Q4 2020 Apartment Income REIT Corp Earnings Call
That would be very true.
And welcome everyone.
Well share with 2000 employees, earning call for sure.
Okay.
With me on the day.
Did you need a true.
It will come from customers such as for the start of Q followed by Europe.
Good day presentation, there will be an opportunity to ask for.
No that's it.
So on.
It sounds from.
Well, it's all your question.
We're going to do.
Please note today's event is being reported.
I would now like to turn the conference over to Lisa Cohn. Please go ahead Matt.
Thank you and good day.
During this conference call for forward looking statements. We make are based on management's judgment, including projections related to 'twenty 'twenty one expectations.
The statements are subject to certain risks and uncertainties, a description of which can be found in our SEC filings.
Actual results may differ materially from what may be discussed today.
We will also discuss certain non-GAAP financial measures such as funds from operations. These are defined and are reconciled to the most comparable GAAP measures in the supplemental information that is part of the full earnings release published on Air's website, Eric communities Dotcom.
Prepared remarks today come from Terry Considine, our CEO Keith.
Keith Kimmel, our president in charge of property operations.
Building, our Chief Financial Officer.
Other members of management are present and will be available during our question and answer session, which will follow our prepared remarks, I will now turn the call to Terry Considine Terry.
Thank you Lisa and good morning to all of you on this call.
Thank you for your interest in air.
2020, with this transformative year with the separation of ear from income.
During the separation we were on it we were able to unlock a $1 billion of shareholder value.
Yeah.
The total return of the combined company's outperformed the six large apartment REIT by more than 9100 basis points from our announcement in September.
We ended the year.
On the same combined basis shareholder returns for the best of the coastal apartment REIT for the past 123 and five years.
And yours for intent we placed second.
And on Board led process My superb fellow directors for Miller, Tom Keltner, Kevin Murphy, Kathleen Nelson, John Reyes, and Sperling, Mike Stein, Indeed, a trend.
Worked hard and well to make the right decisions with two dozen meetings over six month period as well as numerous smaller meetings plus calls with individual shareholders and proxy advisers and so on.
At a time with many boards were hunkering down and grateful for their self confidence there.
Their commitment to shareholder value creation.
We have found advice and thoughtful decisions.
The separation also required long hours of work for a great. Many of my teammates led.
Led by Lisa Cohn, and all Belden, who joined me on this call.
And also by Lynn Stanfield, and Jennifer Johnson remain with income.
Most of all I, thank our shareholders for their recommendations engagement and encouragement as we made important changes at a difficult time in the economy.
If you listen carefully to each of you and search for the right balanced response.
I'm delighted that the share price has been rewarding.
And I look forward to further gains in the future.
And of course, the separation was about the future.
We believe air is the simplest most efficient way to invest in apartment.
And will attract traditional REIT investors and also yield investors generally.
Will prefer air to other investment vehicles designed to provide current income with predictable growth.
Julia for investors on a share on a simple transparent business.
With best in class property management.
Safety of a diversified portfolio and a strong balance sheet.
And low overhead costs.
Together provide a high current return.
We believe that recovery from Covid related stress this is well underway.
And we expect further gains this year as Keith will discuss in greater detail.
Over the longer term, we are bullish on our strategy our markets and our team.
We believe our markets will perform better than the United States as a whole and we're confident that our team will outperform in those markets.
We had a solid path for growth based on best in class operations regular property upgrades.
What we expect will become a more favorable cost of capital.
As I close again offer my air teammates. Many instance here thanks for what they accomplished last year and.
And for the opportunities they have created for this year and beyond.
With that I'll turn the call for Keith Kimmel head of property operations Keith Thanks Terry.
Do they all look back at our results for the full year 2020, and also for the fourth quarter.
Then I will discuss our January results, and what leading indicators tell us about the new year.
Finally, I will discuss our outlook for 2021.
Before doing so I want to take a moment and look at the big picture.
Our 10 year revenue CAGR is three 4%.
As you would expect there's always a short term variation around the long term trend.
In 2020, it was negative.
It was a tumultuous year and yet revenue was down only two 4%.
And net rental income was down only 4%.
