Q4 2020 Bluerock Residential Growth REIT Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the Blue rock residential growth REIT fourth quarter, 2000, and 'twenty earnings Conference call. All participants will be in a listen only mode. After today's presentation, there will be and opportunity to ask questions. Please note. This event is being recorded and all.
Like to turn I would now like to introduce your host for today's call Christopher Vohs, Chief Financial Officer at Blue Rock residential Mr. Davis. Please go ahead.
Thank you and welcome to Blue <unk> residential growth REIT fourth quarter 2020 earnings conference call.
This morning prior to market open we issued our earnings press release and supplement the press release can be found on our website at blue rack residential dot com under the investors tab.
In addition, we anticipate filing our 10-K later this month.
Knowing the conclusion of our remarks, we'll be pleased to answer any questions. You may have please note that this call may contain forward looking statements as they are defined under the private Securities Litigation Reform Act of 1995.
There are a variety of risks and uncertainties associated with forward looking statements and actual results may differ from those set forth and such statements.
For a discussion of these risks and uncertainties you should review the forward looking statements disclosure and the earnings press release, we issued this morning as well as our SEC filings.
With respect to non-GAAP measures, we use on this call. Please refer to our earnings supplement for a reconciliation to GAAP and the reasons management uses these non-GAAP measures and the assumptions used with respect to our earnings guidance.
With that I'll turn the call over to remain campfire, chairman and CEO of Blue rack residential growth REIT for his remarks.
Thank you, Chris and good morning, everyone and addition to Chris with me remotely today.
Several key members of our executive team, including Jordan, Ruddy, our President and Chief Operating Officer, Ryan Macdonald, Our Chief Investment Officer, Jim Babb, Our Chief strategy Officer, and Mike and Frank Paul EVP of operations and <unk>.
Before getting into our results given the costs and you I share enough the COVID-19 pandemic I want to express.
Sincere wishes that everyone is staying healthy and.
And to thank all of our employees for their hard work and dedication during this challenging past year.
Coming into 'twenty and 'twenty, we have positioned <unk> to take advantage of secular changes and domestic migratory patterns employment growth and affordability and market lifestyle characteristics Brg's strategic focus on class a affordable for spring suburban and apartments and knowledge economy growth markets and benefited.
Scrapping here and there was a significant acceleration and that's positive migration to our markets and suburban locations and I'm pleased to report BRG delivered strong relative operational performance and also finish the year number one and total shareholder return them on since multifamily peers.
Recapping 'twenty and 'twenty, we continue to remain active on the capital allocation front executing on $930 million and transactions during the year.
Opportunistic dispositions totaled $525 million across nine assets, and we achieved very robust pricing with cap rates, averaging four 4% well inside published third party NAV cap rates for us that's approximately five per cent.
And our disposition and reinvestment strategy will continue into 'twenty and 'twenty, one with a focus on selling lower growth profile assets at attractive cap rates and reinvesting the proceeds accretively into markets and assets with a higher growth profile and potential value add opportunities.
Net proceeds from these dispositions may impact, our near term Seattle, salt, but will become accretive on a run rate basis, as we reinvest day equity throughout the first half looks for you.
Our capital market strategy for the year included utilization of our unique access to capital at attractive cost.
Through our series T preferred continuous offering which allows us to fund accretive external growth year and periods of stock price volatility.
And we experienced in 'twenty and 'twenty with the flexibility to convert into common equity at our option at a future date and I for future <unk>.
Common stock price during the year, we raised $243 million and our series D shares and are continuing that momentum and the early part of 'twenty and 'twenty, one with 30 million raised in January alone.
Additionally, we accretively redeemed 85 million of for expensive age and a quarter percent series, a redeemable preferred stock and the fourth quarter and.
Subsequent to quarter and have announced the redemption of the remaining 55 million balance at the end of February.
Both of our series C and series D. Preferreds also open up for a call in 'twenty and 'twenty, one and with a coupon of about 7%, we expect to have opportunities to accretively redeem them overtime.
