Q1 2022 RLJ Lodging Trust Earnings Call

May 5, 2022

Welcome to our L. J lodging Trust's first quarter 2022, earning call as a reminder, all participants are in listen only mode and the conference is being recorded.

After the presentation there'll be an opportunity to ask questions. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.

I'd now like to turn the call over to Nick Hilton Pamela R. L Jr, Senior Vice President Finance and Treasurer.

Please go ahead.

Thank you operator.

Good morning, and welcome to <unk> Lodging Trust 2022 first quarter earnings call on.

On today's call Leslie Hale.

<unk> and Chief Executive Officer will discuss key highlights for the quarter.

Sean.

Our executive Vice President and Chief Financial Officer will discuss the Companys financial results.

Tom <unk>, our executive Vice President of asset management will be available Q&A.

Forward looking statements made on this call are subject to numerous risks and uncertainties that may lead the company's actual results could differ materially from what had been communicated.

Factors that may impact the results of the company can be found in the company's 10-K and other reports filed with SEC.

The company undertakes no obligation to update forward looking statements.

Also as we discuss certain non-GAAP measures. It may be helpful to review the reconciliations to GAAP located in our press release from last night.

I'll now turn the call over to Leslie.

Thanks Nikki good.

Good morning, everyone and thank you for joining us today.

We are encouraged by the rapid acceleration of the recovery since our last call, which exceeded our expectations as lodging fundamentals sequentially improved throughout the quarter with mandates lifting seasonality improving and offices reopening.

This momentum was most notable in the resurgence of demand in urban markets, which has continued into the second quarter.

Against this improving backdrop not only did we achieve strong first quarter operating results that were ahead of our expectations, but we also advanced our value creation initiatives repay the remaining balance on our line of credit.

And amended our corporate credit facility to allow for share repurchases expanding the range of capital allocation opportunities available to us.

All of these efforts have further strengthened our overall positioning for the year.

As it relates to fundamentals the pace of the recovery throughout the first quarter was driven by the broad improvement across all segments and markets.

The ability of the industry to maintain rate integrity and pushed ADR to new highs is evidence of the strength of demand that is materializing.

With this accelerating industry backdrop.

Our portfolio experienced positive momentum across all of our markets throughout the first quarter.

Our revpar rapidly improved from 64% of 2019 in January to 84% and March which was driven by robust growth in business and group demand leading to increased pricing power with our ADR in March achieving 96% of 2019 levels.

This momentum carried into April which further improved from March to achieve 91% of 2019, Revpar and ADR Eclipse 2019 levels are.

Our ability to achieve new highs in ADR ahead of the full recovery of our urban markets is an indication of the run room that exist to drive rate.

We continue to believe that the next leg of the recovery will be driven by the strengthening of urban demand.

The pace of the recent improvement in urban markets underscores our confidence that this recovery is underway.

Demand at our urban hotels, which represents approximately two thirds of our portfolio. So a significant inflection point in March as employees return to offices and group attendance improved.

In March Revpar at our urban hotels achieved 81% of 2019, which was a 40% increase over January .

ADR at our urban hotels achieved 95% of 2019 with a number of our urban markets, such as Southern California, Atlanta, Boston, Washington, D C and New York exceeding or approaching 2019 levels.

Notably our northern California markets also saw significant momentum during the first quarter benefiting from office reopening and compression created by citywide such as the game developers conference and the NCAA tournament.

Our northern California, Revpar increased by 65% between January and March with March Revpar, achieving 57% and ADR, achieving 74% of 2019 levels, which had record citywide.

With the continuation of office reopening and a stronger citywide calendar going forward, we expect the recovery of our northern California hotels to continue to build throughout the year.

The substantial improvement in our mid week trends.

Other validates that the acceleration in business transient and group demand is driving our urban performance.

Our weekday revpar in March was nearly 80% higher than in January and represented a new high of the pandemic, achieving 76% of 2019 with our weekday ADR achieving 91%.

With respect to business transient the continuing growth of SME travel was bolstered by the return of our traditional corporate accounts from a diverse base of industries, such as aerospace financial services and the insurance sector.

This accelerated our business transient revenue by 70% between January and March with March achieving 55% of 2019 levels.

Which was the highest watermark of the pandemic.

Our revpar growth was aided by our corporate rates, maintaining strength, which we expect to continue going forward.

Our group segment also accelerated throughout the first quarter as group demand broadened to include more corporate events, such as employee trainings and Offsite meetings.

Corporate groups now represent approximately 50% of our current group bookings.

We also benefited from citywide being held as in person events with attendance levels, holding all of which drove a meaningful increase in our in the quarter for the quarter group revenues with March Revpar, achieving 74% of 2019, which was also driven by ADR increasing to 95% of 2009.

<unk> with citywide calendars in booking volumes, improving our second quarter pace has increased by over 40% since the beginning of the year.

Additionally, we benefited from the return of urban leisure demand as museums theaters and related venues many of which were not opened last year reopen at full capacity.

This led our week in Revpar to increase by 68% between January and March.

March weekend Revpar was the highest of the pandemic and exceeded 2019 by 5%.

Our weekend ADR remained elevated throughout the first quarter and exceeded 2019 by 10% in March.

The improving demand environment led our margins to improve sequentially each month and achieved hotel EBITDA margins of 34, 4% in March.

Moving to capital allocation, we continue to make great progress on our internal growth initiatives.

The transformation of the embassy suites, Mandalay Beach, the Wyndham Millhouse, Charleston, and the Wyndham Santa Monica conversions are well underway and are on track to be delivered by the end of this year.

We look forward to providing an overview of our re imagine hotels as we approach their relaunch.

We are beginning to see results from the completed revenue enhancement initiatives and are making progress on a number of incremental projects focused on space reconfiguration and the addition of keys, which are being executed as part of the normal cycle renovations. We expect the returns from these projects to coincide with the ramp of revenues.

Back in 2019 levels.

And relative to margin expansion, we have completed the amendment of several additional agreements that will contribute to the 50 basis points of margin enhancements that we expect.

Which will be incremental to the industry wide post pandemic operating synergies.

As it relates to capital recycling with the acquisition of the Moxie Denver Cherry Creek last year.

We took advantage of an active transaction market to opportunistically sell to hotels in Denver, which has further reposition our footprint in the market.

Our four remaining hotels are now concentrated in the desirable Cherry Creek Denver.

