Q3 2022 Summit Hotel Properties Inc Earnings Call
We continue to benefit from meaningful pricing power throughout the portfolio is average rates increase in every segment of our business over the first quarter and now exceed 2019 levels and all but are negotiated segment.
For the quarter comparable portfolio ADR was 2% higher than the second quarter of 2019.
While resort in small town locations continue to achieve rates well in excess of 2019 levels of 16% and 11% respectively rates in our urban portfolio exceeded 2019 by over 3%, reflecting rapidly improving midweek corporate and group demand.
Weekday pro forma rep par increased 26% from the first quarter and 67% from the same period last year.
<unk> was more than 71% for the quarter with June posting a pandemic era high of nearly 74%.
Our weekend Rev. R. Recapture rates continue to meaningfully exceed 2019 levels and encouragingly Monday through Wednesday nights are seeing the greatest improvements.
And now all exceed 80 per cent recapture compared to below 70% in the first quarter.
Weekday rates increase in every major segment during the quarter and in June weekday rates were within 4% of weekend rates.
The group segments recovery was particularly notable in the second quarter as group room night contribution reached 15% of our total portfolio mix essentially flat to pre pandemic levels and rates were modestly above 2019.
As expected June with our strongest month since the onset of the pandemic, achieving new highs and absolute revpar repertoire recapture an average rates, which were nearly 5% higher than June of 2019.
Pro forma gross operating profit margins also reached a new peak of just under 48%, which represented 125 basis points of margin expansion over June of last year.
Preliminary July nominal Rev. Par is expected to decline modestly from Jim consistent with historical seasonal patterns, but result in a comparable 2019 or recapture right in line with what was achieved in the second quarter.
August tends to be a slightly weaker seasonal month in our portfolio, which is reflected in our current pace that is down compared to our pays for July a month ago. So once again, we expect 2019 recapture rates to hold fairly steady month over month.
However, we are very encouraged by the pace trends in our portfolio in September and October , particularly within the recently acquired new crest image portfolio and our urban properties, which are seeing significant month over month pace increases for both weekdays and weekends.
September Rep harvests pacing, 14% ahead of August and are pro forma portfolio, which positions us to achieve recapture rate to 2019 that are in line or potentially above the highest we experienced in June .
Combined with our healthy recovery in July and expectations for August we expect third quarter recapture and are comparable portfolio to be generally in line with the second quarter.
But it's still very early in our booking window or optimism for the fall is further supported by our October pace, which is 12% ahead of September and has historically been one of the strongest months in our portfolio.
Are strong operating results and the continued progress we've made enhancing our balance sheet have positioned us to reinstate a quarterly common dividend yes.
Yesterday, our board of directors declared a four cents per share quarterly common dividend, which equate to 16 per share on an annualized basis, and roughly a 2% annualized dividend yield.
We've been prudent decides the dividend so that it can be meaningfully increased over time, if the current fundamental recovery in our business continues uninterrupted, but also to be sustainable if we experience a reduction in demand from our baseline expectation.
Prior to the pandemic, we had a strong track record of paying common dividend, which grew over 60% from the time of the IPO. According to a 5% dividend CAGR over that 10 year period.
We've remained active on the transaction front and during the second quarter. We closed on two previously announced transactions and May we closed on the sale of 169, Guestroom Hilton Garden in San Francisco Airport North Hotel.
Previously owned in our joint venture with GIC for $75 million, and we realized a net gain of $25 million in less than three or four years of ownership.
The sale price reflects a trailing 12 months NOI cap rate of approximately 1% as of March 31.
As a reminder, the sale also allowed us to forego a $7 million renovation that was scheduled to begin later this year.
In June we successfully closed on the equity purchase option to acquiring 90% interest in the newly constructed 264, Guestroom AC element to a brand new hotel in downtown Miami is Brooklyn neighborhood at evaluation of $89 million for $337000 per key.
The hotel features Rosa Sky recently named as one of Miami is best rooftop bars, which is generated on average nearly $500000 of revenue in each month since it's open.
Hotels have ramps incredibly quickly since our December of 2021 opening generating year to date Rep are of approximately $170 despite being in the slower summer season in Miami.
