Q1 2020 Earnings Call
This time, all participants are in the listen only mode.
After the speaker presentation, there will be a question and answer session to ask a question. During the session do you want me to press Star one on your telephone. Please be advised that today's conference is being recorded if you require any flutter assistance. Please press star zero.
Now I'd like to hand, the conference over to your speaker today, Adam while he VP and CFO. Thank you. Please go ahead Sir.
Thank you good morning, everyone welcome to American assets Trust first quarter 2020 earnings call yesterday afternoon, our earnings release and supplemental information were furnished to the Securities Exchange Commission on form 8-K, both are now available on the Investor section of our website American assets Trust Dotcom.
Telephonic replay an on demand webcast will also be available for this call over the next week.
During this call we will discuss non-GAAP financial measures, which are reconciled to our GAAP financial results in our earnings release and supplemental information.
Well also be making forward looking statements based on current expectations. These statements are subject to risks uncertainties discussed in our FCC filings you are cautioned not to place undue reliance on these forward looking statements.
Actual events can cause results to differ materially from these forward looking statements, which we undertake no duty to update.
With that I'll turn the call over to Ernest Rady, <unk>, Chairman and CEO to begin the discussion or first quarter 2020 <unk>.
Thank you Adam that was especially eloquent [laughter] and good morning to everybody. We recently released our 2019 and he reports that we prepared during the first quarter 2020 prior to that Kobin diverging pandemic. The theme of our annual report wouldn't be grateful during.
These I'm pleased to that preceded unprecedented times, we are even more grateful Greek for our colleagues.
Testers banking relationships research analysts.
And our families and our great portfolio.
We are grateful for the first responders and health care for workers on the front lines and the research taking place to find I'm grateful.
Brendan vaccine.
We are grateful for all the little things in life two wheel often taken for granted one thing is sir that together, we will get through this period of history.
Question is how we will be impacted.
We will look like on the other side, we're not immune from the pandemic re to field of bumps and bruises, along the way, which Bob will talk about more detail.
But overall.
Our expectation then confidences with our high quality portfolio.
Coastal west coast markets combined with a low leveraged balance sheet.
Pull us through this period in history and come up better than the other side.
As we mentioned on our earnings release, <unk> directors reduce the dividends from 30 cents per share to 20 cents per share.
<unk>.
Reducing the dividend is heartbreaking for me, it's not it's not the track record that we wanted.
We've done it with regret and humility, but in the absence of caution during these periods of times.
I thought it was the thing to do.
We will ask the board of directors to reconsider making up the shortfall in subsequent quarters as soon as we can see the reason retail sector starting to rebound.
Going to turn the call back over to add anymore or [noise].
Chief operating officer, who will give us a quick quick update on our operations.
Pandemic phone bar Barton, our VP and chief financial.
And that Chief Financial Officer will end with a quick update on the office leasing success.
Seems like center, our Vice President of office properties is see Adam Thank you Sir.
Thanks earnest from an operations perspective in early March we quickly mobilize to implement our business continuity in crisis management plans to help protect their health and safety of our employees tenants and vendors to maintain consistent open communications, both internally and to our stakeholders.
Higher employee base continues to either work remotely or onsite at one or more of our properties employees are generally only on site if necessary to either maintain critical building systems and sure any essential business says that our properties are properly accommodated and to provide resident services that are multifamily properties with skeleton rotating cruise when feasible.
Each of our properties remain open and operating well following all local state and federal directives and mandates across the board, we have increased security and implemented additional health and safety protocols at our properties. However, we have scaled back the other property management services to be more in balance with the current needs of those essential tenants that are which we expect will help reduce property API.
Operating expenses.
Additionally, we have determined to delay most non essential building improvement in common area projects, except for work already under contract.
As expected we have received a myriad of rent relief request.
