Q3 2021 NexPoint Residential Trust Inc Earnings Call
Good day and welcome to the next point residential Trust, Inc. Third quarter Conference call Today's conference is being recorded.
This time I would like to turn the conference over to Jackie Graham. Please go ahead.
Good day, everyone and welcome to <unk> residential Trust conference call to review the company's results for the third quarter ended September 32021 on the call today are Brian Mitts Executive Vice President and Chief Creative Officer, Matt Mcgrew, Our executive Vice President and Chief Investment Officer.
Mr Mann, Vice President asset management.
As a reminder, this call is being webcast and can be sustained.
And Archie.
Uh huh.
Before we begin I would like to remind everyone that this conference call contains forward looking statements within the meaning.
Private Securities Litigation Reform Act of 1995 database management.
Accretion assumptions and beliefs.
No you should not place undue reliance on any forward looking statements and are encouraged to review the company's most recent annual report on Form 10-K, and other filings with the SEC for a more complete discussion of risks and other factors that could affect any forward looking statements.
The statements made during this conference call speak only as of today's date and except as required by law and Archie does not undertake any obligation to publicly update or revise any forward looking statements.
This conference call also include an analysis of non-GAAP financial measures for a more complete discussion of these non-GAAP financial measure see the company company's early earnings release that was filed earlier today I would now like to turn the call over to Brian Mitts. Please go ahead Brian.
Thank you Jackie and welcome to everyone for joining US. This morning. Appreciate your time I'm, Brian Mitts I'm joined by Matt Reiner for our prepared remarks, we'll.
I'll kick off calls some commentary in the quarter year and cover our results wrap up with guidance, which we are again revising upward.
I'll, then turn it over to Matt to discuss specifics on the leasing environment.
What is driving our performance and we have to revise guidance upward.
That migration continued into our core sunbelt markets and continued shortage of high quality affordable housing.
<unk> continues to enjoy enormous pricing power new lease rates increased 23, 8% for the quarter and renewal rates, increasing 10, 5% for the quarter across the portfolio.
Migration to our markets continues pretty much unabated.
He used to trap capital and see cap rates to historic lows in our markets as reflected in our revised NAV calculations.
We continue to find attractive deals despite the competitive acquisition market if acquired three assets this year.
The environment also allows us to sell assets that have been fully renovated at a premium and recycle that capital into new value add products, where we can achieve higher rates of return move out of slower growth assets yesterday, we closed on the sale of two assets in Nashville, achieving a combined IRR of 36, 1% and a <unk>.
<unk> invested capital 355 times.
As we've discussed before our growth prospects are not dependent on acquisitions, we continue to achieve Cisco returns from our value add strategy, where we can move cap rates 75 to 150 basis points over three three to five years from acquisition, which makes us less sensitive to absolute cap rate levels down.
Ongoing and widening shortage of affordable housing, which is more acute in our sunbelt markets.
New household formation outpaces, new housing deliveries gives us plenty of runway to continue implementing our value add strategy across the portfolio and on new acquisitions.
The increased net migration, coupled with a shortage of housing a lot our portfolio achieve all time high Occupancies and sets us up to continue to aggressively push rates for the remainder of the year and into 2022, while still maintaining high occupancies.
Net loss for the second quarter was $5 4 million or negative <unk> 21 cents per diluted share on total revenues of $66 4 million.
Compared to $29 6 million or $1 19 per diluted share in 2020 on total revenues of 61 million for the quarter same store rent increased six 8% and same for same store occupancy was up 40 basis points to 95, 4%.
This coupled with an increase in same store expenses of five 2% led to an increase in same store NOI of $1 9 million or six 6% as compared to Q3 2020.
We reported Q3 core <unk> of $16 4 million or <unk> 65 per diluted share compared to 53 cents per diluted share in Q3 2024, an increase of 22, 6%.
Net loss for the nine months ended September 30 was $15 7 million or minus 62 cents per diluted share as compared to a $48 2 million gain or $1 91 per diluted share in the same period in 2020.
For the year same store NOI has increased $2 million or two 4% as compared to 2020.
Year to date, we reported core <unk> of $44 7 million or $1 78 per diluted share compared to $1 64 per diluted share for the same period in 2020 or an increase of eight 5%.
We continue to execute our value add business plan by completing 290 full and partial renovations during the quarter and we used 349 renovated units achieving an average monthly rent premium of $172 21, 2% return on investment during the quarter.
Inception to date in the current portfolio as of 930 was completed 5979 full and partial upgrades.