For the full year 2022, we anticipate the hotels were generate a combined hotel EBITDA yield on our option price between 8% and 9% effectively in their first 12 months of operation are 31 recently acquired hotels continue performed very well as forecasted EBITDA is trending to finish nearly 10% above 2022 underwriting.
Despite the delayed opening of the canopy New Orleans down.
We remain particularly bullish on the longer term outlook for the new crest image portfolio as we expect to begin to realize the benefits of recently implemented asset and revenue management strategies as early as the second half of this year and continue to believe the concentration of assets and hydro Sunbelt markets are poised to outperform over the next several years.
Our other recent acquisitions continue to vastly exceed expectations as the residents in steamboat the embassy suites, Tucson, and the Doorbrand AC element brick on Miami are collectively pacing more than 40% above are underwritten 2022 hotel EBITDA levels.
Combined for the 31 hotels acquired since June 30th of last year, we expect our blended 2022 EBITDA yield to be approximately 7%.
As a reminder, nearly half of the hotels, we acquired have opened within the past four years, implying there is still considerable upside and many of these assets.
With that I'll turn the call over to our CFO trade concubine.
Thanks, John and good morning, everyone on a pro forma basis, we experience continued redcar growth across our portfolio in the second quarter generating our highest nominal revpar of the pandemic era, and continuing a trend a sequential quarter over quarter improvement.
From the segment perspective stomach forty-two hotel urban portfolio produced a second quarter reservoir of $125 by far the highest quarterly red par for our urban portfolio since the onset of the pandemic.
This surpassed first quarter of 2022 urban red par by approximately $34 or 38%.
Sequential quarter over quarter urban Revpar growth was driven by strength in both occupancy ADR, which increased 22% and 13% respectively.
For our urban hotels with comparable 2019 data second quarter, AVR surpassed 2019 levels by approximately 3%.
Strengthening corporate and group travel were instrumental to improving urban fundamentals in markets, such as New Orleans, Austin, Tampa, Nashville, Charlotte Boston in downtown Chicago.
Most notably urban weekday Rev. R increase sequentially throughout the quarter as each month generated a new pandemic era hot.
This call the dated with gene posting weekday revpar of approximately $125 nearly double that of June 2021, and resulting in an 86% recapture to 2019 urban portfolio weekday results.
Second quarter Revpar for our non urban hotels was $119 an increase of over 13% relative to first quarter of 2022, and a 33% increase to the second quarter of 2021 <unk>.
Strengthen our non urban portfolio was driven heavily by our hotels in airport in suburban locations, while hotels and resorts markets, such as Fort Lauderdale, Tucson, and Phoenix and urged seasonally slower periods.
Despite this seasonality right strength among our resort properties with comparable 2019 results continued to accelerate in relation to 2019 with AVR recapture of 116% in the second quarter versus 108% in the first quarter of this year.
Furthermore, our airport suburban and small town hotels demonstrated exceptional strength was Q2 risks are increasing by 33% over the first quarter to $117.
Booking windows in the quarter continued to expand most notably same day bookings declined from 19% to 15% of total bookings, a new pandemic era levels and relatively aligned with pre pandemic norms. Furthermore, bookings in the week for the week declined by 17% while bookings.
Per stays more than 30 days out increased by nearly 40% during the quarter.
In addition bookings for stays 15 to 30 days out historically the window in which corporate travelers typically book increased by approximately 10% during the second quarter.
From the channel mix perspective, we continue to see strong bookings coming from the less expensive channels as approximately 70% of our stays in the second quarter came from direct bookings in central reservation systems.
Oh Ta contribution declined 90 basis points from the first quarter to comprise approximately 16% of our total bookings as corporate group and business transient demand continued to accelerate.
On a same store basis operating cost per occupied rooms in the second quarter decline compared to the first quarter of 2000 2022, resulting in the second quarter gross operating profit margin of over 49%, which is approximately 100 basis points below the second quarter of 2019.
Despite current labor market dynamics.
Same store hotel EBIT flow through remained strong at 54% compared to the second quarter of last year.
Pro forma hotel EBITDA for the second quarter was $77 million.
94% increase from the second quarter of 2021, which resulted in a 38% margin.
The highest quarterly hotels EBITDA margin during the pandemic era and more than 600 basis points higher than the second quarter of 2021.
