Q2 2020 STORE Capital Corp Earnings Call
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I know about trying to call sort of at least some your investor Relations Wheeler. Please go ahead.
Thank you operator, and thank you all for joining us today to discuss our capital second quarter 2020 financial results.
This morning, we issued our earnings release, a quarterly Investor presentation, which includes supplemental information for today's call.
These documents are available in the Investor Relations section of our website at <unk> IR Dot store capital Dot Com under news and Russell quarterly with.
On today's call management will provide prepared remarks, and then we will open up the call for your questions in order to maximize participation while keeping our culture. One hour, we will be observing it your question limit during the Q and a portion of the call participants can reenter the queue. If you follow up question.
Well, we begin I would like to remind you that todays comments will include forward looking statements under the federal Securities laws.
Forward looking statements by their nature involve estimates projections gold forecasts and assumptions and are subject to risks and uncertainties.
Including those arising from the cobot 19, pandemic and its related impacts on us and our China.
That could cause actual results or outcomes to differ materially from those expressed in the forward looking statements.
Our actual financial condition results of operations may vary materially from those contemplated by such forward looking statements.
A discussion of the factors that could cause our results to differ materially from these forward looking statements contained in our FCC filing.
Putting all reports on form 10-K and 10-Q.
With that I would now like to turn the call Arborcrest bulk storage, President and Chief Executive Officer, Chris. Please go ahead.
Thank you Lisa and good morning, everyone and welcome to store capital second quarter 2020 earnings call.
With me today are married with our Chief operating officer, and Cathy long, our Chief Financial Officer.
First things first we welcome the opportunity to speak to you today and hope that you and your families continue to be healthy and safe.
Our team is working closely with our tenants throughout the pandemic, we've been encouraged by the up trends in both business Reopenings and collection since June.
We estimate that 92% or locations are currently open for business, which is slightly ahead of where we were in June represent those states that have recently experienced new route business closures.
Wherever the mix open businesses has altered some sectors such as education, demonstrating promising trends.
You sector spacing renewed closure mandate in certain markets.
I will provide you added detail here, but our portfolio diversity has been important to our success.
We are currently suburban investment profile, which is limited our exposure to the nation's was sensitive endemic centers, it's more conducive to the massive social business.
Well, that's sad, let me discuss our achievements for the core.
Our portfolio remains healthy with knocks the rate of 99 and a half for side. We continued stability in the percentage of net lease contracts rated investment grade and quality based upon our store score methodology.
The acquisition front, we began to curtail our acquisition efforts beginning in the first quarter.
It did make just over $135 million of new investments during the second quarter.
Those investments were funded with equity and cash recycle from asset sales.
Results of which elevated are unencumbered assets to about 62% total investments reduced our financial leverage to cost historically low levels.
Leverage on the uncover majority of our balance sheet stood at a sector low 23% of cost providing us with ample flexibility in our financing options to navigate the spend on that.
The worst unencumbered asset leverage is lower than most any publicly I know irrespective of corporate credit rating.
No. They do each quarter here are some statistics relative to our second quarter investment activity.
Our weighted average lease rate during the quarter was 8.7%.
Representing a meaningful right over prior quarters and reflective of the less robust capital availability in general across the middle market segment of the economy, we are principally dedicated to.
The average annual contractual lease escalations for investments made during the quarter was 1.8%.
Providing us with a growth rate of return, which you get by adding to Lisa wishes to the initial lease rate.
Kind of the happy or sad.
Personally we're not a plane leveraged our new investment instead, we're electing to maintain a more conservative posture in these less certain times. However, we need to incorporate our customer corporate leverage nearly a 40% or levered investor return would approximate 15% with net returns after operating cost of about 13%.
Our historic Investor returns and outperformance from store and for predecessor public companies have been mostly driven by a robot business model, which is why we take the time to disclose investment yield contractual annual lease escalations investment spreads for cost of long term borrowings and our operating costs or percentage of assets.
These are the for central variable that enable you to compute expected investment rates of return.
Weighted average primary lease term our quarterly new investments continue to be long at approximately 17 years.
I would like no here that our weighted average portfolio lease term has remained at about 14 years since 2015.
Moreover, we're highly defensive with less than 3% of our primary at least currents maturing over the next five years, which is far and away at the lowest I'm aware of amongst our pure public net lease companies.
Major reason for this important contract I attribute we're constantly extending lease terms as we add new investments to existing master lease arrangements.
Given a recessionary environment or lack of near term lease maturities is definitely a good place to be.
Another desirable attribute or not least portfolio is the growing percentage of our multi location contracts that are six to master leases.
Since 2015 that number has grown from 77% to 89% in 2018 and fully 93% today.
In part this move is due to a greater origination emphasis on the importance of master leases.
The part this has been a function of repeat business, where new investments have been added prior individual leases for master lease contracts.
Park. This has been a function of managing tenant relationships to make wider use of master leases.
Long term results. All this work, we believe will be a further reduction and eventual lease renewal risk.
Perhaps more important is an elevation of interest alignment, which stands to be meaningful, especially at less certain moments like this.
Climates interests are extremely important and liberty the number of leased deferrals, having no fixed resolutions.
The median post overhead unit level fixed charge coverage ratio for assets that we purchased during the quarter was 2.2 to one.
The median new tenant Moody's Rick CALP rating profile would be a to.
Maybe incorporate the potent contract level fixed charge coverage is immediately new investment contract rating or store score for investments is more favorable be double it too.
Our average new investment was made at approximately 76% replacement cost during the quarter and all the net leased investments made during the quarter required to deliver unit level financial statements.
Here, we can seem to be the not least sector leader with substantially all of our properties required to deliver a skill level financial reporting.
This is critical to our ability to evaluate contracts can you already and real estate quality, which had been essential to our ability to quickly as fast or times ability to pay the rent.
Which is especially important at times like this.
With that I will turn the call over tomorrow.
You, Chris and good morning, everyone I'd like to start with a corporate update the effects of cobot, our fluid based on government support and community specific business reopening.
As we speak today no one knows the duration that outcome of code that and what the economic recovery will look like however at store we have a good handle on what we can control.
Let's start our business model was designed to be flexible and adaptable and that allowed us to quickly pivot to address the new challenges of co but.
As we navigate through an ongoing carried of uncertainty we expect to continue to benefit from our focus on the fundamental building blocks of our model, which include profit center real estate geographic sector and tenant diversity.
Contracts that require unit level reporting strong relationships with our tenant and a strong organization design to tailor solutions to maximize returns.