Moving on to our results during 2020 on a GAAP basis net loss to common stockholders was $1 91 per share compared to a net loss of 91 cents per share and 2019.
We achieved 72 cents of core F F O, which is NAREIT <unk> with the add back of certain noncash nonoperating items and delivered full year same store NOI growth of 3%.
We ended the year with portfolio occupancy of $95 four per cent and maintained on average rent collection rate of 97% and the second half of the year.
These results reflect our strategic market selection and solid operational execution and and nimble approach has as the pandemic progressed at the onset of the pandemic. We initially focus on on occupancy defensive strategy, which allowed us to build positive great growth on a sequential quarter over quarter basis as the year progressed.
Today, we are well positioned heading into 'twenty and 'twenty, one and I expect our relative topline outperformance to continue.
During the fourth quarter, we generated $56 million and revenue, which was up six 6% on a year over year basis, and was driven by significant investment activity during 2020, notwithstanding being offset by non dispositions throughout the year.
On a GAAP basis net loss to common stockholders was $1 13 per diluted share compared to a net loss of 62 cents per diluted share for the prior year quarter.
For F F L, which is NAREIT <unk> with the add back of certain noncash non operating items was <unk> 18 per share versus 21 cents per.
Per share for the prior year period, our solid operating results were partially offset by our strategic decision to slow our investment cadence and light of more on certain environments and the early to middle parts of the year and an opportunistic disposition cadence and the back half of the year, which resulted in an estimated estimate at negative <unk> <unk> per share impact due to holding and large.
For cash balance throughout the quarter.
We've increased our deployment of balance sheet cash and expect to carry significantly less capital on the balance sheet as right as we get into the back half of 2021.
In terms of property and property level results, we grew property NOI and strong nine 7% year over year to $30 9 million and the quarter.
Same store revenue came in and out of positive 60 basis points with NOI up 20 basis points compared to the prior year period.
During the quarter, we completed three acquisitions totaling 166 million and gross purchase price and invested $24 million and preferred equity mezzanine loans and a ground lease, including two new operating preferred equity investments and additional scheduled fundings for 11 existing investments.
Also during the quarter, we sold for assets totaling $255 million on average in place economic cap rates of three 6%, which again compares very favorably to third party NAV estimates approaching the five per cent range.
With all this investment activity will continue to grow our asset base gross assets were up eight 2% for the quarter from the prior year period to over $2 6 billion, which puts us at the larger and if our small cap multifamily peers.
Shifting to our quarterly capital markets activity, we raised 76 million of our series D preferred during the quarter, which is our second highest quarter ever and demonstrates the resiliency if our access to capital even during the depths of the pandemic when all multifamily REIT stocks were under significant pressure.
During the quarter, we repurchased $28 million of common stock at an average price of 981 per share, which is accretive on an NAV basis and subsequent to the quarter and we've converted $31 million of our series B redeemable preferred equity into common equity at an average price of 11 and 47 per share.
As we look ahead, we're confident and being well positioned to navigate through the remainder of the COVID-19 pandemic and capitalize on what management expects to be on economic re acceleration and the backups back half of 'twenty and 'twenty one M. B on our platform displayed resilience during the depths of the pandemic and our strategy focusing on knowledge economy class a affordable.
<unk> for spring suburban apartments continues to position us well to deliver shareholder value throughout the full cycle environment.
With one rate earnings upside potential as we reinvest the capital from our opportunistic dispositions and favorable underlying secular market trends, we are optimistic about our performance on the coming years.
Finally, I would like to again note that management continues to be significantly aligned with shareholders through its substantial ownership of brg's fully diluted accurate with that I'd like to turn the call over to Ray Brian.
Thank you remain and good morning, everyone.
The operating portfolio continued to build momentum as the quarters progressed throughout the year led by continued strength and renewals coupled with a sequential quarter over quarter improvement and new lease rates.