The majority from our retail tenants many of which we believed to be opportunistic in nature. The majority of such requests are from restaurants salons fitness centers gems and apparel stores not all tenant requests will ultimately result in rent modification agreements nor are we for Boeing or contractual rights under our lease agreements. However for those tenants that we agreed.
Litigations or concessions, we may support them during the short term in ways that we believe will benefit us over the longer term.
We're also asking for some cash or other consideration from our tenants as part of the modifications are concessions.
Finally, we have begun preparing our returned to office plans in each of our office market. So that we can quickly disseminate such information to our employees and tenants with regulatory authorities began to lift to relax stay at home orders and implement market specific restrictions with that I'll turn the call over to Bob to discuss Q1 results and the impact from Cobot 19.
Good morning, and thank you Adam.
Last night, we reported first quarter 2020 up EFO.
56 cents per share and net income attributable to common stock holders of 20 cents per share for the first quarter.
As previously disclosed we withdrew or 2020 guidance on April 3rd due to the uncertainty that the pandemic would have on our existing guidance at the time, we withdrew our 2020 guidance. We believed that we were on track to hit our 2020 mid point of $2.42.
FFO per share, which would've been a 10% growth from our 2019 AFFO per share.
Unfortunately, the economy continues to change day by day with the current out com uncertain as to impact in duration, which is why are 2020 guidance has been withdrawn.
As earn as mentioned earlier the board of directors reduced the second quarter dividend by 10 cents per share to 20 cents per share, which is products approximately a 7.6 million dollar reduction in our dividend distribution from Q1.
The board decided to do this out of an abundance of caution due to the uncertainty during this pandemic, even though we believe our balance sheet and current liquidity remained strong.
There is actually some science or math that supports the reduction that was made in the dividend.
Well, we did was to multiply each sectors cash net operating income by the percentage of cash collected on April rents build through April 15th.
Office is 49% of our cash and why and we had collected approximately 90% of April buildings.
Retail is 31% of our cash NOI and we had collected 43% or were April buildings.
Multifamily is 12% of our cash NOI and we had collected 92% of our April buildings.
We have one 369 room hotel in our portfolio, which has been the number one performing embassy suites hotel in the world since we opened the doors in December 2006.
It is known as the embassy suites Waikiki that sits on a retail podium referred to as Waikiki Beachwalk.
The embassy suites, Waikiki is 5% of our cash NOI, which is currently running on a skeleton crew with the minimal occupancy ranging from 5% to 15% based on Hawaii shelter in place order that has been issued through May 30 Onest.
Accordingly, we're not expecting any increased occupancy until this order has been lifted.
When you add these percentages up it is approximately 68% of cash NOI and applied to a 30 cents dividend. It supports you revise dividend of approximately 20 cents per share.
We also believe that from a risk perspective diversification is a plus and lessens the impact from uncertain times like this it is also worth noting that since our board determined our dividend in mid April.
We have seen an uptick in April rent collections, such that we have now collected approximately 94% of office rents 40, 47% of retail rents, including the retail component of Waikiki, Beachwalk and 94% of multifamily rents that were due.
April 2020.
Other than our one embassy suites hotel that represents approximately 5% of our in Hawaii, our retail sector, which represents approximately 31% of our in Hawaii.
Is obviously feeling the most impact with approximately 47% of April buildings collected.
Approximately 24% of our retail tenants are considered to provide essential services and remain open during this period of time.
And the balance of tenants are considered to provide non essential services, which we're working with do create a positive outcome for both parties.
We expect the second quarter will be the most difficult, but we believe that we're well prepared with a strong balance sheet and stuff.
As we look at our balance sheet and liquidity at the ended the first quarter. We had approximately 402 million in liquidity comprised comprised of 52 million of cash and cash equivalents and 350 million of availability on our line of credit and only one of our properties as encumbered by.
Mortgage.
Our leverage which we measure in terms of net debt to EBITDA was 5.6 times at the end of Q1.
Our focus is to maintain our net debt to EBITDA at five and a half times are below.