It is good it has become clear to us, but there's a direct correlation between our tenants business is being open and rent collection. We have included two new slides in our investor presentation illustrating the.
Currently 92% of our locations are open even with recent closure mandate.
I'm, a diversity perspective, approximately 90% of our contractual base, rather an interest isn't states with less than 25 cases per day per 100000 people and only 9% of our contractual base rent and interest isn't both highly impacted county and within highly impacted sectors.
And you will see we have also added some new slides to our corporate presentation, reflecting the geographic diversity.
We have received virtually no new requests, resulting in a rapidly over the past few months and repeat request remain concentrated in the highly impacted sectors, such as restaurant Education Health Club family Entertainment and movie theaters and the dollar amount of Green leaf. It's also decline.
Since our up across all these highly impacted sectors with the exception of movie theaters, which continued to be constrained by mandated closures and delayed film releases.
And we have already seen some paybacks on or earlier deferral and expect the majority of deferrals to be paid back by the end of 2021.
We continue to closely monitor additional government programs for business is still impacted by called <unk>, which hopefully will provide more support for our customers it needs.
Based on our most recent numbers during the month of April May and June we received cash rent payment of 71%.
89%, and 79%, respectively, which aggregates to about 73% in cash rent collections for the second quarter.
As recently announced we had 85% cash rent collection in July which increases just aggregate number 276% since called it began.
We also reached rent deferral agreement with most of our tenant and as of today, 98% of all contractual base rents in interest has been resolved.
The steady increase in rent collections was primarily due to high rent collections from our tenants in the restaurant furniture and education sectors, whose businesses reopened following mandatory closures.
And at the same time, our acquisition team continued to cultivate new and existing relationships and has maintained a healthy pipeline.
We have also been able to provide our customers with growth capital they need for organic investments and acquisitions and also to deploy capital at attractive yields for our shareholders.
During the second quarter, we invested $135 million and real estate properties across 18 transaction at an average size of under $8 million.
Our acquisitions focused on cobot resistant sectors, including manufacturing and repeat customers accounted for about one third of total acquisitions for the quarter.
Our portfolio remained healthy at quarter end, only 14 locations out of our more than 2500 properties were vacant and not subject to a lease agreement as of today three of those properties or under contract.
Now turning to disposition, we sold 16 properties in the second quarter, reflecting slower property sales due to call that.
Most of these properties were sold as part of our ongoing property management activities have resulted in a recovery compared to original cost up over 65%.
Year to date, we have recovered just under 70% from our property management sales.
Our portfolio composition at quarter end with study was 65% of our properties and the service sector, 18%, an experiential and service driven retail businesses and the remaining 17% in manufacturing.
Our portfolio remains well diversified and at the end of the second quarter, our top 10 customers accounted for only 17% of base rent an interest.
Our largest customer fleet farm represented just 2.8% a base rent.
Furthermore, many of our top tenants were deemed essential and have experienced strong results during the pandemic.
Oh it continues to be a dynamic situation five months into the pandemic. The news on mandated business closures changes every day.
Looking ahead, we will stay focused on the factors, we can't control, adding value to our tenant collecting rent and making selective and opportunistic acquisitions that help our tenants and are accretive to our shareholders.
We're very proud of the store team has worked closely with our customers to successfully navigate this pandemic.
And now before I turn the call over to Cathy I wanted to touch on one more thing.
It has had a substantial impact on college students looking to gain professional experience. This summer.
In response store hosted its first ever virtual summer X friendship in late July.
[laughter] X Transship program comprised of 124 diverse participant representing 54 different colleges and five countries.
Two day events included multiple panels were store employees and executive discussed a variety of important an educational topics, including transaction evaluation and read operations women and minorities in the workplace wealth creation and the past present and future real estate finance.
This program is part of stores ongoing social engagement and diversity initiative and was very well received by both the participants and store employees and now I'll turn the call to Kathy to discuss our financial results.
Thank you Mary.
I'll begin by discussing our financial results for the second quarter, including the impact is kind of it and then I'll provide an update on our capital markets activity in balance sheet.
Second quarter revenues increased 2.7% from a year ago quarter $268 million, primarily due to the year over year growth in our real estate portfolio.
The increase in revenues was partially offset by the impact of underperforming properties, especially tennis operating in industries that were highly impacted by the pandemic as Mary mentioned earlier.
We typically focused our comments only on year over year results.
However, since the impact of Cove. It was concentrated in the second quarter of 2020.
Today I'll provide a bridge to explain the various in Africa FFO for the first quarter to the second quarter to help you better understand the sequential changes.
All other comparisons discussed on today's call will be year after year.
Second quarter revenues decreased by $9.6 million sequentially.
Were impacted by higher loss threats and reserves taken on Kobe deferred right receivables.
Lower other income.
The positive contribution from that acquisition activity.
Taken together these items reduced quarter over quarter, an AFFO by four cents per diluted share.
Higher interest expense also impacted after fell by one cents for smelting and a five cents overall sequential decline in half AFFO per diluted share.
Although the rest relief, we provided our tennis was primarily in the form of rent deferrals, we did not a crew rental income and situations, where the collectibility of their rental payments while certain.
In addition, we recorded a 2 million dollar reserve I guess, the deferred rent receivables.
Oh that these factors reduced total revenues for the quarter.
We recognized $38 million net non cash rental revenue related to cope with deferrals during the quarter.
Mr. CT if all of our balance sheet at least receivables.
We expect leased receivables decreased as deferred rent payments are received in the future.
Interest expense increased from a year ago quarter by $4.6 million to $44 million.
Selecting both the debt we issued under our Master funding program last November to fund a portion of our 2019 portfolio growth.
And the higher interest expense, we incurred from maintaining excess liquidity on our balance sheet. During these uncertain times.
Property costs for the second quarter increased by $3.3 million year over year.
Merrily due to property tax accruals related to nonperforming properties, including certain properties, where tenants businesses are highly impacted by cobot.
These higher costs were slightly offset by lower G.N., a expenses as a year ago quarter included about $2 million, an executive severance expense.
As a percentage if our average portfolio assets.
<unk> expenses.
Excluding the impact of noncash equity compensation and last year's severance expense was relatively flat at 47 basis points versus 46 basis points a year ago.
During the quarter, we recognized an aggregate 5.3 million dollar impairment profession on nine properties.
Properties were primarily restaurants that were likely to sell and seven up. These nine properties are in the process of being resolved.
