Q3 2020 Pebblebrook Hotel Trust Earnings Call
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Greetings and welcome to the Pebblebrook Hotel Trust third quarter 2020 earnings call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Raymond Martz Chief Financial Officer. Thank you Sir you may begin.
Thank you Christine good morning, everyone welcome to our third quarter 2020 earnings call webcast.
With me today is Jon Bortz, our chairman and Chief Executive Officer.
Before we start a quick reminder, that many of our comments today are considered forward looking statements under federal Securities laws. These statements are subject to numerous risks uncertainties as described in our 10-K between our team and our other SEC filings and future results could differ materially from <unk> implied by our comments.
Forward looking statements. We make today are only affected as of today October Thirtyth 2020, and we undertake no duty to update them. Later are asked to see reports and our earnings release contains reconciliations of the non-GAAP financial measures, we use which are available on our website a couple broker telx dotcom.
Okay. We now have 39 hotels open marking a significant increase from the end of March when we had just eight hotels open.
Our second quarter earnings call at the end of July we had 24 hotels open.
Of the 14 hotels that are that are currently closed 10 or in San Francisco, what each in Chicago, New York Portland in Washington, DC, We will reopen these hotels as demand and economics warrant.
Our monthly cash burn has further improved as a result of healthy leisure travel demand the beginnings of a recovery in business travel.
That opening additional hotels during the quarter due to improving demand and economics.
It's been running at just $5 million to $8 million at the hotel level $10 million better than the $50 million to $80 million cash burn we estimated back in may.
Our total average monthly cash burn, which includes our corporate DNA interest and dividend payments is now running between 16 and $21 million.
This is $9 million better than the $25 million to $30 million estimate we are experiencing in may.
With an increasing number of travelers feeling confident about traveling and staying in hotels. Each week, we've been pleasantly surprised by the positive momentum in the last few months given the intense uncertainty and the pandemic environment.
For the third quarter same property total property revenues of 77 million were 80.7% below the prior year period with total hotel level expenses of 96.2 million, which was reduced by 63.2% from the prior year third quarter.
Our expense reduction was 70% of the revenue decline, which illustrates our operating and asset management team's tireless efforts to reduce expenses significantly given the drastically altered operating environment.
Excluding fixed operating costs, such as property taxes insurance and ground rent operating expenses were slashed by 70.8%, which was 88% of the revenue decline.
We feel I feel good as we can about these comparable operating results given the environment. Our hotel teams did a great job, reducing operating expenses at both the suspended hotels and open hotels.
As we noted in last nights earnings press release, we continued to experience healthy leisure demand since labor day, we've seen a modest uptick in business travel demand while leisure travel has held up better than is traditional post labor day decline.
Our total portfolio generated $21.1 billion of revenue in July with 24 hotels open 25.8 million in August with 35 hotels open and $30 million in September It was 35 hotels opened.
For October we are on track to meet the toll revenues, we achieved in September which was encouraging particularly without the benefit of long holiday weekend like Labor day, It was leisure demand being negatively impacted by Halloween and the last weekend of the month.
For the third quarter same property hotel EBITDA was negative 19.3 million compared with a positive 137 nine from the prior year period.
However, the market is significantly improved improvement from the second quarter, when EBITDA was negative $40.8 million.
On a per key basis during the third quarter, our hotels generated revenues of 5800 per key hotel expenses of 7300 per key resulting in negative hotel EBITDA of 1500 per key.
By both same property hotel EBITDA was negative $6.8 million in July negative 7 million in August with $2.1 million of retail rent write offs and negative straight line rent impact negative $5.5 million in September.
We currently expect our same property hotel EBITDA in October to be roughly in line with September.
We are also encouraged that are open hotels were also EBITDA positive and that in total for the quarter ended the month of July and September.
August would've been EBITDA positive after the removal of the negative impact of the retail rent write offs and straight line rent adjustments.
Our eight resorts have been the bright spot in the portfolio all summer as well so far the fall to that there are obvious appeal to leisure demand and their desirable dry two locations. They generated a positive $12.6 million in hotel EBITDA in the quarter.
This resulted from an occupancy of 51% and average daily rate of $303, which was almost $30 over the prior year period and is 10.3% over an increase over the prior year.
As a result of the new operating model is that all of our hotels, we achieved that European margin at our resorts 10 basis points higher than last year's third quarter. Despite a 30% decline in rooms revenue and a 30.5% decline in total revenues at our resorts. We think this is a pretty incredible achievement and not only a testament to our property teams.
But how would you be able to operate much more efficiently on an ongoing basis in the future.
As a reminder, leisure transient portfolio wide has historically accounted for about 40% of our demand with corporate transient has 35% and group at 25%.
Our adjusted EBITDA was negative 27.69 in the third quarter compared with a positive $136.5 million in the prior year period occurred.
Our current quarter also reflects $1.8 million of one time costs related to spending a dramatically reducing operations.
Adjusted FFO per share declined to a negative 51 cents per share compared with a positive 77 cents per share in the prior year period.
Shifting to our capital improvements in the quarter, we invested $20.8 million of capital into the portfolio, which is primarily related to completing two transformational projects. The redevelopment of the Donovan hotel as hotels in Washington, DC and the transformation of Mason and rock into the Viceroy Hotel, Washington DC.
We currently expect an additional $15 million to $20 million in capital investments during the remainder of 2020, which includes the expected commencement before year end of the $10.5 million redevelopment of the luxury Lebaron del Mar resort in Southern California.
As we look forward to 2021, we currently don't expect to commence any other significant capital renovation projects. During the year. However, we'll continue to move several transformational projects forward through the design and permitting phases. So that we're in a position to quickly commence work on the improvements at the appropriate time in the future.
Shifting to property dispositions as we previously reported on July 29, we Soviet Union station Nashville Hotel for $56 million, which increased our available liquidity.
Year to date, we've completed $387 million of property sales.
Turning to our balance sheet at the end of September we had $2.4 billion of debt hundred percent of which is unsecured.
Active average interest rate of 3.8%.
This equates to a net debt to depreciate, a book value of approximately 38%, which is less than 30% of our estimate of our hotel portfolio's replacement costs.
We had 350 to 353.2 million of available availability on our $650 million unsecured credit facility and $270 million of cash on hand, which implies total liquidity of $570.2 million for ongoing operating and capital investment needs, we should be far more liquidity.
I needed to get to the point of generating positive cash flow sometime next year.
