Q1 2021 Mack-Cali Realty Corp Earnings Call
Yeah.
[music].
Good day, everyone and welcome to the Mack Cali Realty V.
Guilty Corp, first quarter 2021 earnings call today's call is being recorded I would like to take a reminder, that everyone that certain information discussed on this call may constitute forward looking statements within the meaning of the federal Securities law, Although we believe the estimates reflected in these statements are based on reasonable.
<unk>, we cannot give assurance that the anticipated results will be achieved we refer you to the company's press release annual and quarterly reports filed with the SEC for risk factors that impact the company with Dash I will now hand the call over.
To Mark Buttoning up my Kelly's Chief Executive Officer.
Good morning, and welcome to walk back quarter 2021 earnings call I'm joined today by David quick on our CFO.
I'd like to start by acknowledging the impact of the past 12 months have had on everyone's professional and personal lives, but the COVID-19 pandemic, forcing a reevaluation of the most fundamental aspects of how we live on walk.
We would anticipate that the U S economic growth will begin to accelerate this year fueled by the sizeable government stimulus pent up demand and recovering labor markets.
It appears that we may be at an inflection point on our Gustaf from an economic recovery maybe.
Maybe a third of new JV on the new JV. The inhabitants of 30, vaccinated, which should also help the reopening of the economy and return to office life in our backyard in the months ahead.
Okay.
While these are optimistic signs youre cognizant of the significant uncertainties per se.
On the path ahead represents largely uncharted territory.
As such we remain focused on the initiatives that are within our control. These include simplifying our business strengthening our balance sheet and optimizing our operational efficiency.
Despite the unprecedented challenges of 2020, we had an active quarter on solid start 2021, we advanced Mack Cali strategic transformation, while generating value for our shareholders by continuing to monetize suburban office properties, signing a number of leases on harborside and further developing our multifamily platform by advancing.
I will see construction projects River house nine on the Charlotte while.
While capturing leasing momentum at the option on the capstone more about these later.
Our asset portfolio was 74, 2% occupied as of March 31st the drop in occupancy compared to 78, 7% as of year end was driven primarily by the previously announced departure of TD Ameritrade because they stayed with 140000 square feet in Harborside six 4 million on this pause it for a fifth.
<unk> was partially offset by the 78900 square feet of new leases or lease extensions completed during the quarter 50.
58200 square feet of which relates to our waterfront assets.
While the office leasing market throughout the country remains subdued from crude and meet the new Jersey market, which during the quarter reported historically high vacancy rates. We are cautiously optimistic on and started to see a marked improvement in tenant inquiries.
Next week, we'll be unveiling the latest updates on harvest by campus, where we have been working hard to develop a premier destination for employees locals and visitors alike by introducing smart design solutions that meet tenant demand for high quality office space on immunities.
We believe we are well positioned to secure new tenants amidst the market recovery and increase in vaccinations and the reinvigoration of office life.
During the first quarter, we also made significant progress towards simplifying our portfolio through the continued disposal above and off the top that having sold over $547 million or one 9 million square feet year to date, representing approximately two thirds of our year end 2020, non core assets by value.
We exited the Princeton office market with the $38 million day at a 100 overlook center and completed the $254 million sale of the Metropark portfolio.
Subsequent to the quarter, we sold on 843000 square foot short Hills office portfolio for $255 million generating approximately $100 million of net proceeds after the retirement of the learning costs. These sales that can create a substantially in line with our internal net asset values and pre pandemic valuation of the properties.
In total these sales has provided us with approximately $372 million of net proceeds which were used towards repaying outstanding corporate bonds further strengthening our balance sheet through the repayment of recourse debt.
Turning to our multifamily portfolio since the start of the year, we've seen an improvement in leasing momentum our operating multifamily portfolio finished the quarter, 93% leased up from 90% of this year and we're seeing strong leasing activity across a number of our off that which we anticipate will allow us to continue reducing debt.
Eliminating concessions.