Hey, AFFO for the second quarter decreased to $109 million from $114 million a year ago, largely due to higher lost restaurant property costs related to kind of it.
On a per share basis, and I thought was 44 cents per diluted share down from 50 cents per diluted share a year ago.
We declared a second quarter 2020 dividend of 35 cents per share.
Which was paid on July 15th to shareholders of record on June Thirtyth.
Its dividend represented a payout ratio of approximately 80% of the 44 cents or there that's out.
Second quarter AFFO includes $38 million of net revenue that was subject to the code regret deferrals I mentioned earlier.
These deferrals were negotiated with each tenant include repayment schedule generally beginning in the fourth quarter of 2020.
We expect the vast majority of these deferrals will be repaid by the end of 2021.
Excluding these deferrals after a fellow would've been 28 cents per diluted share for a second quarter dividend payout ratio, excluding deferrals of approximately 125%.
Now turning to our acquisition activity in balance sheet.
We funded our second quarter acquisitions with proceeds from our ATM equity program, along with cash proceeds from asset sales.
Next time with our additions to the S&P Midcap 400 index in May we issued 8.8 million shares of common stock under our ATM program at an average price of $20.50 per share raising net equity proceeds of approximately $177 million.
We entered the third quarter with a strong balance sheet and liquidity position with approximately $700 million in cash.
At June Thirtyth, we had approximately $3.6 billion with long term debt with a weighted average maturity of six and a half years.
The weighted average interest rate of 4.3%.
As we gain better visibility into the reopening of the economy and continue to collect higher levels or perhaps we expect to pay down this excess liquidity, which will reduce interest expense increase episodes.
We have no significant debt maturities until the EUR 2024, and we're pleased to report that S&P recently affirmed their ratings on our master funding gap.
All told we're well positioned for the remainder of 2020 it'd be armed with a conservative at historically low leverage ratio of 38% on a net debt to portfolio cost basis.
And substantial financing flexibility, including access to a variety of attractive debt and equity financing options.
We continue to remain in compliance with our debt covenants.
And expect to remain in compliance with them for the foreseeable future.
And now I'll turn the call back to Chris Thanks, So much Kathy.
As is usual before turning the call works the operator for your questions I'd like to make a few comments.
First as we did for our first quarter Investor presentation. We've included a section that addresses the sensitivity of our tenants to cope with my team endemic.
With five consequential months, having passed since the initial March general business shutdown.
No much more than we did that for now illustrate portfolio trends in our regularly quarterly investor presentation.
But all we know there recollection rate is tied to the ability of our tenants to conduct commerce and to be open for business.
This correlation is absolutely causal.
Other causal correlation is a higher level recollections that we've realized from our cobot insensitive tenants centered in so called essential businesses.
Since our manufacturing real estate investments are generally essential and cobot insensitive and so have a highest sector lease collection rates.
Oh point out here that many analysts industry observers have noted the high correlation of net lease investment grade tenants direct collections. During these trying times.
We note this correlation to but believe it to not be causal.
That's because most well known at least investment grade kind of tend to be centered in essential noncovered sensitive businesses, which we believe to be the far more relevant issue.
Indeed to prove the point there are many investment grade and strong balance sheet companies, who have elected not to pay rents. So they're read landlords and other read sectors for basic reasons.
No corporate credit rating can insulate accompany from an inability to conduct commerce.
The second point I'd like to make is that we firmly believe that sounds corporate business models tend to prevail over the long term.
In our cope inspection of the presentation, we compared ourselves to rent cholesterol levels net lease peers cutting varying levels of investment grade kind of exposure.
Given that investment grade tenants have virtually all paid their rent to these companies you're not at the top of the rankings in terms of overall rent collections. So we're certainly in the middle.
However, there July collection performance of 85% driven as it was by elevated tenant openings, we're getting close to the collection leaders.
But then we went one step further.
Estimate our compared to cash investment yield at the reduced cobot Brent collection levels.
You should not be surprised to see us emerge as a sector leader.
With investment yields to average approximately 150 basis points over those realized by companies in pursuit of investment grade tenants, we can generally afford to lose almost 20% in rents for 40 breakeven.
Would be like giving 40% or tenants a permanent half off sale.
It's overlooks the fact that are kind of rent escalations will tend to also be higher and more frequent provides a further margin of safety.
Of course, our tenants are not rated and they need companies like store to succeed.
But even with non rated companies, we can create investment grade contracts as a result of our payment priority.
And sector, leading portfolio diversity.
That is the essence of the store score.
In the remainder of 2020 going into 2021, you will see us make some improvements this metric as we incorporate other important variables.
Results will eventually be reflected in our regular quarterly corporate disclosure.
Which gets me to our third point.
We see today encourages us.
When our tenants have the ability to open or maintain their businesses business has been there.
Sometimes that business has been better than it was pretty cobot.
Sometimes that business is less than it was pretty covert.
But in the vast majority of instances it is more than enough to do with you and we expect our tenants will do which is to pay the right.
Keep in mind, there are times do not have to return to 2019 performance levels.
Going into this pandemic most of our locations have you ever coverages in the area of two to one or better which gives us immaterial margin of safety.
Fourth enough uncertainty exists that we're still refraining from issuing guidance.
I'm personally, hoping that such uncertainties phase by the time of our third quarter call, which probably would customarily issue performance guidance for 2021.
Meanwhile, given us uncertainties store will continue to do we have done since the inception of the spend on it.
Which is to provide you with periodic performance updates.
So you can expect to hear from us monthly about our portfolio rent collections activity for the three months between now and our third quarter earnings call.
I would like to conclude my remarks by talking about our dividend.
In June our board with the recommendation for management maintained or 35 cents dividend.
Well the dividend is amply covered by our 44 cents and second quarter adjusted funds from operations, our payout ratio rises to about 125%. When you consider the fact that $38 million with the rents recognized for the quarter. We're not received in cash or subjects deferral arrangements with our tenants in response to this pandemic.
Of course, we know so much more today than we did in March and April when much of the economy was closed.
We've seen our initial reported rent collections elevated.
And we've seen a recollections steadily and meaningfully escalate over the past two months.
Our growing recollections together with sustained strength in property openings and tenant commerce have given us and our board the confidence to maintain our dividend and now I'd like to turn the call over to the operator for any questions.
Yes. Thank you well now begin the question and answer session.
Good question May Press Star, then one under Touchtone phone.
Mary Jane Speakerphone, please pick up your hands up before pressing the he's just try your question. Please press Star then sue.
