Q2 2020 Healthpeak Properties Inc Earnings Call
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Welcome to the health Big properties, Inc. second quarter Conference call.
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MS bought that Rogers Senior director Investor Relations Ms. Rogers the floor is yours.
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Thank you and welcome to help peak second quarter Financial results Conference call. Today's conference call will contain certain forward looking statements. Although we believe the expectations reflected in any forward looking statements are based on reasonable assumptions are forward looking statements are subject to risks and uncertainties that may cause actual results could differ materially from our expectations a discussion of risks and risk.
Doctors is included in our press release and deal in our filing with the FCC, we do not undertake no duty to update any forward looking statements certain non-GAAP financial measures will be discussed on this call and an exhibit of the 8-K, we furnished with the FCC today, we have reconcile all non-GAAP financial measures most directly comparable GAAP measure in accordance with like GE require.
Exhibit also available on our website at Www Dot helps peak dotcom I will now turn the call over to our Chief Executive Officer, Tom Herzog.
Thank you Bob Bad and good morning number one.
On the call with me today, or Scott, Brinker, President and CIO, and Pete Scott or Seattle.
Also on the line and available for the Q and a portion of the coal or Tom Klaritch, Our chief development and operating officer.
Hi, Mchenry, our chief legal officer in General Counsel.
To summarize second quarter, our results were generally in line with your expectations and in some cases better than expected.
However, we are now five months into the pandemic and it remains a great deal of uncertainty on its future penetration and duration.
Yeah, such last night, we provided an update to our 2020 earnings framework, which you can find on pages 44 through 46 of our supplemental report.
I'll start with their current state of play.
66% of total Q2, and a why what's generated by our life science and medical office businesses.
And inclusive of our small portfolio wall cover hospitals that total increases to 71%.
All these businesses have enjoyed strong leasing and steady rank collections.
And life science sector fundamentals are healthy as demand for drug innovation remains at the forefront, especially with respect to the global efforts to develop covert vaccines and treatments.
During the second quarter, the second the sector reported a record high in equity capital raised.
Our year to date leasing is already ahead of our original for your expectations driven impart by the strong development really seen we announced in our Boston and San Diego Submarkets.
And medical office or high quality, primarily on campus portfolio has continued to show consistent favorable results.
Bands and outpatient procedures have been lifted across all of our markets.
Both new and renewal leasing came in above our expectations.
At least retention ended the quarter in the low 80% range and we had high single digit mark to market rents.
11% of total Q2, and all I was generated by our CCRC portfolio, where attrition is much lower than shop due to the average eight to 10 year length of stay along with the nonrefundable entry fees in place.
Our independent assisted and memory care CCRC occupancy and results were in line with their expectations.
9% of total Q2, and a why was generated by shop.
Which continues to experience are very tough operating environment due to cold it combined with the inherent short length of stay.
However, monthly occupancy declined more slowly and operating expenses rose less dramatically then the midpoints set forth in our previous out what framework.
And finally, 9% of total Q2, and while I was generated by senior housing Triple net which also faced a tough operating environment, but rent collections have remained stable.
Moving onto our balance sheet and liquidity.
Simply put they both continue to be in great shape.
And our dividend.
Yesterday, we announced a remained at 37 cents per share, which is one penny above our Q2, a if that's all.
We will continue to monitor a dividend as corporate progress.
On the E.S.G. front, we have a decade, plus history of commitment to corporate responsibility and sustainable business practices.
In June we published our ninth annual yesterday report, highlighting our 2019, environmental social and governance achievements.
Well the second consecutive year, we were one of only five reach named a corporate responsibility magazines hundred best corporate citizens less.
We also have received Presby screen star rating for eight consecutive years. That's one of those leadership awards from C. D P and S&P Dow Jones sustainability index for seven consecutive years each.
So in summary, the majority of our portfolio is performing quite well with continued to take actions to improve our already strong balance sheet and have significant liquidity.
Our team is working very productively from home and we fully expect to come out the other side of this pandemic and even stronger company.
With that I'll turn it to Scott.
Okay. Thank you Tom.
I'll speak to operating results across the three business segments and finish with a transaction update.
In life Science, which represented 35% of our same store pool cash NOI grew 7.3% year over year above the high end up our outlook.
The results were driven by new leasing activity mark to market on renewals contractual escalators and rent collections.
Tenant demand for space is strong across all three of our core markets.
In to Q, we had 270000 square feet lease commencements driving occupancy up 260 basis points to 97%.
Our lease executions in the quarter included 125000 feet of renewals at a 15% cash mark to market.
And is 74000 foot lease at the Boardwalk, our flagship development campus in San Diego.
Construction began in the first quarter and the project is already 39% pre leased at rental rates above our underwriting.
We had one early termination in the quarter for 36000 feet.
We did proactively with a watch list tenant to expand with one of our existing high growth tenants.
Another example of the importance of scale in the local market.
Subsequent to quarter end in July we signed an additional 100000 feet leases, which included 20000 feet of renewals at a 22% cash mark to market and 60000 feet of new leasing at 75 Hayden in Boston.
That development project is now, 100% pre leased and outperformed underwriting on rental rates by more than 10%.
We expect to complete the interior Buildouts in Threeq you 21.
Hayden is arguably bostons premier suburban life science campus, giving it scale amenities and prominent location, you're the intersection of routes to and 128.
New leasing in July also included the final 22000 feet at our scripts Wateridge redevelopment in San Diego.
Great Genomics company urgently needed space to accommodate a call good testing mandate received from the government.
Our team was able to go from initial inquiry to a signed lease and just 14 days to when the business.
The pipeline as solid as well with 170000 feet under letters of intent.
The near term supply demand outlook in all three markets remains favorable sublease vacancy remains in a very low single digits and hasn't changed since coated and the new deliveries over the next two years are already more than 70% pre leased in the aggregate.
[noise] rent collections continue to be strong, including more than 99% in July well rent deferrals are de Minimis, just two tenants aggregating about $1 million of rent that's been deferred.
In both cases, a funny divan got delayed due to colgan.
Both tenants expected close their funding this quarter and to repay the deferred rats at that time.
We do have some lease roll that will impact same store occupancy in the second half of the year.
For example July declined 60 basis points from three known Vacates, we've already signed off or letters on about half the vacated space at 28% cash mark to market and.
And we have good activity on the remainder so there should be a short term but.
On the development front Kobin resulted in a one to two month delay at most of our sites.
Construction has now resumed and all of our markets and without any meaningful change in our underwritten returns.