On the development funds with Easter Berkman to residential communities in January the Optum 193 unit upscale community in short hills targeting affluent empty nesters, and northern New Jersey, and the Capstone of 360 on that project is important imperial.
The often achieved 37% occupancy at quarter end on was 54% leased as of May start the <unk>.
Capstone is 39% up from 25% at quarter end.
Our remaining development projects comprising 1063 units include River House nine important Imperial at 295 unit apartment building scheduled for delivery in the second quarter on the Charlotte a 750 unit power located on Jersey City waterfront.
I'd like to now turn to highlight from the evolution of our ESG efforts on the way from rich we have renewed our commitment to operating in a more responsible sustainable increases on equitable manner across our portfolio.
Last July our board of directors, including myself from an ESG committee that $4 million several global sustainability initiatives and creating the 10 principles of the United Nations Global compact on the task force on climate related financial disclosures or the results of our in house yesterday, I thought from disclosure improvements, including the introduction of new internal policies Mack Cali was awarded.
And ISS quality scores three for environmental up from one nine in October 2020 on the schools, one for both social and governance up from eight two in October 2020, respectively.
We're also one of only seven weeks out of approximately 250, <unk> benchmark from ISS quality school to achieve a score of one across all sub categories within the social segment.
Core is that based on a scale of one to 10 with one being the highest score.
While there is still work to be done I'm pleased with the tremendous progress we've made today and would encourage those interested in learning more to review our 2020 CSR report, which is available on our website.
With that I'm going to hand, it over to David Smith, Chief Financial Officer, who will update you on our financial performance during the quarter David.
Thanks Mallard.
We reported core <unk> per share for the quarter of <unk> 18 per share versus <unk> 33 per share in the prior year the.
The year over year reduction reflects the impact of our suburban asset sales program is.
As well as the impact from the pandemic on our hotel parking and multifamily operations.
Lower than expected asset sales timing lower interest expense due to capitalized interest and better than budgeted expenses on both the office and multifamily platforms led to a <unk> <unk> per share better results compared to the high end of our Q1 guidance range of <unk> 15 per share.
Please note that our adjustment to core <unk> included a $2.05 onetime G&A expense related to management restructuring and a CEO change.
The waterfront office portfolio at our same store cash decline of 10, 9% largely attributable to less parking income year over year and the previously announced move out of an anchor tenant at harborside six offset by expense savings of three 8%.
We have 201000 square feet of our waterfront office campus leases remaining to expire in 2021, including 44000 square feet related to the remaining TD ameritrade move outs.
At Harborside, six and 100000 square feet related to them. It takes us move out at Harborside five.
As Bob will detail, our multifamily portfolio is showing positive trends across a number of metrics.
Although revenues were off 12, 2% on a year over year basis.
As we anniversary the last pre COVID-19 quarter.
Our occupancy increased by 330 basis points sequentially from the fourth quarter and net effective rents stabilized due to lower concessions.
We showed only a slight sequential same store revenue decrease of 30 basis points and a sequential NOI increase of seven 3% as real estate taxes, and repair and maintenance expenses normalized from the fourth quarter.
Transient revenues remain depressed for the quarter as our hotel operations were again limited to the residents in portion of our dual flagged hotel at Port Imperial which continued to run near EBITDA breakeven, notably both the on mute and Hyatt hotels are now fully operational with the Hyatt opening in April.
And the Onvia on Mei.
We anticipate the contribution from these operations to be subdued for the remainder of the year.
Turning to the balance sheet in the quarter, we reduced our line balance to zero and carried $261 million of cash on the balance sheet at quarter end. These proceeds along with the proceeds from the sale of the short hills portfolio will be used to repay corporate debt and will remain on our balance sheet until our bonds are retired on June <unk>.
Six.
We have only one mortgage maturity remaining in 2021 at $3 $9 million mortgage on a small retail condo within Roseland, which we intend to refinance.