Our interest coverage in fixed charge coverage ratio ended the quarter at 4.3 times.
Additionally.
In early April we drew down 100 million out of the 350 million.
Revolving line of credit.
Under our line of credit for working capital in general corporate purposes, and to ensure future liquidity given the cobot 19 pandemic.
And finally with respect to the 250 million of unsecured debt maturities that come due in 2021.
We have options to extend the hundred million dollar term loan up to three times with each such extension for one year period subject to certain conditions and the remaining hundred 50 million unsecured series eight notes do not mature until October 30, Onest 2021.
I'll now turn the call over to Steve Center, a vice President of office properties Steve.
Good morning, Thank you Bob.
We have continued to drive brands and further stabilize our office portfolio. We ended the quarter at over 94% lease was only 9% of the office portfolio expiring through the end of 2021.
City Center Bellevue remains 99% leased but we continue to expand and extend our existing customers at much higher rates, we completed a full for renewal with a major financial firm starting rate is approximately 66% above the ending rate.
Portland has also remained very strong for us our Lloyd District office buildings remained 100% lease.
We recently completed a full floor at least within energy related company with the start rate approximately 28% above the ending rate of the prior customer.
Similar to the 30 building, Oregon Square, we are currently Redeveloping. The 710 building a 33276 square foot building that we hope to deliver in early 2021.
In addition, due to the increased demand from our existing customers as well as other tenants in the market. We are any early stages of design development of two new office buildings on the two remaining blocks of Oregon Square, which we will continue to evaluate pending market conditions.
At first in Maine, we succeeded in renewing a customer and 68000 square feet with a rent increase of approximately 19% and we're in discussions with them to take additional space.
In San Francisco Landmark is 100% leased to Google and Autodesk at one beach, we unintentionally, let lower rent leases expire and we're in the process of Redeveloping a building, which includes the addition of a 4000 square foot elevator served rooftop deck with panoramic views to Alcatraz in the Golden Gate Bridge the fully renovated approximately 102 three.
As a square foot building will provide an 85000 square foot contiguous opportunity to hopefully be delivered in mid 2021.
Finally, our San Diego portfolio stands at approximately approximately 92% leased versus the overall class a market at 89% leased.
Two of the 14 buildings at Torrey Reserve represents 65% of our San Diego vacancy.
With have renovations and design development and we are aggregating spaces into larger blocks, which are scarce and UGC and del Mar Heights. So lot of crossing now stands at over 95% lean and Torrey point is on track to be 97% leased with the recent expansion of one customer appending expansion of another and Eightys move later this year.
The two existing towers and when it comments stand at 99% leased. Additionally, we hope to have a building permit in the next few months for buildings free and we will evaluate commencing construction as market conditions continue to evolve that said, we remain bullish long term on UGC market.
Direct vacancy in class a buildings and UGC is just 3.3% with only a half a percent of sublease space vacant and we expect continued significant new demand driven by both life science and technology users.
Operator, I'll now turn the call over Q for questions.
Thank you Sir as a reminder to ask a question you would need to press star one on your telephone to withdraw your question press the pound key please standby, while we compile the culinary roster.
I sure first question comes from Craig Smith from Bank of America. Please go ahead.
Okay and Craig.
Good morning, Thank you.
I was wondering what.
We have a cautious group here before we assembled to make this call we took each other's temperature.
And your temperature Tayfun yet Craig.
I do have with a mom under but they haven't taken that this morning, okay.
But we can look in the meeting but go ahead.
Okay. Thank you.
Was wondering.
Given that.
A couple days away what are you expecting on May collectibles for.
Retail.
You know.
I don't know.
I've never seen this circumstance before.
We have.
Identified affected our tenants are anxious to reopen.
Some of them have limited financial capacity.
They all have great desire.
We don't know what are.
California is going to do as far as opening up the economy again.