Overall, we are in good shape with our debt maturities, we have just $57 million of debt maturing in November 2021, and no meaningful additional debt maturities until November 2022.
And with that I would now like to turn the call over to John John.
Thanks, Greg.
So I thought I'd start by hitting the highlights of what we saw during the quarter and what we're seeing now of course it all starts with the leisure traveler, which was the primary demand segment during the quarter and has continued to be so since the end of the quarter.
Alright drive two resorts and our drive to get away markets, such as San Diego and Los Angeles have been our strongest performers due to their easy access their outdoor amenities and activity offerings and their favorable weather yes.
Yet leisure has been driving business in our urban markets as well like Philadelphia, where people are just looking to get away from their homes and the monotony of their routines.
Our weekend in the downtown or city hotel.
We saw leisure demand increase throughout July and August.
Over the three day Labor day weekend, but.
But continue post labor day and into the fourth quarter.
We even saw an improvement over the Columbus or indigenous peoples holiday weekend in early October.
While leisure travel as soften from the summer seasons traditional strength.
Most labor day fall off has been nothing like a typical year.
Weekends continued to be strong relatively speaking of course, and we continue to see weekday leisure travel as well.
Many people having flexibility due to work from home and learn from home in many places.
In fact occupancy said, both our resorts and our urban properties have been better in September and October then in August and Buck for the Labor day weekend, they've been better in October than September.
Weekends at our resorts RIN, 84% in August.
83.3% in September and 83.3% so far in October.
Just one weekend lap.
Weekends at our urban properties ramp 38% in August a much improved 50% in September and 48.9% so far in October.
In total weekends for open hotels ran 48.8% in August.
57.1% in September and 56% month to date in October.
During the third quarter, and particularly since Labor day, we've also seen the beginnings of a modest recovery in business travel.
This has primarily been business transient.
But weve booked and cooked some small business groups as well.
We've also accommodate a growing number of small social groups, including micro weddings anniversaries and reunions.
Most of it in the outdoors.
And more of it is in places like Laplaya in Naples, Florida, and Skamania in the Columbia River Gorge in the state of Washington.
As those states have allowed larger group gatherings.
We expect this recovery and business travel to be a prolonged process.
With the pace of its recovery likely dictated by health advances slowing the spread of the virus and improving the outcomes from the virus.
And it certainly seems it's at least a couple of quarters away from today.
Outside of our resorts, which were our best performing properties, our hotels in San Diego, Los Angeles, Boston, and Philadelphia have been our best performing markets.
San Diego of course is benefiting from the consistent consistently great weather.
The fact, the mayor has done a great job safely reopening and marketing the city and its attractions and amenities the.
The fact that it's a short drive from a large population base.
And on a relative basis, its traditional lack of significant business transient travel that is otherwise been severely impacted by the pandemic.
Ally is also benefiting from its traditionally more attractive whether the outdoor nature of the west side of ballet its beaches and the return of travel related to music television and movie production as those industries reopened in the third quarter.
Boston is benefiting from travel related to healthcare biomedical and biotech.
All of which are booming right now as well as the strong education base in the city.
It's also benefited from a safe way it has reopened.
And finally Philadelphia.
Not sure why Phil is doing so well other than the historically strong restaurant and outdoor and other amenities the city has to offer.
And perhaps it's a getaway alternative to New York City.
In addition to being encouraged by the continuing health of leisure travel and the beginnings of a recovery in business travel worried.
We're even more encouraged by the dramatically improved efficiencies at our property operations.
With all new operating models at each property.
You've heard me say this before but we've literally gone through a true zero based budgeting effort.
Between our asset management team and our operators.
As Ray noted our open hotels achieved positive EBITDA in total throughout the quarter, even as we opened additional hotels in the urban markets that have been slower to reopen and recover.
Hats off to our teams for doing an incredible job to mitigate our losses and drive positive EBITDA where possible.
We know Theyre working with slimmer teams with lots of cross functional efforts truly an incredible team effort.
I thought I would provide a few portfolio wide facts and a few property specific examples.
On a portfolio wide basis for our open hotels.
Room revenues declined 69.6% from Q3 last year.
Total revenues also fell 69.6%.
Great was down 19.7%.
Total expenses were reduced 54%.
And GLP declined 82.6%.
GLP margin went from 42% last year to 24.2% this year.
We think this is a pretty amazing effort by our operating and asset management teams.
As we reopened more properties in the quarter and as performance improved during the quarter more properties achieved positive GLP.
We went from 16 properties with positive GLP in July.
To 18 properties in August 26 hotels of the 35 that were opened in September.
And here's a few examples of individual property formants performance. So you can understand how significant the changes in the operating models have been.
At southernmost resort in key West in September a seasonally slow months in key west room.
Room revenues were actually higher this year than last year up by 5.6%.
With all of it being occupancy as rate was down a one dollar.
Total revenues were up over 15% in the month.
Including food and beverage parking and spa.
Of course are not as profitable as rooms.
Even with some higher cleaning and operating costs related to maintaining the health and safety of our associates and guess.
GLP grew by 28.6%.
And the team delivered a GLP margin 530 basis points higher than September last year.
That's a marker waterfront resort in key west room.
Room revenues were down 5% with total revenues declining almost 7%.
Yet GLP increased 5.8% from September of last year, with GLP margin climbing 550 basis points.
Outstanding performances by our teams at both key West properties.
At Laplaya in Naples.
Room revenues also increased in the seasonally slow September month.
In this case by almost 16% with.
With total revenues growing by just over 7%.
GLP increased by 164.5%.
With GLP margin climbing from 11.4% to 28.2%.
At low barriers in del Mar outside of San Diego room.
Room revenues declined by 12.6% from last year.
With total revenues down by 33%.
Due to a lack of group banquet and catering.
Yes, GLP only declined by 24.4%.
Obviously less than the revenue decline and GLP margin actually increased by almost 500 basis points to 42.6%.
Even with the significant decline in revenues.
And finally, the park recently Redeveloped, all Sweet residential hotel in West Hollywood.
These numbers I'll help you see the benefit of the new operating model of our urban hotels like this property.
Where occupancy remained challenging.
In September room revenues were down almost 65%.
With 80 are holding up with a decline of just 7.5%.
Total revenues were also down 65%.
As the park has a more limited food and beverage offering even in normal times.
Yet even with these large revenue declines from some from September of last year.