Adjusted EBITDA increased to $54.6 million in the second quarter, which was more than double for the year ago.
Adjusted FFL in the second quarter was $32.6 million or 2007 cents a share an increase of $24.2 million from the second quarter of 2021 and $12.5 million from the first quarter of 2022 amid and improving fundamental backdrop.
Include in our adjusted FSL was it higher than normal income tax expense for the second quarter, driven by the $25 million gain from the sale of the Hilton Garden in San Francisco.
When adjusting for the tax related to the gain on sale adjusted FFL was $36 $1 million or 30 per share for the second quarter for the full year, we estimate income tax expense of approximately $3.5 million.
During the second quarter on a consolidated basis, we invested approximately $15 million in our portfolio, bringing our year to date total to approximately $25 million second quarter spend was primarily driven by transformative renovations at our Hilton Garden in Houston Energy Corridor Hyatt.
Placed Orlando Universal Studios in Spring Hill Suites, Nashville Metro Center.
In addition to typical maintenance capital and purchasing for near term renovation projects.
Including the year to date spend we expect to spend $60 million to $80 million on a consolidated basis or $50 million to $70 million on a pro rata basis and total capital expenditures for 2022.
Finally turn into the balance sheet or overall liquidity position remains robust and more and more than $480 million. We continue to maintain ample liquidity to repay all maturing debt through 2024, when considering available extension options from.
From an interest rate risk management perspective, our balance sheet as well positioned including an average pro rata interest rate of 3.8% and nearly 70% of our current outstanding pro rata that fixed after consideration of interest rate swaps.
In addition to address the impending maturity of $200 million a notional swaps. We recently entered into to 100 million dollar interest rate swap agreements that will that will fix one month's a sofa and carry fixed rates of 2.6% and 2.56%.
These new swaps will mature in January 2027 in January 2029.
This extends the average duration of our swap portfolio from less than two years to over four years.
The swaps will become effective in January of 2023, after the $200 million of existing interest rate swaps expire.
The new swap transactions will result in the company and maintaining approximately 70% fixed rate debt.
And the second quarter of 2022, we exited the waivers on certain financial covenants related to our primary corporate credit facility and amended the credit agreements for our 400 million senior revolver revolving credit facility and two senior term loans totaling $425 million.
To extend the available loan term and enhance overall flexibility.
The amendments on the $600 million senior credit facility include additional expects extension options that allow us to extend the maturity date to March 2025 for the $400 million revolving credit facility and to April 2025 for the $200 million term loan facility <unk>.
Pricing remains unchanged for both loans.
Additionally, the company has retained complete capital allocation flexibility regarding future potential acquisitions dispositions capital expenditures and dividends.
Included in our press release last evening, we provided 2022 guidance on certain non operational items, including cash corporate G&A interest expense preferred dividends and capital expenditures, both on a consolidated and pro rata basis.
We expect the midpoint of consolidated cash corporate G&A to be $21.5 billion interest expense, excluding the amortization of deferred financing costs to be $59 million series and the series F preferred dividends to be $15 $9 million series the preferred distributions.
To be $2 $3 million and pro rata capital expenditures to be $60 million with that we will open the call to your questions.
Thank you.
As a reminder to ask a question you will need to press star one one on your telephone please.
Please stand by while we compiled the Q&A roster.
Our first question comes from the line of Neil Malkin with capital one.
Mmm.
Good morning, guys.
<unk> congrats on the the dividend and getting out of waivers and everything so.
That's you know the.
The weight off your shoulders first one.
<unk>.
The <unk>.
Of the.
A business traveler you.
Mentioned that.
Pick up in mid week urban hotel as being indicative of an accelerating.
Corporate environment and treble cadence.
Just so we can understand how the dynamics would work in terms of Adi overall.
Can you talk about what a typical premium.
And ADR that business or corporate.
Business.
With get or would achieve versus a typical leisure guest I think it's important that you know a lot of the luxury peers has business comes back those those people are paying below what the leisure.
But I think for your portfolio, it's actually flipped so can you just.
Quantify that and.
You can talk about how that would help the portfolio in terms of AVR lift as we go.
Through the rest of the year and into 2003.
Yeah sure thanks to kneel on good morning.
