Q2 2021 Armada Hoffler Properties Inc Earnings Call
Welcome to Armada Hoffler second quarter, 2020.1 earnings conference call. At this time, all participants are in a listen only mode.
After managements remarks.
You will be invited to participate and a question and answer session at that time. If you have a question. Please press star 1 on your telephone.
As a reminder, this conference call is being recorded today Tuesday August 3rd 'twenty 'twenty 1.
And we'll now turn the conference call over to Mike O'hare.
Chief Financial Officer of Armada Hoffler. Please go ahead.
Good morning, and thank you for joining Armada Hoffler as second quarter 2021 earnings conference call and webcast.
On the call. This morning, and in addition to myself and Lou Haddad CEO.
The press release announcing our second quarter earnings along with our quarterly supplemental package were distributed this morning.
Replay of this call will be available shortly after the conclusion for the call through September 3rd 2021.
The numbers to access the replay are provided in the earnings press release.
I always listen to the rebroadcast of this presentation remind you that the remarks made herein as of today August 3.2021 will not be updated subsequent to this initial earnings call.
During this call we will make forward looking statements, including statements related to the future performance of our portfolio.
And pipeline impact and acquisitions and dispositions and mezzanine program, our construction business and liquidity position.
Portfolio performance and financing activities as well and his comments on our guidance and outlook.
Listeners are cautioned that these statements are subject to certain risks and uncertainties.
Many of which are difficult to predict and generally beyond our control.
Typically in the light of Covid, 19, pandemic and any related economic uncertainty.
These risks and uncertainties can cause actual results to differ materially or cause.
And expectations and we advise listeners to review the forward looking statements.
Closure and a press release that was distributed this morning, and the risk factors disclosed and documents, we have filed with or furnished to the S. E C.
And I will also discuss certain non-GAAP financial measures clean and not limited to F. S. L. A normalized debt first though.
Definition of these non-GAAP measures as well as reconciliations for the most comparable GAAP measures.
And in our quarterly supplemental package, which is available on our website at Armada Hoffler dotcom.
And now I'll turn the call over to Luke.
Thanks, Mike.
And thank all of you for joining us today.
For the last few quarters, we relate to you the strategy, we've successfully employed to see us through this.
With major economic downturn, and our corporate history.
Well I won't rehash, the conservative aspects of that plan, which saw us through the worst of the crisis.
I do want to emphasize that part of our formula that is of the most interest to investors.
The goal of outperforming our peers and the subsequent recovery.
This morning's announcement of a healthy increase and our guidance for the year is but the first and what we expect to be a number of positive announcements on the horizon.
Leasing activity across all sectors of our core portfolio is at the highest velocity, we've seen and years developing.
The development pipeline is well stocked and proceeding rapidly.
And ample supply of off market acquisition opportunities have been uncovered.
And third party construction engagements are shaping up to become high volume contracts later this year.
And most importantly, we are and a strong liquidity position with access to additional capital sources from them.
Potential disposition of noncore assets.
And at some point, we would expect to see these near and long term growth prospects to be reflected and our stock price.
Just as it was and the 5 years, leading up to the pandemic.
For now our team is happy to continue putting the building blocks in place to demonstrate superior if not game changing performance.
This morning, we posted a second quarter results of 29 and sense of normalized <unk> per share.
It was ahead of our expectations.
More importantly have you seen and our earnings release, we have raised full year guidance by 4% to $1.2 to $1.6.
A close look at the components of our guidance reveals the increase is almost entirely due to an increase and our property NOI.
As all the other components remained virtually unchanged.
And as forecasted NOI increase is mainly due to accelerated leasing and both retail and multifamily.
As well as the off market acquisition of 2 high volume retail centers. This month.
Let's briefly discuss each component of our business model and the activity, we're experiencing and each of them.
Apartment leasing and occupancy continued to trend upward at a rapid pace.
Our 'twenty 300 conventional multifamily units are 97% occupied.
The cash same store NOI increase of 12% on these properties only begins to tell the story of the desirability of these assets and their locations.
New leases signed and the second quarter have an average rate increase of over 7%.
With a continued migration to high value properties and the sought after markets of the mid Atlantic coupled with a shortage of housing.
Expectation is for these trends to continue for some time.
Retail leasing tells a similar story with an additional 37000 square feet leased since our last update.
Included in that total are several new retailers that are on their way to our flagship assets The town Center of Virginia Beach.