GLP was down just 73% only slightly higher than the revenue declines.
Not only did the property achieved positive GLP in September.
But its still hit a GLP margin of 38.8%.
Well that was down from 49.4% last year.
The property team also managed to achieve achieved positive EBITDA with a 14% EBITDA margin.
None of these properties could have achieved these bottom line numbers without new operating models coming out of our zero based budgeting initiative that is significantly reduce costs and created much more efficient staffing levels.
Of course, while some of these costs will come back as demand and occupancy is recover.
Many of these efficiencies will stay in place and deliver better results in values over the long term.
We will also speed up the recovery to 2019 EBITDA levels.
I also wanted to point out that our independent and small brand lifestyle properties continue to outperform our major branded properties at both the top and bottom lines.
Our hotels cater to the one major segment.
It continues to be healthy leisure travel.
The unique design and experiences that we can provide.
And the smaller more personal nature of our properties continued to be a strategic benefit for our portfolio.
These properties are also more flexible when it comes to quickly changing operations.
And adapting to evolving customer desires.
There are also able to move faster and reducing costs, yet still delivering attractive product to the customer.
Both of which have been very beneficial to delivering favorable bottom lines at these low demand levels.
With 39 of our 53 properties now open we will reopen the remaining properties as demand recovers and economics dictate.
And as we've said repeatedly we will reopen each hotel when we can lower our losses by being open.
This varies by property and by market.
With the coming winter and the decline in demand that is typically associated with colder months such as November through February.
We currently don't anticipate opening additional hotels in San Francisco, Chicago, or New York until sometime next year.
We do continue to evaluate the two remaining suspended hotels.
In Portland, and Washington as demand recovers.
We're also doing everything we can to accelerate this reopening process.
Including hunting for additional contract business like airline crews, which we otherwise wouldn't have previously taken due to lower rates.
However for the next year or two we believe they will be financially attractive in most situations and.
And we've had some luck in that area, which should help reduce our cash burn as airline travel further recovers.
As we noted last quarter, we also had locked with attracting university contract business first.
For student residences at two of our hotels in Boston.
And we continue to search for similar business in Boston and elsewhere.
Over the next few years, we would expect our hotels to outperform their specific markets similar.
Similar to what they did last year and early this year before the pandemic struck.
Being able to dip down and compete with lower price point hotels and be successful with contract business owner.
Only happens because our hotels are of high quality alright, good locations and are in very good condition.
And our hotels are in better condition than most of our hotel competitors in our markets and that difference can be expected to widen.
As we continue to maintain our hotels.
And many competitive hotels are starved of capital investments as they struggle to survive.
40 out of 53 of our properties have undergone major renovations redevelopments or transformations in just the last five years.
Nine in just the past few quarters and 10 in 2018.
This will be a big advantage over the next few years.
We're also currently planning to move forward with a $10.5 million renovation.
The luxury low fares del Mar resort commencing late this year.
We've completed the design, we've received all required approvals from the city and.
And believe the dramatic improvements to all of the public areas and Guestrooms and the creation of additional outdoor venues while.
Well enhance what is already a very high rate is successful luxury resort in southern California.
The decision to move forward with additional redevelopment in our portfolio will be made on a case by case basis.
And will depend not only on the recovery of the properties and their markets but.
But the timing of the receipt of final public approvals for each project.
As well as the pace of the economic recovery and our own recovery.
When we think about the remainder of the fourth quarter and the first quarter of next year.
These next four to five months are challenging to forecast.
Given the lack of relevant historical demand trends to guide our forecasts.
In addition, we must consider the potential negatives related to the recent increase in KOVA cases throughout much of the us that we're currently experiencing and what many have been previously forecasting.
As a difficult second wave.
As well as the reactions by many states and cities to expand travel related quarantines and roll back operating guidelines for some businesses.
These negative factors increase the uncertainty as we look out over the next several months.
Given that November is traditionally the beginning of the seasonally slower travel period we.
We think it will be difficult to continue to grow nominal revenues through much of the winter.
And depending upon what transpires with the pandemic.
It may soften somewhat from the September October periods as they've done historically.
This means we are more likely to achieve portfolio wide hotel EBITDA losses at the less attractive end of our more recent run rate range of minus $5 million to minus $8 million.
Or slightly worse from now until this spring.
To be clear, we currently expect that it's likely that nominal industry demand and revenue will soften over the next few months as we enter late fall and winter.
Which is consistent with what normally happens in our industry as the weather becomes less conducive for travel.
However, with medical advances likely over these next four to five months we.
We also think it's likely that we in the hotel industry, we'll see improvements in the recovery as warmer weather arrives in the spring.
As we look at the silver lining of potential upside from this crisis we.
We also expect there will be significant opportunities over the next few years to acquire properties in distress due.
Due to a large non number of cash strapped and over Levered owners.
And many properties that will go back to lenders.
As you know our team has been through two prior crisis, driven opportunistic periods, including.
Including one that resulted in the creation of Pebblebrook.
In late 2009 during the tail end of the great recession.
Following that crisis, we were able with conviction.
To fairly quickly and aggressively.
Sample a unique portfolio of high quality hotels and resorts had.
At very attractive prices.
It also has substantial upside opportunities.
Given our ability to operate our properties more efficiently than the vast majority of buyers are unique strength in redevelopment and transformations.
Our vast number of operator relationships.
And our high profile and positive reputation in the industry.
We believe we'll have significant competitive advantages as opportunities arise over the next few years.
We continue to spend significant time on the best ways to approach and.
And structure, our efforts to take advantage of these opportunities as they come about.
Finally, it's safe to say, we'll all we all find ourselves in uncharted territory.
With an almost complete lack of clarity about how the future will play out.
We remain encouraged by the slow yet consistent recoveries in travel.
In our industry and in our business that are currently underway.
It'd be great if the recovery was faster.
But we prepared for a lengthy and challenging recovery from the beginning of this pandemic.
We continue to be confident that our entire team's experience.
Reputation for site creativity.
Work ethic and track record.
Combined with strong corporate liquidity and a fantastic portfolio.
Will allow us to not only grind through the current challenges.
But thrive during the recovery and the next upcycle.
So with that we'd now like to move on to your questions Christine.
Christine you May proceed with the QNX.
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One moment, please while we pull for questions.
Thank you. Our first question comes from the line of Smedes Rose with Citi. Please proceed with your question.
Hi, good morning.