Additionally, we obtained final entitlements at or one or one Cambridge part drive development West Cambridge.
We were able to permit the project for 160000 feet.
And could begin construction as soon as the fourth quarter.
We were successful upsizing, our entitlements to 130000 feet at our highly prominent modular lapse site on East Grand Avenue in South San Francisco.
<unk> gives us additional capacity to build on our leading market share and this important submarket.
Funding continues to flow into the biotech sector driving additional tenant demand for space second quarter was the highest on record for venture capital over $6 billion, while the public markets remain open to both Ipos and secondaries.
April through July there were 32 ipos in the sector raising over $6 billion.
No surprise that biotechs based in our three core markets at Boston, San Francisco in San Diego dominated the capital raising activity.
And help peak tenants accounted for five of the Ipos netting over $1 billion.
Our leasing success in rent collections combined with continued biotech capital raising success gives us confidence to increase our same store cash in a while look by 100 basis points to 45%.
With potential upside from their collections remain strong.
Turning to medical office, which represented 42% of our same store pool.
Cash NOI grew 1.3% year over year.
Which is 60 basis points above our expectations for the quarter.
That growth was driven by higher occupancy rent escalators, and 9% cash mark to market on renewals offset by Kobin related reductions in parking income and address.
We leased 1 million square feet in the quarter, including nearly 800000 feet of renewals.
Looking at July occupancy was unchanged for the month.
We're 20 basis points ahead of our plan year to date.
Tenant demand remained strong but.
But leasing activity in March and April did slow down for obvious reasons. So we'll likely see a temporary impact to lease commencements and occupancy in the third quarter. This was fully reflected in our outlook.
Wrench collections are stable and in line with our expectations at 99% for the second quarter and 98% for July.
To date, we approve $6 million in total rent deferrals, which we expect will be paid back monthly by yearend.
We delivered the 52000 foot on campus and we'll be at Lee's Summit Medical Center in Missouri.
Upon delivery it was 51% leased by each CA.
With active discussions on another 25%.
Construction on our remaining seven each year developments is progressing with three expected to be completed in the second half a year.
Our active pipeline is 49% pre leased to H.C.A., 8% under signed off the letters and 27% in active discussions.
We recently saw a third party report showing that peak, what's the country's largest medical office developer in the private sector in 2019.
We do development as an attractive way to grow the portfolio and the pipeline is strong.
In senior housing performance was better than our framework that we provided today due to expense savings and Cures Act funding.
Triple that same store NOI grew 3.2% year over year due to rent escalators.
Collected 97% tribal rents in the second quarter, but the other 3% deferred capital senior living.
Rent coverage after management fee was 1.02 times on an as reported basis.
Which is based on the industry standard of trailing 12 months and one quarter in arrears.
Rent coverage declined to 0.77 times for the three month period from April through June due to coated.
Shop same store NOI declined 39% year over year.
We incurred significant expense to help keep residents and staff as safe as possible under these extraordinary circumstances.
Occupancy declined 560 basis points due to move in restrictions and the inability to do in person to worse.
Operating margins in the high teens, there's a five to six times multiplier effect on and I lie for each dollar of lost revenue or increase in Colgate related expenses.
The trend in leads to worsen occupancy improved.
As we moved from April to May to June.
But these key indicators are still below historical levels and the sector has not yet return to business as usual.
Moving to CCRC as.
$12.4 billion of Cures Act funding only partially offset cobot expenses and significant declines in skilled nursing census, driven by low Medicare discharges as hospitals canceled elective surgeries in the second quarter.
Performance for independent assisted and memory care was in line with our framework.
Turning to transactions it was a quiet quarter by design as we were intensely focused on operations.
In June we did close on the previously announced the sale of three M. obese and San Diego for $106 million, where the hospital exercised its purchase option.
In addition, after a slow down from March through May the senior housing transaction market has become active again.
We're making progress on the number of noncore asset sales that would further rebalance our portfolio toward life science and medical office.
And now to our CFO Pete.
Thanks Scott.
I'll start today, where they review of our second quarter results provide an update on our balance sheet activity.
And finish with a discussion on our 2020 earnings outlook.
Starting with our results.
We reported FFO as adjusted 40 cents per share, but the second quarter.
We continue to generate solid growth from our life Science, a medical office segment.
Which grew cash same store NOI at a blended 4%.
When combined with triple that and our small hospital portfolio, you sports segment, representing roughly 90% of the same store pool grew 3.8%.
But as we expected this growth was offset by performance from shop, a minus 39% as we experienced a full quarter of cobot disruption, bringing total same store cash NOI results to minus 2.2%.
Our second quarter earnings were impacted by two important item related to go but.
First we experienced approximately $20 million worth three and a half and he's per share of elevated expenses and our shop and CCRC portfolio.
Second we received approximately $15 million for two and a half pennies per share in cares Act grants.
These grants were based on pro rata funding provided to all Medicare providers.
As a reminder, we do not adjust our same store NOI and FFO as adjusted or F out for these items.
Turning to our balance sheet.
In June we Opportunistically took advantage of robust debt capital markets to further improve liquidity and strengthen our balance sheet.
We issued $600 million of long tenure bought at 2.875%.
To redeem a total of $550 million, a bond with a weighted average maturity by about two and a half years and a blended interest rate of 3.7%.
It's transaction extended our weighted average maturity to over seven years and lowered our weighted average interest rate to 3.75%.
Following these transaction healthy next material debt maturity is over three years away in November 2023.
We ended the quarter with nearly $2.9 billion of liquidity and reported a net debt to EBITDA of 5.4 time.
Our revolver remains completely undrawn with two and a half billion dollars a borrowing capacity.
And our cash balance was approximately $350 million after factoring in the redemption.
$300 million a Bob we did in early July.
Suffice it to say we remain in a rock solid liquidity position and are well prepared to withstand the uncertainty you can kind of it.
Moving onto our earnings outlook.
Similar to last quarter.
Hey, just 44 to 46 of our supplemental we have included an updated outlook and earnings framework with detailed some important items to assist with your modeling.
Starting with page 44, there are three items I would like to point out.
First for life Sciences, we've increased our same store outlook by 100 basis, 0.24% to 5%.
We have experience better than expected leasing strong mark to markets and lower bad debt.
I would note that we're currently trending towards the high end of this range <unk>.
Dealt with so many unknowns, we feel it is prudent to maintain from Cushing.
Second for medical office, we have reaffirmed our prior outlook.
