Q4 2020 NexPoint Residential Trust Inc Earnings Call
Good day and welcome to the next point residential Trust, Inc. Fourth quarter Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Jackie Graham. Please go ahead.
Thank you good day, everyone and welcome to <unk> residential Trust conference call to review the company's results for the fourth quarter ended December 31 for any questions on the call today are Brian Mitts, Executive Vice President and Chief Financial Officer, and Matt and the Greener Executive Vice President and Chief investing.
As a reminder, this call is being webcast for the company's website and XR T Dot net dot com before we begin I would like to remind everyone that this conference call contains forward looking statements within the meaning.
The private Securities Litigation Reform Act of 1995 that are based on management's current expectations assumptions and beliefs for.
Forward looking statements can often be identified by words, such as expect anticipate estimate may should intend and similar expressions and variations or negatives.
That'd be great.
These forward looking statements include but are not limited to statements regarding and expertise and that's been the industry in general the COVID-19 pandemic and its effect from company and export Key's strategy and guidance for the full year of 2021 and the related assumptions guidance for the first quarter of 'twenty 'twenty, one and never related to assumption.
And related assumptions and expert Keith net value right and it's for latest components assumptions and planned value add programs, including projected average rent change in return on investment the expected return to service of damaged units and expected acquisitions, Inc.
They are not guarantees of future adults and forward looking statements are subject to risks uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward looking statements, including the ultimate geographic spread duration and severity of the COVID-19, pandemic and the effectiveness of actions taken or actions that may be.
Taken by governmental authorities to contain the outbreak or free its impact as well as low as described in greater detail in our filings with the Securities and Exchange Commission, particularly those we described in the company's annual report from form 10-K, and quarterly reports on form 10-Q.
Listeners should not place undue reliance on any forward looking statements and are encouraged to review the company's most recent annual report on form 10-K, and the company's other credit with the SEC for a more complete discussion of risks and other factors that could affect any forward looking statements.
The statements made during this conference call speak only as of today's date index.
As required by law and it's Archie does not undertake any obligation to publicly update or revise any forward looking statements. This conference call includes analysis of funds from operations or <unk> core funds from operations or core <unk> adjusted funds from operations or <unk> net.
Net operating income for NOI and net debt all of which are non-GAAP financial number measures. Our performance. Our total that these non-GAAP measures should be used as a supplement to and not a substitute for net income loss and total debt computed in accordance with GAAP for more complete discussion of Epsilon for S. F.
So a S F O N O Y and that's actually the company's earnings release that was filed earlier today I would now like to turn the call over to Brian Mitts. Please go ahead Brian.
Thank you Jackie and welcome to everyone for joining us.
And that's our key 2024th quarter Conference call.
Ryan This is joined here with Matt <unk>.
Let me start with some highlights from 2020 films.
Films, a year is $44 million or $1.74 per diluted share.
Care to $99 1 million for $4.30 per diluted share in 2019.
For NOI increase was $2 1 million.
For an increase of three two percentage compared to 2019.
2020 core SFO, a $55 5 million or $2 20 per diluted share, which is an increase of 14% on a per share basis as compared to 2019.
Total revenue for 2020 was 200 for 8 million and total NOI was $116 1 million, which was an increase over to 2019, a 13, 1% from 13, 2% respectively.
[noise] why margins for 2020 or $56 seven per cent.
Even though the margins of 56, 7% during the same period from 2019.
Continue to execute our value add business plan by completing 1679 for the partial renovations during the year, achieving an average monthly rent premium $131.
One 7% worldwide.
So it turns a day the portfolio as of 12 31, we've completed 5355 for partial upgrades for <unk> thousand 286 kitchen upgrades in Washington for our installs from 8880, <unk> technology package installs, achieving an average monthly rent premium of $126 48.
$44 respectively.
ROI of 25% 74, 2% and 33, 8% respectively.
During 2020, we issued $1 3 million shares of stock for approximately 59 5 million of gross versus net.
Based on updated for cap rates and NOI.