<unk> 4554, kitchen upgrades and washer dryer installments, and 10134 technology package installations, achieving an average monthly rent premium of $134 $47 $43 respectively.
And our return on investment of 21, 5%, 72.7% and 35% respectively.
Based on our current estimate of cap rates in our markets afford NOI reporting an EV per share range as follows $75 three sons and low end $86.22 on the high end and $80.62 at the midpoint. These are based on average cap rates ranging from $3.
Five point or sorry, three 5% on the low end to three 8% on the high end.
The third quarter, we paid a dividend of <unk> 44.125 cents per share on September 30th.
Board declared a dividend per share of <unk> 38 cents per share payable on December 31, representing 11, 4% increase over the prior dividend.
Since inception, we've increased our dividend to <unk> 84, 5% year.
Year to date, our dividend was one point some four times covered by core of us with a payout ratio of 58% of core S. F.
2021 are revising guidance upwards as follows four.
<unk> per diluted share of $2 36 since on the low end $2.41 on the high end for midpoint of $2.38.
Same store revenue for.
4.7% low end five one for some high end four 9% on the low end.
Same store expenses, five 4% low and four 6% high end, 5% at the midpoint.
For same store NOI of four 4% of the low end five 6% and high end five 5% on the midpoint, that's up from 4% from prior guidance and our core <unk>.
<unk> <unk> from $2 35.
<unk> per share previously.
If we achieve our midpoint of 2021 core <unk> guidance is represented eight 2% increase over 2020 core <unk> of $1 93 per share.
So without alternative Vermont.
Thanks, Brian.
As those of US that followed our company know our goal is to consistently generate high single to low double digit growth.
Same store NOI core FIFO and annual dividend.
And as Brian mentioned, we're pleased to announce our sixth consecutive increased our annual dividend as well as material increases in both same store NOI for a buffer.
It makes our team continues to benefit from our market and asset selection as well as on the ground operational performance population inflows into our sunbelt communities continue to continue to accelerate with net migration from California, and New York dominating our leasing applications year to date, continuing to increase 20% year over year.
Low migration outflows from our markets and consistent resident retention also explain the material strength in occupancy. Our Q3 same store occupancy ended at 95, 4%, that's up 37 basis points from a year ago.
And as of November one our portfolio was 95, 1% occupied and 96, 8% leased with a 92, 5% trend.
Renewal retention for the quarter was 58, 4% and accelerated throughout the quarter with July being 55% and ending in September at 62%.
These historically high Occupancies and trends are driving material rent increases and revenue growth across all of our sunbelt markets. Our same store or same store revenue growth for example exceeded three 2% and six out of our 10 markets in Q3 with every market experiencing positive rental revenue growth.
In addition, both new leasing and renewal spreads remain elevated.
New leases ended the quarter at a robust 24%, that's almost 10% higher than last quarter renewable finished at a positive 10, 5% for Q3 blended rental growth of just under 16%.
Here are the numbers by month, which demonstrate another acceleration throughout the quarter and into October.
July new leases were up 23, 2% with renewals being eight 4% with a for a blended increase of 14, 2% August new leases were up 24, 1% with renewals being 10, 1% for a blended increase of 15, 4% in September new leases were up 24, 4% with renewals.
13, 5% for a blended increase of almost 18%.
Q3, new lease growth continues to be strongest in Atlanta, Tampa, Orlando, South, Florida, Phoenix, and Las Vegas with each of those markets clearing at least 25% new lease growth every market in the portfolio is up at least 14%.
So far in October new leases are up 26, 9% with renewals being 15% for a blended increase of over 21% on roughly 1000 leases.
On the transaction front yesterday, we completed the sale of Beechwood and Cedar generating $49 million of net proceeds.
As a reminder, these dispositions generated roughly an 80 basis point positive cap rate are funded and completed a reverse 10 31 into two new Charlotte acquisitions Creek side of Matthews and the brand is at Lake Norman.
Both of these replacement assets are performing ahead of our expectations and already being in Q3 NOI budgets by over 10%.
On September 10th as Brian mentioned, we closed the previously announced six forks transaction and RTP for $74 8 million at a year, one economic cap rate of four 1%.
In addition to generating a cap rate are we also upgraded our portfolio's location and quality with these transactions, we recycled capital out of a national sub market with 56000 in annual median income average within a one mile radius of the assets and into Charlotte and Raleigh, Submarkets with a 118000 annual median income within a one mile.
Radius of these assets.