But important to note that we are also trending toward the high end of the range.
So, perhaps some conservatism and our outlook, but with uncertainty around elective procedures, we held our same store outlook constant.
Third for sources and uses we have increased our expected capital spend by $100 million as the Kobin related construction delays, we experience and the second quarter were shorter than expected.
At this point all of our major development project have restarted.
Prior outlook assumed a four month alive on all construction activity when the actual delays were generally one to two months.
Moving to page 45.
I will focus my commentary on what has changed in our August outlook relative to our May outlook.
Movies, we see a half any improvement due to stronger than expected leasing and lower bad debt.
In life Sciences, we'd see a one to two penny improvement driven by strong industry fundamentals and lower bad debt.
Well T.I. revenue recognition.
We see a wanting to have any improvement as a result of construction blade being shorter than anticipated.
As a reminder, this is an f. out impact on that.
Finally, turning to page 46.
Weve updated our framework for shop and CCRC.
Our shop, our estimated monthly net attrition improved by 150 basis point, driven by improved move in and no change to move outs.
And that impact of that is that we expect occupancy declined in the third quarter, but at a lower rate and the second quarter.
Or CCRC no change to our estimated bumping that attrition with our improved 50 basis points increase and moving being offset by increased move outs.
For senior housing expensive.
We expect incremental expenses to be zero to 5% higher which is a significant improvement from the 5% to 15% and our previous framework.
As a reminder, the earnings outlook in framework and the supplemental is based on our best available information as of the current date.
As conditions change and we are in a position to provide updated information we will make the appropriate disclosures.
Before going into Q1 AG I'd like to point out two additional items. We included in the supplemental this quarter on page 29.
First.
We have included a footnote detailing the preliminary occupancy and EBITDAR coverage for our triple net portfolio as of the 12 month ending June 30 2020.
In accordance with standard industry Convention. This data has historically been disclosed on a trailing 12 month basis and one quarter in arrears.
Second we have included a new column with the straight line rent receivable information by operator.
In the current operating environment, we felt the additional disclosures would be helpful.
And with that operator, please open the line for any questions.
Thank you Sir we will now begin the question answer session to ask a question time at par Star then one on your touched on some.
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During the question. Please press Star then too.
So that everyone may have a chance to because freight yes. The participants please limit yourself to one question I missed a little follow up if you have additional questions. Please we answered the question Q.
At this time, we'll just pause momentarily to assemble roster.
The first question, we have will come from Jordan Sadler of Keybanc.
Right.
Thank you and good afternoon, good morning out there.
My first question pertains to seniors housing operating portfolio I'm curious about the deceleration in July move in the didn't speak to what you're seeing there specifically.
And then yet same contract.
Just just noticed you know in adjusting the 80 see a down 150 basis points sequentially I'm on a monthly basis. It seems like June and July performed better than one what you're sort of guiding toward.
Or you know your and your outlook. So if you could speak just both of those two trends.
[noise] I hate Jordan Scott here.
I'm happy to take that one a couple of things to point out no. One is that June was particularly strong I'm of course, that's your relative term in today's environment, but if we look at April and May or June was substantially better our move ins and June were.
More than 50%.
May and April.
Similarly leads into orders were up pretty dramatically.
From April and May a in the month of June So I think that's part of it as the June was just a really strong month. Its one reason that the move ins were down a bit leads into words were down low single digits versus June so not a significant change it was more than move ins. Fortunately move outs continue to decline. So we said.
Three consecutive months now they move out to have declined that's obviously a helpful and the other thing I would point to is that we did have an increase in corporate activity no surprise in very late June into early July.
Particularly in Florida, and Texas, California, where we do have a presence you know the good news is that the activity has started to trend down in recent weeks and similarly in our portfolio. We did have occupancy in the second half of July that was stronger by far the first half the July so.
I think that the trends are actually better than what maybe shows up on that page and important to note that we did improve our framework pretty significantly to the upside from from the prior framework in terms of net attrition comedy either.
No I think you've got to Scott.
Okay and.
And then perhaps as a follow up.
I'm curious about the dividend, yeah, so and it looks like.
I just did that the per share math on a if that though in the quarter I can get worried about 36 cents.
37 cents dividend the trend here in senior housing seniors housing simply being you know what do you saw in the balance in here.
Correct me, if I'm wrong, and while that supported by 70% portfolio, that's been pretty stable the strong.
Yeah, you're already starting from a standpoint here in second quarter, but we seem to be in line with the dividend what is sort of in palm I heard me. Your comment you know you didn't say that you would set the dividend continue to monitor what's going on.
Kim maybe the speak to your expectations surrounding the dividend or how you're thinking about it for the balance of the year.
Yeah, Jordan I sure can.
Ah you started it correctly the dividend was one cents higher than our asset for which I acknowledge.
As I've said as I said last quarter, we're comfortable for debit and modestly exceed or an AFFO for some period of time, because it just isn't going to be that material on an NPV basis.
But I will say that if the virus remains a protracted issue.
Of course, we will need to go back and revisit our dividend in order to protect our credit ratings and our liquidity.
And Ah. So accordingly, we're going to continue to assess or dividend as the conditions unfold, but as of this quarters. We is we Ah that with our board and discuss that we felt comfortable with our 37 cents dividend for a this quarter.
We would you be comfortable sort of overpaying, it a little bit rather than sort of moving it around like we've done today bird anterior it did you know by another 10% sequentially.
Or are you kind of more cognizant.
And.
Yeah, I'm, just trying to think of how would you way sort of wanting to maintain the dividend versus.
No I'm.
Turning to align it more so yeah cool caftwo.
Well I mean bottom line is it it's Jordan it depends on how long we thought this could go.
Our liquidity and our credit rating we consider.
Vital ER in order to be a blue chip Reid in our sector, we think triple B plus beat able beat up late one is is is very important. So if we felt this what's going to go on for a long time, then at some point it will put pressure on net debt to EBITDA and we have to take that into.
Account at the same time, if the virus resolved itself more quickly or senior housing.
Recovers more quickly the other I mean, 71% of our business as you know is doing fantastic. So it's really just senior housing and more specifically shop, which is 9% of around a lie. So if that if that does recover more quickly than we'd be in a position where we wouldn't be covering.
Were you would it would not be long period of time, and that's less concerning but if this goes on a while then we would have to consider what actions today.
That's pretty thoughtful Pittsburgh.
Thank you.
Next we'll vikram Malhotra of Morgan Stanley.