Yesterday, I am happy to announce we entered into a new agreement on a $250 million revolving credit facility and a $150 million term loan debt.
This facility provides us with the flexibility to lease and invest in our waterfront portfolio, while continuing the growth efforts surrounding our multifamily platform.
And now I would like to provide a couple of highlights on our outlook for the remainder of 2021.
First we would like to remind everyone that we held our Metro park portfolio for nearly the entire quarter and it was sold at a 7.0% cash cap rate on March 25th.
Shortly thereafter on April 20th we sold our short hills portfolio at a cash cap rate of eight 5% based on our Q1 annualized cash net operating income.
As a condition of calling our bonds, we will be required to hold cash for 30 days in the second quarter to fund the bond redemption and make whole payments.
Importantly, upon completion of the remaining suburban asset sales, we expect to drive approximately 55% of our NOI from multifamily operations and 45% from our office portfolio in the back half of the year.
We believe this is a notable accomplishment not yet recognized by the market.
Finally, we'd like to take a moment to touch on guidance.
With both the economic recovery and our company transformation evolving we will not be providing guidance at this time.
And with that we'll conclude our prepared remarks, operator can you. Please open up the line for Q&A.
Thank you if you wish to ask a question at this time. Please press star one on your telephone keypad will pause for a moment.
We will now take our first question from Steve Sochua from Evercore. Please go ahead.
Thanks, Good morning.
I guess with the suburban sales now kind of largely in the rearview mirror I guess, there's maybe $200 million or so left to sell.
Maybe we can just kind of focus on on the waterfront leasing you guys made some comments about.
Changing some programs and seeing more more demand can you just maybe speak to the types of tenants that you are seeing are these native new Jersey companies just moving to the waterfront are these Manhattan companies looking at Jersey is a cheaper alternative.
And maybe you could update us on the grow New Jersey incentives.
Thank you for the question, it's a good one.
I <unk>.
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We've got high quality asset in a great location that we've been investing in and through the rejuvenation of that.
Harborside waterfront, we feel that the upheaval.
Is there any going to be enhanced through the quality of the office offering and also the amenities that will be.
On off Bob.
After that we've got a.
First on cost and tunnel and external leasing team in place now.
Focused on leasing up vacant space got debt.
The pace of the vaccine rollout.
It's been progressing extremely well, there's a that on upon what's on the office kind of feel like the worst is behind us.
And and then add to that as you mentioned, depending on incentive package, which really can be significant.
It's down to the tune of potentially 10 to $34 a square foot.
For qualifying tenants, we just think the appeal of that whole waterfront is.
It's only going to.
Improved from this point on.
The comment on we made about 10 inquiries, it's been quite a varied set.
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Some incumbents some looking to move into that area, but it's been a very encouraging early sign I would say.
And validation of all the effort that's gone into that.
Positioning not waterfront.
Portfolio for leasing and hopefully in the near future.
Yeah.
Okay. Thanks, and then maybe second just turning to the residential portfolio. You. Obviously saw a nice uptick sequentially. Maybe just talk about what you guys are seeing on the demand front as folks are coming back to the New York area.
Folks are leaving their parents homes, what kind of demand uptick are you seeing is that trend continuing into kind of April and may and and what's happening with concession packages today versus maybe two to three months ago.
Yes, so the.
Send me the return of demand and what you've seen in the uptick seems to be somewhat kind of broad based but.
It is linked.
The need to.
The beginning of the return to some remnants of normality shoot.
The vaccine rollout and on the <unk>.
More ordinary living on walking.
Conditions so.
Yes.
Optimistic with it it's been a good quarter.
We're hopeful that that's going to continue again core.
Great asset so it was the second part of your question.
I was just trying to get a sense for I think a couple of concession with concession.
<unk>, yes.
Trend, yet and you're on April and May.
Yeah, what's been interesting with last quarter.
We've actually been able to continue to increase occupancy while cutting back concessions.
And on <unk>, not that's actually completely eliminating concession so all again really positive.