I think when they open up some of them will struggle in some of them will prosper. So that was one of the reasons. We it's an important took this conservative is that to make sure that when the opportunity does present itself. We're there to avail ourselves of it. So I just don't know is that a fair question Zeller, you've got a different opinion, Christy I solvent runs our retail.
Hey, Greg.
As Bob pointed out the percentages of our collection.
I imagine will probably be potentially somewhere near those collections or a little bit less but it it's going to be a challenge for me when you consider.
The majority of the tenants in the country.
More or less than close respectively.
Got you.
And then on on.
On the rent.
Negotiations are you looking to get.
Greater control or extend the term abilities.
When you're giving deferrals.
Absolutely if we give something we try and get something and as you pointed out those are the opportunities greater controls on the property extension of the lease them putting up some money. In addition, if they just threw off their hands why do we want to work with them. So we've got to get something forgiving something.
At a fair fair statement. So yes, that's a very fair statement many Craig in many of the big National tenants are going to co tenancies in sales termination exclusively from EBITDA uses numerous encumbrances on those leases. So that's a time for us to come back through those.
What we can do to improve our position. So that is on the same you've got no control over the property going forward. We have a committee to approve these deferrals of Adam myself, and Chris and nothing happens.
Three of us approving those terms. So we're we're careful to make sure that.
Don't do something.
Without merit.
Okay. Thank you. Thank you Sir.
Thank you.
Next question comes from Rich Hill from Morgan Stanley. Please go ahead.
Rich Hey, good morning, Hey, good morning, guys.
I guess I have several questions.
First of all on one Q I was hoping you could provide a little bit more detail on the same store NOI performance of the multifamily portfolio.
I remember that prior quarter, you said that it was going be a slight dip and maybe a couple that better.
Later in the here.
So I wouldn't unless you want to give guidance what's happened to take not asking about the rest of the here, but I am curious about one Q because it was it was maybe worse than what we were expecting based upon your prior commentary. So if you can give us some thoughts about what true.
Maybe the itself the further weakness in the apartment portfolio that would be helpful. Bob's been waiting for that question. Thank you for asking us [laughter].
Yeah. Good morning, Rich, yes, it's similar to Q4, but the let's say the majority of the dip in the same store for the multifamily is really relates that again have slow and Pacific Ridge. So we had lower revenue.
Yet how slow and then higher operating expenses at both at the operating expenses were.
Spread throughout not only higher compensation.
For the for the.
People working at the sites higher utilities.
So that's that's primarily what what is comprised of the that's like 70% of the dip in the same store NOI for.
Multifamily.
Okay, and so so if I'm inferring their correctly it sort of the same store at Fourq you were maybe supply.
It was a little bit of pressure and yet the focus a little bit more driving occupancy.
Operating expenses higher is that fair Bob Yes, that's that's fair I mean, our occupancy is still.
Hi, but we're just giving a little bit less on the revenues in the marketplace and giving some more abatements Abigail and it would you want to cover the occupancy of our San Diego portfolio.
Sure. Good morning, I think when the occupancy given present day today, the San Diego portfolio and.
Bringing in pretty high right now we're currently just about 90% occupied we've got a little day under 3.5% availability to rank.
And we.
Our renters, who are paying their rent so.
I think rare for doing is good is meeting yet given the current nature of the circumstances.
We have some good fortune, let's say.
Labour.
Pacific Ridge that you want to discuss.
You know kind of the highlight in Q1 really big Hill and for US. So Rob I think ridge was our continued engagement in partnership with U.S.C., we continue to fortify and strengthen that partnership with them and as a result of cold.
Came across.
Furthering our partnership with then and entered into a master lease agreement whereby you asked the had too.
Some of the units out of their dorms or the residents on their doors and we were able to secure a good number of units out Pacific Ridge and over at our neighboring community at Loma Palisades.
So we entered into a very short term agreement with them from March 23rd through May 31st and the gain.