We expect revenue growth to resume later this year and referred to our long term growth rate in 2022.
Now turning to our full year results.
Revenue was down two 4%.
Residential net rental income, which we define as residential occupancy times average rate and is the most straightforward measure of the health of our core business was down only 10 basis points.
Controllable operating expenses were down one 1% and total expenses were up one 6%.
This extended our decade of expense leadership with a 10 year CAGR for controllable operating expenses of negative 10 basis points.
Finally, net operating income was down 4%.
Operationally turnover in 2020 was 42, 1% 80 basis points better than 2019.
And customer satisfaction was over 4.3 as measured by 57000 residents surveys demonstrating the consistency of our team even during uncertain times.
In the fourth quarter, the financial results were negative though.
A lag that goes on three events earlier in the year.
The virus and Lockdowns in the second quarter.
Increased lease terminations due to economic stress and.
In onerous regulations put in place by the city of Los Angeles.
Fourth quarter residential net rental income was down for 3%.
During the quarter blended lease rates were down eight 5% with renewals up one 4%.
And new leases, which made up the lion's share of transactions were down 10, 9%.
Revenue was down seven 4% after the impact of a $1 million reduction in commercial income.
On a $4 million year over year increase in bad debt with over half coming from Los Angeles.
Expenses were up seven 6% as compared to the one 6% growth for the full year, but the increase in the fourth quarter was strictly a matter of timing.
As a result fourth quarter net operating income was down 12, 5%.
Okay.
On last quarters call I pointed to leading indicators, including an acceleration of leasing pace and a strengthening of our lease percentage as predictive of stabilizing our recovering occupancy.
As predicted average daily occupancy improved from a trough of 93, 3% in August to 95, 4% in January and further to 95, 6% today as we speak.
Residential net rental income has increased sequentially for five consecutive months.
These leading indicators continue to show that more occupancy growth is on its way.
Our lease position continues to strengthen relative to last year and.
And leasing pace is accelerating with prospects leasing tours and net leasing all up in January from the fourth quarter.
In short demand is good.
I'm optimistic that occupancy will return to pre COVID-19 levels by the end of this year.
With higher occupancy comes some pricing power.
We see indicators that Ren has stabilized and is beginning to strengthen.
Blended rates for leases signed have increased every month since September.
In January the signed lease rates were negative, 3% 260 basis points better than in December and we expect that a typical seasonal improvements will reinforce this trend.
Given this I'm optimistic new lease rates could be positive by mid year.
With those leading indicators in mind I look towards 2021 prospect dividing our portfolio into two populations.
And five of our eight corn markets about half of our portfolio, we expect revenue growth to be flat or positive in 2021.
With particular strength in San Diego, and Denver, where revenue growth is expected to be over 2.5%.
Stability in Boston, Miami, and Washington, D C, where revenue growth is expected to be flat or slightly up.
Our three other markets are also recovering but at a delay due to specific factors I will discuss next and in these markets. We expect revenue growth to be negative from negative 2% to negative 7%.
In Los Angeles, our largest market.
20% of our portfolio is located in Los Angeles County, but outside the city of L. A.
For that 20% we had good results in 2020 and anticipate positive revenue growth in 2021.
80% is located inside the city of Los Angeles on the West side leasing has been steady and occupancy has improved in recent months rate. While still challenging has also improved and residential net rental income grew 50 basis points sequentially in January.
However, this good news is clouded by bad debt.
Sydney ordinances permit those who need to live rent free.
At the same ordinances also enabled those inclined to abuse the system delivering free.
In the fourth quarter. These communities with 19% of our total revenue contributed more than half of our nationwide bad debt and.
And we expect this will continue in 2021 until the unjust laws repealed or corrected.
In Philadelphia, our third largest market.
Almost all of our portfolio was located in center City and University City, serving both universities and a large population of office workers.
We faced challenges throughout 2020, as schools, where virtual and employees work from home.
The student return has already begun.
<unk> recently welcomed freshmen and seniors back to campus and 3000 students attended in person during Penn Spring semester, and we anticipate a full reopening in both schools for the fall of 2021.