Denver, South and Boulder Submarkets.

Relative to external growth, we have demonstrated the ability to source attractive acquisitions.

We expect to continue to be active this year and our pipeline of acquisition opportunities remains robust.

That said, we will remain disciplined as we have demonstrated with our recent acquisitions, which are expected to exceed our 2022 underwriting by over 30%.

Additionally, on the capital markets front, we recently completed the amendment of our corporate credit facility to allow share repurchases during the covenant waiver period, and our board authorized a $250 million share repurchase program. This.

This provides us with another potential tool to allocate capital in light of the current volatility and dislocation in lodging stocks relative to underlining asset values.

It relates to our O J today, we believe that based on every metric and this is the best portfolio. We have one as a public company and comparable trades over the last several quarters further validates the high quality and value of our assets.

Looking ahead, we remain confident that each of the demand segments will strengthen throughout the year.

Our confidence is bolstered by the robust demand trends, we saw in March which have accelerated into April we expect demand trends remain healthy during the second quarter given that business transient is expected to continue to benefit from pent up demand as employees return to offices in April we have already seen a pickup in volume.

From National accounts continued improvement in our transient pace and expansion of the booking window.

Our end of year for the year bookings so far this year, our 123% of the total in the year group revenues, we picked up last year, which is robust with half of these bookings falling into the second quarter.

Okay.

Urban leisure, which was muted last year should continue to see greater strength as we moved into summer with urban attractions fully reopen and finally any uptick in international demand trends should benefit our urban and gateway markets, such as Northern California, New York and Florida.

Based on the improving trajectory of these segments, we expect the recovery to continue to gain momentum throughout the year with particular strength in our urban markets.

Additionally, with respect to operating expenses, while we are continuing to operate in a challenging cost environment. We are seeing signs of easing tight labor conditions with improved hiring reduce employee turnover and fewer open positions.

That said, we recognize that while inflation geopolitical events and rising interest rates to date have not had a measurable impact on lodging fundamentals they could be potential headwinds.

Overall, we are encouraged by the strengthening fundamentals and our unique position to create significant value given our embedded growth drivers which include returns from our conversions revenue enhancement and margin expansion initiatives. The continuing ramp from our recent acquisitions, our ability to better capture postpaid.

Industry margin expansion, given our lean operating model smaller footprint fewer ftes and longer in length of stay are well located urban focused portfolio and our strong balance sheet with significant liquidity that will allow us to pursue multiple capital allocation opportunities.

Given this backdrop, we are confident that our portfolio positioning and unique value creation initiatives will allow us to drive outsized growth this year and throughout the cycle I will now turn the call over to Sean Sean.

Thanks Leslie.

We were pleased with our first quarter results, which further narrowed the gap to 2019 and accelerated throughout the quarter.

After the January impact of Omicron abnormal seasonality fundamentals reaccelerate. It in February and continued through March which was our strongest month since the start of the pandemic.

Pro forma numbers for our 95 hotels exclude the sales of the Marriott at Denver International Airport, which was sold during the quarter.

And the Springhill suites in Westminster, Colorado, which was sold in April .

Our reported corporate adjusted EBITDA and F. F. O include operating results from all sold and acquired hotels during our Oh geez ownership period.

Our first quarter portfolio occupancy was 61, 2%.

Which was 80% of 2019 levels.

Accelerating demand allowed our hotels to drive incremental rates during the first quarter.

Our first quarter average daily rate of $176 grew over 7% from the fourth quarter and represented approximately 93% of the first quarter of 2019.

March was the strongest month of the quarter and generated ADR of $188, which represented 96% of 2019.

Our leisure markets, such as key West Charleston, Miami, and Waikiki generated 80 ours in excess of 2019 by 38%, 29%, 18% and 7% respectively.

Growth in our urban markets accelerated throughout the quarter as we benefited from pricing power in March.

During March we were encouraged by the fact that 80 ours and many of our urban markets, we're near or above 2019 levels.

Such as the 106% in downtown Chicago.

113% and San Diego.

99% in Manhattan 90.

95% in Boston and 92% in Atlanta.

Despite January being impacted by omicron, our first quarter Revpar with approximately 74% of 2019 levels and was stronger than we had expected at the beginning of the quarter.

And accelerated throughout the quarter to 84% in March.

Turning me segmentation.

Leisure remains strong and achieved 85% of 2019 revenues during the first quarter. Our group revenues relative to 2019 grew over 400 basis points from the fourth quarter to 63%.

With March revenues at 98% of 2019 levels.

Finally, while the growth of business transient within the quarter was encouraging.

First quarter <unk> revenues were at 46% of 2019 levels, which underscores the remaining growth runway as business transient revenues return to 2019 levels.

The improving operating trends during the first quarter, let our entire portfolio to achieve hotel EBITDA of $63 $2 million, which represented 61% of 2019 levels.

We are encouraged with our ability to drive strong operating margins of 26, 3%.

Our hotel EBITDA improved as demand increased throughout the quarter.

And was $35 $6 million in March representing 78% of 2019 levels and generated hotel EBITDA margins of 34, 4%.

Which represented the highest margin since the start of the pandemic.

Preliminary April results are even stronger than March as a result of increasing demand and pricing power.

For April our portfolio would generate occupancy of approximately 75% and ADR of approximately $192, resulting in April revpar, achieving 91% of 2019 levels, which.

Which represents a seven percentage point improvement from March.

Importantly, our April ADR slightly exceeded 2019 levels, which is a great indication of the improving fundamentals in our urban centric portfolio.

Turning to the bottom line, our first quarter adjusted EBITDA was $54 $6 million and adjusted <unk> per share was <unk> 14 cents.

As Leslie mentioned, while it demand accelerated throughout the first quarter, we remain vigilant in maintaining cost containment initiatives that are appropriate for the current environment.

Underscoring our continued focus our first quarter operating rig costs remained approximately 19% below the comparable period of 2019.

Within operating expenses wages and benefits, which represent 39% of total first quarter operating expenses were approximately 21% below the comparable quarter of 2019.

On a relative basis, our portfolio remains better positioned to operate in the current labor environment. As a result of fewer ftes required in our hotels, given our lean operating model.

Smaller footprints with limited F&B operations and longer length of stay with suites, representing 50% of our rooms inventory.

While first quarter occupancy was at approximately 80% of 2019 levels, our hotels operated with approximately 37% fewer ftes than we operated with pre COVID-19.

