Q3 2022 Ashford Hospitality Trust Inc Earnings Call
Greetings and welcome to the Ashford Hospitality Trust third quarter 2022 results conference call. At this time, all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
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As a reminder, this conference is being recorded I would now like to turn the call over to Jordan Jennings Director of Investor Relations. Thank you you may begin.
Good day, everyone and welcome to today's conference call to review the results for Ashford Hospitality Trust for the third quarter of 2022 and to update you on recent developments on.
On the call today will be Rob <unk>, President and Chief Executive Officer, Derek Eubanks, Chief Financial Officer, and Chris <unk> Executive Vice President and head of asset management.
Results as well as notice of the sensibility of this conference call on a listen only basis over the Internet were distributed yesterday afternoon in a press release.
At this time, let remind you that certain statements in assumption and this conference call contain or are based upon forward looking information and are being made pursuant to the safe Harbor provision of the federal Securities regulation, such forward looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual.
Our results to differ materially from those anticipated. These factors are more fully discussed in the company's filings with the Securities and Exchange Commission. The forward looking statements included in this conference call are only made as of the date of this call and the company is not obligated to publicly update or revise them in.
In addition, certain terms used in this call are non-GAAP financial measures reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed on form 8-K with the SEC on November one 2022 and May also be accessed through the company's website.
W. W Dot H T REIT dot com.
Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in early.
Also unless otherwise stated all reported results discussed in this call compared the third quarter of 2022 with the third quarter of 2021, I will now turn the call over to Rob Kay. Please go ahead, Sir good morning, and welcome to our call.
After my introductory comments Derek will review, our third quarter financial results and Chris will provide an operational update on our portfolio.
I'd like to highlight some of our recent accomplishments and the main themes for our call.
First we saw ongoing revpar improvement in the third quarter versus 2019, and expect continued strength through the fourth quarter. Additionally, we are excited that September Revpar performance was the first positive month, we've had versus 2019, thus far in the recovery.
Second our liquidity and cash position continue to be strong we ended the quarter with approximately $602 million of net working capital, which equates to approximately $17 per diluted share with yesterdays closing stock price of 788. We believe we are trading at a meaningful discount to both our net asset value per share and our net working.
Capital per share.
Third we announced that didn't have commenced the offering of our non traded preferred equity security importantly, we believe this offering will provide an attractive cost of capital and allow us to accretively grow our portfolio over time subject to future market conditions. We believe access this attractive growth capital is a significant competitive advantage, particularly given the fact that logging in.
These are currently trading at material discounts to their net asset values to the extent we are successful with our non traded preferred capital raise our preference would be to use that capital for future growth. We currently anticipate very little of this capital we raised in the fourth quarter of this year, but believe that fundraising may accelerate as we get into the back half of 2023.
Let me now turn to the operating performance of our hotels.
A lodging industry is clearly recovering with strength revpar for all hotels the portfolio increased approximately 29% for the third quarter versus last year.
This revpar result, equates to a decrease of approximately 4% versus the third quarter of 2019 I am pleased to note that September was the best performing month of the third quarter, along with the best monthly pad versus 2019 during this recovery with Revpar up 4% versus 2019.
Looking ahead to the remainder of 2022 and into 2023, we believe our geographically diverse portfolio consisting of high quality U S assets with best in class brands and management companies is well positioned to capitalize on the strong demand, we're seeing across leisure business and group segments. We also believe that our relationship with our affiliated property manager Remington really sets us apart.
Remington has been able to consistent consistently manage costs and optimize revenues aggressively enabling us to outperform the industry from an operation standpoint for many years.
Additionally, capital recycling remains an important component of our strategy and we continue to pursue some opportunities to sell certain non core assets during the quarter, we sold the Sheraton Ann Arbor, and Michigan for $36 million was.
<unk> was $34 $5 million was in cash and $1 $5 million is due in the future equating to an estimated trailing 12 month cap rate of three 9% in 2019 cap rate of seven 7%. We have another asset currently in the market for sale and have identified several additional assets that we may bring to market for sale if the market.
Conditions warrant, we expect any net proceeds from these sales will go towards paying down debt.
Turning to Investor Relations, we continue to have robust outreach effort to get in front of investors to communicate our strategy and explain what we believe is an attractive investment opportunity at Ashford Trust. We've attended numerous industry and wall Street conferences, which have led to over 400 investor means year to date we.