At this time, we'll pause momentarily to assemble the roster.
And the first question comes from Sheila Mcgrath with Evercore.
I guess I'm good morning, Chris I was wondering if you could touch on the 8.7% yield on investment in the quarter. It did appear to factor in elevated risk in the capital markets should we expect these elevated investment yields to continue in the near term or revert back to the.
Hi Sevens.
Actually all its Chris not married I'll answer this together, but first of all from a volume perspective, we did really not that much bias was about a third of buying we normally would adopt.
And we did it in a time of exceptional market disruption. So whenever you have except for market disruption.
You know the working capital market comes with a less robust.
And so you know our tenants are able to get very attractive opportunities and sees on them on transactions and likewise, we're able to participate in that I get good opportunities as well. So we're really encouraged by that.
It's been really interesting for US is in this marketplace, we've seen that in the demand for investment grade.
Oh, good insensitive real estate has been really high because there's a lot of money out there on the sidelines chasing deals and looking for yield, especially in a 60 basis point 50 basis point tenure Treasury markets. So so you know you people can really reach after those kinds of deals so you're seeing actually at a widening in spreads between the kind of caught investment grade covenants.
That's the stuff and then how the middle market stopped when we were able to seize on that and make some attractive bias both for our shareholders and for our past this quarter. Yes. She was near I'll just add that.
Lets me deals were already in our pipeline they were with existing customers deal that needed to get done on their side and also that these were underwritten in light of Kobe till they were in industries that are covered resistant and very carefully underwritten from that perspective.
Okay, Great and one follow up did you get anything in return for the negotiations on the short term deferrals just lease extension or just give us some insight there.
Yeah, Yeah, you bet. This is Mary for sure most of our notes have interest or interest bearing notes and the most the majority of our deferrals. We're in the form of note and and we did lease mods be my grandson percentage rent some risk rent escalations in a few cases, we would do some lease extensions, but any lease extension was a multiple of.
The month that we were able to negotiate.
Okay. Thank you.
Welcome.
Thank you and the next question comes from frankly with BMO.
[laughter].
Hi, Good morning, just wanted to touch on future acquisitions, how should we think about funding for those and are you still comfortable with sort of match funding additional acquisitions with ATM and dispositions.
Well, there's your market's been ideal for us because weve, if we just gradually funded and and drawn ATM as weve neither.
I think we're gonna be very very deliberate I mean, you can see that in the second quarter, We did 130 million hundred $370 acquisition. So it's.
Not anywhere near the pace that were used to but we you can also see from our.
Quarterly report, our Investor presentation that we've maintained the pipeline at a very high level. So that there are a lot of trend back out there, we're where we were positioned to do a lot more business, but we're waiting to see our way through this pandemic in the meantime, there'll be some opportunities that we can sees on and all in all likelihood if we can do it and we can do an accrued.
The way they can market would be.
Ideal.
Okay. Thanks, and then for the tenants every required to start paying back deferred rent in July do you have a sense of what what percentage paid their deferrals on time and July. Thanks.
It's Kathy a lot of the deferrals are really scheduled to begin in Q4. So that's when we would see the majority of and the ones that Mary mentioned in her script that there were some people who pay back early and that was that would they just paid back before they were schedules.
Okay, great. Thank you.
Thank you and that's when it comes from Keybanc, Ken with Suntrust.
Thanks, Good morning.
Can we just clarify a couple of things the rent collection number 73% in Twoq and 85% in July was there any impact from a change in denominator by waste like known bankruptcies or store or store closures.
You see denominator.
So no impact at all it's like two like.
That's correct okay.
And it how about asset sales I'm not sure what their rent collection numbers looked like for the assets that you sold but curious if that had an impact on hand does that.
<unk> there was no impact from asset sales acquisition of thing out Theres, no change to nominate or period.
Okay, and like even just that.
We sold so few assets anyway, just wouldn't matter like you know so and the asset somebody assets. We sold had no revenues. So they were vacant.
Okay.
And can you just clarify how much reserve or move to catch accounting basis airline into Q2 account for rent that you'd deemed uncollectible.
And with afterwards.
Yeah.
Sure it's Kathy.
So I provided a walk and I can give you a lot more detail on that so from from Q1 to Q2.
Net acquisition activity, which was the acquisitions, we did during the quarter, which were sort of backend weighted in June plus the asset sale, so that net activity.
That's a positive one penny to AFFO per share.
Other income, which has random things then at like a lean.
Modification fees that you received or something like that that was down quarter over quarter.
With that one jumps around so other income was often variable that was a penny down so now you're a penny up in a penny down so that's a wash.
And then the rest of the change in revenue was four cents last rents down.
And most of that was covered related.
But also included the reserve so I had mentioned that we have a rig deferred receivables on the balance sheet for these deferral arrangements that we did and I did put a reserve on those are about $2 million, but the rest where where we did not collect.
Or if we didnt record revenue, so virtually put them temporarily on a cash basis.
For example married had mentioned that there's about 2% unresolved so about half of those people I put on cash basis temporarily.
That makes asking.
It does but maybe you can provide a little bit different perspective. So if I include the cash basis run which might be like obviously, beating collect there'll be zero and any reserves that you took against accruals.
What would that number in total look like as a percent of.
Total billboards.
Yes, the lost rent as.
For pennies per.
For share.
Oh Gee that includes everything and I think you broke Oh, yeah that includes reserve that includes lost rent anything that hit piano.
He wants me that that we did for you on the comments that we gave it was we've actually walked you through not only our FFO, but our cache both we backed out of a AFFO or the amount of deferral. So you actually got a cash number and you understood that our payout ratio from a dividend perspective was 125% during the quarter. If you were to use an AFFO number.
Backing out the deferrals, but if you.
Were to go to our statement of cash flows which will be filed tomorrow. There came out there with our Q.
Hi, we have to do with yes, or take the Q that that's the second quarter numbers and subtract the first quarter numbers, you'll find the saving the cash flows on cash generated by operations could come in pretty close to the kinds of coverages that we're talking about in fact, maybe the coverages are or will the better than that so I think that's an important thing in the time like this and I understand wire.
You're focusing on where the cash is and I think that the statements will speak for themselves.
Okay. Thank you.
Thank you.
And your next question comes on Linda Tsai with Jefferies.
Hi, I'm in terms, the 8% of your tenants that aren't open what's your expectation for opening.
I would assume they're paying right now.
Linear clipping in and out we must have it could side, we were having problems. The connection earlier can you try that again please.