Overall, we are encouraged that the labor environment is improving.

Yeah.

We have been very active managing the balance sheet to create additional flexibility and further lower our cost of capital so far this year.

These accomplishments include repaying the remaining $200 million outstanding on our corporate revolver.

Exercising the first of two one year extension options on a $200 million secured loan which extended the maturity to April 2023.

And amending our corporate credit agreements to allow share repurchases during our covenant waiver period.

The execution of these transactions is a testament to our strong lender relationships and favorable credit profile.

Our weighted average maturity is four one years and our weighted average interest rate is 3.89%.

Turning to liquidity, we ended the quarter with approximately $479 million of unrestricted cash.

$600 million of availability on our corporate revolver.

$2 $2 billion of debt.

And no debt maturities until 2023.

We continue to maintain significant flexibility on our balance sheet and 80 of our 95 hotels remain unencumbered.

Currently 100% of our debt is fixed or hedged, which will protect us from their current rising interest rate environment.

We maintain a disciplined approach to managing our balance sheet.

Even as fundamentals have recovered we remain focused on making prudent capital allocation decisions to position our portfolio to drive results during the entire lodging cycle.

We remain among the best positioned lodging Reits to take advantage of ROI investments and external growth opportunities.

We continue to estimate our O J capital expenditures will be approximately $100 million during 2022.

Additionally, at the end of April our board approved a one year $250 million share repurchase program, which will provide us with additional tool to take advantage of recent volatility in the capital markets to repurchase shares.

We continue to view share repurchases as an important capital allocation tool to return capital to our shareholders.

In closing our O J remains well positioned with a flexible balance sheet.

Ample liquidity.

Lean operating model and a transient oriented portfolio with many embedded catalysts.

We will continue to monitor the financing markets to identify additional opportunities to improve the lateral of our maturities reduce our weighted average cost of debt and increase our overall balance sheet flexibility.

And this concludes our prepared remarks, we will now open up the line for Q&A operator.

Thank you.

Now be conducting a question and answer session.

If you'd like to ask a question today. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.

You May press Star two if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary as Victor handset before Christmas turkeys.

One moment, please pull for questions once again Thats star one thank you.

Thank you and our first question is from the line of Anthony Powell with Barclays. Please proceed with your questions.

Hi, good morning.

A lot of detail on business travel coming back I guess I'm curious I wanted to see if you can talk a bit more about the booking window or how is that what might be going and are you able to get good insight into pace for the next few months and B G.

Please standby across your segments.

Uh huh.

Please proceed.

Okay.

So we are seeing an improvement in and booking windows and transient pace.

And so we're very encouraged what we're seeing on the business side.

Plenty of momentum it's important to recognize that it is real time in terms of what we're seeing obviously the trends that we saw from from January to March and now what we're seeing in April and that we're continuing to see today, but I'll, let Tom give some color on the booking window.

So Anthony not only what Leslie said about the booking window and timing what's happening is the Smes are still continuing to grow and that's what kind of fill this up in 2021, but now the surge is really the national corporate accounts and so what we're finding is those offices are reopening people traveling.

The larger accounts are now coming through we're seeing the largest amount of growth coming from the national corporate accounts in that booking window. Typically there is some 10 between seven and 14 days when their travel patterns are.

And are being set up also I would say that we're seeing the Tuesday, Wednesday, and Thursday at the highest levels compared to the beginning of the pandemic, which has really.

Showing up in regards to what you would expect midweek demand and that's where our midweek growth is happening and they're coming in at dynamic pricing is what we also stated in regards to the strategy. We took so the rates are coming with it at the same time that the volumes are increasing.

Got it thanks and that's.

All positive I.

I guess the concern a lot of people had is advocating sort of summer.

The weekend strength that you've cited maybe start to decline year over year, given inflation and economic issues I'm. Just curious what are you seeing in terms of forward bookings and price sensitivity on the leisure side and do you think that can and we can maintain the strength that it had in the past year.

<unk> benefit for the DTA recovery.

Yeah, well, what I would say.

Anthony I'll start and then Tom will give some incremental color on the specific weekend trends that youre talking about but what I would generally say is that we're not seeing any weakness on the leisure side.

And keep in mind that two thirds of our portfolio is urban and if you think about.

The urban markets last year, many of the leisure attractions, we're actually not open.

Broadway was not open museums were not open they're now open. So we expect not only to see the benefit of what we're seeing from a BT and group perspective, but we also expect to benefit from urban leisure.

As you know as well.

So we are pretty positive on leisure continue to be strength route throughout the summer.

And the thing I would add to Anthony when you think about the <unk> portfolio, we are 50% suites and typically customers love that extra bay. They want to search for that value that people are seeking in regards to the traveling not only with kids.

On the transient side and then went on the group side, what we've seen is concerts venues. The same thing Leslie referring to in regards to the attractions Theyre all open now and so we're expecting some significant demand on weekends to continue and the booking pace indicates that as we look out into the future so far for the summertime.

Yeah.

Alright, thank you.

Okay.

Our next question comes from the line of Austin Schmidt with Keybanc. Please proceed with your questions.

Great. Thanks, and good morning, everyone. Shawn I think you mentioned hotel EBITDA margin in March was nearing that mid 30% range.

Probably near the Best quarterly result, I think you achieved in fall of 2019.

The continued improvement in various demand segments that you and Leslie it highlighted should we expect that margin to improve further in the quarters ahead.

Yeah Austin.

From a seasonality perspective, you would expect our margins to be the strongest.

Just based on normal seasonality as we show in our supplemental during during the second quarter, but from a.

As the as the recovery on both particularly on the urban assets you'd expect margins to continue to improve and just in nominal amounts.

As the recovery unfolds I think it's important to note that within 2022, we expect.

There to be some level of quarter over quarter noise within margin only because as costs get reinserted back into the business to prepare ourselves further.

It covers things like sales and marketing and labor and benefits as well.

That will have an impact on on short term margins, but our view around.

Around both.

What we think of post Covid margin expansion remains intact, and we think that our hotels, specifically are best positioned to capture that margin because of the things that we've articulated in the past with our with our footprint lower ftes less complicated business models et cetera.

And just to add some numbers to what John was talking about four for the quarter. We were at 80% of 2019 levels of occupancy, but we are only at 60% of the Ftes.

Still think that we need to be in the 75 to.