This was all made possible by our strategic decision and in the early stages of the pandemic to focus on building a strong occupancy occupancy base, which culminated in our fourth quarter average occupancy of 94, 9% 130 basis points above prior year quarter.
Occupancy was consistent throughout the quarter ending at 95, 4% and we've been able to maintain strength through the end of January finishing at 95, 6%.
And seven 4% availability.
Our positive 60 basis point year over year increase and same store fourth quarter revenue was driven by a one 4% expansion and occupancy and a 20 basis point improvement and rental rates.
However, this was offset by approximately 300000 of collection malls and lower fee income due to COVID-19 impacts.
Rent collections have remained consistently strong throughout the pendency of the pandemic and 97%.
Even following the elimination of the Federal Cares Act fiscal stimulus and July.
Approximately two thirds of our markets posted positive revenue growth and the quarter with Birmingham, Denver, Greenville, and Las Vegas, all exceeding three and one 5%.
Collectively our sunbelt knowledge economy market suburban footprint continues to outperform our urban and coastal focused peers as we continue to benefit from positive migration trends affordable rent levels and outsized employment growth.
Moving on to rate growth.
During the quarter lease rate growth average positive, 1%, which is up 60 basis points on a sequential quarter over quarter basis.
Both renewals and new leases accelerated sequentially with renewals coming in at $3, one per cent and new leases at negative 30 basis points.
Leading the way and the average rate growth for the quarter were the Tri cities and Birmingham at 8% to 10% and Phoenix and Las Vegas, that's 4% to 5%.
Sequential positive rate growth continued into January up 40 basis points to one 4%, which is very strong number on a relative basis.
Renewals improved to four 4% with new leases coming in at negative, 1% and a seasonally weak part of the calendar.
Birmingham, Phoenix and Las Vegas, all continued.
Positive momentum with Rea.
Rate growth exceeding 5% on average.
On the expense front year over year same store expenses increased one 1% and the quarter.
And on a year to date basis expenses were up one 9% year over year with the majority of the increase coming from taxes and insurance.
Taxes, and insurance were up a combined six 4% with taxes up 4% and insurance negatively impacted by 27%.
Controllable expenses declined 90 basis points led by cost control and marketing admin and travel.
As we've communicated on prior quarters utilizing technology to drive both top line revenue growth and controllable expense savings is a strategic area of focus for us.
And we continue to we expect to see the continuing benefit of that investment and our results.
In terms of capital allocation for the year the sale of nine assets allowed us to strategically recycle capital to assets and new markets with immediate value add renovation opportunity.
The dispositions were executed at an economic cap rate of 4% based on $300 per unit replacement reserves and the buyer's year, one tax estimates.
A portion of the proceeds were reinvested into assets with a year, one economic cap rate for 8% and because of their stronger growth profile.
<unk> stabilized cap rates exceeding 6%.
Subsequent to year, and we sold our Grand what asset and Orlando for $65 million and a cap rate of four 3%.
Which yielded and equity multiple to BRG of three two times invested capital.
Which is a similar return achieved on our Orlando disposition earlier and the year.
We have a dish and we have additional dispositions in the queue with very strong returns and look forward to reporting back on them in future quarters.
During the quarter, we acquired three assets and Austin, Texas, Raleigh, North Carolina, and Phoenix, Arizona for $166 million.
The off market acquisitions offer immediate revenue upside opportunity, allowing us to improve and place cap rate from 4.8% to north of 6% versus cap rates and our markets of approximately 4%.
Also during the quarter, we added two operating Florida preferred equity investments totaling $5 million and BRG equity to an existing six asset preferred equity joint venture, yielding 10, and one five per cent.
On the value add front and more conservative posture and view of COVID-19, and a seasonally weaker part of the calendar causes the slow the pace of renovations during the period.
During the quarter, we completed 65 units and delivered meaningfully above trend returns with an average ROI of 24%.
Turning to the balance sheet.
During the quarter, BRG made investments and new acquisitions, and operating preferred equity assets totaling $64 million and equity.
