Q3 2020 Corporate Office Properties Trust Earnings Call
Welcome to the corporate office properties Trust third quarter 2020 earnings Conference call.
As a reminder, today's call is being recorded at this time I will turn the call over to Stephanie Krewson, Kelly you Lpds, Vice President of Investor Relations Ms. Kristen Kelly. Please go ahead.
Thank you Ryan good afternoon, and welcome to Cops conference call to discuss third quarter results with me today are stupid Dor, President and CEO.
Anthony Mifsud SVP and CFO.
Reconciliations of GAAP and non-GAAP financial measures management discussions on this call are available on our web site in the results press release supplemental information package. A result presentation posted on our website.
As a reminder forward looking statements made during today's call are subject to risks and uncertainties, which are discussed at length in or as he see filings.
Actual events or results could differ materially from these forward looking statements and the company does not undertake a duty to update them.
Keith.
Good afternoon, everyone.
Thank you for joining us.
I'm going to start my remarks by focusing on the Big picture.
Between 2012 in 2017.
We executed our strategic real creation plan.
With the objective of creating a franchise or would generate durable cash flow great.
Regardless of the broader economic environment.
We prefer adequately recycling capital away from traditional commodity suburban office properties and.
It into developing that so it's a strategic defense like T. location.
We also de Levered to create access to public investment grade bond market in an answer financial flexibility.
Before the MSRP, we derived only half or annualized rent from defense like two locations.
Today, we drive 88% of our rents for more occasions that sport defense activities to the United States government.
And its contractors engage the national security Defense information technology.
And cyber security activities following others.
These activities are driven by long term contracts in U.S. government funding.
And are not correlated with the general economic activity.
[noise] emissions executed in our buildings never shut down.
Our performance during the pandemic shutdowns in this period of economic uncertainty.
On the strength of the franchise and our differentiated investment strategy.
Our portfolio locations entirely concentrations.
Position us to continue executing on our straightforward. This one plan of growing cash flow through low risk development at or defense like two locations and solid property operations.
The fixed income market validated the strength of our franchise in September when.
When we issued $400 million of senior unsecured notes and extremely attractive rate.
We also received overwhelmingly positive feedback from investors regarding our portfolio quality the strength of our balance sheet and the durability of our cash flows.
In this context I'll highlight our major achievements for the quarter and for the first nine months.
Our third quarter up from four for sure or 54 cents exceeded the high end of guidance by a penny and represented our third consecutive quarter of outperformance we.
Leasing has remained solid we completed over 1.1 million square feet of total leasing during the quarter and 2.7 million square feet. During the first nine months. These.
These totals include 244000 square feet of development leasing in the quarter and 520000 square feet during the first nine months.
Today, we have completed build to suits at three different fronts, a few locations if it didn't see not only the debt, but the breath of demand.
These build to suits include 46000 square foot facility with aerospace defense contractor Redstone Gateway.
And to roughly 800000 square foot high security buildings for defense contractors.
And at the National business Park, and the other at or San Antonio campus.
We also completed an approximate 170000 square foot lease.
With U.S. government at her first care campus building Redstone gateway.
Notwithstanding the 244000 square feet of development leasing achieved during the quarter, our development leasing pipeline increased by 200000 square feet to 2.4 million square feet.
Approximately half for the U.S. government and defense contractors and have for data center shows.
Or development leasing pipeline remains robust and diversified and.
And we expect to meet or exceed 1 million square feet of development leasing for the year.
Renewal leasing volumes and tenant retention rates remain very strong.
We're on track to exceed or 20 year record of 80% retention set in 2017, we completed 841000 square feet of renewals in the quarter and 1.9 million square feet. During the first nine months, resulting in renewal rates of 89 and 84% respectively.
Lease economics were in line with our expectations in the quarter and for the nine months cash rent roll down 2%.
And their annual Escalations are renewing leases average 2.4%.
Capex on renewals was only $1.45 cents per square foot per year of term in the quarter.
And $2.05 for the nine months.
Average lease terms on renewals were 3.2 years in the quarter.
4.2 years for the nine months.
Excluding the two one year annual renewals with Boeing at Redstone Gateway total.
Totaling 242000 square feet lease terms the average four years in the quarter and nearly five years for the nine months.
We also completed an early renewal with Booz Allen Hamilton for 130000 square feet at the National Business Park.
As a result, and as shown on slide 14, we.