Comcast the employer most important to our center city communities expects to recall workers to their offices by mid year.
We were encouraged as January leasing has been strong 75% ahead of last year's pace.
That said, we have a long way to go both on occupancy and rate.
We expect tough, but improving results in the first half for the year, followed by more normal demand and results in the second half assuming these returns do occur.
In Northern California, our fifth largest market our portfolio is located 40% in San Jose in Marin County.
These properties have been strong performers with fourth quarter revenue growth up one 4%.
The 60% of our portfolio located on the San Francisco Peninsula has been impacted by work from home policies.
Rents on the peninsula dropped about 20% from their pre Covid peak with Big Tech decided to move its workers home.
At that lower price the sub market became highly attractive to rental prospects drawing interest from throughout the Bay area.
With a january leasing pace that exceeded any month in 2020.
Many of the largest tech companies, including Google Facebook and Apple have communicated return to office dates ranging from June to September.
We expect the return of these high income jobs will stabilize the San Mateo County market and improve results gradually throughout the course of the year.
Our expectations for 2021 results for a based on both optimism based on leading indicators, we can see and caution based on external factors that we cannot control.
We forecast quarter to quarter improvements in revenue for every quarter of the new year.
But we also forecast year over year negative revenue growth between negative, 3% and negative 20 basis points with the first quarter being the most negative as we turned over a significant number of leases the rents are well above the current market.
We expect <unk> to be a good guy again.
As it has been for the past decade.
We expect taxes to increase for 5% to 5% with the trend at 2% to 3%, but inflated by larger increases due to a new assessment regime in Colorado.
And the expiration of a tax abatement in Philadelphia.
We expect insurance to increase about 30%, even though our losses and claims are an industry lows as premiums were accelerating after a long down cycle.
In total we expect expense growth of two and three quarters to three and three quarter percent.
As a result, we anticipate 2021 net operating income to be between $424 million and $443 million or a decline year over year between negative one 4% and negative five 6%.
We anticipate net operating income will increase in each quarter with positive year over year results beginning in the second half of the year.
I'd like to conclude with two keys to a successful 2021, our operational architecture and our team.
First as ever we're working hard to get better.
We believe in our unique approach to innovation, which begins not with technology, but with a deep understanding of our customers team members processes and markets.
Through this perspective, we've grafted expertise in machine learning and robotic process automation.
These tools are being used throughout here.
Driving higher customer satisfaction streamlining operations and enhanced results for.
Finally, my thanks to the entire air team your perseverance during a challenging 2020 was inspiring.
2021 will be a year of recovery.
And your relentless drive and determination to deliver outstanding customer service and outperforming results is what will set <unk> apart.
With that I'll now turn the call over to Paul Beldin, Our Chief Financial Officer Paul.
You Keith today, I will discuss 2021 guidance leverage and conclude by discussing eris dividend.
Starting with 2021 guidance on.
Our narrow focus together with high quality cash earnings allows for easy financial analysis and modeling in fact, approximately 98% of 2021 <unk> is derived from only three sources first property related income, including in 2021 income from read.
Development and development communities leased to income.
The cost of our leverage and third off site costs.
In 2021, we forecast <unk> to be between $1 91, and $2 five per share representing growth between 10, and 18% from 2000, Twenty's pro forma $1 73 per share.
We expect incremental growth of 2015 from <unk>.
Property related income.
<unk> <unk> from lower leverage costs and approximately <unk>.
From a lower offsite costs.
Next I'd like to spend a moment discussing leverage.
At December 31, <unk> pro forma leverage to EBITDA was seven five times, one six turns higher than our expectation when we announced air separation from income.
Six tenths of a turn increase as a result of lower NOI from property operations.
<unk> churn is attributable to $440 million of debt incurred subsequent to our September announcement.
Of the $440 million $240 million was used to increase aimed coast capitalization and on.
35 million was invested in upgrades to arris communities.
And $65 million was used to pay a larger cash dividend in the fourth quarter.
We expect to repay the incremental borrowings with proceeds from the sale of a whole or partial interest and low cap rate properties.