<unk> NAV per share range upward as follows.
From the low end $42.83 on the high end and $52.94 for midpoint of $47.88 each day.
Just on cap rates ranking for them for 4% on the low end and 5% on the high flow.
Good day.
This compares to a midpoint of $46.31 12, 31 2019 for free.
For 2% year over year increase.
For the fourth quarter, we paid dividends of 44.125 cents per share on December 31, two share holders of record as of December 15th.
Yesterday, the board declared a dividend per share of $34 40 force <unk> payable on March 31st for shareholders of record on March two.
So consumption is increase our dividend 66%.
Year to date, our dividend was 117 times covered by core <unk> for the payout ratio of 58% of cord blood flow for the year.
Overall, the 'twenty 'twenty one some early challenges we continued our track record of thoughtful capital allocation and earnings growth.
As the pandemic first hit in stocks in General and then it's our key specifically dropped from multi year lows.
We bought back stock.
One 6 million shares of common stock at an average price for $27 70 per share.
The stocks are covered for the next Archie we issued 718000 shares of common stock for an average price of $43 19 per share, creating significant permanent value for shareholders.
Subject to date, we have issued two for an 8 million shares of common stock at an average price of $47.14 per share repurchased two 4 million shares of common stock at an average repurchase price for $25.70 per share.
For a draw on our facilities beginning of the pandemic to ensure maximum liquidity.
We were able to continue our long term view LNG plan, obtaining our facility down to $183 million by the end of the year.
31, with $57 1 million cash on the balance sheet and 42 million capacity under our facility for approximately 100 million successful liquidity and our dividend is 117 times covered by for us.
Since going public in April 2015, we've grown core I thought closed, 62% and NOI by 92%.
Performance Goodbye for buying the thoughtful thoughtful allocation policies is translated in an XR tea being one of the best performing REIT stocks among all range regardless of property side. Since you went public in April 2015.
Let me go through some of the specific results for full year 2020.
Total revenues for Q4 dollars 8 million as compared to $181 1 million in 2019 or 13, 1% increase net operating income for 2020 as $116 1 million as compared to $102 6 million for 2019 for 13, 2% increase.
<unk> core.
For us, though was $55 5 million or $2.20 per diluted share as compared to $47 6 million or $1.93 per diluted share in 2019, which represents an increase of 14%.
On a per share basis.
Despite the challenges presented by the pandemic are caught up with all came in at the midpoint of our original 2020 guidance.
For our same store pool 'twenty for properties, consisting of 9074 units or same store rent increase with one 4% same store occupancy declined slightly by 10 basis points from 94, 3% to 94, 2%.
Same store NOI increased three 2% for the year from $66 1 million to $68 2 million.
For the pandemic began.
Did all of our peers withdrew guidance starting in the second quarter 2020.
Sure on this for reinstating guidance for the full year 2021 as follows.
Core of our flow.
On a per diluted share basis, $2 16 from the low in $2 35 from the high end with a midpoint of $2.25. This represents an increase of two 3% over 2020.
Same store revenue.
Three 9% increase in the low five 2% increase from high end the mid point of four five per cent increase.
Same store expenses, we estimate will increased seven 9%.
From the low end and five three per cent of the high end six 6% and the midpoint.
For same store NOI.
There were two 9% increase in the low end and five 1% increase from high end for 3% increase from it for.
With that let me turn it over to Matt for his comments. Thanks.
Thanks, Brian I'll start by Recapping, our fourth quarter same store operational results.
For instance, fourth quarter earnings grew in six out of our 10 markets from 2020 with Nashville, Orlando being essentially flat.
And the only one is slightly negative every other market ended the year on the block.
Notable markets for same store NOI growth for the fourth quarter were Phoenix at 11, 3% in Dallas at four 9%.
Even during the pandemic leasing activity and revenue growth continues to improve in the fourth quarter over the second and third quarters with eight out of our nine markets achieving revenue growth of 1% or better.