We have no leases over 100000 square feet or more expiring in 2021.
The only 7.7% of our annualized office rents expire next year.
Regarding the 11.25 megawatt renewal at DC six.
The least converted to a rolling six month lease at August. So the tenant is under no pressure to conclude a transaction quickly and we continue to work in harmony with them towards a longer term lease right.
We are confident that the customer will remain in our property.
The deployment is a high priority is power utilization is very high.
And among the matters under negotiation or Enrichments, so the facilities resilience by.
By way of example, since our last call.
The tenant has requested an additional enhancements to our security system.
It is in excess of market norms, and we're working to provide that enhancement.
Notwithstanding the outcome or the timing of the renewal given little rolling lease structure. We are confident we will deliver healthy AFFO growth in 2021.
In terms of vacancy leasing results in the quarter were in line with our revised expectations.
61000 square feet leased in the quarter brought our total for the nine months to 274000 square feet.
Although vacancy leasing volumes trended lower during the shutdowns than our original forecast impacting year end occupancy expectations.
Based on our leasing activity ratio, we expect solid volume in the fourth quarter and should enter 2021 was strong leasing momentum.
Regarding our active development pipeline.
At the end of the quarter, we had 12 buildings, comprising 1.6 million square feet under development that are 84% leased.
We placed into service 600000 fully leased square feet in the quarter.
And 1.2 million fully leased square feet in the nine months.
Before year end, we expect to place over half a million square feet in service that are 100% lease.
Bringing our total for the year to nearly 1.8 million square feet that are fully leased and increasing the size of our core portfolio by nearly 10% during the year.
Our ability to place large volumes of stabilized development projects.
Into service generates highly visible low risk EBITDA that maintains our strong balance sheet and drives cash flow growth.
Now for an update on the impacts of the pandemic shutdowns have had on our operations which are minimal.
Operationally, none of our office and data center properties were subject to pandemic shutdowns and the preponderance of our tenants required employees to work in our properties, allowing only a small portion work from home.
Recall that the vast majority of our buildings either our unsecured campuses contain high security scare from garments are up 3% to other high security standards in each case the missions at these locations absolutely cannot be performed remotely.
In terms of utilization rates.
Some of our portfolio is back to normal pre pandemic levels, another 40% is running at or above 50% or utilization were.
With a current weighted average estimate of 63%.
And only 10% of our portfolio is likely utilize with daily attendance roughly 20%.
Lastly, as shown on slide 20 rent accommodations remain below 1% of annualized rental revenues and a right Brent collection rates in the second and third quarters without adjusting for rent relief granted.
We are above 99.5%.
Finally on our first quarter call, we reluctantly lowered guidance by a penny to create capacity for potential impacts from the pandemic.
Today, we have more than offset $4 million of straight line rent parking income and other losses by outperforming at the price you generate.
Generating higher development fees and managing interest expense.
As a result, we are elevating the midpoint of our 2020 guidance by two cents to.
The $2.09, which implies 3% AFFO per share growth over 2019 results.
Even with a higher than expected mid point for 2020.
We are confident we can grow AFFO per share between three and 6% and 2021.
With that I'll hand, the call over to Anthony Thanks, Steve.
Third quarter FFO per share as adjusted for comparability of 54 cents exceeded the high end of our guidance by one cents.
Stronger than expected development fees and cost savings from lower utilization utilization rates at some of our properties translated into a minus 0.2% decrease in same property cash NOI, which was at the high end of guidance.
September and October we're very active and successful months in terms of raising capital.
On September 10th we issued $400 million of 2.25% unsecured bonds that mature in March 2026.
This was our first bond issue issuance since June 2015, and the transaction received an overwhelmingly positive response from investors, who noted the improvement in our portfolio composition, specifically, the increasing concentration at our defense I T locations, the conservative capitalization of our development pipeline over the past five years.
There's.
The strengthening of our balance sheet and credit metrics. The disconnect between our five years of progress in our current ratings levels and the durability of our cash flows through the pandemic shutdowns.
The initial order book totaled over $3 billion and was led by very strong institutional accounts. According.
Accordingly, we upsized the deal from our initial expectation of $350 million and are in a strong position to refinance future maturities.
Contemporaneously with the launching of a new a notes offering we announced a tender offer for the $300 million of 3.7% bonds due in June 2021.