I think you've highlighted it correctly I think if you look back historically at our portfolio, particularly pre pandemic.
We've certainly run higher rates and are negotiated channel then we have it and some of our leisure channel that has flipped today and we're we're certainly running a much higher percentage of our room night mix through the retail segment. Then we would on a normalized basis I still think you would you start to see and again you saw a lot of that as you alluded to in the quarter, particularly in the month of June .
As we started to see some of this beauty business come back it's still at rates lower than it was 2019 negotiating scale or only channel where the rates are lower than they were pre pandemic, but we do think that there is an enormous amount of upside is that business starts to come back we do think that the remixing of our business overall is.
Going to be positive from a rate perspective, as we start to see <unk> come back into just better better demand broadly in urban markets.
Okay. Thanks.
And then the other one for me is.
Bigger bigger picture of.
The stock.
Kind of been been in underperformer.
Kind of lagging or the.
The group and having a.
Sort of disparate multiple and so I'm just wondering if you could or hoping you could maybe give a couple.
Points or catalysts that would you think would help.
Bridge that.
That discount.
And kind of get the stock moving in the right direction that you can really turn on the.
The external growth engine. So <unk> is a couple of things you could you could talk about and that would be great.
Sure Neil.
I think the.
The way the stocks traded has been frustrating it's been disappointing I'm sure. It has been for most of our peers as well I don't think the stock today reflects the quality of the portfolio the quality of the platform the nature of the transactions that.
That we've we've been able to complete through the balance of the year and really since the onset of the pandemic.
Some of it I think is attributable to the operating performance just the nature of the portfolio. This is where select service portfolio recovered sooner, but we have less suburban exposure, we have less small town exposure, which was which recovered faster and we just have a higher concentration in urban markets.
We have fewer pure play resort leisure oriented assets, which had been the outperformers year to date, what we do have is a really really high quality urban focused portfolio, which I think positions is very well, where we see kind of the next leg of growth and again, we talked a lot about that and are prepared remarks, where we're seeing better growth mid week.
Better growth in an urban markets, where you think we're really really well positioned again as we continue to see growth in that mixed in particular and specifically as we start to focus more on this business found year over year growth and less on an index relative to 19.
Really proud of the transaction activity that we've completed.
And the pandemic and I don't think that value that has been created and will be created is reflected in the stock price. If you look at the acquisitions and we again, we mentioned this in our prepared remarks or 10% ahead of our underwriting ear one.
And everything that we've acquired about $1 billion worth of assets that we've acquired since the beginning of the pandemic the.
<unk> trade has been a homerun, we're probably $25 million to $30 million and the money on that trade from our option price day, one and it's yielding eight or 9% the San Francisco trade I think was a homerun. We're already ahead of our underwriting and the NCI portfolio and I think most of that upside is yet to be realized a lot of the heavy lifting.
That has been done has been done over the last six months, whether it's getting <unk>.
<unk> sales clusters organized at the right resources in place and we think a lot of his particular as we get into the stronger season and some of these sunbelt market. We think a lot of the upside in that portfolio will be realized in the back half of the year this year and into the next coming years, given the growth profile of those assets, we reinstated our dividend, which we think.
Reflects our conviction of one the cash strong castle, a profile of the business and to the confidence that we have in our business going forward I'm proud of the work that we've done on the balance sheet. So I think the businesses really well positioned on a go forward basis and I think if we continue to do thoughtful transactions and continue to execute on.
Our operating plan ultimately, that's gonna show up and earnings and will be and will be realized in the share price over time.
Yeah that was great uhm. Thank you John Thanks, everyone.
Thank you ma'am.
Thank you.
And our next question comes from the lineup, Chris Rock <unk> with Deutsche Bank.
Hey, good morning, guys. Appreciate all the color on the segments in the markets question is.
Seeing this this nice urban rebound.
Do you think do you think resort markets suburban markets are still.
Kind of winning too or do you think this is just a more of a transfer from strength and resort and small town markets to urban in other words seem traveler just go into a different place were perhaps for business instead of a pleasure.
I think there's a little bit of that Chris, but I think look I think leisure still really strong.