The top five were Phoenix at eight 4% in South, Florida at $3, 49% Dallas Fort worth at three 3% Tampa at 3% Nashville at 249 per cent.
Conversions were healthy where a healthy 53 per cent for the quarter with five out of our thin margins delivering renewal renewal growth rates of at least two per cent.
Every market was in the block the leaders for example at three 1% Atlanta at two 6% Phoenix at two four per cent Dallas Fort worth it to three per cent Nashville, two for 1%.
On the occupancy front, we're pleased to report for Q4 same store occupancy remained over 94% at the end.
This is well positioned for 2021 as of this morning. The portfolio is 96, 5% leased and has a healthy 60 day trends at 91 five for sale.
Turning to full year 2020 same store NOI performance.
Our same store margin improve as Brian mentioned for 55% same store average rates and revenues each increased by one three for three.
<unk> three per cent or three 6% respectively. In a line holds strong across the majority of the portfolio in 2020 with six out of our nine markets growing NOI by at least three 9%.
Notable same store NOI growth gross margins for the year were again, Phoenix, and South, Florida at 12, 3% and 10% respectively.
Operationally overall portfolio generated positive revenue growth for the entire year of 2020 with eight markets achieving growth of at least two 4% or better Orlando being the only outlier.
The top line market for Phoenix at 8%, South, Florida at six 1% Charlotte at five 2% GAAP at 5% Nashville at four eight per cent.
On 2020 collections for April through December 2020, the portfolio is collected 98, 5% of all total charges payment plans or continues to increase month over month. Since we started off for the program in April 2020.
2020 payment plans or 97, 2% collected as of.
Friday and there were 959 patent claims in April of 2020, those numbers are down to 168 players at the end of the year and as of today, just just under 198.
Turning to 2020 acquisitions as Brian mentioned, we acquired one asset in 2020 fairways in same markets in Chandler, Arizona for 80 for half a million Bucks.
Selling for assets for $142 million in exiting the D C market entirely.
We plan to upgrade its fairways of 156 units at an average cost of $11800 per unit and generate 150, <unk> hundred premiums of $152 per unit with an ROI of approximately 15, 5%.
So plan to install smart tech packages in every year, they expect to generate monthly premiums there are $40 a unit.
As a result, our underwritten three year average same store NOI growth for this asset is seven five per cent.
Fairways, there's $150000 for 19% ahead of our NOI underwriting budget already.
Turning to 2021 guidance.
Ryan said, we're optimistic we can grow same store NOI in 2020 by at least 3% and from a geographical perspective, we're expecting particular strength across the following markets we.
We expect Atlantic growth same store NOI by six 7%.
Due to the strength of the rail market economic growth favorable supply demand and for a formal housing anterior interior renovation plans for over 200.
85 is to preserve apparel mill and 120 of Rockledge, we're targeting $180 for $235 rent premiums and high teens to low twenties rois.
As a result, we're budgeting five 6% revenue growth for Atlanta.
Nexon and Sam for Us to grow our same store NOI by roughly five 5% again, driven by economic growth, both internally and from searching net migration trends in Florida.
All told we expect or we expect revenue growth to reach the high it reached a high for us to 5% this year, while continuing to upgrade over 50 years from the market.
Next in South, Florida, we expected low to grow same store NOI by five 4% driven again by economic growth, both internally and from searching net migration trends.
For large interior renovation plans for soft quarter, particularly.
Volume at Pembroke Pines, where we expect to complete our comprehensive common area and many upgrades I've been broke in 2021.
So having a tremendous amount of success upgrading units at a volume when we see a pipeline for another 200 or more.
Roughly $250 premium and the low Twenty's ROI.
Finally, we expect Charlotte to growth same store NOI by 5% driven by.
Dan.
Economic growth strength of rental markets and net migration interest.
And for the state of North Carolina.
We expect to upgrade over 30 units in the market and generate revenue growth of high force the 5% in 2021.
Our west we expect both Phoenix and Las Vegas to grow same store NOI in the range of three five.