I guess just in light of the commentary that you gave and how the portfolio did in terms of modestly breakeven with very low occupancy rates.
Where do you think.
What sort of occupancy do you think you need to see in order to go to breakeven just sort of on a corporate wide basis at this point.
So obviously it there are a number of variables there including rate and.
And other revenues.
But we think it's somewhere between 45 and 50.
Maybe low fiftys.
In order to cover.
All of the corporate nut.
Interest dividends, gionee et cetera to breakeven.
And is that it seems like some sort of decline in year over year rate as well to well.
Well certainly rate rate compared to last year.
Yes, it is set up here.
Yep.
Okay, and then John I, just wanted to ask if you could spend a couple of minutes on.
Just the San Francisco market, where that since that's where the bulk of your hotels are still close just kind of what are you seeing on the convention calendar, if anything and just kind of your thoughts on the overall kind of cities should directory from here.
Yes so.
Most of these convention authority is whether in San Francisco or pretty much any other major market have seen pretty.
Pretty much all conventions.
Cancel through at least the first quarter of next year.
And many are seeing the cancellations into the second quarter of next year, our expectation at this point as.
It's unlikely we're going to see much major citywide activity anywhere.
Whether it's in Sam in San Francisco, or San Diego or.
New York, or Boston, or Atlanta et cetera. So.
We just don't without further advances and comfort level with gatherings and as you know and in most states.
Any kind of major gatherings are not currently allow them and here, we are with dramatically increasing spread and caseload. So I think it's.
Well well be wonderful and we'd love it to happen we just.
I don't think theres going to be much in the way of major group and citywide before mid year next year.
And I think as it relates to San Francisco, specifically Smedes and they do continue to have success booking.
New business in the second half of next year.
And further out and as it relates to the second half of next year, what we are seeing is.
A decent amount of the of the business that was in the first half.
Find a place to book in the second half of the year. So if we do get to a point, where major gatherings are allowed and people feel comfortable.
There is a pretty good chance, we're going to have an awful lot of business in the second half of next year.
Great. Okay. Thank you.
Our next question comes from the line of Rich Hightower with Evercore. Please proceed with your question.
Hey, guys good morning.
Hello.
I'll commend you on the on the asset management successes, you had last quarter in light of a very tough situation. So just wanted to say that.
But and I guess my first question was going to be on the cash burn as we get into the.
Late fall and winter here and I think John you sort of answered half of it in the prepared comments so it sounds like.
With the expectation for reduced nominal revenues. As you described you are probably going to hit the high end or the low end, depending on how you look at it.
The expected cash burn range now do would there.
I guess could you contemplate.
Three closing hotels, if it came to that and would that.
That changed those expected cash burn ranges or how should we think about that as we as we get through the next few months.
Yes so.
So rich first thanks for the complement and really the complement goes to our operating teams of the properties and our asset management teams, who work with them and share so much of our cross portfolio knowledge, but.
Yes.
We think it's likely and again forecasting is really hard right now.
We book about a third 25% to a third of our business in the week for the week.
And of course, almost all business on the books is fully cancelable, So and we would say that general cancellations even of leisure.
And transient are running higher than what they traditionally do so.
It makes for a difficult forecasting.
That being at the at the worse end of that range takes into account. What we think is the most likely scenario to occur in terms of that that that nominal slowdown from the seasonally colder months and also takes into account if if.
If it made sense to two.
Close down another hotel that had reopened in one of the one of the colder markets.
In particular.
We certainly will be looking at that and evaluating that and its definitely a possibility.
Whether it happens.
I don't know yet we don't know yet we'll have to see how the leisure demand holds up and what amount of business travel there is.
At those properties, but if it were to occur it would be a pretty limited number of properties.
I'd say, one or two in the portfolio frankly.
Okay that is helpful.
My second question.
In terms of the distressed asset opportunities that you described and that.
We're all kind of seeing play.
Play out in real time.
John I think you've been pretty vocal in the past that.
Pebblebrook would not issue equity doesnt have a need to issue equity anywhere near current levels in the stock price.
So in order to take advantage of some of those opportunities. So in terms of the timing and the structuring and the the sources of capital that you would envision in.
In being able to get involved in that what would that look like what what should we expect.
How are you thinking about that.
Yes, so rich.
It's really not much different than what we've said before.
It's it's going to be off balance sheet.
Well leverage our our equity relatively small amount of equity with third party equity.
Add theres any number of structures and approaches and and investment objectives that.
We're evaluating it and and and we may pursue one or more of those.
Whether it be joint ventures have fun.
And a club deal of Pebblebrook 2.01, 44, it could come in any number of structures, but all achieved the same objective.
Objective, which is to to lever our equity.
Take advantage of our expertise and our knowledge in the markets.
Working with other third parties getting paid for that knowledge and expertise and efforts.
All in all as part of that so.
And and I don't I.
And we've said this before also.
This is going to be.
Slowly ramping up opportunity we're seeing.
A few properties per week get freed up.
We've started to see more loans.
Come to market, which was what we thought would be the likely first.
Set of opportunities, but this opportunity is going to be a multiyear opportunity I mean, it's going to be three to five years.
As we work through.
The sort of gradual.
And lengthy pain. Unfortunately that the industry is going to continue to feel for for quite some time and properties that are surviving off of using capital reserves.
And other reserves.
You can only do that for so long and then you don't have the capital available to actually maintain your asset. So this is the same kind of thing we saw play out after.
After all nine.
And.
At Pebblebrook.
We found opportunities that where you could argue they were distressed or certainly opportunities created as a result of of the distress that occurred.
Economic downturn and the severity of it I mean, we saw those all the way through 2014, and we started buying and in the middle of 2010. If you recall. So we think it's going to be a lengthy process with lots more opportunity than previously and.
And as a result of that we want to make sure. We structure. This the right way and it it doesn't preclude opportunities as the business recovers and our stock recovers.
Okay got it thank you.
Thank you.
Our next question comes from the line of Neil Malkin with capital. One. Please proceed with your questions.
Hey, guys good morning.
Hi, good morning, Neil.
John in.
It was refreshing to hear more.
Optimistic tone.
Tone in the press release and in your commentary very unlike you but.
Okay.
None of that will help you get things getting going here.
Question, you guys talked about the modest improvement in business travel.
Just wondering if you could maybe elaborate on that in terms of what.
Sized businesses is it more regional.
I imagine, it's not the big public companies and also kind of like what sectors are traveling.