The 80%.

And the labor market is improving and so we are seeing the ability to fill roles less job openings less turnover and so that's what the you know.

Incremental putting back into the labor that Sean was referring to.

And that 75% number you just cited Leslie what number does that relate to to the extent you continue to see revenue get to or even above what you had in 19.

Yes.

That number is the number of Ftes that we expect to put back in the business, which will be.

And what we've seen.

For.

Some markets and hotels that have reached.

Prior peak levels of occupancy is that that's sort of a level that we think is a stabilized level and that our hotels can operate within.

Okay. That's helpful. And then just last one for me I think you said <unk> revenue in the first quarter was 46% and 19.

I was curious if you had that figure for March or April .

And then just with all the positive commentary you cited for the recovery in urban markets really across all segments. When do you think you could get that revenue for BT.

Fully close the gap versus 19.

Yeah.

So that's.

The answer on the March numbers about 55% of revenues and keep in mind. The full year for 2021 was at 35, so you're seeing the momentum there.

Often our general perspective is is that we see BT get back at 2023, there's a case to be made that you could reach those levels in the fourth quarter of this year, but 2023 still remains our in our general House view.

Thanks for the time.

Okay.

Our next question is from the line of Michael Bellisario with Baird. Please proceed with your questions.

Thanks, and good morning, everyone.

Bob.

Let me first first question could you maybe triangulate what youre seeing in the transaction market.

Where do you think values are for your for your types of assets and then how that all plays into your decision to maybe reallocate some capital to buybacks today.

Sure look I think that the transaction market.

It remains a very active we're not seeing a change in flow.

Deal flow either up or down there continues to be a wide range of buyers.

Looking for looking for yield we've actually seen new entrants as people shift from other asset classes.

And so sellers don't have any motivation to to lower values at this time for US we continue to.

To be focused on off market transactions and we remain disciplined.

Around around acquisitions, I would say from a value perspective, as I said on our last call we've seen values stabilize.

As they were increasing.

Throughout last year, we've generally seen them sort of stabilized and interest rates really have not had an impact on.

On the amount of capital that's chasing hospitality today.

From our perspective.

We had entered the year expecting to be.

Net acquirer.

And as fundamentals have improved and stock prices have not responded.

Obviously buybacks are become more attractive now the good thing is is for our perspective, given our balance sheet liquidity and we are.

Have the optionality to pursue multiple channels.

<unk> value creation, and optionality relative to capital allocation.

Very clear that where we're trading doesn't reflect the underlying value of our assets and when you look at every metric obviously clearly based on our internal house view and the most recent transactions that have happened in the market validate that.

And so <unk>.

<unk> will become more attractive to us.

Mike in general.

To remain balanced.

We think that buybacks are obviously have contextual.

Perspectives related to that but.

Asset acquisitions have a long term strategic view as well and so we'll continue to look at both but clearly buybacks are more attractive today.

Based on where things are trading.

That's helpful and then sort of a follow up there you guys have sold a couple of hotels.

125, the key you bought three hotels $3 50 key I think presumably those hotels are closer to 400 key today, maybe just roundly not looking for a specific number but how would you kind of bucket your portfolio in terms of how.

How much of what you own isn't that high value bucket and how much of what you own today as sort of a net lower value bucket so to speak.

Great question, Mike I would say that from our.

Portfolios perspective, less than kind of 3% to 5% is in that lower bucket and the vast majority of it is well north of that you're not going to find assets for under 200000, a key under 300000, a key in markets like key West Charleston, and Santa Monica, Boston, Tampa Beachfront in Deerfield, Mandalay downtown Austin and D C, which is the vast majority of our ports.

<unk> youre not going to find those.

Less than 300 key range.

And.

We're very confident that the vast majority of our portfolio of ryzen the higher end of that range.

Thank you.

Our next question is from the line of Tyler Battery with Oppenheimer. Please proceed with your questions.

Good morning, Thanks for taking my questions I wanted to circle back to the discussion on NIM.

Going on midweek in the business.

Just some statistics in terms of Revpar and ADR as well can you talk a little bit about the gap in occupancy midweek, where we are right now versus versus 19, how do you think about that gap closing are there any catalysts or anything that you're that you're tracking or watching in terms of closing that backed up and what's your perspective on.

The ADR strength of.

Some of that occupancy starts to come back a little bit warm.

Sure. Thanks, Tyler what we have seen mid.

Midweek is that that gap has closed the most recent model.

Uh huh.

Around 87%.

On the weekday occupancy.

Of the 19.

From a trend line perspective.

That was the highest month we've had.

Since the start of the pandemic and its been trending up since the beginning of the year is up 2000 basis points since January and 300 basis points from March from.

Midweek occupancy perspective, and so that is very encouraging to us as well, but we don't want to.

Ignore the fact that our rate midweek is actually also improving as well and so our mid day.

Yeah.

Our midweek ADR is approaching 2019 levels as well and Thats the highest once again it's been.

In April and that was a 500 basis point improvement from March and so I think.

Our view around.

Midweek is that it is a function of our urban markets performing better as a function of the business transient and group customer getting better.

Recovering and really that's we view as really a driver of our of our growth for the balance of the year is really that that mid week combination of Bakken and ADR and Tyler just as Sean referred to the average rates side.

With our revenue management systems, and the ability to price each day and the dynamic pricing methodology, that's going with it that's where we're leaning in and.

When it comes to mid week at the same time, when we think about channel distribution with GDS starting to grow because of the national corporate accounts are coming back.

<unk> Singh and really charging bar or retail more often as well as kind of figuring out where the OTA mix should be on shoulders versus peak night. Those are all happening at the same time, which is giving us confidence in regards to our structure in regards to how we are quoting.

Okay I appreciate that.

Just a follow up on the capital allocation discussion here.

In terms of the dividends you know as you exit the covenant waivers.

Where does the dividend fit in in terms of.

The options you have available to you and what sort of trigger points.

Are you looking at in terms of reinstating the dividend and is it possible maybe that's something to look at in the second half of this year or do you think really it's more of a 2023 sort of event.

Great well, let me start with just to reiterate what our house view on dividends is that we believe that they are a critical tool for us to return capital to shareholders an important for lodging Reits, we've historically been an active dividend payer and we are working hard to get ourselves.

Back to being a dividend payer, we think it's critical to our business model.

To reiterate <unk> comments earlier, we have the balance sheet and liquidity to be able to do.