3% to 5% due to continued strength in the middle income market for 5% revenue growth and roughly $300 300 unit upgrades 200 in Phoenix and 100 in Las Vegas.
After the acquisition and internal growth from disposition front for 2021.
We are witnessing a material supply demand imbalanced for class B, sunbelt product driving cap rates down to 4% and below in some submarkets, particularly with debt financing our remaining at historical lows that day.
We remain active in evaluating attractive opportunities that fit our style box and do you think we could likely to acquire $100 million to $200 million of properties. This year.
We would expect to reasonably pair for this $102 million of acquisitions with $75 million to $150 million dispositions with the most likely candidates being a couple of assets in Nashville.
Where we complete our business plan to generate tremendous value for the past five years.
Notwithstanding an extremely competitive acquisition market, we continue to be an internal growth company at our core to that in our guidance. In 2021 includes the following assumptions regarding our value add programs.
We expect to complete at least 1300 for interior upgrades.
For you the same as 2020, Inc.
We expect the average cost to be roughly $10000 per unit and generated roughly $170 average monthly premium or approximately 20% rois.
We expect to complete approximately 75 partial interior upgrades at an average cost of $4400 per unit and generate 77 average dollars average monthly premium or 21% of Rois.
We expect to complete roughly 100 of other minor interior upgrades for example, new back slashes to serve our clients upgrades and frame mirrors to name a few we think these upgrades for average roughly $1000 per unit and generate $50 and average monthly premium or over 30% Rois.
We expect it to.
For approximately 425 washer dryer side for an average cost of $850 per unit and generated $44 average monthly premium or roughly at 60% of our Inc.
Finally, we expect to add 700, additional smart home tech packages, which will generate 40 to $45 average monthly premium.
The 52% profit margin.
So far in 2020, we're off to a good start in January and February with leasing activity in 2021, showing signs of improvement.
Combine January and February new lease growth is up over 3% and renewals continues to exceed 2% across the entirety of the portfolio.
So in closing I'll, just for you or anything we're excited about 2021 will work hard to generate another year of outsized NOI growth for shareholders and for earnings growth.
That's all I have for prepared remarks, I appreciate our team's work.
Next part of the H and their continued execution flexi burn.
Thanks, Matt I'll turn it over now for questions.
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Press Star one to ask a question I'll pause for Mr moment allow everyone an opportunity to signal.
Yes.
James will take the first question at this time it comes from Buck Horne from Raymond James. Please go ahead.
Hey, thanks for pointing Guy right.
I guess, let's start with that.
But with real estate taxes to begin with and just kind of how that.
That impacts your outlook for 'twenty 'twenty, one guidance. It certainly seems like that is the biggest variable. So I guess I'm curious to what degree.
We know that the assessments are going to come in at these elevated ranges. What is what you know what amount is kind of your best guess work here.
You know I know, Tennessee seems to be.
The most volatile component.
Coming up with the estimate, but I'm trying to get a sense of to what degree we know the assessments are going to come in this range into what you read.
Kind of conservatism on your part relative to the guidance.
Yeah, Hey buckets for that.
Good questions and so there is between the upside case in our guidance.
And.
The base case for two significant drivers.
We're basically an increase in rental revenue roughly 90 basis points.
As for market rent and a reduction of roughly $1 3 million in property taxes, and so you add those two together and you get a five.
5% NOI growth.
Or what's that.
We think that the midpoint represents a fairly conservative range, which includes the uncertainty in Tennessee with the millage rate.
Increases that were implemented in 2020 Covid insurer.
Power budgets.
So we don't.
<unk>.
Property taxes to exceed that base case level and were optimistic that theres. Some number between zero and that $1 $3 million that would allow us to reach the upside case.
Okay. Okay.
One other quick one for you there was a line items are noting miscellaneous income for the year totaled about $1 $8 billion, but inc.
Is there any color you could add to what the miscellaneous income represented is that when sort of repeatable fee.
Fee income or what's in that line.