Signs and again Testament, we believe to the quality of the assets that we've got.
Great. Thanks, that's it from me.
Thanks Pete.
Sure.
We will now take our next question Jamie Feldman from Bank of America. Please go ahead.
Thank you I had a follow up on Steve's question, just can you provide a little bit more granularity in terms of the interest.
In the waterfront assets, just kind of on who is looking and what kind of tenant sizes, possibly and I know you guys had talked about life science in the past is that still something.
Youre thinking about.
Yeah, so not really looking to give any guidance at this stage I think it's it's too early.
To provide that but what I would say again as debt.
With the.
The whole package that that between what we're doing on the harvest side to reposition.
Those assets.
And you look at par the one and it's already looks like a very different building to that which it was on a couple of quarters the guy.
And what seems to be pretty.
Widely planned returns on the offense, we feel like the worst is really behind us.
That's why we feel that having inquiries are coming from as I mentioned, it's quite a varied route and it's.
Also very savvy buried in the fives.
Space that tenants are looking for but all really positive signs from our perspective in relation to life Sciences. That's obviously an area that you'll know.
There is considerable.
<unk> at this time and so we've been looking at and continue to evaluate that.
The conversion potential of some of that space to be able to feed into that strength.
We will now take our next question from Manny Korchman from Citi. Your line is open. Please go ahead.
Hey, everyone. Good morning.
Robert as you speak to that.
New leasing team that you have in place.
Sort of what what specific changes have have they made over the last few months to try to find those new tenants debt.
Arguably before the pandemic weren't necessarily looking at Jersey City, what are they doing now to attract those tenants to that market.
So money from.
Good good to speak with you by the way thanks for the question.
So look from my parents when.
Assets are stubborn to lease.
Typically somewhere in the chain between prospective tenant and landlord.
Something is broken.
And usually it means landlord is either not providing the right products that the tendency king on or even whilst it's not the right product on it.
On the right price point either.
So I think what we've done is we've gone a long way to reestablishing.
Relationships with the brokerage community, we've been proactively reaching out to tenants that we believe could really benefit.
From a news to dislocation.
We've been looking to really establish that train them over again and I really feel like we've done that on.
So I think the change in tact.
We've got the right outreach on and.
That's why I believe we're seeing the sort of inquiries that we're seeing.
And coupled with the investment into the product we've been improving the product. So I believe we're creating a product that will be in demand and that will be able to offer a competitive.
Rent levels to attract them.
Are those tenants that are looking to move into that space leasing has been happening and we just haven't been capturing.
Our fair share of debt, which again just given the location quality of these assets.
We hope to change going forward.
Thanks for that and then just as you've embarked on this John.
Selling is selling a lot of suburban.
Dave's comment earlier that the multifamily is now.
Larger piece at least for the year than the office.
Is there any discussion on any plan to sell maybe some of the more core waterfront.
Office or do you think that your scales, where it needs to be to keep that as a portfolio.
Yeah.
Well I think at this stage it's wants to your question would we consider something like that absolute analyst day, The board and management highly focused as you know on creating value for shareholders, particularly in this instance, given how we've we've come to be on the seats that were in.
We'll continue to evaluate all options that are available to us.
And in achieving that goal consistent with our fiduciary obligation having said that.
At this point with focus on things that are within our control.
Those are initiatives, including the what.
And what we believe will be highly value enhancing rejuvenation on.
The waterfront office.
<unk>.
Thanks very much.
Thanks, Mike.
Our next question from Michael Lewis Trust Securities. Please go ahead.
Okay, great. Thank you.
Following up on on an earlier question about the office leasing.
I wanted to ask about.
That pipeline of inquiries how much square footage do you think is out there for you to target and you know along those lines.
We've talked quarter after quarter kind of about the pipeline.
There hasnt been leasing so to the extent that prospects are looking where they ending up as it has it just.
Ground to a halt because of the pandemic, our our tenant's choosing Manhattan and are they are they go into the sunbelt.