We have several more conferences coming up in the remainder of the year, including REIT World and Deutsche Bank's lodging and gaming conference and we look forward to speaking with many of you during those events.
We believe with the right plan in place to move forward and maximize value to Ashford Hospitality Trust. This plan includes continuing to grow liquidity across the company optimizing the operating performance of our assets and improving the balance sheet over time and looking for opportunities to invest and grow the portfolio. We have a track record of success. When it comes to property acquisitions joint ventures, and asset sales and we expect they will continue to be part of our.
Our plans moving forward, we ended the third quarter with a substantial amount of cash our balance sheet with the launch of our non traded preferred offering we are excited about the opportunities we see in front of US I will now I will turn the call over to Derek to review, our third quarter financial performance.
Thanks, Rob for the third quarter, we reported a net loss attributable to common stockholders of $25 2 million or <unk> 73 per diluted share.
For the quarter, we reported <unk> per diluted share of <unk> 52, which.
Which represents a growth rate of 373% over the prior year quarter.
Adjusted EBITDA already was $82 $1 million for the quarter, which reflected a growth rate of 75% over the prior year quarter.
At the end of the third quarter, we had $3 8 billion of loans with a blended average interest rate of six 7%.
Our loans were approximately 8% fixed rate and 92% floating rate.
We utilize floating rate debt as we believe it is a better hedge of our operating cash flows. However, we do utilize cash on those floating rate loans to protect the company against significant interest rate increases.
We currently have interest rate caps in place on all of our floating rate debt.
<unk> into account the current level of LIBOR and the corresponding interest rate caps approximately 59% of our debt is now effectively fixed at approximately 41% is effectively floating.
If LIBOR, which is currently at three 8% goes above 4% all of our debt would be effectively fixed as all of our interest rate caps would be in the money.
These caps are typically structured to expire simultaneously with the maturity dates of the underlying loans and the vast majority of these caps will expire during 2023 as we have several loans with initial maturity dates in 2023.
Most of these loans have extension options that include the requirement to purchase additional interest rate caps.
We recently purchased forward starting interest rate caps in anticipation of these extension options.
We have no final debt maturities for the remainder of the year and have only two loans with balances of approximately $98 million with final maturities in 2023.
Some of the Companys loans will be subject to extension tests and with our significant cash balance. We believe we are well prepared to meet any potential loan paydowns required to meet those tests. Our hotel loans are all non recourse and currently 85% of our hotels are in cash traps.
Cash trap means that we are currently unable to utilize property level cash for corporate related purposes, as the properties recover and meet the various debt yield our coverage thresholds, we will be able to utilize that cash really at corporate.
At the end of the third quarter, we had approximately $18 $6 million in these cash traps, which is reflected in restricted cash on our balance sheet.
Ended the quarter with cash and cash equivalents of $505 5 million and restricted cash of $132 1 million.
The vast majority of that restricted cash is comprised of lender and manager held reserve accounts.
At the end of the quarter, we also had $27 $4 million and due from third party hotel managers.
This primarily represents cash held by one of our property managers, which is also available to fund hotel operating costs. We also ended the quarter with net working capital of approximately $602 million as Rob mentioned I think it's also important to point out that this net working capital amount of $602 million equates.
To approximately $17 per share.
This compares to our closing stock price from yesterday of $7 88.
Which is an approximate 54% discount to our net working capital per share.
Our networking capital reflects value over and above the net value of our hotels as such we believe that our current stock price does not reflect the intrinsic value of our high quality hotel portfolio.
As of September 32022, our portfolio consisted of 99 hotels with 22116 rooms, our share count currently stands at approximately $36 2 million fully diluted shares outstanding which is comprised of $34 5 million shares of common stock and $1 7 million op units.
In the third quarter, our weighted average fully diluted share count used to calculate <unk> per share included approximately $1 7 million common shares associated with the exit fee on the strategic strategic financing we completed in January 2021.
Assuming yesterdays closing stock price our equity market cap is approximately $285 million.
While we are currently paying our preferred dividends quarterly we do not anticipate reinstating a common dividend for some time.
Over the past several months, we have taken numerous steps to strengthen our financial position and improve our liquidity and we are pleased with the progress that we've made our cash balance is solid we have an attractive maturity schedule and our non traded preferred security offering is effective with <unk>.
Believe the company is well positioned to benefit from the improving trends we are seeing in the lodging industry. This concludes our financial review and I would now like to turn it over to Chris to discuss our asset management activities for the quarter.