Thanks for taking the questions and hope everyone is well unsafe assumed a pretty tough environment I'm just maybe on the on the Triple net side are you know the brookdale coverage, which is in arrears trended towards one on an EBITDAR basis. So I'm just wondering can give us some sense so any potential.
Conversions restructurings or you know a few Pete it's it's you're going to keep things intact for now given kind of what near term Corbett trend Darren performance of broadly senior housing just give us some sense of this that the triple net business and if you could just clarify on on tripling that the are you gave you gave a info.
Commission on a on straight line I'm just wondering if you took any right also reserves.
That sounds good Vikram. This is Scott I'll start and then I think Pete and or Tom may have some.
Commentary as well yeah with Brookdale you know we've worked hard over the past three years to.
Bring that concentration down all the way from the mid Thirtys to about 6% today.
And most of it isn't that triple net portfolio, it's about 4% of our and why today around $40 million per year of rents. The most recent transaction closed in February where we basically cut that portfolio in house Oh, We think we kept higher quality portfolio in terms of location.
And performance at least historically or it is a master lease now with more than seven years left on the terminal corporate guarantee so from a security standpoint, or a much better positioned today than we would've been historically in addition to the size just be a much smaller yeah. We think the right coverage in a normal operating environment.
It is sufficient, especially given the security about master lease in the corporate guarantee but we've got a good history with Brookdale now figuring out when when transactions yeah if that.
Uh-huh, where the situation required it but we're comfortable with where that triple net leases today and there's certainly no ongoing discussions to do anything differently and shopped and not be on that list in any of that as an alternative Pete you want to cover the accounting question.
Yes, sure Hey, Vikram. Its good question, you know look I'll just broadly copper.
Right all its generally you know given the strong rent collections and life science demo bees and hospitals. It seems that any future write offs are unlikely to be material.
Oh, no triple net senior housing side as we said on page 29 of the supplemental we have around $45 million a straight line rent balances and that's really just aegis, it 6 million and Brookdale 36 million and fall off what Scott said, we've been very proactive the last couple of years to improve the quality of the ASP.
Said and the coverage of this portfolio.
For agents were still well covered and while it will continue to decline with coded. These are good assets with a very strong tenant and reasonable rents that are supported the long term.
For Brookdale, you know the coverage on those assets its bit tighter than than aegis, but we believe the liquidity behind their corporate guarantee is sufficient to get then asked the worst at the pandemic. So that's our view on the Triple net portfolio there and of course will continue to monitor it closely as a depend demick unfold.
Okay. Thanks, and then just my follow up.
On the on the shop side, maybe correct me, if I'm wrong, but I think you mentioned in June as June was better than you know it for them. They definitely I'm just wondering your view on how July shaped up versus your expectation given the moving never see move in numbers seem down both for CCRC, then Chris Shaw.
Insensitive down another 101 hundred plus basis points can you give a sense of how these have shaped up relative to your expectations and related to that.
Given the Keith loans have increased in several states. What are you hearing from operators in terms of the need to have broad shut down to the ports to targeted kind of shutdowns in terms of moved ends.
Hey, Hey, Scott I'll take that as well yeah.
A lot of this was also covered in the discussion with Jordan, but it's important that take a step back and they talk about it results in July.
And maybe a broader sense, because we do far exceeded in July and that attrition from the original framework that we provided in May and we also exceeded the framework. It would just provided today in the month in July and the results in June were actually extremely strong. So we won't get your lives.
<unk> isolation I didn't say April or May you know shop, moving up more than 60%.
In July versus April and May and then CCRC Jesus.
It is in June were more than 100% Oh, the move in activity in.
April and May So you had huge activity at quarter end in both portfolios that have been reported a month ago. This page would have looked dramatically different and I think it just important to keep in mind. You know, we've always said that it's tough to talking about the senior housing business on a quarter to quarter basis.
Today's just isn't in Austin and now we're talking about it on a 38.
Yes, I mean, it just becomes very difficult, but you know we reported the numbers. They are what they are but I think it does require some context on because we still feel like the trends were fairly positive.
Why we changed our framework and importantly, the Colgate activity.
In those three markets I talked about has started to come down in some cases pretty dramatically in Florida.
No I saw that the caseload are positive tests yesterday were 50%. They were two weeks ago. So you know there's some very positive trends that you're not just if you take a step back.
I think it becomes more evident than just focusing on that one page and month over month data.
And and and just on the operators did.
Well go ahead I'm sorry.
Just to make my question just on the operators and how they're thinking about.
Move ins in states, where we've seen a pick up in covert cases.
Yeah. So that was a July 31, CCRC anywhere at 93% exception move ins hedge property, 86%, that's definitely slightly better than where we were at the end of June so from that standpoint, we're in better shape today, we were even a month ago.
Okay, great. So just to clarify that even though cases that picked up in say, Texas, and California, and Florida. The operators you know just businesses open and they're not needing to shut down either because they just understand how to deal with it or maybe the demographics are different but you're not you know recently you haven't heard operators say over.
Dish, we need to have company wide band again.
Yeah, that's correct and I would just make sure. It's the past tense you know had when you're talking about Jacoby case, because it really wasn't really July the current.
Steve is that they've really started to decline pretty dramatically.
Okay. So I'm here the last half the July was actually much much better for us than the first half that youre.
Great. Thanks, so much.
Thanks spectrum.
Next is not DOSA I'm city.
Oh, Thanks, Rocco, it's Michael Bilerman here with Nick that Scott I want to pick up on one your prepared remarks, where you talked about a number of noncore asset sales within senior housing that would further rebalance your portfolio towards life Science and medical office two of the stronger areas within the healthcare sector or sue.
I guess, how much are you planning to sell and I guess strategically is there a thought process of the larger type of transaction that would you completely exit out of the senior housing business and be a focused life science and medical office building rights I don't know, how they see Rcs will play into that or not.
Can you sort of talk a little bit about how you're thinking about portfolio construction different from where you know I'd say a year ago, you're probably in a third a third a third type.
Structural.
Nick up I'm going to take this one this is Tom Nick Nick and Michael.
Let me describe it this way we intend for the majority of our future growth to be in.
Life Science and medical office, which are already accounts for the majority of our asset value I think as you know and as we pointed out our in Hawaii attach cap rates that you could you could easily compute that the majority of our asset values in those businesses.
The development of life science, and our relationship development with them obese.
He has become more and more an important part of our real story.
On the senior housing side, we do like that CCRC play.
The eight to 10 your length of stay that high barrier to entry the.