And additional 20 million was funded during the quarter and two existing preferred equity mezzanine loans and a ground lease.
As of the end of the year, Brg's investment and preferred equity mezzanine loans and a ground lease stands at 255 million, which represents approximately 10% of our total asset base and of the $255 million approximately 80% or 210 million is invested and operating assets.
Moving to dispositions during the quarter BRG sold for assets with gross sales prices totaling $255 million and BRG netted $80 million and equity proceeds.
Following the quarter and our late January disposition activity netted $25 million and proceeds to BRG.
From a liquidity perspective due to the uncertainties presented by the Covid pandemic, we took a number of measures to increase our liquidity through the end of the year.
As of the end of January 2021, BRG had approximately $158 million available for investment through a combination of cash and availability on our revolving credit facilities.
And we expect to continue to grow our capital base through our series T preferred offering.
Although we entered the year with additional cash on the balance sheet, our pipeline is very robust, including opportunities moving along through diligence and our expectation and 'twenty. One is that we will manage the business with less cash on the balance sheet as we progressed throughout the year.
Looking ahead in terms of some brief market commentary, we continue to like class a affordable assets and first ring suburban locations that are more insulated from supply growth and favor Atlanta, Raleigh, Nashville, Austin, Denver and Phoenix.
While continuing to remain cautious on in town Charlotte.
And the Dallas MSA.
Which we believe will be continue to be impacted by elevated supply in the coming year.
Following our acquisition and disposition activity in 2020 suburban Atlanta, and Phoenix have elevated to our largest market concentration, which should serve us well over the coming years.
We are reinstating earnings guidance for the 2021 year you can refer to page 35 of our fourth quarter supplemental package for details on the key assumptions driving our 'twenty 'twenty one financial outlook.
We project a core <unk> per diluted share for 'twenty, one of 65 to 70 <unk>.
Driven by same store net operating income growth of zero to 3% across a 26 asset same store operating pool.
This is being driven by topline growth of 2% to 4% and expense growth of 4% to 6%.
Of note.
All but one of our same store markets are projected to realize positive average rental rate growth in 'twenty and 'twenty, one on a year over year basis.
Revenue and NOI are projected to accelerate throughout the year towards the high end of the range as we continue to build sequential rate growth and expenses normalize.
On the expense front.
And taxes and insurance account for the largest majority of the increase and collectively contributed approximately 4% of the projected midpoint expense growth of 5%.
On the capital allocation front, we are forecasting another active year with investment volume and dispositions totaling $600 million to $800 million.
And 352 $500 million respectively.
We expect the majority of our dispositions to be Frontloaded in the year, which will impact near term earnings, but expect a run rate to be accretive upon reinvestment as we get into the back half of the year.
So on accumulative basis for the year and just.
Dispositions should be neutral on a <unk> basis.
To conclude I want to reiterate that our capital allocation and operating strategies have positioned us well on a relative basis and when coupled with positive secular market trends, we are forecasting near term and sustained outperformance in the coming years.
And with that we will open it up to Q&A operator.
And we will now begin the question and answer session to ask your question you May Press Star then one on your touch tone phone.
If youre using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
And at this time, we will pause momentarily to assemble the roster.
Your first question today will come from Gaurav Mehta with National Securities. Please go ahead.
Yeah. Thanks, good morning.
First question on your guidance for 2021 bar for.
And investments.
The split between acquisitions and <unk>.
Preferred equity investments and that.
The 2021 number that you have.
Sure. It's a it's about a 70 525 split for us.
<unk> two preferred equity investments.
Okay, and I got to know what kind of GAAP rents are you assuming for the acquisition.
And again.
But for Q.
I think it's a fair assessment that you know we've been able to buy cap rates that are above market you know market today for our cordele core plus deal is around 4% and we've been able to achieve cap rates and the north of the four and 5% range and I think we'll continue.
To deliver on that and that's what's in our numbers.
Obviously gaurav. This is romijn, although obviously with we're looking for acquisitions that we're buying it for and a half and.
And can grow to a six ish overtime.