Oh sure I was just asking about the tenants that aren't currently open any expectation of Glendale open and assume they aren't currently paying rent.
Okay. So.
The biggest corporate is gonna be the movie theaters in the family Entertainment stuff, you know and ER and there's just close to the onsite and.
I want to strictly sort of give you some and anecdote. Though this is just an interesting thing so yesterday and this state you know we are there were two fitness clubs. One we saw mountainside fitness, one with iOS fitness and they filed.
Suit against the government because they've been.
Mandated to close and and basically because the judge came out in their favorite said that the government can't force businesses to close indefinitely I mean that they have to have some some rule and so as a result.
Mountainside I assume you asked for both the opening reopening on August 11.
Under or DHS, which is part of a health safety security or else safety guidelines state basically state health sideline, so which which they were all willing to do right. So a lot of lot of fitness clubs have been working their hearts out to make sure that people are safely distance and they have five plexiglass, Bob barriers between machines and so on software.
And and so if something like that it's going to have an impact across the country and not so if you were looking at our numbers for the for July for example, in the rent numbers, Hi, fitness clubs I went down a collection because of mandates like this where its other sectors went off and so we've seen some fluctuation like that but we're also incur.
Surged by what we see happening and like the downside you Allstate yesterday, but the other thing is that the state of Arizona, which was a poster child for being a very bad statements is where we live.
It has become a better state. So on June Thirtyth of 29 before the July 4th Holiday. We had 54 cases 5400 cases a day.
And that has dropped massively we went into a mask ordnance and virtually every community.
And it's come down a lot bars were close in bars price should be close because you can't social distance and you can drink through a mask and stuff. So.
Hi, so so I think that some of the steps have been taken but very constructive and the state testing for positive people with a miserable 25% today, it's now 12.6% as of yesterday.
Still not great, but like way better and it shows you what what states can do when they start to.
Follow the rules and guidelines.
Thanks, a lot for those additional details just one more in terms of the covered resistant industries you invested in for Twoq. You you highlighted manufacturing can you give us some other examples of industries you acquired and can we expect a similar composition of industries and cap rates in the backup.
[noise] into busy I thought you understand so I would say in terms of acquisitions industries. Similar composition, we did were probably more a little bit more heavy on manufacturing a this quarter I'm being covered resistant stuff, but I think that's the type in terms of cap rates either you know again, Chris mentioned these were opportunistic cap rates and.
We wouldn't be.
We wouldn't see I, maybe I'm on the whole Bose.
After coal that we would expect to go back to I think post Kobe, what you're going to see as cap rates more or less reverting to the where they have been for the last year or two but I.
I mean, you can't do a massive amount of business. These kinds of cap rates at all so you'll see the cap rates for hurting. That's the that's you know that that should be expected. The good news says that the tenure treasury as a 60 basis points. So no we're able to borrow at probably at the low to mid threes today on a tenure no transaction so you're talking.
400, and port for quarter, 450 basis points spread which has historically incredibly attractive.
Thanks.
Thank you and then next question comes from adding about skew with Morgan Stanley.
Hey, guys. Thanks for taking the question can you just talk a little bit more about the level of buyer competition for assets. I know you had said across the middle market segment, there's a little bit less capital availability, but can you just kinda talk about the level of competition, you're seeing a bidding for existing gildan the market.
Merian I'll do that together, it's Chris, but I mean at a high level I understand that that's the most of the people who are buying assets aren't the public names that you all fall. So I about 90% of the business that gets done out there, it's really getting done away from the public markets.
Those people that are buying assets are buying assets and need that typically to get those assets acquired so the debt markets have to be.
Helpful to to make that happen so what you've seen in the last quarter has been public companies for the most part of Retrenched a lot from an acquisition perspective. So there's been less from that sort of is to fill names you do cover.
Then from the side that you don't cover but it's bigger than the size and you do cover debt financings that left readily available and hi, there have been more people that have been cautious and likewise are hanging onto liquidity is sitting on the sidelines. So when that happens.
A time of.
Economic disruption you basically can.
Find some interesting opportunities where transactions have to happen under a lot of production. So just simply have to happen and oh and that allows our tenants to be able to.
Take advantage those opportunities and us to be there a lot but.
Great and then just one more can you talk a little bit about your high level expectations for occupancy in the back half the year and just more broadly how you think occupancy sort of overall post kobin could shake out relative to what happened in the GST.
Sure.
So.
You know if you look at our corporate presentation.
I would encourage you ought to look at the Cobas section, especially which starts on page 26, and it goes on for two pages.
Very very first slide.
Makes it charts prior months openings, the current month's rent because the rent that people pay us tends to be a function of what are they were opened the previous month right. So ah. So hence made with sort of the low month and the quarter for second quarter for collections because everybody was closed in April.
And and as people opened up and made and things got better in June and so and so forth where there's a lag.
So now that's been predictive so far I can't promise that that will be predictive for August or September, but but to date that's been a relationship so.
So you've had basically sort of a flat we were I think were 91% open in July 92% in August.
So as as these numbers go up and movie theaters will open and other stuff open and I expect that there'll be a vaccine certainly.
On the horizon anyway by the end beer and not so is this stuff moves forward. There's a there's a huge correlation between things that are open and our ability to collect rugs.
And and People's ability to conduct business and as I said in a in the comments.
They don't have to do the same business. They were doing a 2019 to pass the rest is very important I mean, it they could be doing a materially less in terms of business and still be able to afford to pay the rents because there was always margin for error in the in those numbers.
I don't know if any will ask this question, but one of the people people sort of look at things.
Things like store scores and fixed charge coverage ratios in our portfolio and it's incredibly important to remember that those numbers that you're looking at I reflect you know Q1 numbers they reflect as in some cases Q4, but mostly Q1 numbers at this point the Q2 numbers won't be due until August 15th and I mean, and you should expect that those numbers will come down coverages are gonna come down.
Now not just for us but for everybody I mean is the way is what happens when you have something but the good news is you know lower covers doesn't mean that can't pay the rather just me it's a day for coaches.
And and really stores has high coverage is I mean, it at our very first public company it up a FDA or average coverage of the 160 now to too so.
So I feel fairly good about where we are for coverage perspective and from a the ability of these.
Folks to improve on their rent payments throughout the rest of year I feel very strongly about the viability of the sectors. I mean, one of the hardest hit sectors has been education and it's just so hard for people to open up and in the case approach our dedication you're having spacing rules occupancy limitations I, sometimes its state by state for the multi unit operators.