And the occupancy approaching our traditional mid to high 90 percentage occupied.
And as the new tenants begin to pay rent.
We expect the retail portfolio will eclipse pre pandemic NOI levels sometime early next year.
And we have said on numerous occasions there.
There is no substitute for well located real estate, regardless of the asset class.
High volume retail centers are no exception to this rule.
As most of you know our stabilized office portfolio is essentially fully leased with very little and the way of lease explorations this year and next.
The only meaningful vacancy is at Wills wharf.
Office building, we delivered at Baltimore's Harbor point at the onset of the pandemic.
Last quarter, we reported the tenant activity was starting to accelerate as COVID-19 restrictions lifted.
We announced 2 substantial leases with transamerica and RBC.
Currently we are at least with another full floor credit tenant and have an abundance of prospects for the remaining space.
And in fact, we have more space proposed and potential tenants and we have space available in the building.
We expect to announce further leasing later this year.
Although the full impact on earnings of New office, and retail leases as well as the rise and multifamily rents won't be fully reflected until well into 2020.2.
The trajectory of our core portfolio it should be easily recognized.
The last factor contributing to our increased guidance is the off market acquisition of 2 high volume retail centers, which we alluded to last quarter.
These centers will have been acquired partially through the redeployment of capital from the early pay off for the soulless interlock mezzanine loan which included the full years interest income that was and our previous guidance.
The first located in Asheville, North Carolina.
And is anchored by the number 1 T J maxx and the state.
And the other and Chesapeake Virginia is anchored by the number 1 kroger and the state.
Both are required on a negotiated basis and immediately accretive well 1 contains value add opportunities.
And it's the fall of 2019, we have made clear the goal of balancing the percentage of our NOI that is derived from our various asset classes.
Dressers clear has been our commitment to expand the retail sector of our business both through the development and acquisition of high quality grocery and discount anchored centers.
And it's gratifying to see that investors are starting to recognize the value of these types of high traffic retail assets.
That said.
Ultimately the portion of NOI from retail will decrease relative to our other sectors due to the predominantly multifamily and office makeup of our development pipeline.
Speaking of development.
The 2 multifamily projects currently underway remain on their scheduled budget and completion dates.
The Gainesville project is scheduled to begin pre leasing by the end of the year with delivery of the first units and the first quarter.
Chronicle mill is scheduled for delivery at this time next year.
Based on the activity and those Atlanta, and Charlotte satellite markets, we anticipate faster than normal lease up at both of these assets together.
Whether with the 2020 to commencement of our new apartment development adjacent to the Regal cinema and Harrisonburg, Virginia, We will soon add nearly 700 units to our conventional multifamily portfolio.
Bringing the total count to over 3000 units.
We believe that this sector of our platform alone has a value of over $1 billion.
We also believe that investors will ultimately reap tremendous growth and value from this very significant portion of our diversified business model.
We are seeing even more opportunities to develop additional assets in this sector.
This leads me to our 3 student housing facilities.
As we have said on several occasions, we view these assets as noncore and they will ultimately be used as a ready source of inexpensive capital to fund development and acquisition opportunities.
Economic occupancy at these properties were significantly impacted during COVID-19 and.
And thus we don't expect full re stabilization to occur for at least another school year.
That said at today's cap rates, we may opt to transact sooner rather than later as even at less than maximum value.
Maybe you can amount of capital and maybe better deployed elsewhere in light of the abundance of growth opportunities coming our way.
The balance of the announced development pipeline and mixed use southern post in Roswell, Georgia, and the joint ventures at Harbor point on the Baltimore waterfront continue on track to break ground around year end.
In addition to the 450000 square foot T Rowe price World headquarters the program for the companion building is substantially settled.
This building is expected to feature 300 apartments, 15000 square feet of retail space and 1300 parking spaces.
So the pipeline is already robust we continue to receive many new opportunities.
The amount of activity and our markets coupled with our 40 year track record have yielded many more opportunities for high value projects across our diversified platform.
We will continue to evaluate these for selective inclusion and our next wave of development.
This brings me to our construction company.
As most of you know this division of our company had perhaps its best year ever in 2020 with.
$7.7 million and third party gross profits.
This year, we have seen a lag and new construction starts as many of our clients delayed projects until later in the year.
However, we still expect to end the year at the low end of our historical range.
With these anticipated projects commencing soon the effect of the delay has simply moved more work in place and therefore profits into next year.
This shift coupled with new engagements that we expect to be solidified later in the year.