Both buy back stock do acquisitions, as well as dividends and so we have the financial flexibility to do that.

Specific to the current environment, we cannot resume our dividends until we are out of the covenant waivers. We are on track to exit the covenant waivers. After we report our second quarter results. So you would expect us to be able to provide an update next quarter on how we think about the cadence of returning dividends, but the factors that are.

Influence, how we think about returning.

<unk> our continued positive outlook on lodging fundamentals how are our taxable income is stacking up as well as our market expectations around investor in at all.

Our expectations around dividends, but with all that said, we expect to be able to provide an update on the next quarterly call about how our thinking has evolved once we're out of the covenant waivers.

Okay, Great I appreciate it that's all for me. Thank you.

Our next question is from the line of Craig Miller with true Securities. Please proceed with your questions.

Good morning, everyone. Thanks for taking my question.

I want to talk about the return to office since you brought it up on the prepared remarks.

I know your team looks at the castle systems return to office parameter like I do.

And do.

Do you think we the collective hotel industry and analyst community.

Overlaying the importance of people, who are turning to the office before going back on the road to travel for work and Im speaking, particularly of salespeople and account management Rogue Warriors that frequently stay and select service hotels and.

It would be less often work being from an office setting even pre pandemic environment.

Some of your properties.

Kind of differentiate your some of your properties from say.

Very high rated upper upscale and luxury hotels and some of the full service purely <unk>.

Thompson.

So Greg I'll start and then Tom will add some incremental color what I would say is that if you look.

How.

<unk> was coming back in.

Kind of prior to this year and in February It was coming back ahead of offices reopening. So we do know that business travel is is not necessarily.

Coupled with offices are reopening having said that with offices reopening in a material way starting in March we saw key inflection point in business travel at that time.

Even even in San Francisco, which is now the offices return to offices in line with markets with similar profile, you've seen snapback relative to there as well and so there's definitely a.

A correlation, but it's not 100% and people are traveling ahead of ahead of that.

And to add in regards to the who and where they are staying I think it was a great question. Greg when you think about the type of trial as the stay at our hotels many times, our middle management sales folks people that are conducting business for their company.

What we found initially is when offices werent opening to that debate it wasn't slowing those type of travelers down because that's where they do business and how they stay and how they interact with their customers.

But the moment offices have reopened in what we've seen is more of a resurgence in regards to the hiring that we've all talked about within our industry. It's also happening in those industries for instance, Leslie referring to the Northern California area. As an example out in the Silicon Valley not only ended accompany higher but now they've got insurance coming in for project business.

We're seeing that give us project business right away as soon as officers are reopening because they had not had that for the last couple of years. So those are in turns and individuals trying to be a part of that company going through that cycle. So we're encouraged that the office reopening is a key element, but it's not the only thing driving BT.

Thanks I appreciate it.

Appreciate the thoughts there.

My second question is maybe a little more than you should for what Tyler was asking.

Focusing on room rates now I was looking at your supplemental.

Both last quarter and this quarter.

And the Revpar variance versus the equivalent quarter in 2019.

Weaker in some of your extended stay brands than the equivalent transient brands. For example residents in underperforming courtyard and not trying to call out the brands here or my former employer.

There you have more hotels within various than say, the Hyatt and Hilton equivalents. So I mean I was looking at that in particular.

And where the gap was most material was in ADR.

In <unk> spread versus one 2019 was over 100 bps.

So I'm curious I'm not sure if I'm reading too much into the variance.

Or there is market specific recovery or are there other factors involved but how do you see your extended stay hotels recovering, especially on the rate side versus transient this year.

Okay.

So Greg what we'd say is first and foremost, it's really footprint print related versus brand related depending upon where they're located and typically first quarter is.

Usually a little slower on the project business, depending upon where the extended stay business is located and then it starts to really build in Q2 and Q3.

When I think about the different performances within the brands I really look at markets more than I do the brands and I can kind of think.

Think about that for instance, when we have hotels in Austin, where we have a courtyard and residence in next week. They really play off of each other in regards to the rate plateau, and how that works and how they handle project business versus BT and citywide business and so many times. If we have same pad residence inns and courtyards, and we think about strategically how.

We fill the occupancy and then fill that courtyard. After the resident than it has been filled with some project business that really is long term and makes more margin. If you will so it's how they play off of each other in those markets is more related to as well as the footprint and how we think about the brands and the performance quarter over quarter.

Okay.

Expectation would be that you'd see some degree of a of a.

These are great variance between say.

Your equivalent trends and extended stay hotels that are coupled together.

That should narrow over the course of the year.

Yeah, I mean, Greg I think what we would expect if we don't see any changes to the relationship that historical relationship between where our residents and in a courtyard.

Are going to perform.

When you look at one quarter data point is obviously, it's a narrow set of.

Of time, but we don't see any dynamic change between how those brands are going to perform.

Okay. Thank you I appreciate that.

Thank you.

Our next question is from the line of Neil Malkin with capital One Securities. Please proceed with your question.

Hey, good morning, everyone. Thanks for the time.

The first one.

Tom maybe for you.

Excuse me.

Called out some of the.

Roy initiatives.

In terms of space can peg a reconfiguration and key ads can you just maybe talk about.

Size scale scope.

Kind of like what's in totality that looks like at least you know kind of what you have.

On the docket.

And when we can expect those things to be completed and starting to.

AD <unk>.

Notably too.

Quarterly results.

Sure, Thanks, Neal I'm going to I'll.

Hoffman on message, so within our $20 million to $23 million I'm, sorry, $23 million to $28 million of margin enhancements. We had the revenue enhancements, which are what you're talking about were $9 million to $11 million of that.

These projects are really being done in conjunction with what I'll call the normal run rate.

Renovations and the ramp up of those is usually one to two years.

Now these capital investments have been split roughly 50 50 between the 2021 and 2022 cycle renovations and so we would expect the stabilization of that to come in for.

For the 2021 projects between 2022, and 2023 and 22 projects between 2023 and 2024.

So what we're seeing is this year is there what would be the start of the 2021.

Fruit from that from that labor and I would expect it to be built today and over the next.

Between now and 2024.

Okay, and then in terms of like total keys, and Youre going to add like what does that number look like or what could that be.

So we've been very successful in adding keys over the last couple of years, we've added somewhere in the neighborhood of between 60 and 70 keys.