Any trends you can see there and then.
Your larger corporate accounts, what are what are you hearing from them and when does it seem like they're going to start.
Coming back in any meaningful way.
Yes, so that the the business transient that we're seeing is really what you would expect is its people on their own businesses.
Whether small or medium size it's.
It's the folks who are restricted by.
By major corporate.
Restrictions that I think are to some extent based upon.
Avoiding liability.
With their employees.
And I think.
When we look at the industries, I mean, and it varies by market, but in Boston, we are seeing a lot of obviously health care.
Biotech biomedical we're seeing consulting I.
I think throughout the portfolio, we're seeing consulting that is our project based facilities based that you.
You have to be on site, you're installing of system.
As an example, Europe, you're installing servers and cloud systems.
In markets.
With the with the growth in that industry.
In L.A. I mentioned, we're seeing production.
Return in L.A., and including production that might have otherwise gone abroad, but the.
The movies and TV production that would have otherwise take place in a place like Canada. As an example is not able to do that right now.
To the same level as before so.
We're seeing some production that would otherwise have been abroad.
Come back to outlay.
And some other places in the us.
Also seeing music production.
In in ally return.
So so content development is driving.
Business and in some markets as well.
Real estate. Good example of folks who.
Funny, but trying to lead I suppose but a lot of the the lot of the rates have come back to their offices and many of them are are having folks travel.
Where we're generally not seeing it isn't is in your industry and the financial services industries.
We're not seeing much travel there.
We're not seeing much travel in the technology space.
I think some of that is the businesses sort of talking their own book.
Which is doing to encourage work from home and use of technologies online E commerce et cetera, but.
The encouraging part is I'd say, it's probably running about 10% to 15% of last years levels and thats pretty consistent with what the airlines have also been saying.
Okay, Great next one.
For me.
Maybe just a more broad question.
Like the model going forward.
And the next cycle.
Accelerates.
Yes in terms of your new API.
Operations and on the expense side protocols with brand standards changing all those things post co vid, what does that look like in terms of.
Either margin or expense savings what margins can can look like I don't know if you for example back tested into what 2019 revenues would be you could talk about.
How that looks or how you see that.
Progressing and sort of what peak margins could potentially look like that'd.
That'd be great.
Yes, Thats a tough question Neil because we don't know what segmentation is going to look like.
How that's going to change on a on a go forward basis, but.
We've consistently and in my 25 years in the business.
So we've gone through quite a unfortunately quite a few down cycles.
And.
What we found every time is that as we as we get to the other end of the cycle to the up cycle in the peaking we've we've always Pete.
At both higher Revpar levels, and we peaked at higher margins.
And so.
This has been a.
A continuing evolution of how we operate.
Hotels in our business and we've always said, we expect it to continue and these down cycles do tend to accelerate.
The progress just like in any other industries. So.
What could it be it could be two 300 basis points of of overall margin as we get back to similar levels of demand and occupancy levels would be our guests, but again, it's it's a it's a guess Neil.
Okay.
And just last one ray.
I think that the recovery kind of taking longer than maybe maybe some expected.
The competitor in the industry extended their covenant waivers.
Obviously, everyone has a different portfolio, but have you thought about or.
I started talking with your.
Lending groups about potentially extending those waivers.
So you don't get running any problems in next year.
Sure well a.
A couple things, there's a lot of time that.
That is out there until we have to make a those are the theres no I can't speak to whoever you're referring to but our waiver period goes through the end of the second quarter of next year. So that's a plus months from now.
Of time, and we'll continue to evaluate all these things we have monthly calls with each of our banks is to stay close to them. So we share our perspective on the world, we get their sense as well.
So we have plenty of time on that side, we also.
There.
Opportunities here, whether we look at.
Additional property sales or there's potential preferred equity in those sort of things are a lot of different other levers. We can look at to evaluate us increasing liquidity because part of this whole discussion with the lenders are.
They are focused on waivers, but also want to understand what the liquidity as the maturities. So these are all part of a broader valuation of the balance sheet and cash is cash sources of capital and so forth. So.
A lot of time.
In the future here I think we will see how the next couple of months go with.
Leisure and business travel.
And then we'll see what happens also on the vaccine side, because that's also a positive momentum, but we have plenty of time I won't say anything is there anything that we would kind of rush into or that we need to do now some others, who have their wafer periods and earlier maybe in a different situation.
We have time here, we will evaluate it and we'll make the right course, and keep you apprised as we make progress.
Thanks, I think the timing of maturities have an impact on corporate decision, making as well Neil so the fed. The fact that we don't have any major maturities until the end of 2022 is gives us a lot of runway.
Appreciate it.
Our next question comes from the line of Danny Assad with Bank of America. Please proceed with your question.
Hi, good morning, everybody.
John I was just trying to think about what ill because everybody keeps asking about we're getting a lot of questions about like the.
No downside risk from potential structural changes to corporate demand and so.
Have you looked at potentially just given your your portfolio mix and your exposures.
What any mix shifts could look like if we were to potentially lose whatever you want to call. It 10, 15, 20% of corporate demand.
That would look like and the potential impact that could have on portfolio margins.
Okay well.
We have looked at an awful lot of studies and there's there's a wide range of different opinions about this.
There there is no there is no doubt.
With technology travel will continue to evolve its been doing that over decades and.
And we've heard about the demise of business travel for since I've been in the business frankly.
And Frank.
Frankly, I think prognosticating in the middle of a pandemic when when everybody is doing things completely differently.
It's not it's not really a healthy effort.
Effort now it doesn't mean, you don't try to understand what the potential exposures are but I would tell you we're not a big believer that theres going to be any kind of material falloff.
In in business travel.
As as we come out of this and I think we get back to a stabilized level that looks.
An awful lot like where we were before.
If there were something that played out what we see is a is some.
Minor decline in business transient and an increase in group.
As we believe that as more workforces become more distributed.
Spread out over the country with more variable.
In work versus work from in the office work versus work from home, we think that increases the need.
For.
For group meetings getting your people together and we think thats good for that will be good for the hotel industry. We also think that conventions.
They'll they'll change that will evolve they'll become highbred they'll bring in more people virtually in addition to the people on site, but I don't think the benefits of business travel go away and frankly, while.
There's there's no doubt that you can get by when everybody's doing it.
In terms of a doing a meeting by zone.
It's nowhere near as effective.
As doing it in person and I, just don't believe that there's going to be much business that gets replaced.