Yes, it's just the way fees after that in EPS.
They were that we were able to collect.
In 2020, which is down from historical levels, but nonetheless, I think that day they can be.
This year again, particularly after the CDC list there.
For more tour.
I gotcha, Okay, great I'll turn the call over to US in the next day analyst from the follow up later thank you.
Thanks, Bob.
Once again participants Thats star one to ask a question and if you find that your question has been answered you may always remove yourself from the queue. This does start to our next question comes from Rob Stevenson from James. Please go ahead.
Hi, good morning, guys.
Matt did you say that you had 198 COVID-19 plans versus $1 68 at year end or did I get those numbers mixed up.
Yes, that's about right. So we started that with nine roughly 90 60 90 and in April.
Down too.
For us.
Down to 98, Yeah down 98 in February we're at 168 at year end.
Okay. So just 90 190 day, it's not an increase so could continue to decrease.
That's right that's right.
Okay perfect.
I was wondering why it was going up is it I didn't hear that alright. Thank you and then did you give January 2021 collection percentage yet.
Okay.
Yes.
We have it is.
Just the 95%.
And how does that compare versus.
December at this point sort of 45 days in November as an improvement status quo.
Weaker how would you characterize that.
Yeah.
<unk> kind of compared to.
I guess compared to last year in 2019 is about.
70 basis points behind.
But it's about it's about 30 30 basis points behind trains, but it's.
It's caught up and seize.
It seems in line for now.
Okay, and then any substantial no differential today versus core <unk> and what day rate would be calculated as of <unk>.
Youre anticipating prepayment penalties or anything else baked it's likely to come through.
No I think were in line with with.
With NAREIT.
We sold those properties not indicated we would.
I think have some prepayment penalties.
But that's that's factored into our guidance.
Guidance.
Okay and then the last one from me you guys gave the market by market quarter over quarter same store operating metrics I think it's page 16 of the supplemental.
Nashville had negative slightly negative average effective rent sequentially and flat occupancy, but total rental income was up 10% can you walk me through how those numbers, how do you get to that big of a jump in rental revenue with occupancy flat in rental rate down.
Yes.
Does the total rental revenue maybe include some sort of fees or something that were outsized in Nashville that drove that.
Hello, everyone.
Okay.
Capex in South, Florida, both have both negative effective rent changes quarter over quarter and negative occupancy and are slightly positive, but that 10, 1% jump in Nashville really stuck out.
Yes.
Yes, I think it might've just conclude.
The additional property RV is being added to the pool.
Okay.
Alright, Thanks, guys I appreciate it.
Thanks, Rob.
Yes.
Yeah.
Well take our next question it comes from Amanda Sweitzer from Baird. Please go ahead.
Thanks, Good morning, guys I'm on your fourth quarter results for them.
Main driver of the 90 basis point sequential decline in occupancy.
And I'm not the demand for renovated or non renovated you deviate at all from your expectation during the quarter.
Yes, the demand didn't deviate we thought we would.
Upgrade basically what we what we did there were.
A couple of market specific.
Issues line one in Houston.
With an asset cost replace that with experience from some evictions.
It is now recovered it's about.
94% occupied today and the other one was wasn't asset.
In Charlotte that same issue.
Reservoir and then the other day evidently.
One in Charlotte.
<unk> had a small fire timber creek had some occupancy because that's the those are the main drivers of the decline and.
And like I said today, we're back at 94 per cent for those assets.
Okay. That's helpful.
And then following up until the earlier questions how much bad debt or are you assuming in 2021 guidance and then how much of a benefit did you realize from them at this stage I shouldn't read for us it didn't funds in the fourth quarter.
Yeah.
Yes, the bad debt assumptions.
Roughly 120 basis points for 2021.
And you know anywhere kind of in the band I think this is your question in the band from the from the base case.
Sure.
To the upside case, I think that that number can be.
Decreased to about 80 basis points.
So that's the cause for their upside but we're.
We're we're optimistic.