Our portfolio and we've done that through a lot of primarily through.

Conversion of suites into into the ability to sell us two rooms now we've done that in a creative way.

Through adding doors in between to allow them during certain periods of time to be sold as separate rooms and during periods of time, where we were you wouldn't and that covers a period of time, where you wouldn't get a big rate premium for the suite, but also allow them to continue to be sold as suites. During periods of time, where you can sell them a suite and so from our perspective.

We're sort of maximizing our optionality for those rooms, and so it's something that we've spent a lot of time on.

As we've done the ROI initiatives within the portfolio.

And in our pipeline going forward, there's more to come as well.

Okay. Thanks, everyone for me is the.

This guidance from some of the lodging Reits have given quarterly guidance.

Guidance and just curious as to.

Your view on that and if you think maybe next quarter.

Youll give quarterly or dare I say annual guidance and.

And what would be the thing that changes that.

Sure Nelson.

As you know, we've historically provided earnings guidance and have a preference to return to providing future guidance I think our view is that we are comfortable providing guidance. When we believe we have enough visibility to forecast results and provide the street information within a relatively narrow range of outcomes.

We acknowledge our visibility has significantly improved and continues to improve but we still think the range of possible outcomes is still a little wide today.

To provide guidance with a high degree of certainty that being said, it's an active discussion within.

The team here and the board and we're going to continue to evaluate that every every quarter on a go forward basis.

Great answer Sean great. Thanks for the time.

Thank you.

The next question is from the line of Floris Van <unk> with.

With Compass point. Please proceed with your questions.

Yes.

Thanks for taking my question guys.

Maybe if you could give some comments on the.

Obviously, we've seen some of the select service more urban focused select service portfolios trade, maybe talk about the availability of debt and your view on.

The values achieved.

That youre seeing out there and how does that relates to your portfolio.

Yes.

He said the availability of debt right for us.

Yes, yes.

Our lenders are willing to finance urban hotels.

Particularly urban select service hotels, yes, I mean, we've seen buyers being able to achieve structured financing in order to fluctuate we haven't seen.

The capital markets be a hindrance to the ability to.

Execute trades and where you think we seen things trade at over 400, a key in Midtown Atlanta.

450. These are all select service type assets in downtown Austin.

Assets in Charleston are trading above 500, a key downtown D. C. Four in a quarter, there's plenty of trades that are happening with four and five handles on a per key basis and buyers have not had a challenge in terms of <unk>.

Being able to execute those from a capital there hasnt had knee been a need for seller financing in any of those transactions and relative to the broader landscape of hotels Flores urban select service is viewed very favorably among the lender community because of that because of the high margins and the free cash flows et cetera, it's a much easier story.

For underwriters to.

It's a land on versus some of the more bigger box.

Type assets, where you've seen seller financing in the market.

Thanks, maybe a follow up question on something that's been asked previously but in terms as you way.

Share buybacks versus <unk>.

Acquisitions and frankly.

ROI projects you've got.

Tremendous.

<unk>.

The return potential from your existing ROI.

Pipeline, but also the future pipeline, which could be quite large how do you how do you weigh those and.

As you think about it you've got 450 or $479 million of cash to play with.

How aggressive I guess is another way as to how aggressive will you be to take up your repurchase and use up all of the capability. This year.

If your shares continue to trade where they are.

Yes.

Sure. So I'll start to reiterate Leslie is comments floris around the fact that we have the liquidity and the balance sheet.

Not just be.

Limited to one choice on the capital allocation.

I think.

Within our baseline expectations.

The ROI initiatives were already baked into sort of how we think about.

About about those investments and those dollars have been going in.

And into those projects.

In the past and that they are.

Baked into the $100 million of Capex that I that I provided.

Prepared remarks, I think relative to.

What I would think about as incremental capital today right our choices.

<unk>.

Really all about.

Acquisitions share repurchases and dividends right are there are the three incremental choices, we have in front of US today. Once we have the choice to do all of them, but I think relative to where we started the year share repurchases have become much more interesting, which is why we proactively went out to our lender group and got the ability earlier than we otherwise would have to be able to buy shares.

And so I think that's an important tell us sort of what our attitude at around share repurchases.

They are attractive at this at this price, but acquisitions are also we also remain constructive on acquisitions as well and.

And believe that that's something that we're actively looking at them and as Leslie mentioned in her remarks, we have an active pipeline and then the dividend question, which I addressed earlier is we expect to be a dividend payer.

We are we are going to really spend a lot of time on that as we.

Emerge from the covenant.

The covenant waivers.

After the end of the second quarter, but I think what you'd expect from US is that we're going to be active on all of them what lever, we actually pull and how much volume we pull is going to be a function of what the what the relative returns available on those are at the time that we make.

Make those decisions, we don't make them in isolation.

And in order to make them now for the balance of the year right things change rapidly throughout the year and you would expect us to be able to pull the right lever at the right time.

I think John did a great summary, there I think the only thing I would throw into consideration is that.

Some of these are tools and some of these are strategy base. So like when we think about acquisitions, we think long term and we think strategically same thing with rois on the buybacks is obviously contextually driven.

And how long that context.

We maintained itself.

Thanks, guys.

Okay.

Thank you.

Our final question is from Christopher <unk> with Green Street. Please proceed with your question.

Thanks. Good morning, just one quick question for me regarding the Denver sales, which I realize it's relatively small in the scheme of things, but hoping you can provide some of the figures around the grand required Capex and then more broadly.

Congress.

Yeah.

Right.

Sorry, so the color around <unk>.

The brand required Capex is as part of those sales there was pitch required. So we have good granularity on what that what they were going to be.

And so there.

What they were about one five turns on value.

The way to think about it.

From a.

From a from a purchase price.

Gotcha, Gotcha and any conversations.

And any other areas of the portfolio that.

Mike.

Seafood.

Yeah.

I think your question, you're a little muffled there, but I think the question is is there any more opportunity for incremental dispositions is that was that the question.

No sorry, I will not come into clearer just asking around.

The improvement plans right with the Denver sales is there any other kind of conversations around those with brands in any other areas of the portfolio that you would that you would see through.

Oh, Yeah, we're we're very constructive on Denver.

Spot.

And our asset and Terry Creek.

And this was just a function of looking at the existing portfolio. We had given in light of the acquisition that we did in determining whether or not we wanted to put capital back and these assets are just repositioning our footprint, but it's not a read through to our to.