Approximately 40% of the 2021 bonds were tendered and simultaneously with the tender closing on September 19th we announced the redemption of the remaining 60% of those bonds.
Redemption closed on October 19th Repaying, all that $12 million of next year's maturing debt.
Also on September 19th we terminated the $225 million of forward starting swaps for a cost of $53.1 million.
Combining the cost of the hedge settlements and the prepayment charges associated with the tender and redemption of the 2021 bonds. The all in cost of the new issuance is approximately 2.7%.
Lastly, as you as referenced in our third quarter press release, we.
We will be shortly under contract to sell joint venture interest into datacenter shells and expanding an existing joint venture.
We expect these transactions to close before year end raising $165 million of equity proceeds.
The combination of this equity an incremental EBITDA from placing additional developments into service during the fourth quarter will lower overall debt to EBITDA to between 6.2 and 6.4 times by year end.
The larger sale also lowers the risk of future equity funding and maintains our strong investment grade balance sheet.
After these two transactions, we will have wholly own datacenters shells in service or under development that could generate over $500 million of equity to fund our development activities for the next three to five years.
And this does not include capacity that will be created from datacenter shells in our development leasing pipeline.
And impact of this joint venture activity is that removes 1.3 million fully leased square feet from the same property pool.
Because of this change to the composition of our same property pool, we have lowered year end same property occupancy guidance from a prior range of 92.5% to 93.5% to a new range of 92% to 92.5%.
More broadly our portfolio continues to be extremely stable and well leased.
At the ended the quarter, our core portfolio was 94% occupied and 94.6% leased and we expect core portfolio occupancy to tick slightly higher by year end.
Slide 27 of our presentation details the major assumptions of our elevated 2020 guidance.
For the full year.
We are raising guidance for FFO per share as adjusted for comparability from $2.07 to $2.09, which is one cents higher than above the midpoint of our original range.
We are also reiterating our fourth quarter guidance FFO per share as adjusted for comparability, which has a midpoint of 53 cents with that I will turn the call back to Steve.
Thank you.
The goal of our strategic reallocation plan was.
To create a portfolio for which demand was consistent in varying economic conditions and that when paired with the conservatively levered balance sheet regenerate highly durable cash flows and ensure ongoing access to capital.
The shutdowns in the economic challenges brought about by the pandemic provided a proving ground for our strategy.
Concentrated assets around the government demand drivers we support.
Our ability to outperform expectations in the face of this year's challenges evidences.
Excuse me this is the operator.
I apologize, but you have a slight delay for today's conference. Please hold on to conference and it moves from one moment. Please.
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Ma'am you May proceed.
Okay. Thank you.
Well that was interesting.
We got dropped on our end, we're unsure as to where we were dropped so I'm going to.
Repeat or wrap up.
Bear with me if so if it's repetitive.
The goal of our strategic reallocation plan was to create a portfolio for which demand.
Well, it's consistent in varying economic conditions and that when paired with a conservatively levered balance sheet would generate highly durable cash flows and ensure ongoing access to capital.
The shutdowns in the economic challenges brought about by a pandemic provided a proving ground for our strategy of cats treating that sits around the government demand drivers we support.
Our ability to outperform expectations in the face of this year's challenges evidences the strength of our franchise.
Well, our business is not impervious to the negative effects over crises like depend on mix.
We have demonstrated its resilience.
We are confident in our ability to grow AFFO per share and 2021.
At least a healthy 3%.
To a robust 6%.
Moreover, our pipeline of 1.6 million square feet of highly leased active developments.
The breadth of future opportunities center development leasing pipeline.
And our access to attractively priced capital bode well for growth beyond 2021.
As a final reminder.
Emissions are building support, namely signals and human intelligence missile defense space exploration law enforcement and cyber activity.
Driven by National and global security needs. These.
These submissions are not correlated with traditional office fundamentals.
They advance irrespective of election outcomes and they absolutely cannot be performed from a remote locations.
Police the ball home offices with that operator, please open up the call for questions.
Thank you Mr. dieterich, ladies and gentlemen, we talk about this part of the question and answer session.
Oh I thought question. Please press Star then the number one on your telephone keypad. Thank you draw that question press the pound.
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Your first question comes from the line of Manny Korchman from Citi. Your line is now open.
Hey, everyone. Good afternoon.
Anthony the data center sale or the JV Sallie talked about just want a couple of points of clarification.