As you might have noticed we updated our cap rate range as Brian mentioned to be three 5% to three 8% from four to four 3% last quarter, we continue to see aggressive capital compressed cap rates as demand for quality affordable housing assets in our markets has never been stronger during Q3 'twenty one we ourselves on.
Wrote many deals our target markets and finish it up as a bride's bridesmaid on several that went multiple rounds and ultimately ultimately culminated in a sealed bid process.
During these processes pricing often moved 20% from initial broker guidance and in some cases when pricing went in a sub three cap rate land.
We witnessed the same process as a seller of beechwood, cedar, which culminated into a sealed bid ourselves and ultimately sold for tax adjusted three and a half cap rate.
Given the underlying growth and fundamentals of class B multifamily in sunbelt markets, coupled with how resilient. These assets performed during the pandemic, we don't see as investor appetite abating anytime soon.
On the redevelopment front, we completed 290 total rehabs in Q3, so far in October we started a 132 and completed 42 were budgeted to complete an additional 253 full and partial upgrades as well as 141 washer and dryer installs during the quarter, we stand ready to complete these upgrades that will adjust the number lower.
To the extent, we retained more tenants at elevated pricing during the winter months.
This will allow some of the supply chain issues to abate, which are there, but arent detriment or detrimental year material at the moment at least for us as it relates to delays in appliance deliveries and paint sourcing both of which we can navigate over that over the near term.
As Brian mentioned, we're pleased to announce another meaningful increase in core if a phone to a midpoint of $2.38. A share. This guidance improvement is largely driven by revenue growth and expense savings or not acquisitions as was the case for prior quarter.
Our portfolio's revenue component has been well documented here, but wanted to briefly provide an update regarding property taxes.
Now receive preliminary value notices for all assets and are presently appealing or filing suit on 24% to 41 property values largely concentrated in our Florida, Georgia, North Carolina, Tennessee, and Texas markets. We've seen some favorable value notices issued in protest settled year to date and are continuing to aggressively pursue further tax expense reduction.
On the open approach to protest properties, our improved full year 2021 same store NOI.
NOI guidance forecast incorporates all known reductions refunds and settlements booked to date, we're still mildly optimistic about realizing further reductions in the fourth quarter and early and into early 2022.
In closing I wanted to address questions routinely being asked by our investors regarding how long we can generate disagree of revenue growth.
As those of you that follow US know our goal is to provide an affordable but upgraded housing experience that post renovation can still be at a price point comfortably underneath in excess housing option in our markets, which mainly as a new garden your single family rental.
Today. This delta is still as material as it has ever been we resumed we routinely analyze class phosphate effective rent data from axiom metrics in real page as well as <unk> rates reported by the public REIT and our own internal SSR platform XR.
<unk> Q3 effective whole dollar portfolio rent is 1100, $83 and our markets actually is class a average rent is $684. An invitation homes is 19 $874 that leaves roughly a 500 and $800 per month effective rent differential respectively between our uptick or.
Graded product in these next best options. We believe this headroom and rents will continue to provide a tailwind for our company's revenue growth over the near and intermediate terms.
All I have for prepared remarks, thanks to our teams here next point and VH for continuing to execute and back to you Brian.
Yes. Thank you.
Turn it over for questions.
Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad.
Using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.
Again press Star one to ask a question, we'll pause for just a few moments to allow everyone an opportunity to signal for questions.
Yeah.
We'll take our first question from Amanda Sweitzer with Baird.
Thanks. Good morning can you provide an update on where you currently stand with loss to lease in the portfolio.
Okay.
Yeah, So hey man is bad so we are currently.
Yeah.
Two quick questions.
Roughly adds.
Sure.
All at 824000.
Across the portfolio for the year.
Okay.
Absolute dollars.
Yeah, that's right.
That's helpful. And then as you think about same store growth into next year, where do you stand in resolving some of that was prior casualty events and when do you expect that unit to be back fully online and no longer impacting same store growth.
Yes, I think for us we're expecting to have.
Cutters be up and running during the first probably towards the end of the first quarter.
And then along that same timeframe from a from the ice storm the Houston assets in the Dallas assets should be should be hitting.
In the first quarter as well so kind of Q2.
Everything should be back in the pool.
Okay. That's helpful. And then last one from me you did talk in the press release about how you continue to evaluate the portfolio for additional capital recycling opportunities can you talk about the potential magnitude of that recycling activity and potential location, you're considering for sale today.
Yeah I think.
Don't know if we said on the call that is definitely an investor one on ones as the.