Our view on Denver, we're very constructive of that overall market. We think that you know, it's a top five migration market.

Where companies and individuals are moving to and so the economic backdrop the overall frame.

Our framework for Denver, we're very constructive on.

The other thing just to add onto lives. These comment with respect to a read through the portfolio. We've been very actively investing in our portfolio over the last three to five years and so we are sitting on a primarily renovated portfolio of hotels and so one of the drivers on these two transactions as well as some of our previous dispositions, where there was the decision around.

Investing incremental capital on that those hotels in that market relative to do two other assets in markets with our portfolio that we thought had higher returns and so what we have left today with a 95 hotels are as Leslie mentioned are almost all what we view as long term holds and keepers and may have been largely renovated.

Got you that's helpful.

Thank you at this time, we've reached the end of our question and answer session I'll turn the floor back to Leslie Hale for closing comments.

Well, thank you all for joining us.

We are encouraged by the trends, we've seen and we're optimistic that they're going to continue we look forward to meeting with you all and giving you an update over the next several weeks at various investor meetings and conferences.

Take care everybody.

This will conclude today's conference. Thank you for your participation and you may now disconnect your lines at this time.

[music].

Welcome to our L. J lodging Trust's first quarter 2022, earning call as a reminder, all participants are in listen only mode and the conference is being recorded.

After the presentation there'll be an opportunity to ask questions. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad I would now like to turn the call over to Nick Hilton Pamela R. L. Jr. Senior Vice President Finance and Treasurer. Please go ahead.

Thank you operator.

Good morning, and welcome to argue or logging Trust 2022 first quarter earnings call.

On today's call Leslie Hale.

Evident and Chief Executive Officer will discuss key highlights for the quarter.

Sean.

Our executive Vice President and Chief Financial Officer will discuss the Companys financial results.

Tom Barnett.

Negative vice President of asset management will be available for Q&A.

Forward looking statements made on this call are subject to numerous risks and uncertainties that may lead the company's actual results could differ materially from what had been communicated.

Factors that may impact the results of the company can be found in the company's 10-K and other reports filed with SEC.

<unk> undertakes no obligation to update forward looking statements.

Also as we discuss certain non-GAAP measures. It may be helpful to review the reconciliations to GAAP located in our press release from last night.

I will now turn the call over to Leslie.

Thanks Nikhil.

Good morning, everyone and thank you for joining us today.

This momentum was most notable in the resurgence of demand in urban markets, which has continued into the second quarter.

I guess, it's improving backdrop not only did we achieve strong first quarter operating results that were ahead of our expectations, but we also advance our value creation initiatives.

Pay the remaining balance on our line of credit and amended our corporate credit facility to allow for share repurchases expanding the range of capital allocation opportunities available to us.

All of these efforts have further strengthened our overall positioning for the year.

As it relates to fundamentals the pace of the recovery throughout the first quarter was driven by the broad improvement across all segments and markets.

The ability of the industry to maintain rate integrity and pushed ADR to new highs is evidence of the strength of demand that is materializing.

With its accelerating industry backdrop.

Our portfolio experienced positive momentum across all of our markets throughout the first quarter.

Our revpar rapidly improved from 64% of 2019 in January to 84% in March which was driven by robust growth in business and group demand leading to increased pricing power with our ADR in March achieving 96% of 2019 levels.

This momentum carried into April which further improved from March to achieve 91% of 2019, Revpar and ADR Eclipse 2019 levels are.

Our ability to achieve new highs in ADR ahead of the full recovery of our urban markets is an indication of the run room that exist to drive rate.

Okay.

We continue to believe that the next leg of the recovery will be driven by the strengthening of urban demand.

The pace of the recent improvement in urban markets underscores our confidence that this recovery is underway.

Demand at our urban hotels, which represents approximately two thirds of our portfolio.

A significant inflection point in March as employees return to offices and group attendance improved.

In March Revpar at our urban hotels achieved 81% of 2019, which was a 40% increase over January .

ADR at our urban hotels achieved 95% of 2019 with a number of our urban markets, such as Southern California, Atlanta, Boston, Washington, D C and New York exceeding or approaching 2019 levels.

Notably our northern California markets also saw significant momentum during the first quarter.

Benefiting from office reopening and compression created by citywide such as the game developers conference and the Ncw tournament.

Our northern California, Revpar increased by 65% between January and March with March Revpar, achieving 57% and ADR, achieving 74% in 2019 levels, which had record citywide.

With the continuation of office reopening and a stronger citywide calendar going forward, we expect the recovery of our northern California hotels, who continue to build throughout the year.

The substantial improvement in our mid week trends further validates that the acceleration in business transient and group demand is driving our urban performance.

Our weekday revpar in March was nearly 80% higher than in January and represented a new high of the pandemic, achieving 76% of 2019 with our weekday ADR achieving 91%.

With respect to business transient.

<unk> growth of SME travel was bolstered by the return of our traditional corporate accounts from a diverse base of industries, such as aerospace financial services and the insurance sector.

This accelerated our business transient revenue by 70% between January and March with March achieving 55% of 2019 levels.

Which was the highest watermark of the pandemic.

Our revpar growth was aided by our corporate rates, maintaining strength, which we expect to continue going forward.

Our group segment also accelerated throughout the first quarter as group demand broadened to include more corporate events, such as employee trainings and Offsite meetings.

Corporate groups now represent approximately 50% of our current group bookings.

<unk> with citywide calendars in booking volumes, improving our second quarter pace has increased by over 40% since the beginning of the year.

Okay.

Additionally, we benefited from the return of urban leisure demand as museums theaters and related venues many of which were not opened last year reopen at full capacity.

This led our week in Revpar to increase by 68% between January and March <unk>.

March weekend Revpar was the highest of the pandemic and exceeded 2019 by 5%.

Our weekend ADR remained elevated throughout the first quarter and exceeded 2019 by 10% in March.

The improving demand environment led our margins to improve sequentially each month and achieved hotel EBITDA margins of 34, 4% in March.

Moving to capital allocation, we continue to make great progress on our internal growth initiatives.

We look forward to providing an overview of our re imagine hotels as we approach their relaunch.

We expect the returns from these projects to coincide with the ramp of revenues back to 2019 levels.

And relative to the margin expansion, we have completed the amendment of several additional agreements that will contribute to the 50 basis points of margin enhancements that we expect.