Thank you Derrick we are proud of the work that our asset management team has done to drive operating results during the third quarter comparable revpar for our portfolio increased by 29% during the third quarter relative to the same time period in 2021 for.
For the third quarter, our portfolio recovered 96% of its revpar relative to the comparable 2019 with September being the first month since the pandemic that we have exceeded comparable 2019.
Our asset management team has done a great job capitalizing on the recovery of the industry I would like to spend a few moments highlighting some of the broader trends and successes, we are seeing across our portfolio.
During the third quarter, our portfolio recovered, 98% of our group room revenue relative to the same time period in 2019, and we continue to see acceleration from this segment for comparison, we entered the quarter with definite group room revenue pacing at approximately 90% relative to 2019 throughout the quarter.
Our booked group room revenue for the third quarter exceeded comparable 19 by 38%.
Our long term route momentum shows encouraging signs with group lead volume generated during the third quarter exceeding the previous two quarters. In fact August and September were the best months. This year in terms of lead generation.
We are even seeing instances of group lead volume exceeding 2019 levels and some of our larger central business districts.
We are also seeing continued ADR growth within our portfolio, our third quarter ADR this year exceed comparable 2019, and 2021 by 7% and 15% respectively.
We remain encouraged by the continued resurgence of our urban assets throughout our portfolio during the third quarter, our urban assets grew ADR by 9% compared to 2019.
The asset management team has done a great job in aggressively challenging issue of property managers to drive pricing premiums in markets with outsized demand and in identifying new inventory opportunities through physical room alterations or digital inventory odds.
In addition, I want to highlight how well our asset management team handled the recent storms in the southeast.
Our commitment to keep our hotels opened during these natural disasters provided refuge to locals and accommodations to disaster relief groups.
During the third quarter, our Florida hotels increased hotel EBITDA by 24% compared to the same period in 2019.
Despite the hurricane impact eight of our 10 assets outperformed third quarter total revenue relative to 2019.
I'd also like to quickly highlight that we had a substantial number of property performance records broken during the third quarter in fact over one third of our assets broke their previous third quarter Revpar Records.
Collectively these hotels exceeded comparable 19 revpar by 15%.
Moving on to capital expenditures, we have noted in previous calls how we were proactive prior to the pandemic and renovating our hotels.
For 2022, our Capex spending is higher than the previous two years, but we will still be well below our historical run rate for Capex capex spend during the third quarter was approximately $25 million and we currently anticipate strategically deploying approximately $100 million to $110 million and capital expenditures.
In 2022.
We recently completed the guest room renovation at Marriott Fremont as well as public space renovations at residents in Fairfax Merrifield residents in Salt Lake City, and courtyard Newark Silicon Valley.
We are also currently renovating the meeting space at the Hyatt Regency Coral gables.
As we look ahead to 2023, we are currently expecting total capex spend between 101 hundred $20 million.
Before moving on to Q&A I would like to reiterate how encouraged we are about the recovery of our portfolio in the industry as a whole each quarter of this year has shown improvement with many of our hotels already outpacing their 2019 performance.
During the first quarter of this year or 11% of our hotels exceeded the comparable 2019 hotel EBITDA.
During the second quarter, 25% of our hotels were exceeding their comparable 2019 hotel EBITDA and now for the third quarter, 36% of our hotels have exceeded their 2019 hotel EBITDA.
There are also a number of broader signs of the industry recovery, including TSA throughput data, which has shown an improvement every quarter this year with.
With the portfolio trajectory and travel industry momentum, we believe that our portfolio is well positioned to capitalize on the industry's continued recovery.
That concludes our prepared remarks, and we will now open up the call for Q&A.
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Please by the call for your questions.
Our first questions come from the line of Tyler <unk> with Oppenheimer. Please proceed with your questions.
Good morning, Thanks for taking my questions first one for me on margin and labor costs.
Are you seeing any pressure on margin from higher labor cost what is the hiring situation look like right now where are you on an FTE is now versus pre COVID-19.
Any other areas of cost inflation that are worth calling out besides potentially labor.
Yes. This is Chris I'll take that so great question I mean, we are still seeing.
Seeing labor pressures, we're seeing.
Wages continue to increase.
It's definitely been a challenge I think wages are up over 30% since 2019.
In terms of being able to staff and higher.