So youre selling additional assets during two with existing JV and then some assets to new JV or you.
Getting out of some of the assets.
And then forming a new JV.
Ah So we are forming a new JV.
We are contributing to wholly owned assets.
That are valued at $90 million by the venture 100% value.
We expect to get 90% of that so little over $80 million.
And then we will be increasing.
But we will be increasing the size of the of the joint venture. That's currently a 50 50 joint venture.
To increase the IND and investors interest in that venture.
Can you share what they are.
One new interest is going to be.
We will go up to 90%.
Or excuse me the Investor will go up to 90%. So currently its a 50 50 venture.
So we will be selling 80% of our 50% interest.
And that's expected to raise another $85 million.
Got it.
And pricing on a on that that is going to consistently did the deal that I assume.
Well, we can talk about that more after it closes but it's.
Pricing, that's more favorable than where we did those deals last year.
Great and then it sounds like leasing is starting to pick up has there been any change or discussion change and.
You know lease rate or or other sort of components of leasing coming out of that the pandemic or does it.
Sort of business as usual from from a rate perspective.
In our active markets business is very much as usual right now.
We've seen no intensity.
Demands for concessions or change in leverage and then negotiating posture.
I think there's a great deal that in some markets in the region, but not where properties are located.
Okay.
Great. Thanks, guys.
Thank you.
Your next question comes from the line of Steve Sakwa from Evercore ISI. Your line is now open.
Hi, Thanks, good afternoon.
Steve I was just wondering if you could talk a little bit of both a little bit more about the vacancy leasing I know it.
And kind of dipped in we've seen leasing activity down for just about every office company, but.
What are the discussions like with existing and other tenants.
Tenants for the vacancy leasing which seems to be kind of one of the areas to drive upside to earnings going forward.
Well, that's a great question.
The impact on our company was really timing it was a process delay.
As the brokerage community that represents most where tenants they really shut down over the summer.
Are we measure our activity.
Every week.
And from a normal activity ratio of about 80%, meaning we have.
80%.
If a identified opportunities relative to the amount of vacancy we have by the time, we get to July there was down near 50% it's.
It's back up north of 80%.
So we just had to slow down and timing, we expect strong fourth quarter relative to the 61000 square feet. We did this year.
And we have strong demand going into next year. So.
I think we're moving beyond that.
Okay, and then on the development side I think you've done you know maybe it's a little over 500000 square feet of development leasing in that I think you said you're going to hit.
At least which implies a pretty strong fourth quarter I realize you can't share too many specifics, but you know how does that sort of break out between datacenter shells traditional office and are there particular regions, whether it's on sale or NBP, where you're seeing stronger demand.
Well, we're seeing demand throughout the portfolio, but relative to the rest of this year.
I'd say, 80% is likely defense I'm, sorry did center show.
Great and then last question you talked about that 2021, and I guess, you've de risked it from a large tenant standpoint, but the you know you've got a little under 8% rolling.
How do you just sort of see tackling that in what is your expectation that retention rates for that remaining 1.1 million would still be in the 80% range.
Too early for us to put out guidance, but I would say north of 70 or in.
70 or both.
Okay. Thanks.
Your next question comes from the line of Jamie Feldman from Bank of America. Your line is now open.
Great. Thank you.
I appreciate that.
The range of guidance outlook for next year, the 3% to 6% can you just help us understand what gets you to the three and what gets you to the six.
Maybe well the six true Oh UBS.
I'll be very clear.
It refers to my comments about the renewal at DC six.
We believe we're in a position where if the renewal were not to be achieved we'd be at 3% range.
Mid point would be a represented by achieving the rule is respect we expect and the upside would be additional velocity in starts have vacancy leasing.
Okay, so that would be a NBP.
Throughout the throughout the portfolio.
Just overall volume of new new rent starts.
Okay.
All right so.
TC six really it's the big swing.
Yeah, but the key point, we're trying to convey.
Is their respective of that lease we're going to deliver growth next year.
Okay do you have a sense yet of what same store could look like next year for leasing spreads.
I think it's too early for I would expect leasing spreads I can talk about that remain.
In the range they had been.
And.
Yeah, Jamie is as Steve said, the reason, we put that 3% to 6% out there was to get them Scott Boyd.
You sort of at the Goalposts for where we expect next year's growth to be it wasn't.
It wasn't.