Average campus size at 50, plus acres, which makes it virtually impossible to how much new supply ever come up against that we do like that play.
But it it's our view that trap and triple net have become more and more challenging place for public Reits.
Yet it is.
I still feel strongly as does our team that this real estate is still going to remain vital long term.
There will still be seniors that have memory care needs or daily living needs and senior housing provides those services.
Yet we have sold $5 billion of senior housing over the last four years, and we had disposition guidance of another half a billion and our original 2020.
Guidance and we haven't had some inquiries from from a number of P. players independent on pricing you could see us lighten up.
I bet, but I will say, it's too early to comment on that at this point. So I'll just leave it at that and Michael.
Right. So it it could when you think about the development of the acquisition side awesome abuse in life Science.
And evaluating potential buyers that would take a larger subset of your senior housing portfolio that strategic shift.
Driven by what's happened independent Mick could become a reality.
I think it becomes as we go forward, where do we want our growth to be and that is in the M. Ob and life science businesses.
And Oh, we do like again, the CCRC, but it's hard to grow very quickly there because they rarely trade and.
On the shopping trip on that side, that's not an area that we're going to focus as much growth as to what takes place a if we lighten up a bit more that's yet TBD.
Nick if a follow up too thanks, Yeah, Scott in your opening comments you mentioned that the senior housing business is not active business as usual.
Do you actually expected to go back to business as usual before there is either a vaccine or treatment or I can tell them.
Expect continued disruption.
Hey, Nick It probably is until there's a vaccine before were truly back to business as usual.
But we're getting pack in snaps or phases as of today just over half of portfolio.
Is it least allowing some level of activities again use of the challenge of the pools Om group activities. It's just done on them much more limited basis with small groups, but at least the residents aren't corn seed in the rooms anymore for a good portion of the portfolio. Similarly at about half the portfolio.
It was now if you read dining again as opposed to just eating into rooms, but again, it's being done with reservations and social it's insane and smaller groups seemed like visitation, which is obviously are really important part here so that family and friends can come visit.
Their grandparents your parents the case, maybe and again, we're at about 50, 60% of the portfolio is allowing some level of visitation. So that's a huge improvement from where we were two months ago on those important things, but until we get back to 100%. It's hard to say that it's business as usual and it does feel like.
Okay scene is kind of be the ultimate SAP and getting business. There now that being said clearly the industry and our portfolio in particular has to be enormous strides with just dramatically improved testing over the past three months. That's made big difference as was the fact.
<unk> normal part of a business at this point. So there have been actions taken that have allowed the portfolio to get at least closer to normal operating environment, but we're not there yet and I don't think that's going to happen in the next 30 days, but.
The drugs industry is making pretty dramatic progress I'm, almost 30 different potential vaccines in human trials. So it does feel like there's optimism that the normal operating environment is although not 30 days away, it's probably not a year away either.
It's on anything that you would huh.
I think you cover almost everything I would have said it would be two things I would add Nick.
[music].
One of the things that we've noted and this goes back to what I said before what does business as usual or back to usual up there is a waiting in line at many communities.
Yes, yes, they reopened as they were neat based seniors or that's just really could not effectively with <unk> live at home anymore and so.
That that became a factor and the concept of virtual marketing is something that allows a effective.
Video tours virtual tours that take place so that's not back to usual, but it's a it's a whole lot better than just having communities closed off as they were for a period of time last quarter.
Thank you.
Thank you.
Next we have rich Anderson SMBC.
Hi, good morning, everybody.
Thanks for all the detail usual.
So I guess a question for whoever.
When you think about the spread that has happened and you know perhaps.
Hi to sort of change your radar screen about you know where problem for existing Florida, Texas, and California mentioned and hopefully you're right Scott that we are getting close to.
Recovery, there as well, but in the absence of that I think a life science. He got a lot of clarity there medical office clarity you know you think third quarter occupancy and shop will decline of a slower rate.
I'm wondering if in your mind it on the topic of guidance.
Well what could you provided some some more concrete guidance if not so that the Florida, Texas, California situation, where you almost ready to do that except for the for that that variable that entered into the equation.
And and I'll stop there and see if you can respond to that or it's just still too so even in that case.
Hey, rich, it's Pete here, maybe I'll, just add to that I mean, obviously our outlook in framework is pretty detail and it basically on the best information we have as of today.
To your point, there's still remain significant uncertainty around co bed and that could result in delays in elective surgeries construction admission bandit at senior housing communities, all of which could impact our results in its basically unknowable at this time so.
We made the decision to update our outlook in framework as opposed to reinstating formal guidance.
Okay.
And then on the topic of elective surgeries.
You know that became the conversation is for medical office and they May June when they started to get turned on again has that sort of reversed course on you have you seen that starting to turn off and if that a forward thinking issue within medical office that.
And that that could be a sort of a reversal to the negative.
Hey, Rich this is Tom Klaritch.
We did with the rise in cases in June and July.
We did see a little bit of limitation in the hotspot areas of Texas, Florida, and Arizona, but not all of our facilities restricted admissions. It was really based on what capacity. They had in there in their hospitals at most most of our affiliated hospitals kind of had 20% 15 per se.
Capacity. So we did see some restrictions on inpatient what did happen, though is there were no restrictions on outpatient procedures. So many of our tenants actually saw benefit of procedures being shifted from the inpatient side too to outpatient you know either in our physicians offices.
Ah ambulatory surgery centers or hospital outpatient area. So you know why there was some decline on on the inpatients like we saw a benefit on the outage.
Okay, great two questions I promised.
Thanks Rich.
And next live or John Kim of BMO capital markets.
Thanks, Good morning, Scott on the asset sales of the noncore senior housing can you discuss how pricing has changed either on a cap rate or price per unit basin.
Yeah, it's hard to say because that noncore sales.
That are underway really arent trading on a cap rate basis anyway.
They are more trading on a replacement value or price per unit basis. So I think it's hard to say from a practical standpoint, otherwise going to be a lot lower or would it then say six months ago for at least the next 12 months or so so there's just a present value of money concept that would impact.
Valuation and then presumably some of it goes risk premium to get back to the original.
And why but some to really to comment on whether or not.
Valuations are more stabilized products it changed meaningfully because at least at this point, that's just really not what we're selling.
Okay, and then Tom I guess just following up on.
The you know what seems to be your second strategy toward lifetime going in there will be.
HM can you just maybe elaborate on what is or what will be the tipping point to make that change final is that the potential impact. It has on your credit rating because you said.