And so.
But yet a education is a is a fundamental need and it will be there and so we're very confident in our tenants and the portfolio. So I see this personally up printing through the rest of year and and that's why our board was confidence to Oh, we pay the dividend, but where there were confident our ability to maintain that through the rest of your given what we're saying.
Got it and then just one more quick one on AMC, we've heard from some other landlords that they started paying partial rent in July is that sort of similar to what you guys are seeing but with your exposure and any just sort of color on how those conversations have been trending.
Yes.
Yeah. This is married so we're not disclosing any comments on individual deferrals that we've made the tenants that way, but I will say as that we do have a deal with them.
Okay. Thank you.
Thank you and the next question comes from spends Rollo with Green Street advisors.
Thank you I really do you buy the cat external growth guidance with John but can you just provide some color on how you're thinking about strategic dispositions in the back half the year, particularly given the more elevated cap rates, you're seeing in the market right now.
Well, it's interesting so yeah, we're seeing some ability to do all the cap rates on a direct basis and so your question seems to be suggesting whether or not there is sort of a decline in overall real estate and maybe as a result about and I would say no.
I think that the.
The marketplace for the most part of the Middle markets is still kind of a seven to.
No sometimes high Sixs took mid seven number you know, it's not highs as to the numbers that we got were.
Better than that but again, we do a lot of stuff, where we're not using brokers and we're going to Iraq. So we have more salespeople, we got more credit people than pretty much anybody else in that lease space. So it allows us to have access to deal flow, which is the advantage of having more salespeople I mean, it comes at a cost but see advantage there haven't been more salespeople. So.
I think that the actual broader numbers or are not there and in fact, if we were going to elevate our acquisition pace to where we were prior to cobot there'd be no chance at all that we could kind of repeat we just did here with the height with the mirror hundred $37 million I mean, a secret doing a hard to 37 million hours a month, you're going to be.
I would most likely in the high sevens, because where we've been.
In the past them, such I'd say on dispositions, you're asking about and that's certainly the velocity has been down and 31, you know whether that was extended to July 30, or 50 to use their deferral and that's been lifted and not extended.
But weve not seen a broadly.
Rob repricing in the marketplace as Chris mentioned as some of it.
Yeah, and I went to I. I think also if if people get nervous about 10 31 going away. There there is likely going to be a rush for the doors on some of that stuff. So so in the near term you're going to have maybe even some contraction in cap rates as people are trying to take advantage of tenthirty, one exchanges and they can do.
Long term, it's 10 31 goes away.
It will sort of hurt our ability to opportunistically sell to people who are getting subsidized by the U.S. government, which is always nice thing.
But any other hand, if you don't have people be supplies U.S. government it should.
They cap rates overall, I mean, and you'll see that especially in the investment grade sector and the.
Which is sort of much more of a retail product right, so you're going to see.
We're individual people are buying stuff through tenthirty ones, if that market goes away and there's no tax instead of anymore than basically a cap rates are likely going to elevate that'll push cap rates up potentially across all sectors and sort of widen spreads out and.
And so that would be actually in a positive for us.
Okay. Thank you Ed.
Yes.
Thank you and the next question comes on dramas talks with Ladenburg Thalmann.
Good morning.
First off apologies if I can tell a choppy here I'd also had some reception issues.
Hey, maybe focusing in on the education segment, I mean, and you're kind of conversations with particularly your kind of non early education tenants. How those gone are the expecting to open as kinda plan now that the kind of school years starting.
Are there any concerns that restrictions there and its impact on cash collection.
Yes, Okay, John Mary So its goals that we own outside of early childhood education, there, primarily private schools and they have actually superior online capabilities and parents are paying situation and they are geared to go on they'll have a we they they are suggesting a little bit in person anthem online sort of a combo, but they certainly can do the online.
They need to so we're seeing a positive a positive trend that way for the ball.
And again fairly positive trends in terms of maybe kind of enrollments.
So far yes, yes.
And then as a kind of think about the portion of the portfolio that they just kind of falling to cash basis in terms of how do you guys are recognizing rad.
How much of that or what percentage do that is currently either you know bankruptcy or some kind of restructuring process and is there anything significant outside of that portion I think cash kind of recognition that in bankruptcy or or some kind of restructuring.
Well there are always a few bankruptcies that we have as you recall, we mentioned arc than last quarter.
That was in bankruptcy.
That deal of was for Salt.
Effective starting in Q3, so the full impact of not having rent are they on for example hit Q2.
But generally if you look in our investor presentation, and we do a little walk every year of revenue growth and there's always this but theres a bucket we call work in process and that is what you're talking about the people who are in the process of having a workout maybe they went bankrupt.
And you're waiting for the lease to be affirmed or things like that so there's always going to be that small amount and over time. It's been about I think 50 basis points over time every year you have that so it's it's it can consistent thing generally.
But with Covance, we temporarily did put additional people on cash basis, just because for example, if they were it not resolved or things like that.
But we don't expect that trend to continue.
And I would say that no since you know as covert started to pick fit and there was and there were business closures. We saw a handful bankruptcies, where people were kind of push over the edge.
But since co visits started I don't I'm not sure we've seen any bankruptcy.
And.
And what's kind of it and interesting thing as you think about this all these tenants and businesses not just with store, but with across the country have been.
Working out.
Their businesses with their bankers and their accreditors and their landlords and they've been doing it outside of bankruptcy. I mean are normally a lot of times. We think we were done in bankruptcy, but no other than outside of bankruptcy and very constructively and Oh and so we're encouraged by that and we don't see anybody really wanting to rush towards the doors to file for bankruptcy at this point.
So.
Now if if if cobot turns into sort of no. After this appear or company for just don't survive and don't make it a store spoke to handle that you know may not stores built to handle a recession is all day long, we've got more diversity than anybody else mixed in the space by like a factor too I mean, I mean is buys you have huge reduction at risk just add from.
From our diversification depressive Freeport.
So so we can handle that will we can't what we have a harder time with its when every single business is required to close because businesses irrespective of whether they're AAA companies were were probably companies can't pay rent. If they can't have have revenues coming in the door nobody's really structure that way so and.
Fortunately for US obviously, we're at 92% oxy today, and and and growing and so I think I expect that to grow and and there's a correlation between whether business 'cause it can be open megapath around so.
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Thank you and the next question comes from Chris Lucas with capital One Securities.
Hi, good morning, everybody Com copying just a couple of quick detailed questions for you what was the dollar amount of cash contractual rent billings from Twoq.