Our resort markets again, we don't have a ton of pure resorts, we do have a number of leisure oriented markets, they're still leading the pack they're still the furthest ahead of 2019, and we have a couple of markets that we're actually down slightly year over year in June , but still way up to 2019 and I think some of that is reflective of what you've seen.
Travelers have other preferences I think over the summer you saw some leisure travel get reallocated to urban markets and we saw the greatest strength in urban markets and markets that have great leisure attraction markets like Austin, New Orleans, Miami, even Tampa, but even if you if you go and look at the performance through.
June .
More and more of his performance is driven by what I would call more BTR and markets at least in our portfolio markets like Charlotte, we were up almost 6% over 19 in a market like shortly 13% in June that's really Beachy, driven Pittsburgh and other market that was up eight or 9% both for the quarter instead.
The month of June we were up in the loop in Chicago over 3% for.
For the quarter in June over 2019 levels. So some of this is just being driven by more beauty. There's no question that I think we've seen some urban shifts out of pure play leisure resort destination to more urban markets, though.
Okay, but thanks, John and then.
You know it was interesting yesterday I think we heard from <unk> that.
They are starting to see more conversions on the select serve side into their brands, which was a little surprising to.
Here.
Are you guys seeing any of that in your market is there any concern that.
New units become a little bit maybe tougher to get done on a timely schedule that you.
Get any pressure from some of these marriott's, new Mary I'd sort served conversion product.
Not particularly a Chris I mean, I think that the brands are clearly going to need to focus on conversion activity look I think the math depends a lot of new development remains incredibly challenging and I think one of the silver linings of the pandemic and some of the uncertainty that exists today in the broader macro economic environment.
It's just it's really hard to pencil new development. So we think we're going to be in for an extended period of time, where there is very low below historical norm supply growth. So certainly understand that that's going to be a push on their side, but generally I think the supply dynamic is very favorable for us going forward.
Okay very good appreciate it thanks so.
Thanks, Chris.
Thank you.
Our next question comes from the line of Austin were Schmidt would Keybanc capital markets.
Hey, good morning, everybody <unk>.
<unk> you mentioned.
The <unk>.
<unk> gains for September and October and I'm, just curious if you have any breakdown or detail between sort of odd.
<unk> versus versus ADR, and then also if you specifically have any of the.
Paige trends for sort of that urban midweek piece of business that you are able to share.
Yeah.
We can follow up with specifics what I, what I would say is that the.
The pace gains are both in right now I can see so we're seeing good traction there I would say we are seeing much more significant growth in the urban portfolio and the pace gains are largely attributable to the urban portfolio, particularly the new address portfolio as we get into in the Sun belt markets Dallas in particular, you're getting out of the peak summer slow season here.
Here, where it's been pretty hot for the for most of the summer in Texas, we get into the fall, we get into a much better convention and citywide activities and some of these markets. So I would say that our paces is definitely skewed higher than some of these markets and again, particularly in the Democrats portfolio.
That's helpful. And then you discuss recent investments are trending ahead of underwriting and I'm curious if you roll up all the new investment activities, you've completed over the last few years kind of taking the stabilized yields on those and then marry that with the legacy assets.
Where do you think.
Stabilized hotel EBITDA could could shakeout, certainly won't won't hold you to a timeframe, but just curious if you have sort of a range in mind.
Yeah, you know, what we said publicly about the acquisition portfolio has been roughly a 7% EBITDA yield in 2022. We are ahead of our underwriting we're about 10% ahead.
Our expectation was that these with all these would all stabilized north of 8% I think frankly, we're probably ahead of expectations.
I think the point that we've continued to reinforce is a lot of the upside, particularly in the new craft portfolio is still would be realized I think that the 2023 and 2024, where we really feel like it's going to take for those to stabilize a number of those properties are brand new a lot of them have never been through a traditional rfp's season again.
Many of them were just now implementing a lot of the asset and revenue management tactics that we think we're gonna drive a lot of value on a go forward basis. So the non new crest portfolio acquisition are way way ahead. When you look at steamboat and you look at Tucson.
In Silverthorn, you look at some of those acquisitions, they're they're far ahead of our initial underwriting, but I do think a lot of upside of the portfolio, particularly in some of these urban markets or to come in the next.
Beginning in the back half of this year, but particularly as we get into next year.
Hey, thanks for the thoughts.
Thanks Austin.