Our guidance does not explicitly contemplate property sales, but we believe that sales of low cap rate properties will result in minimal <unk> dilutions.
Finally on January 25, the Air Board of Directors declared a quarterly cash dividend of 40 <unk> per share.
<unk>, 5% increase over the regular quarterly dividends paid by the combined companies.
The increased dividend reflects <unk> high quality of earnings lower leverage and greater predictability of cash flows.
With that we will now open up the call for questions. Please limit your questions to two per time on the queue Rocco I'll turn it over to you for the first question.
Thank you once again, ladies and gentlemen, if you'd like to ask a question. Please press Star then one.
She has already been addressed and like to remove yourself from the queue. Please press Star then two.
Today's first question comes from Rob Stevenson with Janney. Please go ahead.
Good afternoon guys.
What is the the $45 million to $55 million of capital enhancement is that all just kitchen Bath programs does that include your technology upgrades. What is included in that and then what else are you spending the free cash flow on.
If you don't make any acquisitions this year.
Hey, Rob This is Paul Thank you for the question and our guidance you're right to point out that we are guiding to 45% to 55 million of capital enhancement spending as you know those are projects that we expect will either increase our revenue growth going forward or reduce costs in 2021, and our plans are heavily weighted towards the continuation.
One of our ANV programs that we put on pause during the 2020 of those will get re accelerated in 2021.
And from a capital standpoint, if you don't make any acquisitions I mean, where else is the capital go on is it just.
Repaying debt.
Right and those leverage levels that you were talking about.
Rob This is Terry if we got on otherwise address leverage we could use it to reduce leverage once we're at our leverage target targets additional cash flow to go to increase the dividend.
Okay, and then Keith you were talking about.
Positive lease rates by sort of middle of the year on your sort of commentary I mean, when you get there I mean are you expecting that to be on a blended basis is that new lease rate.
Help us understand sort of the cadence.
In your guidance estimates that's implied by the $1 91 to 205 is that a blended number or is that just the the new lease rates et cetera.
Rob.
It will be on a blended basis is how we're thinking about that so what.
What we know is is that in all of 2020, our renewal rates were positive the entire year, even despite the challenges that the pandemic.
The disruption to the economy occurred and so we think that that will build upon as we get into 2021 and we're seeing.
The bottom of a new lease rate pricing that has started to pick back up and so we think as we get to the middle of the year.
Potential exists once we get there.
And where concessions today for you guys.
The portfolio.
So we don't we don't think about concessions maybe as others.
Others might traditionally talk about it so we just thinking about net effective rents.
And so whether that's really driven market by market. You know you think about some markets. The Bay area. As an example, where there's a lot of our competitors who will use them on three we think of it at the end of the day is is it a combination of what the occupancy is is at a lower rate and so as we look through it we can see that most of that pressure.
It will come in the first quarter in the second quarter, and then we get stronger as the balance of the year goes on okay. Thanks, guys.
And our next question today comes from John Kim of BMO Capital markets. Please go ahead.
Alright, thank you.
Just to follow up on that so the blended lease growth rate that you had negative eight NAV.
In the fourth quarter, how does that compare to the third quarter I know <unk> had minus 3%, but it's not quite apples to apples and then minus eight 5% how much of that is session vs.
Do you think that day.
So John.
I'll have to see if I have the exact third quarter comparable going back to aimco, but when we look at the combination. There then it's mainly driven in the in the fourth quarter by new lease rates because what we were doing as we were building the occupancy in places like the Bay area and Los Angeles, where there was a greater gain to lease and so those those rates.
Really we're the ones that were more impactful, but we continue to have positive <unk>.
Blended rates in the fourth quarter or excuse me a positive renewal rates, which is really the offset.
Yeah.
Do you find it harder to increase face rents rather than decrease concessions when the.
When the pricing environment improves.
No difference.
No at the end of the day, we think it's the same as when we think about the net effective rent that it basically isn't any different.
There is certainly maybe some markets that will have a very particular unit die for something like that where someone will be consenting something that you have to deal with on a one off basis, but we don't price.