Say that again.
What was the dollar amount of cash contractual rent billings were to Q.
If you look at.
The run rate that we had at the end of March It was about 730 million. So a quarter that would be about 180 millions that would be the maximum you could get for base rent and insurance for the quarter.
Okay, and then from the 30.
Does that mean it doesn't I mean, I guess the question become as it relates to expense reimbursements or pass throughs whatever.
The rent collection and you're tracking you know those numbers as well or is there. Some you know.
Meaningful Delta.
I'm not sure I understand your question.
Well for you so you're kind of pay rent, but they also have expenses the pace, which they paid directly from over two parents.
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Okay Yeah.
Yeah.
Let me try to.
Yeah good apart.
For the Triple net expenses were not finding.
At the tenants aren't paying those so people who asked for rent deferrals.
We're still paying their expenses so if they had.
You know Cam charges electric insurance property taxes that kind of thing.
We were not signing that they weren't paying those but they didn't reach out you know and asked for some rent deferrals.
Sure and then let's let's switch over to.
[music].
Let's just say, but you know its save time, we did take a reserve for sovereign some property taxes that was not specific so which you would expect us to do and an abundance of caution. So so some of the property costs were noncash.
And different what the reserve.
Okay, and then on the deferrals Kathy the 38 million is that all for second quarter and their schedule for what you're deferring and <unk> for July at this point than we ever since the with that amount is gonna be.
Yeah. The 38 million is net of the 2 million reserves. So it's really 40 million of deferrals with a 2 million reserve.
And that is just to Q2.
Okay, and we don't anything Chris we don't we always do you have a no we have some arrangements with some of our tenants that go on beyond.
Q3 at some that actually go through to Q4, so so and no opic, we have some but now we're in a time of uncertainty. So we don't really need to talk about it I mean, it's why its level of the change in fact it changed in Q2 will alone. We have people that have had deferrals of pay them right back so that's what Mary.
Okay.
Thank you that's only had considered.
Thank you.
Thank you and then I suppose it comes from they cross it with Berenberg.
Hey, good morning, guys I know a guidance remains the drawn but I was kind of wondering if you could give us maybe your appetite for acquisitions in the back half the year. I think you mentioned that deals you did in Twoq, you, where where the tenant needed to get a transaction done so I'm just curious.
How much of the pipeline is kind of time sensitive where the tenant is looking at close quickly.
For some but not a lot you know and.
We haven't turned on.
The front end and they meaningful way at this point and Ah. So we're still.
Keeping a lot of powder dry and were waiting.
And we're being very cautious so I mean died and that things change from day to day and I know, it's hard to overcome the covert news cycle. So whatever covert new cycle is on a day is going to drive whether our stock goes up or down no matter, what we did [laughter].
So weve, but we're ready to do business and I think as we get into it as I said in my comments earlier, if we get into the end of thought.
Q3, I normally that's when we would have given guidance and.
You know where cross our fingers that we can do that for you I.
We continue obviously to have stuck construction.
The ongoing construction commitments that that will fund through the rest of the or that's probably $100 million.
Okay. I mean is there a certain level of Brian collections that we shouldn't be kinda looking for from you guys, where we would kinda know that you're ready to start kind of ramping up.
Again or is it just kind of.
You're going based on multiple factors.
I think we're going based upon multiple factors, it's not just all about rent collections.
Okay. Just quickly on the stuff you did you in Q2 can you just give us any color on what was included in that.
Industrial or.
That's $137 million it there's there's more than so corporately were at 17% manufacturing slash industrial and there's a little more 17% in Q2 so.
But it was across the board. So we just service no retail and Q2 offices historic manufacturing assets.
All covert insensitive.
And.
Nice cap rates are mostly existing customers and no decent coverages and.
Candidly, if we were able to get a fair fair amount of credit enhancement. Some of these things like regret deposits and whatnot, which is something you can also got environment like this and so it wasn't every transaction, but they were enough for them, but we.
It was more than usual.
Thank you and the N.S. doesn't count somebody called along with Keybanc.
Oh, Hi, sorry, I'm I'm food comes as Craig Melman here with already.
Caf Yeah. It was helpful for you to give kind of a walk from one Q2 Q.
So what I'm just curious if you could give us a little bit a breakout from maybe a gap perspective, how much in rents are actually just gone because you guys recurrent leases going forward event, just also kind of what the straight line write off was to kinda net out too.
A portion of the four cents and how much of the four cents was actually related to that versus just on the write offs and some other noncovered related items.
The four cents.
Had the reserve in it so that was a little that's probably one center the four cents.
And the rest covered related I would say.
Most of that was related to temporary reductions that we gave people.
And I HM.
Guessing.
I'm guessing most of that was was that probably 80% of it was that the temporary reductions and the rest of it might or you know was just other types of.
People, perhaps to might've been.
Underperforming slightly before covert hit and then what kind of pushed over the edge because of co that you know some small restaurants and things like that.
But most of that where the temporary reduction.
So that's going to point to that you'll see if you'll see that revenue number it'll get recaptured rights. So so in in the Q2 number you have these this chunk of deferrals, which is most of everything you know me. So the deferrals for most everything and then you'll have some that were just not recognized recognized threat, but that stuff is going to non recognize Brent wind up being recap.
Captured overtime you know.
The substantial majority of it.
So just and I apologize for the the confusion here, but you guys 38 million of revenues that were deferred worry included how much of these temporary.
Kinda rents warrant were excluded and is it just because it was a bit he did rather than.
Kind of a deferral he's going to give us a color why these this.
Almost two other how sensitive about 80% of that he said.
Was kinda exclude from annual FFO was 38 billion wasn't.
Okay well the.
Deferrals, we're where we bumped the revenue and took a note receivable on interest bearing receivables for the difference with a specific payback schedule. So we had that group. There were some that were temporary lease modifications were rent would be.
Reduced in the front end.
But you they're supposed to pay it back say.
During Q4 or something like that so within a short period of time that rental comes back to you, but that's just technically they did it or at least nod versus a note itself and that might have been individual tenants may be couldn't put a note payable on their balance sheet or something like that so.
So those are the deferral limits have district paybacks.
That hit to Pan out we're reductions that were.
Well, you're taking back something different for example, we might have.
Said, Okay, you can not pay 25% in your Gen rent, but then we want percent rents for the rest Italy.
On top of the normal so you're collecting it back but not in a way that was set up as it receivables that makes sense.
Yes, it's just an accounting classification wonder someone could take a receivable.