Which will be incremental to the industry wide post pandemic operating synergies.

As it relates to capital recycling with the acquisition of the Moxie Denver Cherry Creek last year, we took advantage of an active transaction market to opportunistically sell to hotels in Denver, which has further reposition our footprint in the market.

Our four remaining hotels are now concentrated in the desirable Cherry Creek.

Denver, South and Boulder Submarkets.

Relative to external growth, we have demonstrated the ability to source attractive acquisitions.

We expect to continue to be active this year and our pipeline of acquisition opportunities remains robust.

That said, we will remain disciplined as we have demonstrated with our recent acquisitions, which are expected to exceed our 2022 underwriting by over 30%.

This provides us with another potential tool to allocate capital in light of the current volatility and dislocation in lodging stocks relative to underlining asset values.

As it relates to all day today, we believe that based on every metric and this is the best portfolio. We have one as a public company and comparable trades over the last several quarters further validates the high quality and value of our assets.

Looking ahead, we remain confident that each of the demand segments will strengthen throughout the year.

I am from National accounts continued improvement in our transient pace and expansion of the booking window.

Urban leisure, which was muted last year should continue to see greater strength as we moved into summer with urban attractions fully reopen.

And finally <unk>.

Any uptick in international demand trends should benefit our urban and gateway markets, such as Northern California, New York and Florida.

Based on the improving trajectory of these segments, we expect the recovery to continue to gain momentum throughout the year with particular strength in our urban markets.

That said, we recognize that while inflation geopolitical events and rising interest rates to date have not had a measurable impact on lodging fundamentals they could be potential headwinds.

Pandemic industry margin expansion, given our lean operating model smaller footprint fewer ftes and longer length of stay are well located urban focused portfolio and our strong balance sheet with significant liquidity that will allow us to pursue multiple capital allocation opportunities.

Thanks wisely we.

We were pleased with our first quarter results, which further narrowed the gap to 2019 and accelerated throughout the quarter.

After the January impact of Omicron abnormal seasonality fundamentals reaccelerate. It in February and continued through March which was our strongest month since the start of the pandemic.

Pro forma numbers for our 95 hotels exclude the sales of the Marriott at Denver International Airport, which was sold during the quarter.

And the Springhill suites in Westminster, Colorado, which was sold in April .

Our reported corporate adjusted EBITDA and F. F. O include operating results from all sold and acquired hotels during <unk> ownership period.

Our first quarter portfolio occupancy was 61, 2%.

Which was 80% of 2019 levels.

Accelerating demand allowed our hotels to drive incremental rates during the first quarter.

Our first quarter average daily rate of $176 grew over 7% from the fourth quarter and represented approximately 93% of the first quarter of 2019.

March was the strongest month of the quarter and generated ADR of $188, which represented 96% of 2019.

Our leisure markets, such as key West Charleston, Miami, and Waikiki generated 80 ours in excess of 2019 by 38%, 29%, 18% and 7% respectively.

Growth in our urban markets accelerated throughout the quarter as we benefited from pricing power in March.

During March we were encouraged by the fact that 80 ours and many of our urban markets, we're near or above 2019 levels.

Such as the 106% in downtown Chicago.

113% and San Diego.

99% in Manhattan.

95% in Boston and 92% in Atlanta.

Despite January being impacted by Omicron, our first quarter Revpar was at approximately 74% of 2019 levels and was stronger than we had expected at the beginning of the quarter.

And accelerated throughout the quarter to 84% in March.

Turning me segmentation.

Leisure remains strong and achieved 85% of 2019 revenues during the first quarter. Our grew revenues relative to 2019 grew over 400 basis points from the fourth quarter to 63%.

With March revenues at 98% of 2019 levels.

Finally, while the growth of business transient within the quarter was encouraging.

First quarter <unk> revenues were at 46% of 2019 levels, which underscores the remaining growth runway as business transient revenues return to 2019 levels.

The improving operating trends during the first quarter, let our entire portfolio to achieve hotel EBITDA of $63 2 million, which represented 61% of 2019 levels.

We are encouraged with our ability to drive strong operating margins of 26, 3%.

Our hotel EBITDA improved as demand increased throughout the quarter.

And was $35 $6 million in March representing 78% of 2019 levels and generated hotel EBITDA margins of 34, 4%.

Which represented the highest margin since the start of the pandemic.

Preliminary April results are even stronger than March as a result of increasing demand and pricing power.

For April our portfolio would generate occupancy of approximately 75% and ADR of approximately a $192, resulting in April revpar, achieving 91% of 2019 levels, which.

Which represents a seven percentage point improvement from March.

Importantly, our April ADR slightly exceeded 2019 levels, which is a great indication of the improving fundamentals in our urban centric portfolio.

Turning to the bottom line, our first quarter adjusted EBITDA was $54 $6 million and adjusted <unk> per share was <unk> 14 cents.

As Leslie mentioned, while demand accelerated throughout the first quarter, we remain vigilant in maintaining cost containment initiatives that are appropriate for the current environment.

Underscoring our continued focus our first quarter operating rig costs remained approximately 19% below the comparable period of 2019.

Within operating expenses wages and benefits, which represent 39% of total first quarter operating expenses were approximately 21% below the comparable quarter of 2019.

On a relative basis, our portfolio remains better positioned to operate in the current labor environment. As a result of fewer ftes required in our hotels, given our lean operating model.

Smaller footprints with limited F&B operations and longer length of stay with suites, representing 50% of our rooms inventory.

While first quarter occupancy was at approximately 80% of 2019 levels, our hotels operated with approximately 37% fewer ftes than we operated with pre COVID-19.

Overall, we are encouraged that the labor environment is improving.

Yeah.

We have been very active managing the balance sheet to create additional flexibility and further lower our cost of capital so far this year.

These accomplishments include repaying the remaining $200 million outstanding on our corporate revolver.

Exercising the first of two one year extension options on a $200 million secured loan which extended the maturity to April 2023.

And amending our corporate credit agreements to allow share repurchases during our covenant waiver period.

The execution of these transactions is a testament to our strong lender relationships and favorable credit profile.

Our weighted average maturity is four one years and our weighted average interest rate is 389%.

Turning to liquidity, we ended the quarter with approximately $479 million of unrestricted cash.

$600 million of availability on our corporate revolver too.

$2 $2 billion of debt and no debt maturities until 2023.