What's kind of been the headwind there.
But I'd say actually office leasing across the U S has been subdued.
During the time frame that we're referring to really when we got involved in and started to really kind of look at repositioning on <unk>. So I don't think it's been a queso, there's been significant missing in Jersey City and we.
Miss debt because tenants.
Elected to go elsewhere, it's really just being net leasing has been subdued.
And that having just.
It hasnt been the volume that's what we're seeing changing how large is the opportunity very difficult to say at this point.
But what we are seeing encouraging signs debt.
Lead us to believe that on.
Office is very much alive and funds on generally the came from a ton to an office in some form but the assets that we have with location quality the flexibility of the floor plates.
Should provide a good option to tenants that want accessibility to Manhattan, but at a significantly lower cost.
Particularly when you factor in the new incentive package, which we believe will be of interest to many.
Many qualifying tenants.
No that makes sense and then.
On the apartment side.
How do you think about do you think now is a good time to be starting apartment developments to maybe deliver into that 2023 2024 window.
Hum.
And if so.
Are you kind of hamstrung at all from the strategy and the rest of the company and where the balance sheet is.
Okay.
It's a good question so we've been clear about.
One thing to unlock the potential within within Roseland and grow the multifamily part of the business, we've just got to balance that with.
Capital constraints cash flow.
And so all of those considerations are.
Really being contemplated right now.
On to ultimately just having the go forward strategy on <unk>.
No decision has been made yet.
In relation to future development, but as with broader decisions that we'll be looking at it will be ultimately a capital allocation decision.
And looking at the capital that's currently available to us.
And determining what is highest and best use would be.
Okay, and then just lastly from me the free.
Core first earnings call with them with a new CEO I wanted to ask about kind of a broader strategy question.
Uh huh.
You are almost done with the noncore asset sales.
Back about two years ago, both street when they put out their slide deck, they seem to suggest that they.
Selling the non core office and trying to delever, the balance sheet that way and still deliver on the on the promise of the multifamily with sort of assumed strategy.
And they thought the debt buyers were lined up to buy pieces or all of the company. When you're finished with the noncore asset sales, which will be soon.
Do you have a different view on the on the strategy or do you think you know the playbook that is.
On leasing the waterfront and then and then see what options are after that or.
Anything different on the strategy any different view you have about where the company is headed.
Well, so I would say.
At this point.
I'll make more general comment, but again, we're continuing to evaluate all options available to us too.
On <unk>.
Create and unlock value for shareholders.
<unk>.
Bob.
I mean, our approach is going to be measured it's going to be thoughtful.
And any decisions that we make.
B.
Decisions that we believe to be in the best interest of shareholders now for now.
I believe that the near term strategy is really to focus on.
Things that are within our control.
On value enhancing initiatives that we believe will ultimately create the value.
Half the value of the company that we have.
Uh huh.
It involves the simplification of the business over time.
It means looking at.
The operational efficiency.
But within which we operate and looking at whether there's enhancements we can make that.
So looking at ways to further strengthening our strength in our balance sheet.
On its focusing as I mentioned on leasing and tenant retention.
Those are things that we can focus on today, but will ultimately create value.
And the broader direction will the time on them.
As on when.
We have greater clarity on the direction that we believe will be in the best interest of shareholders.
Okay. Thank you.
Thanks, Tom Catherwood from <unk>. Your line is open. Please go ahead.
Thank you and good morning, everyone.
Day, Amy just a.
Mechanical question.
If I heard you right. It sounds like you have to have the cash on your balance sheet for the bonds for 30 days as you mentioned so you have obviously the cash from the recent sales you draw down your new secured line of credit and term loan.
You'll obviously pay the interest on that for a period of 30 days after that so we get into June.
Or do you redeem the bonds in June do we have a period, where you're gonna be redeeming them over time, how does that process kind of roll in.
Yeah. Thanks, a lot time, so [noise].
Actually last night.