By soon maybe internal meetings and things like that but we always say the.
But the first time, one of our one of our partners doesn't come visit us.
For a piece of business, they're pursuing and someone else does guess who's going to get the business I mean, showing effort and showing you care and showing where important.
Your clients important I don't think that changes because technology has advanced.
So.
We haven't spent a whole lot of time on that at this point, maybe that'll turn out to be a mistake, though I think we have plenty of time.
At this point and it's not like we're going to be dramatically modifying our hotels to accommodate up.
One point change in transient or a two point change and transition into one or two point change in group and the industry overall.
Fair enough and that's it thank you for that color.
And maybe just at the operating level. So you guys are actually are in a pretty good place just considering your mix of.
Branded and.
And third party managers.
And I know comparing the two against each other is actually not fair because.
Your your branded managers are operating a different kind of hotel and third parties, but but with the transitions you've made.
Again, it is it too early to tell but or but have you potentially like have you looked at what the.
The impact has been to ops to margins to anything as you transitioned some of your third party managers.
Yes, I mean I think in total the conclusion is that where we're convinced that the savings on the.
Independence side are.
Our real and more lasting and substantial and.
We're not completely convinced that's the case on the branded side. There are reductions I don't know that the reductions are ultimately going to end up being reductions as a percentage of revenue.
Right now, they're clearly big nominal reductions from brand standard relaxation.
The one thing we are encouraged by is is the decisions being made by some of the major brands.
That that have done a lot of activities in clusters.
Or what they call shared services.
Had a dramatic reduction in those services that are shared and bringing the.
Those services the responsibility for for those services back to the property level, where we have more control.
And accountability and flexibility so we think thats a big positive.
In in the in the case of our major branded properties, but were.
We're not convinced that the ultimate savings on the branded side will be as material as those on.
The independent side and they havent been so far in fact, they've come with a lot of a lot more onetime expenses.
That has been the case on the independent operator side.
Got it thank you very much.
Our next question comes from the line of Dori testing with Wells Fargo. Please proceed with your question.
Thanks, Good morning, guys. How much consideration are you getting right now traditional asset sales.
Which markets do you think would add the smallest declines in asset values within your portfolio pre to post Kelvin.
Yes, so dory we.
We get a lot of calls.
From.
From potential buyers.
About lots of different assets within our portfolio and.
Tough Fisher and his team span.
A lot of time, both making sure that anybody who calls that they are real theyre qualify they have the.
Financial Wherewithal to do this particularly in the case of of.
Situations, there is not a lot of new debt financing available and so.
Transactions in many cases will need to be driven by either all or an awful lot of equity.
In order for the buyer to be real.
And so like we did with Union station.
Where the buyers legit, we're happy to talk to everybody.
Anybody who is legit about properties in our portfolio and.
If there is an attractive price than.
We'll we'll move forward with a sale and we'll react reallocate that capital to places, where we can get better returns I think in terms of where weve were likely the market has seen the lease declines while it would be in our resort portfolio is not surprisingly.
And and some of the.
Sort of getaway markets like a San Diego, where those markets not only held up better but again.
Live off of something that's likely not going to go away like great weather.
And the amenity base sets and in the market. So.
That's sort of the.
The best I can tell you right now a lot of a lot of valuation decisions are going to be subject to more specific properties in many cases than they are the particular markets within our portfolio.
Thanks, and can you also talk about booking trends that you've seen for Thanksgiving and Christmas.
And.
Is it I guess is predominantly at your resorts are you seeing a little bit more widespread in the portfolio.
Yes, so the booking trends for Thanksgiving have been for for many weeks now pretty favorable.
And.
They seem to it seems pretty consistent.
[music].
Compared to other weekends, and and the and the days around on both sides.
So and it and it is at both.
The resorts as well as the city properties so.
[music].
What we're speculating is what.
You would expect I think which is.
For those who are still going to have family Thanksgivings people coming in from out of town maybe.
More often than normal would be staying in a hotel instead of staying at somebody's house.
And for protection purposes. So.
So that's that's consistent with what we're seeing in the portfolio.
Havent focused that much on Christmas week, yet, but I think it's likely to perform similarly.
We expect these these holiday weekends or periods to be stretched out.
End of <unk> and the benefit more days around them then they would traditionally because of the strength of leisure and the desire of.
Folks to get out and get away. So we're encouraged by that and of course that's the.
Those are the particularly positive.
Attributes of both November and December to have significant holidays that we think will drive leisure.
Okay. Thank you.
Your story Thanks story.
Our next question comes from the line of Michael Bellisario with Baird. Please proceed with your question.
Good morning, guys.
Good morning.
Just one from me just want to go back to your comments, John our that scope.
[laughter].
Just want to go back to the San Francisco comments you made.
Really really focus on that on the Z collection. There can you update us on how you're thinking about that brand today and and the value there.
So really to monetize that at some point.
Yes, I mean, it's well first.
The whole businesses of pandemic interrupted right.
So that would be the case with the.
The Z collection.
We.
We do continue to focus on expanding that as a proprietary collection and.
As time goes on we'll take a look at its value to them.
Potentially to third parties.
We only have one of disease open in San Francisco and and of course, we just opened the DC property. So we do have a website up now and certainly encourage you to go take a look at it it's quite different than your typical.
Your typical hotel web site and I think it is.
His attitudinally in line with the attitude of the brand so.
And as we look at the rest of the portfolio will continue to look at assets that.
That makes sense being transformed in disease and that would be at the appropriate time.
Which would be consistent with our thoughts on the marker in San Francisco, which we are completing designs and and permitting for it to be converted into as a collection property.
Got it thank you.
Thanks, Mike.
Our next question comes from the line of Bill Crow with Raymond James. Please proceed with your question.
Good morning, John.
But short relationship do you see between the return to work.
Status and business travel demand.
Yes, I mean, I think they're pretty closely related I think it I think first there are obviously in indications of.
The the way businesses.
How they're looking at the timing of getting back to sort of normal right and.
I guess the encouraging thing is post labor day, we've seen some returned to office in various markets.
Clearly, we'd love to see a lot more.
We'd love to see legislation in Congress that passes related to.
The sort of the cares 2.0, or 3.0 out of I don't know what the what what we're counting as what but that also includes a business liability protection and I think that would help as well.
And of course, all of these health advances, which would help aid both returned to office and.
Return to business travel, we have a hard time.