Okay, and you guys are growing that through generations.
Yeah, we're looking for assets that have opportunities there under rented.
So that could be a number of things it could be and operational issue it could be that the assets, a little dated and need said and it needs a touch up.
And where we're looking got their peers and seeing where we have headroom for 100, 150, 200 Bucks and rent and that's how we grow it over time through a through improved operations.
Improved rental.
Rental and methodologies and through upgrades and we can obtain reposition and all of their book and if you look at our history and kind of our ability to source deals with cap rates above market cap rates I think we've done it fairly consistently since we've gone public.
So I don't think it's any different this year, albeit it's certainly very hard but if you recall, we have a sourcing network with our partner network that creates a force multiplier effect and old.
Allows us to see a lot more off market and relationship deals than it than a typical firm.
Okay, and lastly, I think and the prepared remarks, you also mentioned that couple of other.
You may well and crippled tunes.
And we want this year.
How does that low.
Look in terms of capital allocation towards redeeming debt brooklet startup rushes deploying towards acquisitions.
We're working on it we're continuously value we'd like to redeem those.
And so they're expensive cost of capital.
And as we sat with a series of day, which is when it came on a bit when it became unlocked we would look to redeem at our viewpoint is the same obviously the timing may shift depending on what opportunities were saying in terms of preferred or acquisitions.
And my sense says that just based on looking at what we have available and in front of US today, it'll be a matter of quarters, rather than on a matter of years that where they'll be redeemed.
Okay. Thank you.
Thank you Rob.
And our next question will come from Barry, Oxford with D. A Davidson. Please go ahead.
Great. Thanks, Thanks, guys Romijn, just kind of following on that line of questioning when you look at the dispositions.
Is the dispositions and the cap rates that you're getting there versus the acquisitions and do you not see that and growth potential.
And that asset is that what causes that disposition and what causes that acquisition to be accretive.
Vs.
On the causes that acquisition to be accretive versus that disposition to give you the same return.
I I Barry Yeah that does that does that make sense for me.
Did I explain that ranks and that's why okay. Okay.
We look at we're looking for an asset that where you look at the sub market, where it's ranked amongst its peers. We will look at say, okay that new product and the market is getting at.
Is getting acts and that's going on and that's a number of data points and the asset that we're looking at which is 10 or 15 years old is getting X minus 500, So we're never going to be able to get X minus 502, and I'll take that our acquisition to get to actually it has but it's not new but with some reasonable touch on five to 10.
On a unit or not.
Some light value add I should call it actually core plus mostly decorative stop catch and scan all kitchen and lighting fixtures.
Furnishing and so on and so forth and and and.
And common areas and you can get it up 200 box 250 box et cetera, et cetera, and these are all custom custom design based on based on the specific asset and so we have a business plan in mind, when we do it and as we and and that business plan and close how much room, we have to grow its share of value add and what that market looks like in terms of on.
She needs to grow to grow rents organically and we continuously revisit those that underwriting.
With respect to opportunities that we see and when we want and to Covid. We said, okay. Let's take this opportunity and we want to be defensive going into it but this really is going to have three legs to it. It's a download we want to be defensive but slow down and that's spelled.
Cash and not slow down.
And our.
Our our upgrades, let's let's let's be defensive on occupancy and then you've got the recovery, which we're now let's let's invest that cash, let's do more upgrades and let's and I'll, let's start to push rents and then there's a third phase which is the growth and that was the most strategic piece, where do we want it to be positioned in terms of markets and assets and.
And and and.
Coming out and we've been and that's what this rounds of disposition and acquisitions are what you are saying, which is okay, where do we want to be we strategically positioned ourselves and these large economy markets. We've done well with these assets, but markets are and but we have the advantage. We're not a big behemoths, we have the advantage of being able to shift our footprint, particularly.
With our partner network, where do we want to be coming out. This is what we asked ourself last year, that's hard what do we want to be two years from now in terms of what are going to be the next generation of markets that are going to drive growth for us, let's find the right assets and those market Yeah and a great example of that Barry is our capital allocation moves and Orlando So we over weighted.