Our probably next.
Calling of the portfolio will occur in Houston are through our three assets in Houston, specifically old farm in.
And Stone Creek are probably the first two that would go there.
We're thinking there is Houston has been a market that is sort of underperformed.
The rest of our core markets.
Both on the revenue side and then the the tax assessors and municipalities are very aggressive in terms of raising taxes. So you kind of get the worst of both worlds.
And then we want to continue to overweight markets that have robust growth and lower lower property taxes and other non controllable.
Those markets for US right now are in North Carolina, Charlotte and research triangle, which we're spending a lot of time.
There and especially the six works and then Phoenix is another market Thats, probably performed as well as any for us with robust leasing growth and then obviously they have the.
<unk> limit on property tax increases so thats helpful. There. So I would say we continue to focus on those on those two markets.
Thanks appreciate the time.
You bet.
Okay.
Again to ask a question please press star one.
A reminder, only analyst may ask a question.
We'll take our next question from Gaurav Mehta with National Securities.
Yeah. Thanks, good morning.
Last question I have is on cost.
Cost of material I'm wondering if you could comment on what you have seen that spreads.
Cost of material.
Thank you all right downs on redevelopment at all.
Yes for us.
The cost of materials.
Is really probably focused in two areas appliances and paint.
We're seeing the most increase in it.
Necessarily an increase that we can't pass along it's just just really getting access to the classes and goods.
Which is about eight to 10 weeks behind schedule.
And.
I think in terms of timing and in terms of costs, roughly 15% to 20% more.
But again <unk> been able to pass that on.
For the upgraded product.
I can't answer the Rins.
Great.
Second question I have maybe big picture on the macro side.
I was wondering you know what's your view is on sustainability all the mid <unk>.
<unk>.
In the event you have tightening.
Monetary policy in 2022.
Yeah, I mean I think.
So that in the NAV table discussion, but.
We don't see any.
Bester appetite abating.
Then just a wallet share cash and capital out there.
For assets.
Notwithstanding inflationary pressures most of the world is in a negative interest rate environment.
And we just think that.
You know that that.
Those issues, coupled with coupled with the cash how well the growth is in these in these assets you know double digit increases the ability to pass along inflation reset on a monthly base for rent and then, particularly how well these assets performed.
Specifically garden affordable B assets and Sunbelt performed during <unk>.
One of the worst of times over the past 18 months.
<unk> had some bad debt issues and collection issues, but but generally performed well and were occupied people paid rent.
The revenue didn't didn't turned materially negative so I think investors from all aspects from all.
Capital allocation perspective or took side of that.
And we're seeing it pour in space right now.
Okay. Thank you that's all I had.
Thank you.
We'll take our next question from Buck Horne with Raymond James.
Hey, good morning, guys.
Curious you know.
New lease pricing.
Pricing power you guys there are generating it's just.
Almost unprecedented right now.
Certainly incomes and wages across the economy seemed to be improving quite a bit.
But I don't know if they're keeping up with 24, 25% new lease rate increases so I wonder if you could provide some context around.
Where your rent to income ratio stand for for your new applicants, who are coming and maybe what the you know.
What kind of income or those.
Out of state applications, bringing with them.
How sustainable are these levels of rent increases given the you know the.
Credit quality of the applications.
Yes, I think our portfolio average is roughly I think 26% as it sits today.
And that's and that's been.
It's usually been I think for us 23% to 25%. So it's a little bit I think elevated but it doesn't really tell the whole story, though because as I mentioned from the capital recycling of the assets are our median household income is going up with with location upgrades. So 180.
<unk> thousand for the Charlotte and RTP deal versus.
55000 per for the Nashville deal so.
<unk> been upgrading R. R.
Or kind of demographic and our job quality.
Throughout the throughout the past three or four years.
Just harking back to.
Just a headroom in rents between what the options are.
Again, Mike or.
Our rents are 1200 box <unk>.
New Garden is seven 700, and <unk> as 2000.
We will have the ability.
Once we get I think a $100 a coin flip between us and them.
Best option I'll get worried but 500 $800 respectively.
And those and it's not like class, a and Thats how far on doing the same thing I mean, you see record increases in both of those property types as well so.
Yes, I think it's sustainable over the certainly over the near term because.
Not going to be enough supply versus the versus the demand for affordable housing.
Great. That's great color. Thank you. Thank you for that.
And with the certainly improved cost of capital.
How you are underwriting new deals how are you thinking about where your current leverage target stand in.