And most probably see this division back to the high end of our normal range, if not beyond in 2020.2.
On numerous occasions, we have discussed that our mezzanine lending program will be gradually reduce to a principal amount of approximately $80 million.
We had anticipated that the 2 major projects and this program would have loans outstanding well into 2020.2.
And thereby reducing our ability to meaningfully resize the program until that time.
We still project that the interlock commercial loan will be outstanding for that duration. However.
Due to favorable market conditions, and the rapid pace of unit absorption our partners, that's where earlier Pappas decided to sell the solas interlock assets earlier than was previously contemplated.
Our mezzanine loan was paid paid off in early June.
And a $33 million of capital inclusive of nearly $10 million of stipulated minimum interest enhanced our flexibility to take advantage of the shopping center acquisitions that I previously mentioned.
These actions are totally consistent with our stated goal of using more of our capital to build a top quality core portfolio.
As we demonstrated to you with our guidance presentation from last winter.
2020, 1 as a year, where our focus is to substantially increase and a V through our leasing initiatives improved quality of earnings exciting developments starts and resizing of the mezzanine program.
In short, we anticipated that our activities over the course of 2021 would build a solid base for higher earnings and dividends over the next few years and ultimately lead to a significant expansion of our earnings multiple.
We believe that we are well on our way towards delivering on those commitments and the company's largest active equity holder management remains committed to generating long term value for all shareholders.
Now I'll turn the call over to Mike.
Thanks Lou.
Second quarter reported <unk> 28 per share and normalized <unk> of 29 cents per share as core earnings included <unk> <unk> per share of interest income from the early pay off for the solar and a lock alone.
Our long terms contained a minimum interest amount, which was calculated through the end of the year.
Is it pay off this quarter its interest income, which was included in our prior guidance, which decelerated into the second quarter.
And as Lou discussed it's accelerated interest income was not the reason for our increased earnings guidance.
And our stabilized operating portfolio occupancy for the second quarter was 94% for life.
And I sit 97 retail at 95 multifamily, including student housing and 92.
Our conventional multifamily was 97% occupied student housing and 84 per cent.
Student housing property, John Hopkins village was the outlier at 77 per cent.
Overall same store NOI was positive 1.7% on a GAAP basis and $13.5 per cent on a cash basis.
Office was positive 3.2% GAAP and 6.4% cash the office portfolio continues its strong performance.
Retail was negative 3.2% on a GAAP basis and positive 24, 6% on a cash basis. The significant increase in cash reflects tenants returning excuse me and pretend pre pandemic and schedules.
Multifamily was positive 6.6% on a GAAP basis and positive $1.7 non cash basis.
Issues with the John Hopkins student housing property and a large net negative effect on these metrics.
It was 77% occupied had a large increase and real estate taxes due to an exploration of real estate tax abatement.
The conventional multifamily same store NOI.
Without the effects from student housing was positive 14, 9% GAAP and 12, 3% cash.
Re leasing spreads were positive for the quarter and 8% GAAP and 6.9% cash there were no office renewals during the quarter.
If you look at the performance metrics of our portfolio, good and occupancy same store NOI and leasing spreads and how quickly the vacated space re leased and reflects the high quality of our real estate.
Yeah, 7 development projects and are in various phases of development, both wharf, which is complete with only tenant build out remaining.
And the construction and foreign Preconstruction and this is the case with T Rowe price headquarters.
This building and the associated mixed use project.
Structured is 50.50 joint ventures.
And just structure both projects will be non consolidated joint ventures, and there for off balance sheet.
Our current estimate of our cost and equity requirement of 2 projects combined $60 million.
The JV will develop these projects and be the construction loan borrower.
Our share of the costs and the 7 development projects is 440 million.
Cost to date as of June 30, It was 162 million 278 million to complete.
There's 278 million it'll be funds into expected construction loans and $180 million and.
And 98 million through the credit facility.
The projects and pre development are expected to start construction late this year and early next year, yeah for the cash funding requirements from through the end of 2020.2.
I think really liquidity position of $170 million.
The extended ramp up of cash requirements and potential sale of noncore assets and strategic use and the ATM program and well positioned to fund these projects.
Actually the ATM. This quarter, we raised 14 point for a million and average price and $13.44 and $23.6 million a year.
This past quarter, we refinanced our last 2021 debt maturity and now our dressing and the 3.2020 2 maturities.
And our shopping center loans totaling $20 million, which we intend to pay off and has for the credit facility borrowing base.