It does remain a challenge we're seeing some signs of encouragement. The recent trends are showing the quick hits are down those are those are employees equip within 90 days of being hired.
We haven't gotten to the point, where we've had to turn away demand based on Lai.
Labor needs, but we have more heavily utilized in contract labor where needed that we have in the past and so one of the things. We're encouraged by though is that we.
Pulled forward a lot of the efficiencies that we've found through Covid.
We're actually seeing low double digit improvements in productivity across our portfolio.
Some of the other.
Issues that are that are factoring into margins as you mentioned the cost inflationary pressures the cost of supplies are up we're also seeing utility costs increase and on a pure basis, we're seeing broad utility costs that are up about 25% over 2019, and so those are some of the major issues plan into margin.
The one thing we are encouraged by is in Q3, our EBIT margin improved significantly over third quarter of 2021, and so again, we pull forward a lot of those efficiencies and as we as we move forward through the recovery, we expect to see continued margin improvement.
Asked about kind of FTE count to pre Covid levels right now were between 75% to 80% of pre COVID-19 staffing levels through the third quarter across the portfolio.
Okay, great. Thank you for that and then follow up question on the cash traps.
Percentage of the hotels in cross shops was flat quarter over quarter doesn't really seem to lineup with improvements in fundamentals. So is that really just a function of how those cash drops are calculated and can you help us think about your expectation for what percentage of hotels there'll be a cost drops by the end of the year.
Yes, Hi, this is Eric I'll take that so it varies by alone and depends on the performance of the underlying assets.
Each loan and they're mostly debt yield tasks that are backwards looking on a trailing 12 month basis and you take the NOI over a trailing 12 month basis as a percent of the existing loan balance.
Youre right. So very few hotels came out of <unk>. This quarter, we anticipate that probably a few more will come out at the end of the year, but do not anticipate that a significant amount will come out prior to their extension tests, which will happen in 2023.
The good thing is any cash that's sitting there and the trap is available to fund any potential pay down that's needed for those extension tests. So so thats a positive, but we anticipate that the vast majority of those hotels will continue to be on track over the next 12 months or so yes, I mean, I think the reality that the first quarter.
This year was was obviously soft with the omicron variant and so as we've seen is since those most of these tests on a TTM basis.
There is a little bit of headwinds on that test until we kind of get past that year over year comparison.
Okay, great that makes sense.
Okay. That's all from me thank you.
Thank you our next questions come from the line of Christopher <unk> with Deutsche Bank. Please proceed with your questions.
Hey, guys good morning.
Wanted to ask also on margins.
As to whether Youre seeing any.
Any meaningful difference in kind of the ability to push on select serve versus full serve I know, you're tilting a little bit more towards full serve but.
Given given some of the.
Is it just more difficult to find ways to optimize select serve given that there is.
<unk> please.
<unk> flexible with it.
There is less to be flexible with I think our employees that are at our select service hotels are.
Great it wearing multiple hats, and they're cross trained and so there are some efficiencies that we're able to pull through I think from a from a wage standpoint.
To your question, we are seeing in Q3 that wages grew a little bit higher at our select serve hotels that are full service hotels.
We saw increase of about 5% across full service and that was eight or 9% across select service and so I think.
It speaks to some of the challenges we are experiencing hiring at the select service hotels in kind of that.
Might have a lower.
Hourly hourly starting point.
Depending on the market that they're in.
The positive thing, we're seeing though is that.
We believe wages are starting to level off and so and talking with our brand partners and our management companies I mean, what they're expecting us.
Somewhere around 5% growth too.
To kind of the prior year on a go forward basis and Thats in line with what we saw broadly when you average those two across our portfolio for Q3, we were at about 6%.
Okay.
Chris very helpful and then.
Follow up Rob you mentioned.
Yes.
Valuation metrics on the sale of Ann Arbor Hotel I guess.
And you mentioned you have another one for sale and maybe more down. The road are there are the buyers how are they underwriting or are they purely looking at 2019, and just kind of saying that.
That's the run rate or are they kind of underwriting economic softness next year I know the trailing numbers.
Much lower cap rate than the 2019 cap rate, yes, I mean, as you can imagine Chris it really varies by property and market in the story.
The buyer that we had for this.
The previous one is someone that owns other assets in that market to know that market well. It has a very bullish view of that market probably more so than we did which is why that that transaction made sense.
So I think it really varies I mean, I think youre seeing people that are that are looking at.