As you are continuing to pursue new acquisitions do you think about over <unk>. Some of those new deals to bring the total leverage down.
Yes, I think so.
The.
I guess the dispositions.
Are going to be our probably.
The highest near term currency <unk>.
To the extent that we funded acquisitions are the Houston assets for example, because I think that theres going to be at least that net net cap rate are especially if you look at out through year, one or are you too in a new acquisition.
Just given the drag in taxes and revenue growth in Houston, and then as we've said from our.
From our NAV table, we think were relatively cheap right now the private market values in transaction activity and so we're not necessarily looking to.
Ready to raise a bunch of equity here again, we don't see that this is going to stop any anytime soon.
Yeah to the extent, we found a new deal, we'd probably add less leverage on on a replacement replacement asset and over advertise it that way instead of issuing equity.
But comfortable with where our swaps are with where.
All in interest rate are in where we're hedged.
The next four five years, Brian anything out of them.
Perfect.
Perfect.
Alright, Thanks, guys appreciate it.
Thanks, Bob.
We'll take our next question from T O O Gastonia with credit Suisse.
Hi, good.
Good morning, guys congrats on another great quarter.
First question could you just talk a little about Vegas.
Atlanta, and Charlotte that typically kind of negative.
Year over year and quarter over quarter occupancy trends on what may be happening in those two particular markets just kind of given how strong the everything else was.
Yeah, you bet. So Vegas is primarily related to one asset Thats Bloom.
In which there is.
There are a little bit more concentrated late payers. So when you saw the.
Is it kind of uncertainty in the eviction moratoriums.
They stopped and started again soft again in July and August I think that property in particular was hit.
Hardest with skips and so thats, primarily the driver of that occupancy since then.
<unk> had a ton of units there.
We made a decision to go ahead and upgrade them on in achieving new new leases.
And the 20% in 2025% range there.
So that's going to I think work itself out to be a net positive.
Atlanta kind of the same story with the preserve at Terrell mill concentrated issues.
Again, because the eviction moratorium.
Was off and on again and then off again so had the same has the same issue there.
Cleared out a lot of the skips and late payers.
And have upgraded units there and again same same store, 30% plus new lease growth at that asset.
And then by the way and those two assets. We've also received a ton of rental assistance that.
That had made their way that will make their way through.
Through the income statement through the year finally Charlotte.
Primarily related to.
It's a timber creek so one again one asset there same story.
Some skips plus or some bad not bad debt, but some units down there.
Do you do to casualty so.
Yeah. Those those are all kind of the three problem children. If you will in those in those markets that cause I think overall relatively minor.
No.
Issues, but not.
Not anything that we're worried about long term.
Great. Okay. That's helpful. Then the second question I mean, just from some months prior comments the.
The spreads on the new leases and the renewals are pretty eye popping.
And then as you mean.
The benefits from.
The Tech pack it upgrades on the unit upgrades are built into those numbers and and if they are is there will be can you just kind of separate the benefits from those.
Ranked jumpsuit, when you've done that versus just kind of standard kind of rent increases for renewals and new leases.
Okay.
Yes, I mean, youre talking about ex kind of.
Value add.
Right.
3% all of that as you mentioned before kind of ex all the value add that we're just kind of really looking at.
The similar unit quote unquote, what would that number be.
Yes, I think the best indicators are your renewal rate perhaps.
Which is.
10 12, 15%.
But then again like we Didnt upgrade is.
Many units we signed probably.
I'd say, probably 500 actually a reminder.
We had.
390, new leases.
And then for Q3 or excuse me 390 upgrades.
349, 349 upgrades for Q3, but we signed 4500 59, new leases during the quarter at 23, 81%.
For an average increase of $275.
Backing out the rest of the.
The premium.
You are probably still in the mid to high teens, but that's something we can we can definitely.
Colon gift for you.
Following this call alright, irrespective of the numbers.
This is a pretty aggressive increases it's pretty impressive that there wasn't a.
Any kind of a bigger impact on occupancy so well done.
I appreciate it.
We will take our next question from Michael Lewis with Trust Securities.
Thank you.
A follow up on the cap rate discussion a little bit so the disposition cap rate the two Nashville deals.
I think I missed it did you say that was a four one cap.
No those were 335, 4% tax adjusted cap rate.
Okay and that fund is that on forward 12 month, NOI or is that in place.
It's in place Q3, Q3 of a T 12.
Okay, so assuming that there's any loss to lease there.
He'd been lower forward cap rate.