Thank you.
And our next question comes from the line of Michael Bellisario with Bird.
Thanks, Good morning, everyone.
Good morning, John .
Follow up on new crest, there can you maybe digging a little deeper just on all the heavy lifting that you guys have done kind of behind the scenes in the portfolio. During the first six months of your ownership and then I know you mentioned 22, and 23, but like when might we start to see the top line and bottom line start to pick up and learn more about it.
Heavy lifting start to show up in the numbers.
Yeah, I think you you've highlighted something we spent a lotta time working through internally.
Heavy lift to get a deal closed the real work started when we close the deal and so our team and I'm incredibly proud of the work that the team has done has been very very focused particularly on getting some sales clusters organized in markets like Dallas and in Frisco in Oklahoma City.
We're in slow season, and a lot of those markets today, and where I guess I alluded to in on the last question. We're just now getting the right resources in place will go through our first RFP season for for many of these assets I think generally when you look at the quality of the asset. These are the highest quality flexor with assets and they're given markets and.
Just haven't had a chance to ramp up and stabilize and so I think we're very bullish on the dynamics in the market, particularly starting in the fall. So I think we'll start to see some of the benefits in the fall, but we've always felt like stabilization in this portfolio as of 2000 2300 of 2024 event. We're ahead of where we thought we'd be at this time, but I I do think it's going to take.
Some quarters for us to really get fully stabilized in that portfolio.
[noise] got it that's helpful. And then just switching gears just on the transaction front could you maybe talk about what you've seen over the last 90 days in terms of.
Changes in pricing or buyer seller expectations and then if you have any interest in providing seller financing to prospective buyers to get deals across the finish line today.
We haven't seen a lot of trades, Mike I think that that was kind of what we talked about on the last call that the environment that we are in and particularly that we've been in over the last 60 or 90 days hasn't been conducive to transaction operating performance is better.
Outlook all of the hard data that you can point to from an outlet perspective, whether it's pace transient group trends convention trends. They all still are very positive that's clearly offset by being in a higher interest rate environment. The credit markets are tighter than they were in their some recession fears that are clearly looming.
Overhang, particularly in the public markets and so I think generally asset prices have trended lower not meaningfully lower but probably marginally lower probably 5% to 10% lower than we were at the beginning of the year I still think there's a pretty deep buyer pool for assets and I think particularly for the type of asset that we are any.
Any decline in values, probably at the lower end of that range again, just given how much capital is still chasing these type of high quality deals from.
From a seller financing perspective, we look at it we've done it in the past, it's not our preferred method of execution, but if a facilitate the trade and economics makes sense, it's certainly something we would evaluate.
Kind of helpful. Thank you.
And things like.
Thank you and our next question comes from the line of Bill grow with Raymond James.
Hey, good morning desk.
Try I appreciate your comments on the on the emergence I think we're all trying to grapple with stabilized margins and.
Kind of a lag.
Between you know, what we're seeing the occupancy rate recovery and what we're seeing there though.
F P sort of recovery sure are you if you look it up.
Her occupied room or per available room basis.
Two 222, <unk>, two Q19 FTE basis.
Hi, good.
Good morning, I would say look on the cost rises cost.
<unk> room.
And Q2 relative to acute 2022 relatives in Q2, 2019, we're probably up about 3.8%.
From that perspective, a lot of that is driven by the mix of labor are fte's today stand at about 2004, Fte's. If you remember prepaid desert that was probably 35, we don't think that we're going to get back to 35.
As we move forward here, but it's certainly needs to be something higher than 24, and part of what's impacting that that that.
Delta in terms of an increase of cost rock guide real as the contract labor, which frankly is a little bit less productive or we would like it to be and so there continues to be an evolution as we as we kind of navigate this labor market of bringing back additional ftes in offsetting that contract labor, which I think is what will close the remainder of the gap from a from a <unk>.
Perspective.
So it looks like marble what do they look.
Alright.
I'll just jump in and say add one thing and that and I still think we've talked a lot about stabilize margins being 100 200 basis points higher than they were on the same revenue mix pre pandemic I still think we feel good about that number I think where we where we shifted the narrative slightly has been more of that just going to be driven by your mixes skewed higher from a <unk>.