Believing there many corporations out there where they're not going back to the office, where they are allowing people to travel. So we haven't seen much of that bill.
Well, we've generally seen as most of the people Weve seen traveling are also people going back to their offices. So.
So we do think it's pretty closely related.
Right.
One follow.
Follow up for me John.
You talked a little bit about the days around the holidays, maybe being a little better it seems like college calendar some changed a lot.
Still have people working at home could this really be.
Kind of a blow out December January February in places like South, Florida or the.
West Coast to Florida for you.
Are you doing enough to did you did you.
You gave us some great statistics and.
West.
From this past quarter, but rate could raise have been pushed more and are you looking at.
Pushing rate a little bit higher.
Going forward.
Yes so.
The answer to the first part of your question is yes, we think Theres theres upside opportunity from this restructuring of of education both both.
[music].
Grades one through 12 as well as as.
Okay.
Colleges and universities, who.
In many cases have cut on on property.
Even when they're open there on property residences in many cases down to Thanksgiving.
And setting the kids Holman and not having them come back for for finals as an example.
So I do think that can help.
With with increasing leisure demand.
To levels that are greater than what we would traditionally see.
As it relates to our we are we getting enough rate.
We'd always love more rate and it's a focus in our port.
Portfolio of particular focus obviously in the resort markets and there are places we're getting significant increases in rates like in Naples, and their places in like key west where.
Without.
You think about Naples, Naples doesn't survive off of festivals and events.
Where you get a lot of compression at a lot of high rates and so Keith.
Key West does get.
To help the average rates there bill and when we compare it to last year. When you don't have all these these festivals and events and activities that go on there.
We we don't have that opportunity to gain from the high rates that that we would typically have so our normal rates without those events are actually running higher but when we looking compared to last year, where we're losing it is on these these particular weekends.
When these activities would otherwise be going on.
Got it thank you.
Thanks Bill.
Our next question comes from the line of Lukas Hartwich with Green Street. Please proceed with your question.
Thanks morning.
Whenever we do come out of co bid Shadow I'm. Just curious do you anticipate any changes in the types of hotels you'd like to own.
Well I don't see us moving from from full service to limited service or select service at least not in the traditional sense. I mean, we we believe the always the greatest opportunity to create value is to be as far away from a commodity product.
As as possible.
Where you can use your creativity to to create more value.
Through through that process.
I think so.
Lucas if you go back to one Pebblebrook was created.
Bakken nine we had a much broader set of markets that we were active in pursuing acquisitions.
That traditionally are more cyclical and so if we could have found properties in those markets.
We would have bought in those markets and I think as we look at as.
As we look at the next three to five years will come at it with a similar focus and maybe even broader where where we'll be more focused on the top 30 markets where opportunities may come about out of the fall out of all of this to stress versus.
The longer term more permanent markets that we continue to prefer these major coastal markets, where the supply protection is greatest in the.
And you have the the most differentiated number of demand generators.
Particularly in markets, where you have growth in the creative industries.
Great. Thanks, and then just one quick housekeeping question the transfer taxes taxes related to the Lasalle merger.
Provide a little more color there.
Sure that relates to.
In California, just the.
The.
Tax office assess the.
Tax at.
We had to pay it but we're going to we'll be disputing that.
We don't we grew the number and as these these are typical in transactions. These.
These are whether its individual transactions or in this case.
Acquisition of the company.
Lasalle so thats a.
Expense that we recorded in the quarter.
But expect us to pursue it and.
Ordered and paid well and they were forced to paid its the beauty of the state of California here.
But we're going to be aggressive in pursuing that we don't agree with that and hopefully we'll get some positive progress and that this is going to play out over time, it's not get rough issues are resolved.
Great makes sense. Thank you.
Thanks Lucas.
Our next question comes from the line of Gregory Miller with true Securities. Please proceed with your question.
Thanks, Good morning.
For your.
Southern California, and South, Florida resorts as we head into the winter months.
What are your current demand expectations from snowbird leisure versus last year.
Especially say the mid Westerners to the Florida West Coast.
And if snowbird demand is lighter how much demand do you think may be replaced by closer to home drive to leisure.
Yes, we're actually seeing healthy demand from both places. So we do continue to see folks come down from the Midwest.
We also are seeing.
Hey, a broadening and widening of the drive to market some markets like Texas.
As an example that historically hasn't been a major feeder and into next.
Paypals as an example is increasing feeder.
The other thing we've seen is.
Meaningful increase in capacity being brought into the market, but both parts of South Florida.
By the airlines and obviously, they're they're moving those routes from other places where there isn't demand to markets like these where there is demand we've even though we've seen that in key west as well.
Where it where we've actually seen significant announcements of of increased routes.
And service into the market because of the the demand is there for that fly too.
That fly to demand.
In Southern California.
I would say.
The fly to there is mostly coming in from would be northern California.
And the drive to comes from from La Orange County, Central California, Arizona.
And Nevada when.
When the weather is much more attractive and southern California then.
Then in those markets.
Thanks, John and I want to.
Use my follow up to talk about.
West L.A. in particular.
Most of the Submarkets that you're in west delay and I think especially of West Hollywood in Beverly Hills.
There has been headlines in recent months of distressed independent hotels.
Your own but.
But other properties and a least a few of the hotels are trying to reposition or may permanently close. There also are a number of hotels that have recently opened or are planning to open under fledgling small brands.
Between West Hollywood in Santa Monica, you spoken often of New York City in Chicago in terms of their supply changes.
But I'm curious how you see west to lay going forward from a supply perspective, and the potential impact to your hotels.
Yes, I mean, I think Westell is one of those interesting markets where.
Unlike say a new York today.
Or a Chicago today, the residential market is really strong and so I think what were we would expect is there to be some.
Conversion of less competitive or distrust.
Hotel properties and seeing those convert over to residential but the there there have been one or two announcements of that theres a bit announcement of a boutique hotel converting to a members only.
Property as well, so the little more creative, but but something specific to a market that.
Accommodates that kind of.
Use so we do think it's likely to continue.
Particularly given where where values have been and what level debt likely is on these properties.
When there is an alternative like that that's that's apparent we would expect to see some more of it.
Thanks, very much Thats all from me.
Thanks, Craig.
Our next question comes from the line of Anthony Powell with Barclays. Please proceed with your question.
Hi, good morning.
I wanted to ask Lucas question, a different way so.
Long focused on.