Will be better on bad debt in 2021 to 22020, where are you seeing.
An increase in for the state of their rent on time and like I said.
<unk> question the decrease in the payment plans.
On that last one go ahead.
Yeah, I was going to answer the.
David I think we've collected around a million dollars a day.
Across our various markets from the local agents being offered outside of anything in the stimulus packages.
Okay. That's helpful. And then or are you guys expecting additional eight in your guidance ranges at all or that would be incremental if you ever see that.
Yes, I think it would be an incremental I mean from from all the states are in our markets. There's over 7 billion of.
From available a $400 million at the county level.
And that's all available, but we're not we're not underwriting that in the guidance.
Okay. Thanks, and then last question for me interest on capital allocation.
I kind of expected cap low risk that Greg your guidance Craig Tuttle.
Good day kind of breaks but are you exploring any alternative external growth opportunities given how competitive the transaction marketers today.
That's not above it in terms of any other deviation from from our core property type or value add multifamily or not.
Trying to venture outside of Covid.
Any of that where we're.
We're focused on the internal growth first and foremost and buying a recycling of capital and then six here. We can we can RMR soccer.
Like we did in 2020, which I think Brian mentioned, we bought.
About 60 million net imply five eight cap and sold them. So you know 50 50 possibility.
For six so I think we will continue to do that.
Thanks, that's it for me.
Thanks for that.
Your next question comes from John <unk> from Ladenburg Thalmann. Please go ahead.
Good morning.
Good morning.
In the prepared remarks, you mentioned some market specific NOI expectation, but if I heard correctly, they were all at or above the midpoint of kind of total NOI growth expectations. So what other markets counterbalancing those stronger markets and why are they maybe relative underperformers.
Yes, the two largest detractors.
Or kind of under the <unk>.
For a 5% our Dallas Fort worth and Nashville.
The good news for both of those markets.
If the if the taxes come in at.
The upside case for either market in those markets will be yeah.
The midpoint it should provide upside to our guidance.
It's largely.
Almost entirely tax day.
Okay understood and then as you think about <unk> same store rental rate change what would that have been if you exclude uplift from we got projects.
[noise] X we have organic.
Hopefully just just over.
Just under 1% zone.
Call It 70 basis points.
Okay.
And then if we think about kind of the NOI expectation for next.
Next year yeah.
In terms of occupancy and you kind of seeing a parent level that may be the ceiling on total occupancy.
Pickney vs for Q4.
And the potential uplift there as well.
<unk> had a rental rate.
Yeah, I think I think there is.
There's a lot of uplift in occupancy I think that that's going to that's going to be a primary driver of growth first and then the rates for what you would you have to stabilization across.
Let me get funds at feeling kind of the 96 and a half a day or it could even go higher.
Is there anything kind of shakes out at the end of month.
Yeah, I mean, we've historically run around 94, so and pushed and pushed off their interest rate.
For those.
Another quite quite happened occupancy. So I think we'll continue to do that I'd be surprised if we if we pushed it higher than 96%.
Okay. That's it for me thank you very much.
Thanks, Joe.
Okay.
The next question is a follow up question from Buck Horne from Raymond James. Please go ahead.
Yeah, just one quick follow up for me. So you mentioned in some of your NOI forecast in your your outlooks that are you seeing continued economic strength in the Sun belt markets plus some factors continued in migration.
No population trends that seem to be playing out I'm. Just wondering you know in some day early lease application data, whether it's fourth quarter or January February numbers, you've got so far just you know is there any tangible.
Tangible uptick in applications coming from out of state or out of market residents better.
Part of that that migration effect that you can quantify.
Yeah absolutely.
So.
January the.
The January numbers, we have net.
Migration total moving into our markets.
For for export markets.
Our out of state to enter our markets was 10, 9% majority of that 11% from California.
9%.
New York.
Ohio was 8% in Illinois was about five Janney.
January 2021 net.
Libration data into our markets.
We could we could see interest to you.
To book later after after the call, but just to give it to you here was 14, 4%.