Orlando, our three or four years ago.
With the expectation of significant outperformance on on market rent growth.
And we sold a couple of assets this year.
Three two times on average.
Multiple <unk>, which was the kind of realization of of that move to kind of front run the market rent growth in Orlando and it doesn't mean, we don't like Orlando just means that we took chips off the table. After we realized significant growth and we're reallocating that capital to different markets that we think may.
And they have a little bit more upside opportunity either organically or specifically at certain assets and in fact with Loopnet, we had been working to reduce our exposure to Orlando and.
Even before the pandemic so that was a part of that part of our plan, we realize Ryan and I will just go.
And to markets like Phoenix, and Austin, and Atlanta, where we're seeing option.
No that's great and I know you guys for doing that debt that's good.
Switching gears a little bit.
When I'm looking at capital.
On allocation and as far as monies to work I know you got cash on the balance sheet. So that that's going to carry you for it.
Well the series T and give you enough equity or would you guys be looking for some JV money kind of down the road I know right now you're you're a little bit flushed by what about down the road.
What we're not looking for JP, we get we get approached all the time, but the way. These work is that these JV partners want want all the upside and and on it.
And we do a lot of hard work to create upside in terms of value creation, and we want to keep it for our investors. So we get approached on a regular basis and we start discussions and once you get once you once you weren't you.
It sounds good on the surface about the Devils and the details yet and are you drove that detail and saying, okay, I'm, giving up on my upside for what.
We want to keep that upside for investors and looking at any changes is the series T enough.
On a serious needs planning I think we've got a guy that last year I think we have 42 per cent of that market and.
We're raising debt.
Now we did 248 million January with just 30, so we're running it at running at higher rates on that so seriously. It gives us plenty of plenty of firepower not not only to redeemed arm up more income.
Pensive preferreds, but also two to growth to drive external growth.
Okay. Thanks, guys for the color appreciate it.
Thank you Yep.
And once again and if you'd like to ask for your question. Please press Star then one and.
Our next question will come from Craig Kucera with B Riley Securities. Please go ahead.
Hey, good morning, guys wanted.
I want to circle to your guidance for a bit.
And your expectations for interest income from preferred and JV interest.
$29 million is down from I think for 35 million you did this year and in 2019.
Are you looking at this as more of a long term strategy of kind of gradually reducing your exposure there or I guess, just any sort of color there would be helpful.
Sure, Hey, Craig and try and more specifically on kind of the reduction and so it's a couple of different factors. One is we had a I think we had novel perimeter on.
Our our low transactions pay off and on return on capital.
And then we have a couple.
Couple of pending dispositions and 2021, and so I think when we started out as and as a smaller entity and the <unk>.
And it was was north of 30% of our capital base, that's obviously come down significantly I think.
Right now our pipeline, we see opportunities to build backup that preferred equity book. So I I don't know if it's going to get back to call. It to $35 million run rate certainly this year or early next year, but.
One of our focuses is to allocate capital to for that book and build it.
And build it up from the 10 percentage of the total capital base.
Okay.
That's helpful.
I also want to touch on your share count expectations. I know you bought back a lot of stock on the fourth quarter, you had the series B convert here and the first quarter, but.
I guess kind of what what gets you from kind of the current 35 million call. It chairs to the 39 is that just the expectation of more series be converting or just some color there would be helpful.
As well as as you know Craig one of our expectations quantify our goals, which we actually started executing on last year pre COVID-19 and it got halted and get out and March was to grow our common equity base.
And because we are on debt costs as we were last year. This time off getting into the R. M Z and being eligible for all the RMC index funds and so on and so forth, which has been a huge driver.
Common stock pricing for our appears that.
Got to that milestone.
So and that could be a combination of a finish off the combinations additional series B conversions.
As you can tell that.
We issued the last year you know on that.