Eight perspective than it is occupancy is Trey alluded to we're we're still running about 70% of our pre pandemic FTE count the reliance on contract Labor is made up for some of that which is more expensive and less productive, but I still feel I think we're still confident in that 100 200 basis points margin expansion longer term.
So we should expect margins to continue to rise next.
But can we can we see margins grow next year.
<unk> slows them as labor staffing levels at a normalized.
Yeah, I think so long as that you're Revpar mixes continued skewed towards right growth.
Yeah.
It just you know.
You have this dislocation that brings opportunities.
Your balance sheet.
Yeah, I think so long as that you're Revpar mixes continued skewed towards right growth.
Ooh Ooh.
Just you know.
Anytime you have this dislocation that brings opportunities and your balance sheet and it may not be in a position to.
Or had any of these right now, but I'm I'm wondering what your thoughts are.
Three.
Gross.
Areas number one whether you received any inquiries from leverage donors who might be.
In trouble or whether you're seeing any sort of.
Opportunities on the on the acquisition side.
Second of all on the <unk> side, which obviously got you pretty good asset done and Brickle and whether there's any thoughts to <unk> resume in that process and then you've talked to think before about broken development deals, which just happen.
To maybe.
Maybe the recovery is too good for them to come up but it seems like there's gotta be some some debt laden developers that are looking for an exit and I'm just wondering what you're seeing out there broadly in those areas.
Yeah, we haven't seen a lot yet bill.
In terms of what I will say your first and your third buckets broken development deals are kind of leopard owners I would say, we're still fairly early in this higher interest rate environment in an environment, where the credit markets are are open, but certainly dislocated and tighter than they were 60 or 90 days ago. So I think if you're going to see.
Opportunities there, we probably haven't seen them, yet, but they potentially will come in again I think we'd always love to be opportunistic around finding a deal that's broken or distressed in a way that we can get a really compelling basis.
We would like to do more in the mess lending program you highlighted something that we're incredibly proud of the deal that we did in brick Hall I think it highlights the value of the program, where you can earn we are 9% on our money all through Covid and then stepped into you know 8% to 9% yield an asset that were well well in the money on so we would obviously love.
To do more of those it is a difficult time to get development to pencil right now and this isn't we've always looked at the mess program is something that we wanted to do for.
For asset that we want to own longer term and.
This is that we were never we never designed this just nearly to be kind of a lender and so the type of assets that we own again I think you are going to see you just less applied for a period of time. So I do think there'll be some opportunities will continue to be very selective.
What we do but for the time being I think we're just in a lower supply growth environment generally.
Thanks for the time this morning.
Thanks.
Thank you and our next question comes from the line of Neil Malkin with capital one.
I think just a quick.
Follow up you know in terms of the leisure demand are you seeing.
Just from the consequences and factors.
The stock market sentiment.
Inflation everywhere, not not just with gas pregnant, but with food everything travel so.
I know like typically when I'm, particularly people reference that high gas prices don't affect demand. It properties. You know that you guys have seen but I think it's a little bit different environment now with 40, plus year highs and inflation. So I'm just wondering given the you know maybe.
Maybe I dunno called lower budget orientation of this of the leisure traveler compared to some of that you know like.
High end resorts.
Are you seeing any impact any changes in the arm or any any issues in terms of swelling.
Swelling drive to demand or you know a pushback on right or potentially booking trans not.
Coming to fruition because of some of those things.
And we really haven't Neil I know, there's a lot of concern out there broadly about the trajectory of consumer health I think where we sit today that consumers still really healthy whether you look at how much savings have been accumulated.
The pandemic if you look at the labor market people have jobs wages are growing inflation admittedly is growing faster but.
The vast majority of people they still have disposable income and it hasn't shown up in any signs of any crack.
Of leisure travel so we're monitoring it very closely again I think that we think that if there is any softness there it's going to be more than offset by strength and beauty, which were seeing come back more rapidly, but the simple answer is we certainly haven't seen anything yet there are no real signs at least in the data that point to it happening in the near term.
Okay. Thank you.
Thank you I am showing no further questions. So with that I'll have to call back over to the President and C. E O John standard for any closing remarks.
Well. Thank you all for joining today, we'll look forward to catching up with you of leisure travel so when I say.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.