Leisure heavy southern warmer markets I think some of them are.
Or potentially pulling back either rate of revpar, a little bit or at least not growing as aggressively as other parts of the country. I do think as you are looking at at assets in markets that are more urban a little bit more northern I do think people are starting to underwrite recut.
Our recoveries in those markets more aggressively.
So I think it really varies by story I think you the smaller assets.
Are ones, where you can bring in some owner operators and they may be bringing in something they think are different operation strategies, but.
But overall as you can imagine things are slowing down we do have an asset in the market its a smaller asset.
But even that has been somewhat impacted by the <unk>.
<unk> in the debt markets and things going sideways. So.
So it's just hard to it's hard to see the transaction market and getting too aggressive until the debt markets at least show some trajectory of recovery, which they arent quite yet.
Okay fair enough, thanks, Rob and one final one I guess for Derek.
I think you mentioned, 59% of that being effectively fix through the swaps is that can that should that change much going forward I mean, how much can you or do you want to move.
<unk> moved down the fixed curve with I guess more swaps, yes, so theyre not swap their caps that kick in depending on where LIBOR goes and I'm not sure if you heard that.
The prepared remarks, but once LIBOR goes above 4% then we would effectively be 100% fixed. We're currently LIBOR is currently at three 8%. So we're almost there and it looks like we're probably headed there. So I would anticipate that we'd be basically at 100% fixed here pretty soon I don't.
Now that will start to trail off as those loans mature and are at least have their initial maturity date, our anticipation is that we would extend those loans.
One is that we have obviously at very attractive spreads on them compared to where spreads are today and so the thinking is that we would need to replace those interest rate cap with new interest rate caps and we exercise those extension options, which is why we've gone ahead and kind of pre purchase.
Several forward starting interest rate caps to be prepared for that but.
I mean, I think the easy way to think about it is if LIBOR is above 4%, we're pretty effectively fixed for a extended period of time.
And if it's less than that then we'd be more floating.
Okay.
Great very helpful. Thanks, guys.
Thank you. Our next question comes from the line of Michael Bellisario with Baird. Please proceed with your questions.
Thanks, Good morning, everyone.
Alright, good morning.
Derek just one follow up on that same topic, what the cost associated.
With buying interest rate caps today are presumably what the costs might.
It might be in six or nine months I would think that would be.
More expensive, where your cap rate might be higher than 4% right.
Yes, so it totally depends on the strike rate.
The term how long it goes out and what the market's expectation is for future rates.
So it just it just depends I will tell you that the forward starting rate caps that we just recently bought we bought on a notional amount of $2 8 billion, which is a pretty significant amount of our floating rate debt and those cost $25 million.
Got it that's helpful and then.
Along the same lines can you maybe just update us where you are seeing mortgage debt price today.
Yes, thankfully, we're not in the market for any refinancings at the moment, it's not a great time to.
Get a hotel loan.
As I've said before typically when you are seeing in short term rates go up we've always seen spreads compress.
And it's kind of ironic because the credit is getting better hotels are.
More profitable and are doing better so from a credit perspective, the credits just getting better but the market's a little dislocated at the moment.
Spreads are still relatively wide effort typical call. It 60% LTV loan you are probably in the 400 to 500 basis points spread range.
And thankfully like I said, we don't have a ton of maturities that we're looking at we've got extension options on on really all of the loans that you see with near term maturities, except for two and 2023.
That had final maturity dates it's only $98 million that we don't believe we'll have any problem refinancing. So thankfully. We're in I was wondering fortunate spot there.
Suspect that once there is some clarity in terms of what the fed's going to do with short term rates.
And the debt markets will will soften a little and be a little bit more attractive, but I think until we have that clarity. It may be a difficult time on the hotel financing front.
Got it. Thank you and then Chris back to you and just one more follow up on the same topic on expenses and maybe ask slightly differently are you seeing any difference in cost pressures between a brand managed and Remington managed hotels.
I wouldn't say that we're seeing any differences I think.
If anything.
So it is very nimble and they are able to adjust very quickly, they're typically quicker to roll out creative solutions and test things and so.
We're not seeing any meaningful differences in terms of.
Broad productivity, our broad wage increases.
<unk> brand and our third party managed hotels, it's really driven more by markets.
Where we're seeing the big variances, but.
I will say there is a benefit to remingtons kind of nimbleness in how quickly they can they can roll out new initiatives or pivots.