As a blanket way across the country, we price every single property individually, but even more particularly we price by unit type and so we could have a one bedroom unit that is in limited supply that we are actually raising rates and at the same time, you've got a two bedroom that is in a different condition in which it could be something that is being more.
Lowered on a net effective basis.
Okay, and then you mentioned as one of your objectives.
And your cost of leverage.
Some of your peers now have unsecured bonds trading sub 2% can you just remind us how attractive that market is for you and potential timing.
Going that route.
You bet John Thank you for the question this is Paul.
We announced the separation of air for remain co. One item. We commented on was about diversifying our sources of debt capital and unsecured bonds are certainly an option. So it is better to have more options than less and the executions that I have seen some of our peers achieve over the past recent months only increase that attractiveness.
And you'll note that as part of the separation, we did receive a triple b flat rating from S&P and so to the extent that pricing is attractive that's an option, we'll explore but I'll also call out that property that also continues to price quite attractively in today's market as well. So it's always good to have choices.
And what about timing.
If we have something to announce John you'll be one on the first to know.
Okay. Thank you.
And our next question today comes from.
So any sales.
Hi, Good afternoon, guys can you talk about Philadelphia bid you sort of mentioned it in the same day is a San Francisco can you provide any more color on the submarket there and.
Maybe quantify some of the prepared remarks about the university students returning to help out.
For your line.
Sure.
So in Philadelphia.
I'm really center city and University City are the two places that we really have our business.
I'll start with what we're seeing in the universities between Drexel and Penn.
Now of course.
It's early but we've seen drexel brought their freshman and seniors back to class for the spring and we also saw that Penn had 3000 students.
Coming back and so what we have is we have relationships with many of the folks that work in those schools and while there hasnt been public announcements.
What what we're hearing from all of those folks is that they are working hard and diligently to get their schools back reopen.
And so we're expecting that in the in the second half as we get into 2021 and Ah but of course, that's yet to be seen.
When we get into the center city, where we really see there is the Comcast impact of the towers and so Comcast as.
They've indicated that the middle of the year is what their expectations are and so we talked to their local administrators and folks that work inside those buildings, who have told us that they are driving to get their employees back in those offices by the middle of the year.
Those are those are areas. There that are still open items, obviously and they'll have to deliver on them and and we all know theres lots of uncertainties, but we are encouraged to see that those are folks that are really pushing to get the schools reopen and get people back into the offices.
So that's really the backdrop to our affiliate portfolio.
Okay Gotcha.
I guess just sort on a follow up on I guess just on some of the other more urban or dense locations can you talk about migration trends a bit are you still on types of people who have already moved out of the city are you seeing people.
Trickle back into your apartment buildings that are just any color there would be great.
Sure Zach.
On the migration.
Not seeing a lot of variability there we have two places I would point out that maybe that would.
Be a little bit different and that is first the bay area and second Miami. So in the Bay area, we've seen a little bit slower new jobs coming in from outside of the states and traditionally.
The Tech company has hired a lot of folks that come in we think it's just a pause that we're seeing is the tech companies have been working from home and the hiring has been a little bit slower, but we believe it will return.
And then on the flip side of that in Miami, we've seen a significant uptick on folks that have been moving there.
So when we go through our applications and people that have moved in there's been some migration from the northeast and other places.
In which obviously a lot of positive things going on in South Florida.
Thank you.
And our next question today comes from Sumit Sharma with <unk>.
Please go ahead.
Hey, guys. Good morning, congratulations on the first quarter and then you read.
So there's a lot of work that goes into this.
So I guess, what I really wanted to understand a focusing on a couple of expense items.
On the expense growth Q over Q I saw anyways.
Probably the highest across your portfolio with about 8%.
Sequential increase versus a 1% sequential decline.
Sorry.
There's 1% from across the portfolio. So was this pressure was there something special about L. A I mean could this be because youre not getting.
Utility reimbursements Darren so besides the bad debt that you took on people who did not be since June and people, who are being partially that is rent, but not utilities.
Any color you can provide on that 8% spike would be great.
This is Paul I'll start and Keith if you have anything to add please jump in but what I would say is that the driving factors in L. A if you look at it quarter over quarter. One is our increase in bad debt as you called out in the second factors on the expense side around property taxes, where we've had a longstanding appeal that has been in place.