So roughly three opposite increase kind of January over January St. St. Louis do markets, California, 19% of those numbers so.
From.
Almost 11% in January 2020 in California from from California.
For 19% in 2021 in New York for 14%.
That numbers.
About 8% year over year so.
Definitely seeing an impact.
Is in a big way, both in Texas, specifically, Phoenix and Florida.
Hey, Mike It's Brian.
So I just wanted to follow up from your earlier question about miscellaneous income.
You were talking about the actual miscellaneous income on the face for the financials. So we misunderstood your question, but what that 1.7 hundred 7 million is.
Most of these business interruption insurance that we received on the cutters property.
Basically you completely destroyed in October of 19, and so we've been rebuilding it this year in getting.
Income from that insurance.
Oh, they ever get that's helpful. I appreciate that color. Thank you for you out there.
Yeah. Once that's operational again that'll flip up into NOI and out in the miscellaneous income got it.
Got it thanks.
Thanks, a lot.
The next question comes from Jon Petersen from Jefferies. Please go ahead.
Oh, great. Thanks.
Yes.
Think about.
You know more leisure travel.
In fact in certain markets I'm kind of looking specifically at Orlando and Vegas places that you have significant exposure I mean can you help us characterize maybe specifically how some of your properties are positioned there and if you are.
Expect some uplift that you see more leisure travel and then kind of on the other side of that yet.
The migration trends you guys were just talking about I mean is your same store guidance underwriting some kind of unwinding of that in migration turning into out migration is a I think for reopening.
Yeah, So we really.
Took it on the Chin of day to your first question on leisure travel markets in Orlando in 2020.
The the one asset I can think that comes from minus stable call. It like what like one of the Vista, which was directly impacted by the closure of the theme parks and.
In some cases, it's got down to a 90% occupancy, which we hadn't seen since we owned it.
Since we own the asset.
That.
We're getting through those issues.
And.
So I'm really optimistic that we can see that property come back to perform much much better than in 2021.
Vegas on the other hand really.
It's really wasn't as weak as we thought it would be obviously the with the strip.
We have closed down.
A lot of the leisure related jobs.
Loss or furloughed.
But we saw that kind of offset that was in migration from from California.
Particularly in that kind of helped us.
Have a pretty good year in Vegas, all told and.
I think and ended the year positive from a year over year basis.
I, particularly don't believe that outward migration or excuse me net migration trends in these markets will reverse because of a vaccine or there's some other.
Some other development I think that.
These cities are.
Our origin cities. They were 20 years ago, they offer a lot of lifestyle and other amenities that are affordable cost where we're located in these markets and we think they'll continue to grow and I don't.
I don't think that one's wants.
Once a millennial or for other.
New jobs African comes in sales.
These are in the sunbelt.
We will return anytime soon but that's I mean, that's our personal belief.
Yeah.
The jobs are companies who've moved there and they are not likely to turnaround in new pack.
Especially in our renter cohort these aren't people that were escaping the cities.
And then they're going to back once things return to normal for more working class people that are maybe new permanently to fall jobs.
For companies.
Alright, I appreciate the color. Thank you.
Right.
Take the next question comes from Michael Lewis from Choice Securities. Please go ahead.
Okay, great. Thank you.
I wanted to ask about the cap rate assumption in the Indiana.
Our calculation it looks like you took for cap rate down about 30 basis points across all the markets. So I was just wondering if you could give a little more color on you know is that to the low.
Interest rates or some kind of blanket assumption or alternatively is it based more on transactions were seeing each for those markets just kind of a coincidence that they are all day.
And you know the level of transactions and the confidence you kind of have in cap rates right now.
Yes.
The main drivers were tightening of the high end if it was to bring.
Great cap rates.
So sub 5%, adding to your 5% property in several years now.
And so I think that.
I think that from what when we survey CBRE in Green Street real page Yeah. They came back frankly at a lower number than ESAU.
And from a transactional perspective in the in the acquisition market and bidding tents.