A significant amount of money for that very short term partnership and that we will see further into Q2 for multifamily I'd like to pointed that to us de not USBC, yes.
Got it thanks, Scott it helpful color Hey, Bob.
Maybe just counting housekeeping.
When you think about the deferrals you mentioned your press release, you give the deferral into Q or even maybe maybe beyond how are you going to account for that and are you going to book it.
Hi, straight line revenue, thereby maybe topline earnings won't be impacted my people, though free cash flow lumpy.
Yeah, Weve, what we're going to do is under the.
Accounting.
Generally accepted accounting principles, the referred to as a 42, what we're going to do on a deferment is we're just going to readjust.
The straight line rent, that's going to be treated as a lease modification.
And by the way Hey, I'm impressed with your accounting knowledge in your recent publication you have no idea how tight Bob is for you asking that question [laughter]. So Bob I'm, sorry for Belaboring. This point because it's too there's two ways you can account for it.
Are you going to.
It sounds like what you're going to do is adjust.
The straight line rent as if.
And reduce it for variable rent. So so there will be a reduction in revenue during that period of time, whereas the other thing you could have done. It's just kept the straight line rent the same.
Then taken a reserve against receivables. So are you going to effectively reducing the total rent received by by reducing bearable rent is that right. No. That's that's not right. So you have you have an election and there was one of the things that the FCC came out on is that you can you couldn't the LEC no.
Not to do the lease modification under 842 or you can treat it like variable rent and if you treated as variable rent then you'll take the hit for it on a month by month or quarter by quarter basis. What we've chosen to do is because we think and the reason why is that we think that the collection.
It's going to be.
We think that when we do these deferments, we're hopeful that will.
Let's say that that will receive 90 at least 95% of those remaining cash flows and as a result, we're going to straight line that without taking any earnings hit.
From that methodology.
Okay, that's very clear.
I would just ask you to be as transparent as you, possibly can be in twoq, because I think.
Hello.
Eliminate and avoid some confusion. Thanks, guys. That's all I had sure good question and by the way Bob Since we went public I can't speak about that before that because it was probably in jail or something.
So transparent and it's it's a it's a touch point for our company is to be absolutely transparent, we'll continue that thanks for asking rich thanks for Gary.
Thank you on that last question comes from Haynesville Saint Joseph from Mizuho. Please go ahead.
Hi, Endo good morning.
Hey, good morning out there.
So I guess I had a question going back to the dividend.
First.
I guess I'm curious on the decision to its.
Only trim, the second quarter dividends, youre, implying that somewhat temporary than a part of Mcclatchy how did your way that decision cups, and just the second quarter versus perhaps.
Pending the dividend or maybe waiting until year end to decide what level you wanted to a required.
The payout, especially in light of the retail uncertainty you highlighted in the expectation that this likely continues into may and maybe than June.
At the moment my view is that regardless of the outcome on retail that dividend should be sustainable for the next 12 months. So what the we ask the board to consider.
We oh.
What we should do because we we felt and they felt it wouldn't be.
Logical not to take into account the current environment for retail on the other hand, it was equally illogical not to take into account the high quality portfolio.
In the rest of the company. So it was a token.
Reduction hopefully a temporary reduction hopefully a reduction that can be made up if this if this retail does do open up and the retail does continue to function, but we have to send the message that we're not perfect as we work before cobot 19 as we are.
After covert 19, and I hope that answers your question I think thats, a Bob anybody else got any view of that.
Yes, I think thats right, Ernest and that was well discuss that at the board meeting I mean, if if you look back to Q Q4, or Q3, when we raised the dividend to 30 cents.
That that basically was based on the expectation or based on knowing that we had leases in place from all the strong office leasing that would take our cash channel why significantly higher.
Our expectation is going to be over 280 million by the end to 21 and even higher than that after in 22, and that's based on locked in leases. So the 30 cents going into Q1, I think our payout ratio was what.
One.
1.22%.