Temporariness Lee with the close of the credit facility, we funded the entire bond redemption of both issues $575 million plus another approximately $20 million.
For the make whole payments, so how that trade actually works, it's kind of like a T. Plus 30 days. So we do have to continue to pay our 4% interest on the combined bond issues for the next 30 days so.
Absence of guidance I, just wanted to highlight that for you on the other analysts.
Perfect Perfect and then.
We think about it obviously you had the cash on hand part of the balance sheet part with the sale of short hills, but youll still be carrying some on.
On the full line, even after you close out the unsecured.
And I assume that a good chunk of that gets paid down as Red Bank portfolio gets sold and is kind of the other ones gets hold it seems like the bulk of the assets are under contract and the impression I got last quarter was that Red Bank was a kind of a near term event, but the others might slip into maybe early 'twenty two what's your current thought.
On the on on sales pace.
Yeah. Thanks, So I think youre right on it and you can see in the structure of the line on the term loan. There was about 150, there is $150 million term loan outstanding So the asset sales and you pointed out the right one Red Bank, which is under contract as we said on the release.
As expected the hope.
If we close around the end of the second quarter you have a couple of assets left from the parsippany and draw on our portfolio.
And those in total with some other non core land pieces should take care of your term loans. So that is kind of the match and again over the longer period.
Of time as we reduce all of our non core again, it's a couple of joint ventures on some land pieces, but you should be focused on my list in the last two assets for Gate Hall on seven Gerardo as really the culmination of our suburban office asset sale program with.
With the proceeds again to be used to retire the term loans.
Got it I appreciate that Dave.
And then.
My Board I agree with your with your comment on Harborside, one really does look like it's coming along as I step back and think about the office portfolio. It seems to me that it's laying out and kind of some some different chunks or different segments. There is some.
On kind of high rise space available Harborside five there is what would be kind of creative office space. It seems harborside six above what's gonna be the whole foods.
There's kind of this.
Few blocks in two and three and then there is the brand new space effectively all new at Harborside, one when Youre thinking about marketing. This are you segmenting it into these different groupings, and maybe approaching tenants and you know approaching potential opportunities targeted to those different type.
<unk> of space.
Yeah.
Yeah, that's a great question on and as you would expect.
Two are to a large degree yes, that's correct.
But I also would say that I think one of the strength of our offering is is that flexibility of space on the range of space that's available.
To perspective tenants.
Can you on the right location, great assets, but even on small floor plates and alright building.
That's one of the benefits I guess of the vacancy that we got is that there is quite a wide range of options that are available to suit tenants' needs, but fundamentally.
You were on a great location and how community offering low it.
Cindy on myself.
Got it and then in terms of Harborside one.
On timeline wise, how much longer until that's.
Buttoned up white box ready and you know it could be ready to show the market.
But it's progressing well.
And I hate to put a date on these things, but I would say suddenly.
Towards the end of the third quarter early fourth quarter is our expectation that that would be when you're.
You're talking about.
Excellent that's it from me thanks, everyone.
Great. Thanks for your questions.
Yeah.
Our next question from Gerrick Johnson from Deutsche Bank. Please go ahead.
Hi, and good morning, everyone.
I'm sorry, if I missed this but can we get an update from your vantage on the New Jersey legislative appetite for tax incentives or relocations from New York.
Two new Jersey any update on possible timing kind of what you guys are hearing on the ground I feel like we've discussed this for some time.
But it seems elusive on the once again, sorry, if I missed comments on this.
But sorry, what it is already approved.
And so.
It was a long time in the making but it was actually already it's already been approved so it's available to qualifying tenants and the comment that I've made about it idea was really just debt.
It can be quite a meaningful.
Incentive.
You know dollar figure for qualifying tenants, we believe could be.
We intend to make <unk> T.
So all the type of of an incentive package for qualifying tenants on a per square foot basis that is sorry.
But it is very much available today.
Okay, and so the timing so it's a it's approved and the timing is sums up for leases to be signed.