One of our properties there and we've had some costs associated with that appeal that are in our fourth quarter numbers.
Understood. Thank you for that day I was I was.
Thinking there was something.
One day and non controllable.
That now in terms of the Bay area in California agenda. This is kind of fun I think you mentioned that you know of.
At one point actually.
When she goes up in this quarter's release you guys had the highest average rental rate per unit than any of the baby IV right ex AQR avalonbay. So at the same point in time, you also have the lowest average rental rate decline you guys are down 2% with an average of 7% for the peers and unnecessary.
The revenue decline of 8% with Isabella and put out for bid. So the only different theories day as you guys are 90% occupied while your competition does whatever you call it.
Generally.
But on 94% to 97%.
So it is the hypothesis that you're not dropping as price as much as what's driving that strategy.
And is the case that your your your.
Larger than usual.
Rental rate.
Is that a function of unit mix by any chance.
Well, let me this is Keith I'll take it in and walk you through some ideas on it and then if you need further clarification. We can go there what I would say about the bay area is that a.
Couple of things one is I wanted to think about it in two different portfolios.
The first is as our San Jose and on Marine County portfolio that has been very stable and highly occupied running at 97% or better occupied essentially through this period of time. So there has been a real stability that has come with that portion of our portfolio. When you go to the second half of it which is really the <unk>.
The peninsula in San Mateo County.
That's the one that has had the greater stresses on it and so think think Redwood city.
And things San Bruno that particular area and so really those are the ones that have had more stresses.
Those are the properties that actually have the higher price points are.
Our brand new buildings that are out there at indigo and Pacific Bay, vistas, and and others have had high price points and we've been at a steady hand on those we know that theres been a lot of pressure around rates.
And lots of folks have taken an aggressive approach. What we are focused on is retaining our current customers and so having folks stay with us longer paying higher rates, we believe ultimately.
Those renewals trade at about a 25% premium when they stay with us versus having them go out. So we've really been focused on how do we retain our residents keep the rents and then also have a steady hand on the dose folks that are coming in with that all being said theres a lot of rate pressure in the peninsula and it still exists and while we've seen a.
Stabilization of occupancy there.
The rates continue to have pressure.
Got it so let me let me just ask a really quick one and then and then on.
Thank you everybody for indulging me, but.
See you in 90% occupied is that is that a level that the debt at this stage in the cycle you are comfortable with when market is around 94, ipos or somewhere around there to it says.
Is that a conscious decision and one that signifies to you that you don't you.
You will see is less concession.
Sure.
So it doesn't mean.
We don't solve the occupancy we solve the total revenue. So many times what will happen is there is there is this belief that if you just get to a certain occupancy that that somehow or another that's going to change things. What we really focus on is the combination of occupancy also rental rates, but mostly on how do we retain.
Current residents even longer and so you know listen certainly we would like to be better than 90% occupied.
Without a doubt, but we also aren't going to sacrifice that somehow or another we're going to move rents just so that we can get for the kid somehow or another get the wrong customer in the community. We're also be more deteriorating against our current in place rents. So it's a delicate balance and it's something that we work on every single day.
Thank you very much I appreciate it and thank you for indulging me.
Of course.
The next question comes from Richard.
So it goes on hey, thanks.
Good morning out there.
So.
So you haven't seen it.
Company.
Keep it simple stupid.
Thing.
And that's that's great and it's great for a risk off.
Environment as well, but what happens when when we move to risk on and your peers are doing more value add type of acquisitions and you know.
Things like that.
Could use growth a little bit more well you have a hesitancy to go after stuff like that now because you've created this new kind of low risk platform.
Richard This is first of all it's always good to hear your voice and I hope you're well.
Carrying that secondly, I would say that we're not likely to be hesitant.
Doesn't describe us.
And when we see opportunity for value add acquisitions.
Will we will tackle them with enthusiasm.
Okay.
And then Paul you said no no dispositions explicitly in guidance.
But obviously this again this company has been created.
In part to make dispositions and easier undertaking.
