
And well not on top of that are you.
Finding that need to offer any incremental incentive parties virtual leases as well thanks.
Sure has now listen Mike is this going back to the old property market specific thing again, where we have places where we just can't give a guided tour and in some case of can't even offer self guided tours virtual tours are 100% of our our traffic right now come through the property and in other cases, where we are sorry.
To open up more we're still doing the self guided tours and we have guided tours, where we can but I'd say over the last week or two as we've looked at this technology, we're utilizing the doomed youre, that's starting to pick up more and we're utilizing that as it has.
Very good tool to help us close.
And I would add I don't believe Mike and correct me that we've added we've offered any additional incentive for virtual tours no that's correct.
Okay.
That's all for me. Thank you got.
There are no further questions you I'd like to have the call back over chairman and CEO Mr. Toby for closing comments.
Thank you operator, and and first let me start with a thanks to all of you for your time and interest annuity our and certainly we hear open you are and your families are safe and healthy.
Again, thanks to the team in the field in Denver, very proud of what you've accomplished so far and.
I can't say that enough very very very proud of view on the business for us.
I'm reminded that America is extremely resilient.
That you see the power.
Solutions come through in a variety of different ways grateful for that but I do believe America is an extremely resilient society and we will get through this.
We have a business that is frankly.
A necessity.
And we take that responsibility very seriously and at the same time recognizes the a core of our business and people will continue to read and we're grateful for that.
I'm also very grateful to our experienced leadership team, we've been through different crises deferred challenges and.
They have risen to the challenge on our teams on the field I know you're focused.
Got the tools the resources, we've discussed already that we have an abbreviated leasing season, but I'm confident that they will perform well during this short leasing season, that's going to be in front of us.
Lastly, grateful that we have a diversified portfolio.
A strategy that gives us optionality and platform to build on.
And.
We look forward to showing you more of that from the future and demonstrating again the rights strategic decisions, we've made and now they're going to build for our future.
And with many of you will see you at May read look forward to that and certainly hope that you are safe and well in the interim and please take care.
Ladies and gentlemen, thank you for your participation. This concludes today's event.
Disconnect your lines at this time and have a wonderful day.
[music].