And alone just for the pain Street Wharf building.
We have a term sheet refinance for 5 years and similar interest rate to the current loan.
And we anticipate closing on this phone this month.
Taking into account for 'twenty 'twenty, 2 long maturities just discussed.
65 per cent of a debt maturities and beyond 4 years, including the credit facility.
Our debt is a mix and fixed and variable interest rates with 59% fixed and 41 per cent bearable.
As discussed in the past, we maintain a hedging program for insurance if interest rates increase.
Currently we have LIBOR interest rate caps are 50 basis points for 98% of available rate debt.
Our average interest rate on all our debt is 3 per cent.
The combination of our long maturity ladder average interest rate debt service coverage.
Ex charge coverage at 2.4 times, we're comfortable very comfortable with our debt levels.
As expected increasing NOI.
Raising capital through the ATM program, assuming favorable market conditions and the best.
Sales of non core assets.
And that to maintain and leveraging of our target range of 6 to 7 times core debt to core EBITDA.
<unk> 2021 and normalized <unk> per share earnings guidance was increased to $1.2 to $1.6 per share and.
And we discussed the largest contributor to this increase is higher NOI through leasing and the 2 acquisitions.
In addition to the acquisitions and GAAP effects.
Stabilized property and projected NOI increased by $1.7 million.
Please see page 6 of the supplemental package for details of our 2021 guidance ranges and assumptions.
What's the insight into 'twenty 'twenty, 2 we're expecting normalized S. S O earnings per share increased due to a combination of.
Higher NOI from 'twenty, 'twenty, 1 and leasing of the pandemic related vacant space.
Leasing and tenants occupying and Wills wharf.
Full year impact of acquisitions.
And and project deliveries and.
Higher construction process.
Now I'll turn the call back over to Luke.
Thanks, Mike.
Operator, we would now like to start our question and answer session.
Thank you ladies and gentlemen, if you have a question at this time. Please press star 1 on your telephone and fear.
And it has been answered any wish to withdraw it you may do so by pressing star 2.
And if you are you, saying that speaker phone today, please pick up your handset before entering a request.
Our first question is from Dave Rodgers with Baird. Please proceed.
Yeah, Good morning, Lou and Mike Thanks for all the detail and the prepared comments and wanted to follow up you talked about leasing spreads and the strength of multifamily maybe continue those same thoughts with retail we've seen more leasing over the last 2 quarters as you have a number of big leases set to roll over the next 6 to 12 months those those mid.
The large size boxes, and what do you expect the economics still look like and is there still really solid demand behind that.
Hey, good morning, Dave good to hear from you.
So our expectation is that the majority actually I would say nearly all potentially for probably all of those large boxes are going to renew at their option rate.
We're not anticipating.
Any give back of space at this point and time.
That's helpful with the option rate being higher than where they are today I guess I'm presuming, but you could fill me in and then maybe the same question really on office you have 1 I think its data and Zimmerman Rolling next year, maybe a peek into kind of what office and looks like as you think about it you know here post COVID-19 as well.
Sure Yeah option rates are typically a minimum we hire a then the demanding renting a rental rate on the office side, we're seeing a lot of really good activity, it's kind of across the board Dave.
And at Wills Wharf, where you are significantly above pro forma rates.
With the prospects that we talked to you about as well as as the leases that are in hand.
With the rollovers Hum.
Our expectation is that we're gonna have increases on a GAAP basis potentially flat or so on a cash basis.
And that's due to the significant bumps and these 10 year leases, sometimes gets you passed the market.
But ultimately we're not seeing the gist of your question is are we seeing any let up in demand and that answer is no and if anything that's accelerating.
And I appreciate it yeah, yeah, and that's what we were getting that that's great maybe shifting to the construction and development side of the business talk a little bit more and this is maybe more owned and third party, but what youre seeing in terms of the availability of construction materials and and the increases and construction pricing and you know what that might do to your ability to create.
And with anything.
So far they are the effect on us is pretty well contained are the projects that are underway are were all purchased prior to.
The dramatic increase and a lot of these materials, we haven't had any any hiccups in terms of the deliveries and as I mentioned earlier.
Earlier, both those multifamily projects or slated to maintain their budgets as well as their schedules.
With regard to projects and it hasn't started yet you're obviously seeing some inflation Oh, we're not seeing issues supply chain issues on the types of materials that we use as you know is predominantly high rise construction commercial.
Commercial construction, but.