Coastal markets with any kind of west coast bias.
And Thats still the case you other questions about urban markets of industrial desirable there's question about Ms.
Political issues in West Coast markets, what are your views on these issues and.
Could you maybe long term, maybe reducing reliance on markets like San Francisco, Yes.
Yes, the kind of the environment doesn't improve there from either.
EBITDA governance, or just overall environment standpoint.
Yes, I think Anthony its.
It's something we continuously evaluate and and are focused on and we'll be focused on as we as we look at new opportunities.
We we had this conversation a long time ago and what we said was look we ended up on the west coast, because with an emphasis a bias to the west coast because the risk return proposition was more attractive than on the east coast in general.
And we look at every market the same way, we try to evaluate the risks in each of those markets. One of those risks can be political one of those can be how as the city evolving and some of it can involve an overall macro view. So I would say, we're not necessarily believers in in a.
A movement out of cities.
On a on a long term basis and into suburban markets as an example, or world or secondary markets.
We think cities still.
Have a lot of positive attributes and amenities.
And reasons for people and businesses to be there.
And generally have a lot more demand generators, you think about today, if I'm, a 25 year old living in a city and I'm living there because I love the buzz of the energy of restaurants, and movies and Broadway and sports events and while there aren't any of those right.
Now, so going someplace else or going to live at home right now.
Is you're not really given up anything in fact are probably gaining a feeling of safety. So lot cheaper too. It's a heck of a lot cheaper depending upon whether your parents are charging you to be home, but.
I haven't heard a lot about that in the middle of a pandemic.
But but I do think.
All of these things are factors that we take into account and we've said we've said it publicly it's been printed in San Francisco that.
There are issues that the city has slipped their issues at Portland has.
They need to get their arms around these and the city's need to move in a positive direction and if they don't we're going to reallocate capital.
And yes that could mean very well, reducing our exposure in San Francisco or or Portland, as examples and moving that capital elsewhere. So.
We're definitely looking at all of that we're evaluating all that.
There are very positive attributes as to why we went to those markets, but if they get overwhelmed by the negatives then we'll live.
Got it what are what are one or two markets that you're not in now that our highest priority priority for you to get in over the next cycle.
We wouldn't say that publicly Anthony I mean come on.
Hi.
Maybe just maybe attribute of sets markets that.
Maybe.
Within the prior time well the attribute is the one I just mentioned, which is that you get more attractive returns for the risk that you take.
And clearly the other thing is.
Not not related to markets, but assets, mainly like assets, where we can use our creative our creative experience and expertise to significantly add value beyond just what's going on in the market.
Okay got it thank you.
Our next question comes from the line of Jim Sullivan with BTI. Jay. Please proceed with your question.
Thank you.
John quick question regarding the issue of looming distress.
Four hotels that are likely to default and the opportunities that.
You may find as a result of that.
And you have talked about the being very comfortable with the type of products, particularly the smaller independent hotels that.
You have a lot of in the portfolio and when you have talked about the markets that you're not going to open ended.
We tend to think when you mentioned Chicago tend to think about larger products.
A little more large group oriented product.
And I'm, just curious whether theres not from the standpoint of civil work at least for potential mismatch between where the distress is going to be greatest in this cycle versus the type of hotel you want to buy.
We've already seen in New York, some some very large products.
Default.
And commentary that it may never open again and I just wonder from your standpoint, maybe Tom is some insights on this weather whether there was going to be that issue, whether it's more likely to be distress in the large the large urban product that is focused on a large group.
Customer base.
Yes, I don't think there will be a mismatch Jim because I think some of these things are just a question of timing so.
You know the bigger properties have clearly been hurt.
To a greater extent, particularly the.
The large core group oriented properties as well as the urban properties and in that regard and.
But that's just a timing issue I mean, it it's a little like I remember when the pandemic started and.
People were all all hot and bothered about pebblebrook because of our our emphasis on the west coast and because that's where the pandemic started and we will continue to purchase and dynamic is going to get back to the east coast.
And spread all over the country and and and so I think it's a little bit similar.
You think about the level of distress. This time I think we can all agree it's much greater than the last cycle.
Yes, it's impacting different properties differently, but it's pretty severe everywhere.
With Mick maybe though.
With the exception of of.
[music].
Particularly hotel types that maybe are really alternative residential properties in the market like extended stay properties or secondary markets tertiary markets and of course resorts, which are generally doing better as I said earlier, probably not going to provide as much of a discount to.
To previous values as as other types of properties, particularly urban properties. So I.
I think it's more geographic focus than it is.
Bigger large and while our smaller properties are clearly doing better than our larger properties.
They are all pretty distressed, particularly if you had a mortgage on any of them.
So we think the opportunity will be.
It will be similar for the kinds of assets that we like but by a multiple of.
345 times, what it was in the last cycle.
And then a follow up question for me you mentioned.
When you talked about the special contract business.
The university transactions or demand that you've been able to tap into in Boston I think both of those as if it were to agreements there both of them.
Run one wins I think through Thanksgiving and the other roles I think through the middle of December and I, just wonder as you look out to the first quarter, whether there is.
Number one whether you expect those contracts to be renewed.
<unk> expenses.
Expenses.
Reduced.
And.
Kind of the broader question broader part of the question, whether it is going to be a significant opportunity for a number of additional contracts. If you will in the first quarter from other universities and other markets.
So I think as it relates to up to our too.
Where we're in discussions about.
Second semester opportunities the one.
At the W would be similar students the one at Copley.
If we have additional business next semester would be a different program. The program. We had we have at Copley right now as of one semester its actually in foreign students doing.
Doing study abroad in Boston.
We were in discussions with others, we they've not all decided how about how they're going to be teaching and.
And how kids are going to be learning.
In the second semester, and so I think we have to wait and see.
How that works out they've learned now who who decided to be virtual and who decided to come to campus and that has an impact on their needs as well so.
It's a little too early right now to know how it's going to play out Jim.
Okay. Thank you.
Thank you we have no further questions at this time Mr. Mark I would now like to turn the floor back over to you for closing comments.
Okay.
Thanks, Christine Thanks, everybody for participating appreciate for those of you who continue to stay on the call with with all the questions that we had hopefully you found that time useful and we look forward to updating you as this quarter progresses, we'll provide some some mid quarter.
Some during the quarter updates.
And then we look forward to speaking with you again in.
In February of next year.
Thanks, very much and happy holidays to everyone.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.
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