In your prepared remarks, that's something you really value.
Or is it really just you see a slower road to recovery for shop, and well with anticipated.
And then they cut.
Let's hit or two separate things.
Johnny the credit rating.
[music].
In both the leverage at the company the net debt to EBITDA and whether there would be de leveraging required us to cope with went on for a long period, we've modeled that 18 different directions to make sure that will be ahead of it and not chasing it if it if that occurs and it may not we hope it doesn't but if it does we'll be ready for it so.
That's one item as protecting our.
Triple B plus speed up the beautifully one credit rating.
And as to the.
The portfolio reallocation, that's just depends it depends on the direction of where the virus goes up how much government stimulus wasn't that becomes a part of a healthcare real estate that is is a more government reimbursed weather.
That impacts how we think about it.
How long that recovery is it fair to say if we concluded to long term recovery or we may very well choose to play through that that might be the answer but if the price in a strong its something that we could choose to lighten up a bit more that's just all TBD. So we don't we don't have an answer on that yet.
But something we're just at least a aware of and paying attention to and so we'll see where it goes.
They'll get me too thank you.
Thank you.
That's live Michael Carroll with RBC capital markets.
Yeah. Thanks, Tom I cover that touch on their your last comment regarding a seniors housing grants I know that I'm. Your seniors housing portfolio that has some more government reimbursement 30 got some some funds I guess do you expect those specifics me. So we'll get a fun are you hearing on the.
Broader picture of will private pay senior housing facilities could they potentially get stimulus.
Hey, Michael It's Scott I'll I'll take that one.
The industry trade associations and some of the big operators are certainly lobbying to get funding.
Private pay senior housing.
I don't have any better information than anyone else as to what the government is ultimately going to do from a fairness standpoint. It does seem appropriate given that the government has provided stimulus to a lot of different businesses that senior housing would be on the list.
Given the profile of the.
Communities and the residents in the fact that the industry's taking pretty dramatic actions on both the cost side as well as the revenue side by shutting down admissions in many cases to protect residents that it would be the beneficiary of federal stimulus, but as we sit here today, we can't see.
For sure that there will be any stimulus or how much or when Ah, but there's certainly actively lobbying for that stimulus.
Okay, and then then your assets that gum got government reimbursed. The cares act funds that you read that you kind of reported in Twoq you. There's nothing that was received in July or August to date right.
That's correct the funding is from the second quarter.
Okay, Great and then just real quick on can you mentioned talk about.
The senior housing tenants I think goes what each are a theyve requested a deferral I guess earlier during the attack both.
You made that comment your prepared remarks, but how are you thinking about that specific kind of and do you have deferral discussions going on within.
Oh, we do not have any active dialogue with them. Unfortunately, that's one that we were.
Proactive and got into that more than a year ago. Historically, we have 15 buildings.
With a trade today were down eight because we've corrected we redeemed at least in a pretty dramatic way to get rid of the lower quality properties is wants to combine all the properties into a single master lease with a 10 year term and improve our corporate guarantees so we're much better position.
Hey than they would has done a year ago a dramatically. So fortunately a that being said on the entire senior housing portfolio. We're watching it carefully so no active dialogues right now about rent deferrals, Oh My God.
Okay. Thanks, guys.
Next we have Stephen Bala quiet of Barclays.
Oh, Thanks, a lot hobby.
The question.
Yeah, let's say the point datapoints on a five point exactly all Rodney occupancy et cetera, and with the move and projections on that.
Okay.
Do you assume that they are center properties accepting move in stay about the same.
Throughout the whole corner right out 86% of property within shop at night.
Alright.
No that increase further into it.
Projections on flat.
Hi, Steve Scott here.
We do not need to have a higher percentage of communities open for moving to hit those projections.
In fact, we exceeded the framework in the month of July even though there are some questions about whether July was a week month. We just finished the month for both CCRC and shop, how does the framework. So we're not anticipating were expecting a big improvement in that presented in order to.
I mean this framework.
Okay.
And then maybe just as a quick reminder, as far as the various policies in place that trigger a wind facility discontinued the move and when they were once again, except.
I don't know if it different operator, operator or state by state, but maybe just I'm sure that some commonalities, maybe just give a little more flavor of.
Right right now.
Right.
Well the ultimate decision.
It is the state and local health authority, they could make the decision to house property goes down can do admissions, but assuming that that does not occur.
It would be up to the operator and there were some consistency, although it's not 100%, but in general it's based on a the amount of Colgate activity inside of the property or the percentage of residence and were staffed up but also with the timing and whether it was three days ago.
14 days ago, and then secondarily the activity in the local market for the population at large goes or do you have to wait the three things that most impact whether or not a properties open to see.
I got the final quick follow up just on that last point that would be but it's really that are not accepting move in yet.
Ah that remain or how much of that is sort of you know forced by a state policy versus kind of more voluntarily.
There.
After that we enjoyed one side of the others are the remaining ones that are not.
Yeah, it's a very small percentage now that is being dictated by the state or local systems. It. It's it's primarily the operators decision based on their own sticky policies.
Okay. That's perfect. Okay I appreciate that color.
Next we have Daniel Bernstein of capital one.
Hi, good morning.
[laughter] excuse me.
Nobody's really touched on margins, yet so I wanted to.
<unk> back to that I mean, you had one shop margins are a good shop NCC expenses were only a 1.6% persist I guess to five to 15 wanted to understand what was behind that and has that continued or into Threeq. You were been impacted by some of the increase in coated.
That we've seen in Texas, Florida can kind of how you're thinking about margins for the rest of the year. Thanks.
Oh, Hey, Dan, It's Scott, I mean margins or more likely than not.
Going to decline although for the framework, we just put out it's going to be more driven by revenue.
Oh, good occupancy in particular, then by expense.
And the framework in May.
It would be a pretty even balance between expense and revenue that was causing how to watch decline NAS. It's turned down the expenses have not increased by as much as we thought that's obviously good we are spending a lot on supplies <unk> in particular.
But testing, although we're doing it in a pretty dramatic way across the portfolio has not been cost increase because in most cases the stage either paying for directly or insurance is paying for it. So we haven't seen a huge increase there a which is good on the other thing is we have had pretty substantial savings on.
Repair and maintenance as well as marketing, although that will start to ramp there.
Now, but certainly the number of conditions that are being paid is lower than it had down in the number of activities from marketing standpoint has declined I'm just given that it's healthy darn virtually at this point. So we have has good success on the expense.
