Q3 2022 Red Rock Resorts Inc Earnings Call
Good afternoon, and welcome to the Red Rock Resorts' third quarter 2022 conference call.
All participants will be in a listen only mode.
Note. This event is being recorded.
I would now like to turn the conference over to Steven <unk> Executive Vice President Chief Financial Officer, and Treasurer of Red Rock Resorts. Please go ahead.
Thank you operator, and good afternoon, everyone.
Thank you for joining us today on Red Rock Resorts' third quarter 2022 earnings Conference call. Joining me on the call today are Frank and Lorenzo Fertitta, Scott Kreger, and our executive management team I'd like to remind everyone that our call will include forward looking statements or the safe Harbor provisions of the United States Federal Securities laws.
<unk> results may differ from those projected during this call. We will also discuss non-GAAP financial measures for definitions and complete reconciliation of these figures to GAAP. Please refer to the financial tables in our earnings press release form 8-K, and Investor deck, which were filed this afternoon. Prior to the call also please note that this call is being recorded.
Yeah.
The third quarter represented another strong quarter for the company by any measure in terms of same store net revenue, we had our best third quarter in the history of our company and in terms of adjusted EBITDA and adjusted EBITDA margin. This quarter was our second best third quarter ever only surpassed by last year's strong quarter.
On a consolidated basis, excluding great management fees, our third quarter net revenues was 414 point million effectively flat when compared to the prior year's third quarter. Our adjusted EBITDA was $182 million down one 3% from $184 $3 million in the prior year's third quarter.
Our adjusted EBITDA margin was 43, 9% for the quarter, a decrease of six basis points from the prior year's third.
With respect.
Spectrum, our Las Vegas operations, excluding the impact from our clothes properties, our third quarter net revenue was $411 $6 million up 1% from $407.4 million in the prior year's third quarter, our adjusted EBITDA was $199 $9 million down 2.1% from $204 $2 million in the <unk>.
Prior year's third quarter, our adjusted EBITDA margin was 48, 6% a decrease of 16 basis points from the prior year's third quarter. This represents the ninth quarter in a row. The company has delivered same store adjusted EBITDA margin in excess of 45%.
We continue to prioritize free cash flow converting 55% of our adjusted EBITDA to operating free cash flow generating $99 $4 million or <unk> 96 per share. This brings our year to date cumulative free cash flow to $325 $7 million or $3 13 per share with virtually every dollar being reinvested into our Durango.
Project, a return to our stakeholders.
During the quarter remained operational discipline and stayed focused on our core local customers as well as our regional one out of town guests when comparing our results to last quarter visitation remained flat and we continue to see strong spend per visit across our portfolio, allowing the company to enjoy near record profits across our gaming segments.
The trends across our database in the third quarter were similar to those we saw in the second quarter and those trends have remained consistent throughout the beginning of the fourth quarter.
Turning to the non gaming segments, we saw continued growth in food and beverage and hotel as both segments delivered their most profitable third quarter results ever fueled by the strength of our regional and out of town businesses.
With regard to the group sales and catering business segments. The recover of these business lines continues as we saw the third quarter represent the fifth consecutive quarter of double digit year over year growth in this business line.
We continue to see our pipe our lead pipeline grow into 2023.
On the expense side, we've made operationally disciplined and continue to look for ways to become more efficient, while providing best in class wages and benefits to our team members and delivering best in class customer service to our guests.
We recognize the headwinds in the economy and the adverse impact inflation has on both the company and our customers are actions taken over the past 10 quarters and our focused efforts to control the controllable.
[noise] allowed us to continue to generate strong adjusted EBITDA maintain adjusted EBITA margin and returned over $1 billion in capital to our shareholders. Since we reopened in June of 2020.
Moving forward, while we remain vigilant to macroeconomic trends, we will continue to stay disciplined and focused on executing investing in our core strategy, including offering new amenities to our guests such as the highly anticipated November openings of our new high limit slot room and local favorite notices Siam restaurant at our Red rock property as we continue to refresh our amenities across our.
Folio.
Now, let's cover a few balance sheet and capital items.
The company's cash and cash equivalents at the end of the third quarter was $101 $1 million. The total prints amount of debt outstanding at quarter end was $2 $91 billion, resulting in a net debt of $2 eight 1 billion.
As at the end of the third quarter, the company's net debt to EBITDA and interest coverage ratios were three eight times and six eight times, respectively give you a low leverage low cost of capital and no shirt or no short term debt maturities, our strong balance sheet allows us to focus on executing on both our longer term growth opportunities and returning capital to our stakeholders as we move forward.
Also during the third quarter, we made distributions of approximately $71 $3 million to the LLC unitholders of station Holdco, which included a distribution of approximately $41 million to Red rock resorts.
The company used the distribution to make its third quarter estimated tax payment pay its previously declared dividend of <unk> 25 per class a common share as well as partially fund the purchase of approximately 496000 class eight shares at an average price of $38 33 per share under its previously disclosed $600 million share repurchase program.
Under the current share repurchase program, we have approximately $313 million of availability for future share repurchases.
The third quarter purchases, bringing the total number of shares purchased under the program and through our 2021 tender to approximately $14 2 million class a shares at an average price of $45 29 per share, reducing our share count at quarter end to approximately $103 9 million shares.
Combined with our third quarter dividend, we returned approximately $46 million to our shareholders during the third quarter and over $223 million year to date.