We haven't seen an.
Offered on assets most recently, Inc.
Tampa and Charlotte.
I could've gone sub 4%.
And we were we were holding our notice being around a four for four or five cap rates.
So there's a lot of capital out there to your point there is.
There's an incredible amount of sub 3% debt financing as well.
And that's just driving a material supply demand imbalance for this type of product in the sunbelt.
Thanks, Matt.
Matt you mentioned.
From an internal growth company.
<unk> got about 14000 units.
Just kind of I'll call it modest net acquisition activity in the 'twenty one guidance.
Sorry for the company or do you think there are any advantages.
Took diversifying or for Kona and remark next or just kind of accrual of the of the port calling on general partner.
Or do you like where you are now.
Yes.
Great question, but we think we debated a lot we've kind of never been a company, that's saying we're going to go.
Oh 50 75 1000.
100000 units.
Basically 40 properties since we've been public and went public in 15 and.
We were able to.
Quadrupled our market cap by recycling capital and that's what we care about first and foremost is the with the stock price and giving up getting that up for for stockholders.
The ones we don't.
I want to venture into any new property types.
But we are looking at inventories a little bit by the research triangle in Raleigh Durham.
Yes.
So in the life Sciences biotechs value space made some acquisitions there.
We'd like the job growth there, we like the demand drivers there.
That's a market that we are that we're searching for and it could be interesting.
Over the next few years for us, but other than that where we're comfortable and like what we're doing.
It sounds good and then just lastly for me I'm going to ask about a line item in that income statement as well that corporate G&A line.
It was down a fair amount sequentially and year over year.
When I looked at the guidance for next year it looks like it goes back up.
Was there anything unique or or.
So we should look to that that kind of how does that force the number over the lower.
Yeah, I think maybe.
Maybe.
Being conservative on the.
The guidance.
See some drop in audit costs and some of our.
Kind of overhead there.
Yeah, pretty minimal and immaterial amount, but there are certainly less travel and stuff that was getting.
Flush through corporate G&A, just with the pandemic.
But yeah, we don't really expect a material increase in those expenses.
For guidance kind of average the back out to them.
Where we thought it would be.
Historically.
Okay. Thank you.
Excellent.
Yes.
Yeah.
The next question comes from John Michel Good just a follow up question from Ladenburg Thalmann. Please go ahead.
Just a quick one on capital recycling I mean, I guess as you think about that today.
Staying as timing and they're kind of bespoke transactions, but would that be day, one dilutive on a per share basis, given kind of a cap rate dynamics, you're seeing today or do you think it would be largely from.
What you can dispose the Inc.
Is equal on a day, one NOI versus what you can take on.
Historically, we've done it in a reverse manner. So we've acquired the property before we've.
So.
Settled on the dispositions.
That's cash that's cash accretive but.
Depending on where you buy the deals could be to your point cap rate dilutive.
But on a stabilized basis for wood.
Probably more than likely like repeat buyer for a quarter for a half you know.
Our goal is to generate 75 to 125 basis point NOI lift post rehab in three years. So yes. It has.
Second you have second year.
Cap rate accretion would deliver at that point.
What would be what would be the way we can think about it yes.
Just a couple of other things.
So as you said, we took we recycle out of something that's older.
It has gone to the rehab process and so the upside there is not as much to Matt's point is the new deal, we're bringing in and then not so much NOI focus.
For Us also.
For refinancing that that new deal or putting financing on that new deal at a cheaper cost of.
Death, and what the current dealers for some I think that's accretive to our core sofa line.
The entity.
Hum.
Thank you.
For the question answer session for today I'd now like to turn it back over to you for any closing remarks.
Oh, Yeah no. We're good appreciate everybody's participation and a lot of good questions. We look for.
2021 2020.
There's definitely a tougher year than we thought going in but I think we came out pretty well and well positioned in some.
Some good prospects for the future. So thank you for everybody for participation.
This.
Today's call. Thank you for your participation you may now disconnect.
Okay.
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