On their books as that versus you guys technically class swings of loan modifications with the hope again to get back in percent rent if that is viable over the remaining life Italy's.
Right now generally you're gonna be basing that percentage rents on what there.
Historical kind of sales volume wise and what they thought they could achieve.
In this kind of post cobot environment, so each of the deferral arrangements we're done.
Tenant by tenant negotiated individually tenant by tenant based on the financial statements that we receive.
Every quarter from these tenants so.
That they're arrangements where based on.
What we thought yeah, we came to an agreement on the tenant or what needed to be deferred.
And that or or if they needed to go to percentage rents or something like that and with the idea that you wanted the payback schedules to be something that could be achievable.
So again, you looked at a tenant how quickly could they reopen and what were they say well where their post carpet sales would be so I'm very very tailored.
Okay. It was there any non cash write off related to the said it sounds like you wish you are going on cash accounting to some extent.
Well there are some there is a small handful of people on non accrual accounting, but there always will be.
I mean.
The bulk of the number.
Which was taken in the form to rent deferrals, you know and a big Greg and read across from it from an F O perspective.
Our has to be included they have a phone so weve reported AFFO, we're reporting it with this sort of noncash slide which is unusual because a lot of times people think about after FFO is sort of being a cash number but it's not really.
Technically designed to be a cash number it is right.
I had an analyst I think of it as being.
Sort of like a long term run rate cash number, but not necessarily like exactly cash that base, it's never going to play out precisely to your statement of cash flows but in this case no. If you. If you were so we did with we also backed it out for you indicate we gave you a.
Payout ratio not excluding deferral and then if you would tie that out to stable cash flows are getting a pretty close you know right.
Yeah, if the perfect and like I said look it's just the statement of cash flows because that's going to show you cash provided by operating activities and you'll be able to see the noncash rent coming out of there.
Okay. So if we think about sort of your real.
Yeah sure sad to support the dividend you could be.
Overtaking the dividends for several quarters here till the paybacks really accelerate in 21 is in a fair way to think about Oh, not it's not fair at all I think I think we're we're out right today.
Right today, we can actually covered the dividend as this is where we were I mean, 72% you can you know 72%, where we were in Q2 no offer July we were at 85%. So so 85% were beyond being able to pay off the dividend from a cash perspective, you know so so I think from a Q2 perspective, you know we're going to be short and.
We covered the dividend, we expect to be able to cover Q3 Q4, and so for the whole year, we expect to cover it and then have room on top of that right.
Okay, great. Thank you.
Thank you and the final question because a follow up on Cuban Kim with some Suntrust.
So the line is pretty spotty. So I tried to follow all that but I just want to go back.
Very briefly to.
The four cents walk the ultimate impact from one Q2 Q.
That's about $10 million and you mentioned 2 million was reserved but when you also be pearl bucket.
Tonight is it's fair to assume the 2 million is a total reserve.
From your run rate.
And maybe 8 million is lost through store closures or temporary rent abatements.
Right.
Yes, so that would be so yeah.
Okay. So 2 million fat is about 1% of your once you revenue run rate.
I'm, just comparing that and I know every pop property propose different every company is definitely but I concur that 1% reserves to other companies that have reported and it just seems light.
And he.
Details that you can share beyond that what went into that thinking.
Well I'm not sure.
What your question as to that so the lost rent four cents is.
It's.
Next the closer to $11 million.
That you've got a $10 million there.
And the rest would be.
Rent loss due to co bid for for example, not having rats are fan for the quarter.
So it's okay, a lot of I'd like why that number is a lot of that number is going to come back right. So the base here on a cash basis for that so the only the only thing that you're doing is you got a 2 million hours ERV against a $40 million worth of rent deferrals and you know we did our best to come up with number it picked up that's the right number. We also disclose for you what the coverage was.
Assuming that we didn't clicked any of it because the if you don't reflect any of it the payout ratios, 125% right and if you look at where our stock valued today, our sockets technically valued as if we're not going to collect any of the of the rest deferrals you know.
It's all going to go away I mean.
Now I'd say I think we're in quick virtually all her Brett deferrals, but that would mean stock that is valued in that respect that may not and we gave you that disclosure so.
We think that the right reserve is $2 million could it be free or for me to ours, maybe I don't know what we'll see we'll see where it comes out I mean, we tried to be conservative. So we're not trying to you know we're not we're not as being we're not Patti anything we gave you the number without it. So so so you you have.
Okay, and any write off to the us in accounts receivable balances not in that four centsfive because that's not.
That's typically <unk> and they Epo anyway right.
Oh right. There is if we wrote off and accounts receivable that was from a prior quarter is that what you're asking.
Well I mean are supposed to write off like you did it reserves or you can do a eighth straight line rent.
Receivable.
Battles write off right I mean, it's a different things I'm just curious four cents doesn't include any kind of straight line.
Accounts receivable write off right.
A straight line rent receivable would've been less than a million dollars.
Okay and just last question.
Someone asked you about the Hbr into Q, you guys used to disclose it in your press releases.
Things are bought up and maybe that's all I think your hand. It was just a 730 million from first quarter to be by about a four but that's not really that twoq. Your run rate. So you have any.
There's no color on just what the HDR it.
As the Twoq.
So what we what was difficult and why we didn't put it in the press release is because we have old for some of these temporary deferrals going on so it didn't really makes sense to try to figure out what an annualized number would be because it's the deferrals for temporary right. So for example, if you told somebody Okay you have to.
You can pay 50% of Gen. But then your rent goes back to normal in July if I would annualize Jan the whole year, but Charlotte 50%.
Which wouldn't make any sense right. So.
You know as soon as we would assume that Kobe it is a little bit more volatile and showing.
A b R was more.
Insightful I think knowing that the months were pretty even all year long right. So you could annualize it because it's a same rent every single month and during this Kobe time, that's not true.
Yeah.
Q and this concludes our question and answer session, what I'd turn the conference bunch, Christopher folk for any closing comments.
Well. Thank you all for attending the call today I'm married Kathy Niagara be available for any follow up questions. You've got given that we're working remotely and we're not seeing many of you if we'd normally would during a periodic conference events, which has been disappointing to us. So so during the third quarter, we're expecting a and we're planning on virtually conducting a few non deal investor.
Isn't patients.
If you have an interest in being included in this kind of outreach feel free to call US meantime, like have a great day. Thanks, so much.
Thank you you conferences out included thank you for attending today's presentation now disconnect your lines.
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