<unk>, but because we still expect occupancy decline roughly 150 basis points per month.
The point that our framework there is that multiplier effect that I mentioned on the earnings call. It's just a mathematical reality.
For Newport, 40, which today in the same store where in the high teens I'm in for the portfolio arch where in the mid teens.
So we didnt that's gonna continued to come down commentary can you walk down.
You know, it's kinda I think you completely covered that and I think this goes without saying, but Ah.
Obviously with the outsized impact of cobot.
I'm shop, the natural place to want to talk is it's about the shop result.
I, just remind you guys, 71% of our portfolio's life science that movies and hospitals that are doing fantastically.
Tcrs he's have a far far superior outcomes, and then shop does due to the length of stay and I would note due to the diversification in our portfolio mix.
You should note that our first half same store results across our entire portfolio were plus.
1.4% year to date. So it just it just does highlight that don't forget to look at the overall makeup of our portfolio, but I think you all know that but it's it's probably bearing in mind and yeah. I know you have other questions and they can be shop related but I thought I would throw that in like it was it was top of mind no no.
Actually my my other question his life science related well, there I guess, Oh, I again, just trying to switch it up versus what people are asking.
Actually [laughter] well did want to ask about the the mark to markets are very obviously work seemed very strong right now in life science. So.
Looking out to to 21 22 in some of those expirations how are you thinking about the mark to market.
For those at this point.
Yeah, the mark to market across the portfolio downturns in the 10% range, but it does vary by year.
Depending on the particular these that matures. This year was expected to be a strong mark to market year has been today were 15% and the first quarter, 15% here in the second quarter and we're off to a great start in July as I mentioned in the prepared.
Remarks, and we'd expect that to continue.
2021, we do you think is another year of positive mark to market, although maybe not quite as strong as this year, but so much of that.
Of course on whether or not certain leases are renewed and strength of the market at that time struck a little bit too early.
Comment with a specific number but we do you think it's positive now as you look up to 2022 and beyond I think it's just too far into future to comment which have to see where the mark.
Okay. Okay, I do have about an hour worth a shot questions. So [laughter] maybe knows.
Thank you [laughter] [laughter] take care. Thanks.
Next we have Lukas Hartwich with Green Street advisors.
Thanks, Hey, guys I was hoping you comment on monthly shop in a why decline since April that somebody could provide.
Or at least the range.
Oh, Hey, look you said Scott in websites meeting.
I'm just curious, though John you know.
How did in Hawaii or decline or in April May June July.
Whatever you can provide enough front would be helpful.
Yeah. It was certainly in Hawaii has declined sequentially because we've continued to lose occupancy from month over month for that part is clear, but in terms of the degree.
Got to change that most dramatic month was April obviously, when we lost almost 400 basis points occupancy and you compare that to June and July where at least from in 80 standpoint. It was question is 50 basis points in July so the rate of decline has come down pretty dramatically, but we're still.
Oh, losing and why obviously with occupancy phone.
Right I'm guessing that April result was also driven by the higher than.
The other months in terms on the Opex fund is that fair.
Ah, yes, but not dramatically so okay.
Great and then the a the other question I was just on <unk> pre leasing progress at the Boardwalk development in San Diego can you remind us what you expected stabilized yield is for that project and has that changed at all.
Hey, Lucas this is.
Tom Klaritch the the yield on the Boardwalk prop project give me just one second.
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If such small letters here just taken me a second.
It it looks it should be around 7%.
What's your expectation.
That's probably jump.
Yeah, it's its just under 7% of 6.8%.
Great. Thanks, so much.
Sure.
Yeah. The beauty of that one was was there was a good amount of preleasing that ended up occurring so.
That was a positive.
And that's what I've Tayo okusanya of Mizuho.
Yes. Good does good morning, everyone. So my first question in the senior housing portfolio.
Got you on the elite a move out a declining I guess the question I have is you would think is your housing. There's that's kind of a natural attrition that happens in that business because of the age of the resident.
And your recent numbers seem to kind of into at least some of the from a occupants perspective seems kinda suggest that.
Backlog of attrition that I would've expected given that they typically live there from 30 to 30 to 36 months.
I've got doesn't seem to be showing up in your numbers, because youre youre baking your occupancy numbers kind of dropping a little less.
Kinda like that.
2% to 3% drop you would expect every quarter.
<unk> yeah. He <unk> I might ask you to rephrase the question I I wasn't.
Exactly sure so I'm not so I'm just trying to understand you know if not much of happening by we Americans.
And there's a natural attrition that happens in the portfolio from move outs given again the age of the residents as its typically there from 34 30 to 36 months you know I would have been expecting kind of occupancy drops of about you know 300 about 2% to 3% a month.
But you occupancy drops to kind of coming in much less than that is that just because I see some movement up or a activity or alright, you know yeah 'cause your move out after you seem to be getting better and I just don't quite understand that if you should not be using 3% per month naturally.
Yeah.
Do you want to comment I can just jump in quickly Oh that.
You working to get Lumpiness in the actual results number if you were looking at the.
June and July results from what we put out today and previously it's not going to go in a straight line, but to put this in the most simple terms in shop.
When you've got a let's just say to your average length of stay for a portfolio.
You're going to have about 4% move out attrition.
Per month, and that's going to be relatively consistent it but it's going to bounce around from one month of the next just based on natural.
Discrepancies between months, so we haven't changed our view on that for shop.
So that's if that's your question, which I think it is up the actual activity that you're seeing is going to defer a bit from what we know will be a mathematical outcome overtime and then the big driver becomes how much what are the move in that result, as a result of the marketing the virtual marketing that we're doing and the waiting.
Line that occurs for neat base seniors as they desire to move in and the ability to move them in as those properties are open that's the much bigger driver that will dictate the net attrition for ultimate stabilization of those properties. It's got anything you would that come along.
Hi, just to clarify tyres question about move ins.
You're not zero the original framework was zero to 2% per month. It move in activity. We just increased that to 1.5 to 3.5 per cent per month. So that's below that.
Store collaborative which is closer to 4% per month, but it's certainly not zero. So there is positive move in activity today.
Great that's helpful.
Lastly, just a broader question again, Tom your comments earlier on just about.
Again, the longer this goes on and as more uncertainty I mean, you know you would have to kind of.
Reassessed did with it and against that kind of backdrop I mean could you just kinda talk about maybe a little how about 2021, but you do kind of end up in a world where you know the fall.