And by reducing this dividend by 10 cents.
If you implied 20 cents dividend to Q1, let's say that we have the same results in Q2.
That would be about an 80% payout ratio. So I was just a more conservative stance, it's not that debt. We couldn't do that 30 cents because we have a very strong balance sheet, but I think it was the right.
Right outcome with an abundance of caution and of course, the other side of the coined as we do conserve.
Some firepower.
Steve went.
Through the opportunities in.
Yes in office.
If we pay out a little less we have a little more ability to take advantage of opportunities that may present themselves. So well it sends a negative message I hope. It also sends a positive message that if we do have opportunities we're going to be prepared to take advantage of them and not have dissipated our fire power on.
On the distribution of cash the could otherwise been available to take advantage of those opportunities.
Got it got it. Thank you for that thanks, and then maybe a question on the retail.
The risks that weren't collected in April and it sounds like early read per May it's probably more of the same if not incrementally a bit a bit lower.
How do you think about how should we think about the collectability of that indicates people that other 53% that wasn't he.
What does the past the recovering that uncollected look like.
Yes, as we said earlier, we have a committee.
Adam.
I myself and Chris Sullivan reviews every deferral.
Take into account whether the tenant.
We'll have the capacity to review.
It is likely to have the capacity renewed and have they been a good Canada. So now we also try and get some benefit out of it either interest if possible or a.
A rent an extension or some change of terms and so.
I don't know what's going to happen. If this thing may open up sooner and this may have been a blip that may open up a lot later and it won't be a public so I'd like to tell you. If I knew I honestly don't know and that was met that led to the action that we.
The board talk Incenting them more conservative viewpoint, and I'm more optimistic viewpoint that is everything is just the same has always been everything is not the same has always been do you want it sounds only.
Hi, I know what I'd add to that is that collection.
That is there in the high high Fortys as we're still working through these receivables were still collecting some of that stuff I Miss still part of the deferment process and we're going to now with tenants if they had paid in April.
But your situation is we'll be able to do X y and Z for you, but you're going to pay a chunk of that chunk of it later, so as I kind of use the expression around new there's still a little more chicken on that Boeing and getting on so that we collect more of that April that that April 50%, you're looking at is I know I know stretch gone, we're still working to get that.
As we move forward.
And I don't think our situation has any different from any other foreigners retail except perhaps.
Retail is because of its position on the coastal west coast barriers to entry job creation.
We probably have a better shot than most and we hope that time will prove that out.
Well and you're reporting earlier, so it gives us the typical you with questions first.
So.
Sure I'll RP or is it look and that's what adult those guys do.
A couple of quick close by May did you guys have you said are common share what percentage of your your retail tenants as for deferrals and what percentage of those your grandchildren and any color on consistent how meaningful they are in terms of the prevalence any signs or any parameters around what's your granting there.
Thank you things selling is going to answer that but I'll tell you. It's a war I mean, if I was a retail tended I'd say, what can I get away with.
And then as a as a landlord we say they can't get away with anything and that starts to negotiations. This war I mean, I don't know how to describe it otherwise you wouldn't describe it otherwise.
So it's not about right for you asked the.
And as a percentage you think you're probably about 50%.
Calm asking for something.
Come just there is a part I can call just some counseling see what's going on and what question I do.
But again on these deferrals as early as mentioned on every tenants.
John situation, you know when you get the big guys coming that has some strong financial statements. That's a much different conversation than if you take it down to the extreme you know to the nail salon, who hasn't seen a customer six weeks. So it all berries through it.
And we just got to work our way through it and we will work our way through it I would say the majority of them will make it to what I referred to tomorrow.
Certainly there's going to be some that don't get to tomorrow.
It's been no fun and I'd tell you I think about my career I wish I could have been stock analysts stands today instead of a private property managers because it's been tough.
And as I'd happily traded jobs right now.
I have great definitely.
[laughter].
Thank you. Thank you.