To put out specific guidance about the assumptions behind that so we'll be following that up with our typical guidance.
Information and detail as we as we start next year.
Okay that makes sense.
And then there's been some commentary on conference calls, especially from Boeing and Raytheon about cutting office space I know, you've got expirations coming up in the next few years with both can you just talk about your reaction to to their comments on their calls and.
How you're thinking about what it could mean for the leases you have.
Sure I've got a cup summers are run through with regard to Raytheon.
We have them in six located six separate buildings three concentrations largest.
Component is the intelligence and space activities, which is about 66%.
Hundred 56000 square feet.
Balance are either missile systems or signals and cyber none of this activity has been impaired by.
The slowdown in commercial airway.
The airplane.
Airplane creation, so we don't see it affecting us at all.
With regard Boeing Similarly, we have them in five locations and their over well, there's 614000 square feet.
The largest concentration 60% of the area just renewed.
And that has those building toes ground missile defense.
Which is our nation's anti missile defense system.
And space launch system, which is the heavy lift rocky for future grid space exploration. So we know that to be stable.
And then the other four locations or the until represent into intelligence and analytics.
[noise] Aerospace operations Intelligence services. The Navy aviation again, none of these tied to the commercial come.
Doldrums that they're in so we think we're fine.
Okay.
And then.
Just any any big picture thoughts heading into the election next week just latest thoughts from what you think you could mean either way.
It's got to be a nail biter.
What we have said all along is going to look to the actions of the house Armed Services Committee since it turned over in 2018.
Been very pro defense and is recommended spending at or above the level. The white house has requested.
That combined with comments from the presidential candidate a Democratic Party suggests the level of defense spending would mean we'd be maintained.
Perhaps the concentrations would be shifted.
With Joe Biden, emphasizing more advancement in technology and less focus on capacity.
ER, which frankly would play to our favor.
Okay, great. Thank you.
Your next question comes from the line of Craig Mailman from Keybanc. Your line is now open.
Hi, guys, maybe just to follow up on Matts question on the JV contribution.
His g. I still going to be in the JV are you, replacing them with a your newer partner.
Well get into the details of that once the transactions close Craig.
Okay.
And then just separately.
Clearly demands been good work from homes less of an issue for you guys, but the government at least yesterday really tried to densify their.
Their spaces I'm just curious what you guys are seeing from defense contractors and government agencies on the densification side of things and whether that could.
Could be a potential tailwind as well for for you guys what leasing comes back in bigger volumes.
Well I certainly hope they read more space per person <unk>, we've seen nothing to date that would indicate that trend.
I will say the government.
Customers we have are.
[noise] configured in a in a high density configuration.
We had some preliminary whatever discussions back in May and June, but nothing affirmative that I could say would indicate a trend and Craig one why indication of where they get their view on that is the government tenant that just occupied space in the third quarter down in Huntsville.
The 170000 square foot tenants, Steve referred to in his comments the space planning for which had been done.
A month ago and was actually executed in line with that space plan that was done pre pandemic.
They took occupancy in.
In August.
Okay and then just lastly, you know on the DC six renewal have there been any discussions with this tenant given just the the complexity of the requirements that are looking at just whether they buy it from you guys and and eventually absorbs the space over time is that an option that they want in the lease or.
You guys would offer to them.
We haven't had that discussion I have no reason to believe they had that interest.
It would be an interesting discussion if we had it.
All right. Thank you guys.
Thank you thanks Craig.
Your next question comes from the line of Dave Rodgers from Baird. Your line is now open.
Anthony just on the rough guidance for an extra 3% to 6% diminish I wanted to clarify is that after you sell the assets in the fourth quarter. This year and is that related to any financing next year I guess I just asked that because the asset sales in the fourth quarter bigger than anticipated and have about a 300 basis point negative impact next year. So I wanted to clarify that if I could.
Yeah.
Sure I'd say that.
The 3% to 6% does take into account the impact of.
The increased amount of equity raised in 2020 765 million that we expect to raise this year is a little more than double what was in our initial in our initial guidance so that.
The impact in late in the fourth quarter as well as for the full year next year is in bed is included in those numbers, Yeah, I think with respect to additional.
Equity for next year I think we're still in the process of.
Finalizing that Matt and again, we'll put those those details that as we put out the other specifics around guidance next year.