Okay. Thanks, and then just last one from me for Rob just on capital allocation, maybe when does it make sense to start putting some of your cash balance to work on the acquisition front or is that really so.
Really depends on the pace of the non traded preferred.
Well I think.
I think as of right now given that we're being I'd say, a little bit cautious in the sense that we want to make sure we understand what's going on with the <unk>.
Financing markets, we do have.
Extension cash and on some of our loans next year that are kind of happens throughout the year and we.
We anticipate that some of those could need some aspect of some pay downs in order to to receive extensions and we obviously begun conversations with lenders as part of all of that and so that can be.
As we sit here now not knowing exactly what's going to happen next year from an operational standpoint, we don't know if the risk to that is is zero or is it something.
And so obviously that's why we are.
Holding amount of cash that we are until we feel confident that we see that kind of what the path forward looks like and have some.
Some agreements in hand on those loans and so the combination of that and yes.
The pace of non traded preferred can also dictate how aggressive we get so I think to the extent that you see us do something on the acquisition side.
Either some.
Some smallish acquisitions.
Or potentially some joint ventures with partners.
We're we're probably the smaller piece of that until we get a little bit more clarity on the debt markets.
That's all for me thank you.
Thanks, Michael.
Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Our next questions come from the line of.
Bryan Maher with B Riley. Please proceed with your questions.
Good morning, Thank you the lineup.
Closing on the caps the $2 8 billion in notional value that you discussed for $25 million.
That being expense through the P&L.
And Thats capitalized so it's not expense through the P&L.
It gets capitalized and assets that we purchased.
And you probably have what sort of mark to market or as you see the value of that would fall through the unrealized gains on <unk>.
<unk> derivatives.
And if it ultimately pays off that would show up in other income or it would just burn out through ultimately a realized loss at some point.
Our P&L.
And with the notional value on that.
Is that assuming offset is sticking with the 4%.
Cap or did you buy that at a higher rate, 5%, 6% et cetera.
So it's a blend between 4% and five 5% so kind of a weighted average strike rate of 475% is basically a way to protect us if short term rates just keep keep going up.
Forward curve right now shows.
LIBOR starting to come down in sort of April may of next year, whether that really happens or not who knows and we just wanted to protect ourselves because in most cases, the caps that were going to have to replace or around a 4% strike.
Okay.
Then lastly kind of on that topic. When you look out to 2023 and you see the debt pieces and sharing that are associated with hotel asset and you think about the cost of extending those who are refinancing those at a new rate or buying caps is that influencing your decision.
Susan on potentially selling some of those hotels, we found it a little bit interesting that.
Certain hotel REIT.
Still having some success transacting not broadly so but definitely assets here or there is that how you are approaching 2023, taking that into consideration yes.
Yes, I mean, I think we're looking at.
We've got a handful of assets that we are contemplating I mean, it's call. It seven to 10 assets that are contemplated to the issue. We had is as you said some of them are crossed and other pools and other loans and so because of the way that our loans are crossed.
To sell some of these assets would require either one the ability to extract them.
But given that current debt yields and other.
You still have missed the recoveries, it's little more difficult to extract the asset and kind of in typical times and so we don't quite have as much flexibility as we wish we had.
To sell off some of these assets.
So the answer is as I think as operations continue to improve and it gets easier to potentially extract those assets and I think it's something we will be.
Looking at more aggressively and hopefully if the debt markets have.
Improved it can make those transactions will be easier as well so it's simply on the table.
Last from me.
Is it still the plan to retire the outstanding balance on the <unk> loan in the first quarter and that would impact to some degree your sizable net working capital balance.
Again, I'd say, Brian I would like to but it's just dependent upon what happens over the next several months I mean, I think as you can imagine given the way the debt markets have moved.
It gives me give it gives us a little less comfort in the ability to.
To do some refinancings and asset sales like we hope so I think it's going to be a little bit of we'll just have to see what happens. The next few weeks next few months and how the recovery happens if things go extremely well and there is some.
Change in trajectory on the debt markets, and then perhaps but I think more likely as we sit here now it may just be a little bit of a waiting game until we get a little more clarity on the debt markets.
Okay. Thank you.
Thanks, Brian .
Thank you there are no further questions at this time I would now like to turn the call back over to management for any closing comments.
Thank you everybody for attending today's call and we look forward to speaking with you next quarter.
Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect. Your lines at this time enjoy the rest of your day.