Stock was even on our stock was and the high threes, which is which we took a hit and late March all the way through the recovery and are now at a much.
And as as we get to a much more attractive stock price, we and I'll return on that.
Redemption feature of the conversion feature.
Which allows us to at a flip of a switch.
Increase our common equity base, so where we have a we have that tool at our disposal. We also have the ability obviously to go out to do on to a common offering and it's all going to be stock price sensitive obviously, if youre doing a common offering you're paying.
Ah you're paying a fee to their national bank, and there's going to be a discount and that discount range for people on our side to 10% to 20% last year. So it can be expensive depending on on the price for that the advantage of being redemption as you flip a switch and it's on effectively it's like and aftermarket with no desk.
No no no fee being paid and so we're going to use those too.
We're gonna do use those two tools too.
And we expect that our carbon basis kind of growth.
Does that answer your question.
Yes, yes, yes it does.
And I just wanted to circle back you took the provision for credit loss on on <unk> and south side.
A couple of questions surrounding that a sort of some color on what youre seeing in that sub market.
And B I know that the Lexus Lexus Citycenter has actually seen rent declines pretty significantly from last year, as well and and sort of I know that some color on is that loans still cash flowing and performing and sort of your expectations there.
Sure Hi, Craig its Ryan.
For the.
The south side provision was was purely I would say capital allocation and opportunistic capital allocation related.
And the sub market.
Proximity.
And as effectively on almost on campus with the Texas Medical Center and.
I would say that the.
The medical center with Covid took substantial hits.
With with procedures down significantly so the Submarket was certainly impacted we had a offer that came to the table and we made it we made a decision to move for with that offer because we've got more immediate opportunities with significantly higher upside versus.
<unk> waiting on on that.
And that asset value to rebound, which it will over time, but it was against strictly capital allocation related on on data growth with the opportunity set in front of us with respect to city Center.
Yes that that market has been impacted by supply.
Which is has had negative impact on rent that loan to value. When it was when it was done was very low.
It was in this I'm going to say the 70% loan to value typical typical mezz and press ltvs are upwards of anywhere from 85% to 90% of cost we did that deal at 70% ish LTV loan to cost at the time so.
We still feel really good about value there and.
In fact, theres actually been some trades.
Within that little micro markets Citycenter micro market.
That.
That make us feel exceptionally.
Good about about value relative value not only for the asset and our.
And our mezzanine equity position, but also kind of the I would say that the common equity position as well.
Alright, yes, if I could just add to that the south side was that.
Two.
And to add to Ryan's comments on side was an isolated incident and we obviously look at all our mezz and perhaps on a regular basis in terms of valuation and see if theres any impairment. This is Ben. This was one case the thesis was Texas Medical center and somewhat counter intuitively that was a weak market because of COVID-19.
Do you think it would be a strong market because it's a medical center, but.
And TMC had big gross clients that got put on hold and employee and attach rate declined because of all day elective surgeries that drive drive that so we decided to wait.
And when we looked at along with as we did we realize that we needed to.
And to do the write down but when you look at our when you look at our.
Loan book in General. This is we've had I think 11% IRR and one point for multiple and it continues to be very helpful. Inclusive of the south side and closing that's right and that is not a net of that net of that write down.
Day, and obviously, we took a.
And against that write down and yet.
On a $59 million and gains if I remember the number correctly for the year, which were cash which were cash gains on us.
The other the other kind of note a return of return note is that I think we've got seven pending dispositions, including the including the the write down on Southside are projected irr's and whole dollar profit multiples.
And on the seven or call it north of 15% and almost two times equity multiple so.
The portfolio has performed exceptionally well and.
Spite of this one isolated and incident.
Okay. Thanks for the color I appreciate it.
Yes.
And this will conclude our question and answer session I would like to turn the conference back over to Robin for any closing remarks.
Thank you operator, and thank you all go on for joining US today, we look forward to.
Continuing to report to you on our progress and the upcoming quarters and wish you a safe and healthy 'twenty 'twenty, one and goodbye.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.
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