Great. That's helpful. Thanks for the color development in NOI contribution for 2021 based on what you've announced today. So far do you have a a bracketed amount for what you expect to see from a development in NOI contribution. If you would put that in something I haven't seen it so I might have missed it.
For 20 or 21 21.
Yeah.
I just don't have that with me, we I think we put that out I don't I.
I think we've put out.
The annualized contribution with respect to the projects that.
That are part of the development pipeline right now.
So that's really a a subset of what will be included in that specific guidance.
Okay, and then maybe Steve last for you on the CEO search I don't think you mentioned in your prepared comments is that something you are still moving forward with and any timing you expect with that.
Yeah, we've been.
Engaged in a process for the last quarter and you.
Let's see the announcement before the next call.
Okay. Thanks, guys.
Hello Hello.
Operator may we have the next question.
As a reminder.
Please press star one on your telephone.
Looks like to us yes.
There appears to be to more people in the queue ma'am.
Yep.
Our next question comes from the line of Steve Rogers.
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I think we just talked to Dave Rogers looks like Tayo from Mizuho is on the line.
You opened his line.
Lining malden.
Yes.
Yes, good afternoon, everyone. How you all.
Yes.
Great Little true [laughter], the slow getting hacked by Twitter.
Well were all working from home, we all have to well enough to do our best given some of the glitches. So I just had a very quick one about the development pipeline.
Isn't there to project delivery earlier than expected and won the need kind of any color on kind of some of the movement, that's happening with a with a timeline.
[noise] well to two we completed early and delivered.
Yeah, No no yeah, yeah, I've, Nova often see that's not going to bring in fourth quarter up 21% to 22.
Yeah that there's a the one bill.
Building in our government campus in Northern Virginia has been accelerated from the second quarter of next year of 2022 and two though.
Late in the fourth quarter of next year.
So that's based on that the team has been able to make with the government on the build out of.
Building and the build out of that of that project.
Gotcha and then what do you think some good River road that was the need that.
Yep Yep.
The building is completed frankly have to tenant improvements are completed.
The local power company is been frustrating in the timing to relocate switch gear for the street lights, which are right in front of our front steps and we can't get a permit to they move that equipment.
All right.
Got it so we're just not ready to go and the tenants are ready to go just waiting on Prince George's County.
[laughter] Underfed face of classic Oh, the classic issues, you run into with development that that's it okay. Great. Thank you.
Yeah.
That's right.
Our next question comes from the line of the knowledge.
Your line is open.
Great. Thank you.
I appreciate the discussion on the history in the portfolio, but can you refresh US you know maybe over the next three five years, what do you see as the optimal mix of data centers and office as well as what you see as the optimal geographic mix for the portfolio.
Well Oh.
[laughter] Yep Yep.
[laughter] thermal is.
There's as much as we can get our hands on for both.
50, 50 makes sense to us.
We've had.
Really strong.
Preliminary discussions in government and defense contractors.
I think it's going to prove to be a big component of the next couple of years.
We believe our data center shell development relationship is very strong.
Hmm would second to ask the question region, Chief Oh, then geographically we're.
We're very happy with the regions were in our data Center show activity is the strongest.
Data center market in the world and the demand that we have at our existing defense 80 locations continues to be strong and strengthening so I don't see any new regional endeavors.
At this point in time at the other thing you just need to note is with respect to the datacenter shells. If you go back and you look at the size of those projects. When we first started the relationship with our tenants they were probably half of the size of the buildings were developing today. So.
One building is worth probably twice the square footage it was five or six years ago. So.
So it's just a.
Therefore becomes a bigger percentage of the total.
And then as you think about development over the next few years any discussion on the direction of yield and a possible influence itself, which is construction costs on some profits in the next few years.
So we we have not really experienced upward pressure on construction cost over all.
During the pendency make there was some pressure on.
Some smaller components like believe it or not lumber or.
Because of some delivery restrictions.
Well, what we experience as we bought out our jobs over the summer and finish so were of the developments that we actually were able to achieve savings and increase our yields.
Honestly.
And I would expect in the environment.
There were in for the next 12 months it would be stable too.
We have little more pricing pressure, because I think a lot of development activity.
Was stopped by other developers.
Great. Thanks, everyone.
Thank you Stan.
So it looks like it's it operator could you please confirm [noise].
[noise]. Thank you all for joining us today.
We're in our offices all afternoon. So please coordinate through Stephanie if youd like follow up call. Thank you. Thank you all.
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