But we are seeing increases Fortunately, we're also seeing increases and the ability to to to rent for a higher rate. So I don't think our I don't think our ability to maintain our traditional spreads is gonna be impacted to any material degree.
Thanks, Lew and maybe Mike last 1 for you I guess with regard to the Delta vary and the large amount of funding that you have you went through the funding ability that you have but I guess do you feel the need or have you thought about being a little more aggressive on the capital raising side, just with continued uncertainty given the solid per.
<unk> do you have and the backlog and.
It sounds like you talked about maybe noncore asset sales with the student housing, but just in terms of putting more equity into the balance sheet, whether it's holding onto some of those asset sales or.
For raising more capital through equity and thoughts around that.
Hi, Good morning, Dave I think as far as issuing more equity I think get and where the stock is trading today, we're going to you know and.
Putting out very little or not a lot from a raising standpoint, we certainly interest.
And then selling noncore assets and the past, it's something we're continuing to look at like we've talked about and student housing and we have other assets we're looking.
The other thing.
And kind of keep an eye on is the interlock alone could could get paid off next year and it's a matter of what's the timing on that when they go to market and that will be a substantial source of capital as well.
And your point alright, guys. Thanks, so much.
Yeah.
Our next question is from Rob Stevenson with Janney Montgomery Scott. Please proceed.
Good morning, guys Lew.
Lou can you talk about you know.
Of the retail acquisitions Greenbrier than overall.
Overlook and you know what you're seeing there what the upside is and sort of what pricing looks like on a overlook given that it's a kroger anchored center.
Yes, Greenbrier is a kroger anchored center and I'm sorry.
The other is is anchored by TJ Maxx, Homegoods and Ross.
<unk>.
Rob we're seeing a really good value and those properties, we were able to get them off market as we mentioned there they are accretive.
We will have press releases on those out.
And the next several days 1 is 1 is just to close the other will close here hopefully in the next week or 2 but we see solid value and high volume centers. So we've we've been and the.
And the grocery anchored discount anchored center business for about 40 years and what we track is traffic.
And when you have high traffic, there and basically everything stays for when you have a lot of flexibility to increase rents as they rollover of these 2 properties or are no exception..1 has some vacancy which are which is a great value add for us.
But in total we're looking at these as core assets that are going to be maintained for a long term.
Okay. So these are not redevelopment place or anything of that nature.
No. These like I said, there is a tremendous amount of foot traffic and and both of these was which is what attracted us to them. These are properties that are known to us and the owners for people that we've dealt with before.
And so it just fit hand in glove for US Okay and then.
How are you viewing the student housing market and how robust is that right. Now do you really need to have you know a year of the kids back in school and.
In order to maximize pricing on any type of sales. There is there are strong market. If you work today. If you were to market 1 of these assets how should we be thinking about that.
And the sort of timeline for you guys to maximize profit there.
Sure there is.
Yes.
And there's a confluence of different factors a debt you look at right now there still is a lot of hesitancy, particularly on the part of parents.
Many of whom got burned last year with universities changing changing gears and so this has been probably the latest lease up we've seen in that business are occurring you know that.
Since since we've been around.
So that's that's the drag on occupancy and and and and financial occupancy on.
On the other side of the coin you've got cap rates and historic lows and anything that involves multifamily and so you're you you've got the push pull of where you can maximize your value for us and defining factor is going to be redeploying. The capital as you know is there.
On the phone knows as a REIT, it's a question and whether you have a better use of the capital.
And to the extent that it makes more sense to transact sooner rather than later because of opportunities that are that are basically flooding or our inboxes.
And then we're going to do that otherwise, we'll wait because we believe we can get more value as time goes on.
To your comment about the cap rates I mean, how does that how does pricing look like on a per unit basis right is it because the NOI is down and so the cap rate might not be the best sort of arbiter of value on something with a sort of a depressed rental rates. So when you look at per pound or are we sort of.
Similar valuations to where we were pre pandemic or are we still probably a little bit down and need to have the fall semester go off.
Uninterrupted before that's fully recovers.
Yeah, I think the fall semester has to it has to come off without a hitch and hopefully that'll be the case, but again your and the student housing business as you know you're locked in for a year. So you really aren't going to get and any.
Any kind of a substantial increase until the following school year, which you know consistent with what I had said earlier.
There are theres enough dollars chasing these kinds of assets out there that you still can get a.
A nice price.
I will.