Okay.
I was just I was going to say, if I was comparing apples to apples with the cap rates you're using.
Trigger NAV analysis, but I assume when you when you calculate your NAV.
You're capping forward 12 month, NOI as well or is that in place.
The cap rate you just can't.
Yeah its forward, but it's nominal so it's sort of net net neutral so the nominal cap rates, we are the cap rates that we.
For the NAV table table or Nam are nominal cap rates and art.
Tax adjusted or.
Or capex adjusted the cap rates that we just quoted of 3554 for for Nashville, Our tax adjusted in our post.
Post capex.
That's helpful.
And I wanted to ask about.
The rally acquisition I assume that's probably a market.
Mine growing in.
Maybe thoughts on looking to do more there and I'm also wondering.
Other target markets, how many how many markets are kind of in your.
And your play Pan here that you would.
That you've kind of survey and are poking around.
Yes.
<unk> is the biggest focus for us.
Right now we're spending a lot of time effort energy money.
And resources in that market.
The latest research, we've seen and being on the ground there.
Over 10000 jobs over the next 12 months with an average median income of $150000 or more in only three plus or minus 3000 units of new stock delivered so that's an incredible dynamic that just doesn't exist in most places promise capital. There are capital is also seeing the same things. We are so it's just a tough market to enter.
Other than other than that frankly, there's not a ton of new places are new markets that we're that we're focused on we've studied salt Lake city a little bit.
The mountain West region.
Probably not not going to spend a ton of time, there but other than.
Raleigh, where we are spending time in salt Lake could be interesting later and later in the future.
We're really happy with our core markets.
Okay, Great and then just lastly for me following up on an earlier question about the leverage it looked to us like the like the leverage to come down a little bit this quarter, but.
You've got I think 200, you ended the quarter I think with $275 million drawn on the credit facility.
It sounded like maybe you would use some sale proceeds to pay that down a little bit, but how do you kind of think about.
Sometimes you run a little bit tight on the facility how do you think about.
What it might be worth two to free up a little bit of dry powder or thoughts on the way you use that facility or how you might do some permanent funding and bring that balance down I don't know.
Yes.
Starting I'll, let Bryan finish I think.
For us we.
I think we well first of all we just paid 50 of a down yesterday, so it bounces a little bit lower from our dispositions, but you are right. We do run generally drawn and hot.
On the revolver and then utilized.
The portfolio is currency, we started to do that when we issued a little bit of stock on the ATM, but then they didn't realize the market environment, where we were and stops because.
We just saw pricing that it was going to run.
Incredibly far we still believe that so.
And a.
Mad Dash Curry two.
To issue equity.
And pay down two 5% that right now when when our growth rates are increasing so.
I think that I think the current thinking is if we if we can.
Reach a position where our new table is then we can we might utilize the ATM to.
To delever.
Otherwise, it's going to be.
Dispose.
Yes, Thanks a lot.
Yes, sorry.
No.
The next question.
We'll take our next question from Rob Stevenson with Janney.
Good morning, guys.
Guidance is same store expense growth coming down from five 6% down to a midpoint of five O. Now is this just timing of year over year comp. So you're really starting to see any material relief in the expense increases on the big items like taxes people in insurance as we move into 2022.
Yeah, I think Rob it's largely taxes.
We realized a pretty good a reversal.
The second half of the year.
And the Houston taxes, I think it's almost half a million bucks.
And so we think that.
Houston optimistic on some turn county assets in Dallas and Atlanta.
I think those are.
Those are the main drivers.
Okay, and so as we start thinking ahead, I mean is it likely to be in the sort of high fours is where same store expense growth is likely to be given the current market environment and the inflationary pressures across the board.
Yes.
Yes, I mean, I think we're I think we're optimistic it can it can come come in lower but it wouldn't be.
Yeah.
Don't think it would be largely driven by.
A big number and repair and maintenance savings or.
Our payroll I think is largely texture.
Okay. Thanks, guys I appreciate it.
Thanks, Rob.
Again, if you would like to ask a question. Please press star one as a reminder, only analyst may ask a question.
Again that is star one.
Pause for just a few more moments to allow everyone an opportunity to signal for questions.
I'm showing we have no more questions in the queue. At this time that concludes today's question and answer session speakers at this time I will turn the conference back over to you for any additional or closing remarks.
Yes, I appreciate everyone's time.
<unk> talked after the year end. Thank you.
That concludes today's call. Thank you for your participation you may now disconnect.
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Okay.
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