When you look at what's potentially available for sale do you kind of go with this 10% of the portfolio type of concept or do you have assets that are obvious for sale candidates that didn't get left an aim co that you still own that are kind of a source for capital that you're perhaps just not identified.
<unk>.
<unk> right now.
Richard.
I'll take that too.
I think that we have.
I wouldn't say, we crushed the goal of areas to make dispositions easier, but having said that we're going to be comfortable making dispositions that make our portfolio better and we see opportunities and income.
Exiting from New York City, and we see opportunities in perhaps lightning, our allocation to California, and net ladder case, probably true joint ventures, and both of those would be very low cap execution, which is why Paul pointed on his remarks.
It would address leverage but not likely be diluted <unk> right I was referring to the step up in basis.
Allowed for more growth.
I see.
You're correct me and Youre right.
Exactly right that our tax basis is much improved okay. Thanks very much.
Yes.
So I know this question today comes from Alex Combs with Zelman Associates.
Hi, Thank you for taking my question just talking about for <unk>.
On line of the New York City.
Physicians potential what would you need to see in the market to the field.
We're comfortable.
Disposing of those assets.
Alex again, it's Terry I think what we.
Conor if you want to speak to that but I think in general what we'd be looking for is the.
The right price understanding that today's prices can be.
Can overly discount future expected results, but yeah.
Counter <unk> didn't mean to jump into it nothing too much to add to that is we could see the market improve optimism around the vaccine people returning to the office that would generate helped buyer underwrite, but we're gonna be judicious, we're going to get the price prices that we need or.
We're not going to act in a rash manner.
Yes.
Got it thank you and.
Pre split the market became aware of.
Unsolicited offers for the company.
Postpaid have those conversations really died down.
Given the.
The new operation and our platform.
We haven't had.
On any of that.
Noise.
That I can think of.
Got it thank you.
Yes.
Yeah.
And on the final question today comes from John.
Yeah.
Okay.
Thanks for the time, maybe continuing the disposition conversation.
It sounded like your opening remarks.
There was something imminent, where you had a batch of dispositions teed up to Delever. So is the New York City properties or California properties.
Currently in process of those teed up or is this more of a longer term two to three year type deal.
John if I implied that if something was kind of just ready to be announced but not quite ready for prime time, I I apologize that wasn't my intent I was wanted to to portray the fact that we are above our leverage levels, we want to be within those leverage targets and as Conor mentioned will act judiciously to allow us to get there and get there are there in a manner where <unk>.
<unk> is not diluted by a significant amount.
Okay.
And then Keith your comments about occupancy returning to pre COVID-19 levels by year end.
Am I interpreting that right that would imply kind of a low 97% occupancy figure by year end is that is that an accurate read.
Well John.
<unk>.
It is a we are optimistic that there is if things continue to do improve that there is a path that we could find their way. There now if there is a lot to happen between now and then and it's obviously early days, but what.
What gives us encouragement is is that when we look at sort of how the pandemic impacted going back to almost a year ago and the stark drop off and how it has steadily been improving since particularly September through January and now even in February we're just optimistic that there if we keep seeing these types of improve.
<unk>.
The economy starts to come back that there is a weighted for us to get back there in.
There will be a lot of work to make that happen, but there is a there's a way that we could see it.
Yeah.
Okay, and then last one for me because I can't resist.
On or if the Alco portfolios you had your risk Board ahead of you in <unk>.
Outside of Calix shrinking California's shrink in New York are there any other big portfolio repositioning we would do.
Well, we make this decision as it as a team.
And so we've publicly discussed our desire to increase our allocation to the sunbelt the underlying principles that we like to be diversified by geography within geography and by price point and so we continue to look into the sunbelt, but again like dispositions, we're going to address that judiciously and in the best interest of shareholders.
Alright, thank you.
Ladies and gentlemen, this concludes our question and answer session.
For us back over to the management team from the funnel.
Thanks.
Well. Thank you all for your interest in air.
It's fun for us to have our first earnings call as a new company and if you have questions. Please do call Conor or Paul on me and we will do our best to answer them be well. Thank you.
Mhm serves this includes today so if that's true.
Thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.