Well, Oh God forbid, but if it's not the was that kind of live in and how does one really start to really think about the the kinds of your business that is kind of having the impact but.
Bike, who bid heading into 2021.
Well.
But first let's hope that.
But this has a fast a quicker resolution, but none of us can predict that and that's all we put our framework out.
Your question is very fair one.
What happens if this becomes a protracted problem.
And as I stated earlier or our liquidity and our credit ratings, we consider to be quite important relative to a blue chip Reid.
And so we would revisit.
Our leverage and our dividend as necessary to.
Maintain the strength of of the right hand side of our of our balance sheet and our liquidity.
I would expect that.
Many many high quality rates would be that especially any of those that are in sectors that are being heavily impacted by cobot, which are plenty of us are going to be doing the same calculus. So to me, it's just responsible management.
To stay a step ahead of this and not get behind to a point, where all once we've got credit rating issues. We've got liquidity issues, we're not going to let that occur. So bottom line is all I'm doing its acknowledging yes. If this becomes a protracted issue you can expect us to be doing.
Lots of analysis lots of execution with clear disclosure as to what we're up to and why Bottomline.
But that's helpful. Thank.
You bet thanks, though.
And next would have Josh let done a lot of bank of America.
Hey, guys. Thanks to the question I guess I just wanted to touch base on a common I heard for God and prepared remarks about.
Life Science, I think it related to the same store NOI.
Sounded like you.
You could see some upside from that 4% to 5% range ran collections remain strong curious on what do you kind of.
You did it in there for I guess the back half of the year on Iran collection.
Trying to get a sense of that maybe the upside but that could be in there Frank collections remain high.
Yeah, Hey, Hey, Josh that was a comment in the prepared remarks and that is the primary source of upside versus the 4% to 5%.
Outlook I hesitate to give a specific number just given.
The reality is you know discussions with.
But I would say, there's at least 200 basis points of of potential upside there depending upon her success you know what it nearly 100% rent collections in the month of July pretty pretty incredible and only ended up.
Referring ranch or two tenants a million dollars you'd be accurate, it's really small numbers and that's really a credit to the team spent an enormous amount of time on this topic in March April may really into June so that we ultimately only had the two tenants with deferrals and there was a significant as long as analysis done.
To make sure we were comfortable providing about different you know from either companies in growth mode, and they need to raise capital under the middle of capital raising we think they'll get home based on discussions we've had and at that point tourettes would be paid back. So there's still a lot of Oh, so five months left to the year. So.
Really could comment on specific numbers, but there is the potential upsides to the 45%.
Okay, Yeah, no that's great great color I appreciate that Scott.
Maybe give me one more for me.
Yeah.
Yeah, I think it's kinda touched on with maybe some other questions.
Yes, it a different way I guess or would you mentioned I guess moving declined in June July I love that maybe it was driven by Florida, Texas.
Or the west move in relative to kind of a month ago is that driven more by folks they need getting a little bit more nervous about putting their loved one in a senior housing or was it more.
Just.
Senior housing communities, maybe not being.
Well like opening two new rather than to that point, because they've got a case or too.
I think it's more just a reality of.
People.
Moving around Wes when there are periods of outbreaks I think all of US being quoted probably you included tick extra precautions when the local community you've seen a high number of cases and it just leads to less activity period, <unk>, obviously had a pretty dramatic move to.
For senior into a a senior living community. It's not one person that's making that moves there's an awful lot of activity attached to that decision and if you can wait a week or two weeks I think it's just much more likely that you would do that given the choice I think it's more related to that.
It wasn't that we had a huge percentage of our communities that all the Sunday in early July could admit residency that that's not what drove that I mentioned earlier, we're actually.
A higher percentage today that are actually Rubinstein, we didn't do each year and I think it's more just the amount of activity in the environment in particular, the people, making the decisions, which is usually the adult children and not just senior themselves.
Great. Thanks, Scott appreciated ever.
And next live so that type of JP Morgan.
Hi, good morning, Uh Huh.
On for Mike Miller.
One question on my end, Oh could you talk about occupancy cadence or in the second habits July.
Oh sure Scott speaking in the shop <unk>.
Portfolio. We ended July with this spot occupancy that's exactly in line with the average daily census for July So that suggests that the second half. The July was actually a very strong move in activity or your move out so although we did decline in the month of.
Do you like most of that occurred in the first half a month and then we recaptured.
All of it in the second half of them on so you know that was a positive and the CCRC portfolio was similar.
Although there was a 20 basis point gap between the spot occupancy and the average daily census for the month. So in both cases. The ended the month saw positive momentum enough in shop to completely offset the first after the month, but not quite then CCRC, but nonetheless, clearly the second half was more.
Were stronger than the first half Sir.
Tom Claire action and and Scott, maybe maybe mentioned the Inmobi in life Science.
If I didn't see as well.
And those are much bigger businesses and also driving our results dramatically Tom maybe on M. obese first.
Sure.
I never be were actually our leasing activity has been very strong for the year, we had great commencements in the month of.
In the second quarter at a million square feet versus 600000 in the first quarter. So that's done very well our occupancy is about 70 basis points ahead of where we expected it to be a now you will recall last quarter I said that.
New leasing we saw some declines in prospects in the months of April and May that is sense improved but there is a four to six month.
Delay in getting occupancy from those tours and prospects are we likely will see a slight decline in occupancy in the third quarter, but since new leasing picked up I think that will reverse itself later in the year.
Got it.
Yeah, and then in my Science and second quarter, we were up about 250 basis points over the previous quarter July we were down 60 basis points from June Thirtyth because of three known Vacates in some cases, we proactively.
Terminate leases in order to grow with existing clients. So that drives some of it and importantly, we we've already released 60% of the space that we lost in the month of July. So it's more of a timing issue in certain cases that you know the day that existing tenant stops paying read it impacts occupancy.
Looking forward. It we do have a replacement tenant and in this case had a positive mark to market. So when you're looking forward its actually a very positive story, even though we lost a bit of occupancy short term.
Operator or any other questions.
No no. So we're showing no further questions at this time. Okay. We'll then conclude the question that just doesn't Mr. Herzog I'd like to have the comments about government seems or for any closing remarks, yeah. Thank you operator, and thank you everybody for joining our call today and your continued interest in LP I Hope you all stay safe.
And we'll talk you soon thank you.
Yeah. We think it's also for your time and to the rest of the management team.
Getting a conference calls now concluded at this time you may disconnect. The lines. Thank you again, everyone take care and ever Greg.
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