Like I said, the timing is really going to be a question of whether we are a better use for capital.
Okay, and then is the hotel open pit Bulls for and if so how are they doing.
Yeah hotels open and enrolling it it's done extremely well on the weekends and.
They're getting a lot of.
Vacation or tourist traffic.
And it's coming back on the business side. So we're there.
We're pleased with where they are in light of a pandemic.
The restaurant is is completely knocking them debt has.
Alright, Gotcha and it seems like it's been since day, 1 so I think there are real happy with the investment and of course as people continue to return to work and it's only going to get better.
Okay, and then on the deals that you've announced thus far I mean, when you think about the any type of free rent component or anything else and the initial part of the leaf Mike Windows, you know on the current lease signings and when do you sort of hit for you know cash revenue off of.
That asset based off of current lease signings is that not until first quarter or is that sometime here in the back half of 'twenty 'twenty 1.
Tomorrow.
And it's gonna be middle to third quarter of next year 1 is like.
We were saying we were and lease negotiations now with a with a credit tenant and by the time and get that lease signed and get them in and it's going to be well into next year Trans America, RBC and how it can be occupying until till next year and continuing to lease up so unfortunately, and this business by the time you get out.
Make a sudden LOI with a tenant and get them in place and paying rent and takes quite a period of time.
Alright, Thanks, guys I appreciate the time.
Thanks, Rob.
As a reminder, if you would like to ask a question and it is star 1 and your telephone keypad. Our next question is from Peter Abramowitz with Jefferies. Please proceed.
Yeah.
Thank you.
So I think and Lou's comments and the press release, you mentioned, a I think the wording was an ample supply of off market acquisition opportunities. So I just wanted to dig into that I mean is that something where we should kind of be expecting more of these opportunities as we go through the.
Back off of the year or you just kind of referring to what's already been identified and announced to date.
Thanks, Peter and it is good to hear from you.
I'd say, it's a little bit of both.
What you should understand is we have a 40 year track record and our markets do we have a number of people that we've done business with over the years, many of whom own very desirable property.
And we continually talk to them about the possibilities of joining with us and.
Through an outright sale or and O P unit transaction.
There are a couple of those in the offing.
And a couple of larger opportunities as well again timing is hard to put a it's hard to put a date on it and.
But I think you'll you'll see more activity of that ilk are over the next 2 quarters or so.
Okay. That's helpful.
And then on Wills Wharf apologies if I missed this in the prepared remarks, but house tour activity and just kind of interest on the space that you have left.
Hum.
Relative to what the vacancy is there.
Sure and so you might you may have joined late so what we said earlier was that where we're at least with another full floor credit tenant and which will leave basically 2 floors left and the building we have proposals out for effectively for floors, if not a little bit more.
As I mentioned earlier the velocity of tours is is really at a very very fast clip at this point and time.
We couldnt be happier with the with what's going on and there's as Mike alluded to the question is how quickly those turn into leases and then how quickly that turns into actual rent.
And everything seems to take longer these days.
Notwithstanding the pandemic, just just permits for tenant improvements and and the actual work and the actual move ins.
Like we said earlier, where we're looking at well into 2020.2.
And before you really have those people and and paying rent.
Okay got it and then 1 more for me. It was good to see you have some more clarity now on harrisonburg, and as well and southern post and so I guess that that leaves 10 dry on AR is.
The 1 that's still kind of on pause I guess, what would you need to see or what are you looking for kind of points of progress.
And to check off before you feel comfortable.
Going forward with development.
Yeah.
Okay and.
Hey. This is this is the beauty of having a diversified model that project was intended to be and mid rise office building anchored by a fortune 100, and tenant as well as a public from the ground for.
We are concerned about putting as much spec space and that particular location is that original design called for and so we're working with Publix and the other tenants as well as our partner to see if theres, a better mix for that property and and we believe that there is.
We're running some tests designs now and I think you'll see and announcements here and the next quarter or so.
On a new project that we will be happy to get underway.
That's.
And I can't emphasize enough how how much of an advantage and the advantage. It is not to be locked into 1 product type and also having your own and development and construction expertise certainly helps.
Alright. Thank you that's it for me.
We have reached the and if our question and answer session and I'd like to turn the conference back over to Mr. Haddad for closing remarks.
Thanks, very much for for joining US. This morning stay tuned as I said earlier for for further updates I think you'll be hearing from US later in the quarter and a couple of different arenas and.
Look forward to updating you and November thank you take care.
Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
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