Right away correct right.
Correct.
You know on on.
Office here in New York CBD peers. This quarter certainly came off is very optimistic.
I think one way in so far as saying that things were on fire.
Given the pipeline you see on the Jersey city side, especially.
Since new leases have been a little bit challenged.
And you did have some positive commentary.
Do you expect that we may see an occupancy inflection point.
If that could be a maybe late.
'twenty one event any thoughts would be helpful.
Yeah.
Yeah, it's difficult to put a specific timeframe on these things I think.
It's encouraging to us is the trend.
And that trend.
Certainly this year has been very positive in terms of the debt level of inquiries.
And the nature of those tenants.
That's what we're cautiously optimistic about and again, we have strong confidence in the quality on the location of the assets that we've gone from what they were put into repositioning noise we feel.
Wednesday incentive package provides a compelling proposition to those tenants.
Okay, Great and then just lastly, I mean, I know, it's a small piece of the pie, but I guess as as suburban shrinks. It gets larger what is the outlook for the hotels.
And are there any bookings for a return to events, maybe late summer or fall.
Our early fall or any maybe pent up demand for weddings, which are pretty high margin.
So the suddenly looking at we've only just slipped on the Ria and the home depot suddenly looking at what's happening in the hotel sector. The majority of the revenue seems to be more consumer oriented than business oriented so.
With the anticipated return to offense, we should see that that balance.
One would hope towards the latter part of this yet.
They normalized composition of revenue.
For hotels.
Thanks, everybody.
Thank you.
As a reminder to ask a question. Please press star one please on that take a follow up question from Jamie Feldman from Bank of America. Please go ahead.
Thank you it looks like leasing has been pretty strong in the Upton I'm just curious.
Neal.
What types of tenants how are you on what types of users seem to be leasing that space.
And then any thoughts on.
If you're able to push rents at all and then does that have does that make you rethink the sale of the other site there.
So.
Good morning. Thank you for a question on the majority of those seem to be empty nesters.
Then on taking that space.
It's been great for us we've been.
And we've been pleasantly.
I would say surprise, but it's been good to see what that asset is getting the traction that we feel that it deserves.
I'm sorry, what was the second part of your question what does that does that change I think the second part of it whether that changes our view.
I'd go back to the comments I made on a day.
All of them on and capital allocation I think all of that is really TBD, we've got to sit down on the cut.
How capital is allocated today and determine what the highest and best use for that capital available to us would be going forward and say no decision made on that back book.
At this point.
So youre actually some marketing the debt.
Second site for the hotel.
No we're not.
Okay.
Alright, and then David I appreciate you, providing the cap rates for the asset sales can you give us on a GAAP basis.
Thank you said cash yes, yes.
Yes, so on both of those if you added 20 basis points to their cash you would arrive at the GAAP cap rates on those.
Okay.
And then I guess back to my Bad just kind of Big picture I think this is your first conference call on the seat.
Just perspectives after taking over the role things that have surprised you things that have been that you think are more challenging.
Thank you.
I'm, taking over leadership of the company.
Yeah, no not really I mean, I was in a fortunate position that.
I was on the board side.
Months prior to taking this rolls on.
I had.
The ability to be able to eat myself into the position. It is a different level of detail and now being in this seat and having looked under the hood I wouldn't say, there's anything, particularly surprising or troubling as I said I do think debt.
For us near term focus.
It will be in areas.
Looking at ways to further simplify the business over time looking on operational efficiency and on how weird.
Organized and aligned internally.
And and really using the resources that we have human and capital.
And the best way that we possibly can to create value.
Okay. Thank you.
Thanks.
Hi.
There are no further questions at this time I would like to turn the call back to your speakers for any additional or closing remarks.
Well. Thank you very much everyone for joining us today, and we look forward to keeping you updated again in due course.
Thank you that will conclude today's conference call. Thank you for your participation ladies and gentlemen, you may now disconnect.