Thank you on next question comes from Todd Thomas from Keybanc Capital. Please go ahead, Hi, Todd.
Thanks.
So.
The.
Okay.
Hi.
Because theres some interference on the call.
I don't know what it is on has done.
Yes.
No no things happening feedback on is there.
Sorry, Todd Todd has a bad connection if you could hang up and worry about back in our next question comes from Tammi Fique from Wells Fargo Securities. Please go ahead, I Tammy morning, Tony Hi, Good morning.
Just wondering on going back to the deferrals that youre granting did you have a policy in place on payback period for those is it six month 12 month, just curious you have kind of us apart.
It's war every every armistice has a as a true street and its negotiated we want the money back as quickly as we can we have to take into account their willingness to give us.
It back is it can and their ability to cast give it back as quickly as we can so.
Certainly I think that varies on the tenants situation via the ability to pay.
I think it was cut covered in the script that it's mostly restaurants nail salons, who haven't seen a customer now in six weeks and then assessing what thereby building is going to be when it opens up so it.
It's so uncertain I've never seen anything like this.
Okay. I guess are you getting any indications from something that they will no longer occupied their spaces at this point.
No. It at this point I haven't.
I haven't actually received that from one of US great say one of the more meaningful tenet Theres certainly some independent tenants.
That are on the margins of our property that wont make it because they just didnt pay and we'll have to take care that when we're able to but I haven't heard for many big guys that we won't be there tomorrow and even little ones I Havent heard anybody throw in there thrown does not anybody's actually from nobody's thrown in the power they're all hopeful.
We're hopeful.
So that gives me.
Some encouragement that again the quality of our property locations will allow our retail tenants to continue to product prosper at least survive anyway.
And then I guess based upon your more conservative stance on liquidity at this point have you revised your Capex spending plans for 2020, I think originally with $80 million to $85 million, it's been done.
Well, we're looking at every nickel a funny that every nickel that goes out of here Bob drones and.
But we're not differing anything.
[noise] would be.
Reduce our productivity. So we're spending every nickel that we have two and not spending anything that we don't have too and we're trying to do internally. Some of the things. We would have normally hired to do Jerry you want to cover that well, that's that's absolutely accurate, but thats, where we are.
We're hopeful that it won't be.
What original guidance was on that.
It will be less than that but a lot of the capex of course is tenant improvement allowance and we have good tenants tens movies.
Silly not to exceed those projects on the other half these projects are getting delayed because the remains the permits are.
The municipalities are closed down so.
We don't know how much will spend because we don't know when we'll get to go ahead.
Thank you.
I guess, maybe just office wondering what your views are on segment.
If you think this Horst welcome home trial.
Disrupted teach office demand at all.
You know there's two schools of thought the one school of thought I here is that.
That everybody is used to working at home now, they're not going to come to the office. The other school of thought is that when they come to the office, they're going to acquire more and more spacing.
We found that not coming to the office is not productive coming in the office is product is productive. We all work together there is there is synergy.
And again your guess is as good as mine, but things will be different for sure I don't know, what they're going to be but they're going to be different I think certain types of businesses will go one way and others will go in other ways.
[music].
I don't know.
Fair enough alright. Thank you thanks, David Thanks Sammy.
Now Todd.
Got the dial in.
Yeah.
I think Todd gave aetna.
I don't so tall comments in the queue at this time.
[music].
With that I like to turn the call over to Mr. Ernest Rady Chairman for closing remarks. Please go ahead. Okay again I want to tells you how grateful we are far first of all for the great team. We have you have at 80 grateful for the great properties. We have the great look great locations, they're not going to get any worse, if anything they're going to get.
Better as as if this thing unfolds and on some of our competitors and not as productive. So we look forward to the short term with great uncertainty and the long term with great enthusiasm and thank you for your interest.
Ladies and gentlemen does conclude today's conference call. Thank you for participating you may now disconnect.
[music].