Capital spend in the third quarter was $97 $2 million, which.
Which includes approximately $72 $8 million in investment capital inclusive of our Durango project as well as $24 $4 million in maintenance capital.
For the full year 2022, we now expect to spend between $65 million and $80 million of maintenance capital and an additional $275 million to $325 million in growth capital inclusive of our Durango project.
Now lets provide an update on our development pipeline.
Starting with our Durango project as we have mentioned before we are extremely excited about this project, which is situated on 71 acre site ideally located off the $22 15 Expressway in Durango drive in the southwest Las Vegas Valley.
The project is located within the fastest growing area of the Las Vegas Valley with very favorable demographic profile and no unrestricted gaming competitors within a five mile radius.
The project is progressing nicely as we topped out in early October expect has the structure fully enclosed by the end of February .
The project continues to remain on schedule with an anticipated opening in the fall of 2023.
As mentioned on our prior earnings call, we expect to spend approximately $750 million, which includes all design cost construction hard and soft costs preopening expenses and any financing costs associated with the project and are currently operating under a guaranteed maximum price contract, which represents approximately 70% of the total project cost.
As the project stands now approximately 82% of the project, including the purchase of long lead if any has been secured.
We will continue to execute on our early procurement strategy in a matter of which seeks to minimize supply chain inflation related issues.
As stated on our previous calls the company expects the return profile for this project to be consistent with the past Greenfield projects.
Within our portfolio.
Turning now to North Fork as we noted last quarter after favorably resolving all of its other litigation. The trial. There is only one pending case in the California courts. As we also noted last quarter, we do not believe that any decision by a California State Court could deprive north Fork if its ability to game on its federal Trust land.
We continue to work with the tried to progress our efforts with respect to this very attractive project, including working towards the approval of the management agreement continue to work with Don development of design and having preliminary talks with our prospective lending partners. We will continue to provide updates on our quarterly earnings calls.
And in September we announced the permanent closure of our wild Wild West property.
<unk> is scheduled to be demolished and the land will be repositioned for future development.
With the closure of wild Wild West along with the eventual purchase of a 67 acre gaming site at low C and the $2 15 Expressway, our land holdings around the Las Vegas Valley will amount to almost 630 acres. The strategic holdings will serve as a foundation for the future growth of the company and represent a continuation of our 46 year history of growth through development of <unk>.
Gaming sites located in attractive high growth areas with superior ingress and egress, along the major belt waves in the Las Vegas Valley.
We are currently working through the planning entitlement and zoning processes for several of these holdings, including our <unk> brought it in Skye Canyon parcels, while concurrently looking to divest certain land parcels as we continue to reposition our real estate portfolio for the next chapter of growth at station casinos.
Lastly on October 27, 2022, the company announced that its board of directors had declared a cash dividend of 25 cents per class a common share payable for the fourth quarter of 2022.
The dividend will be payable on December 30th to all shareholders of record as of the close of business on December 15th.
With our current best in class assets and locations coupled with our development pipeline was seven one development sites located in the most desirable locations in the Las Vegas Valley.
Parallel growth story that will allow us to double the size of our portfolio position us to capitalize on the favorable debit long term demographic trends and high barriers to entry that characterize the Las Vegas locals market.
While the quarter presented a return to normal seasonality significant economic uncertainty and record inflation.
Disciplined approach to running our business, coupled with our unparalleled distribution and scale, resulting in near record high EBITDA and EBITDA margin, even as we continue to execute on our long term growth strategy and continued to return capital to our shareholders.
As we do every quarter, we would like to recognize and extend our thanks to all of our team members for their hard work, we understand and appreciate that the guest experience starts with them and they are the ones who make our property so special and bring our guests back time after time.
We'd also like to thank them again for voting us the top casino employer in the Las Vegas Valley for the second year in a row and making us the employer of choice in the Las Vegas Valley.
Finally, a special thanks goes out to all of our guests for their loyal support over the past 46 years.
Operator. This concludes our prepared remarks for today and we are now ready to take questions from participants on the call.
We will now begin the question and answer session.
To ask a question you May press Star then one on a touchtone phone.
If you are using speakerphone, please pick up your handset.
Yes.
Is it any time your question has been addressed and he would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Okay.
The first question comes from Joe Greff with JP Morgan. Please go ahead.
Hi, everyone.
Like to ask a question about the margin performance in the three Q here.
They were better than we and consensus.
Consensus.
At all expected sequentially flat.
Unlike our competitor quarter over quarter.
Can you talk about what youre seeing on expense creep on cost inflation overall, maybe what youre doing.
Differently.
Now versus before on the expense side that might be incremental in mitigating some of that and then as a part two related to this topic Steve.
Fourth quarter would you expect to experience.
Sequential revenue and margin performance similar to history, where revenues were up sequentially and margins were up a couple of hundred basis points sequentially fourth quarter versus <unk>.
Yeah, I don't think we want to have a crystal ball and to or want to project into Q4, but you are right. His.
Historically Q3 has been the company's weakest quarter and typically Q4 is one of our two best quarters between Q4 and Q1. So I mean, we don't see anything that would suggest that that would be any different than it's been historically.
And then last Q3, where we had a bunch of stimulus money and the economy there.
Maybe things are a little bit harder to read.
Yes, Joe this is Scott or maybe I can add a little bit more color.
First of all the management team continues to be operationally disciplined and we focus on margin every single day.
And I think the results of the consecutive quarters of performance kind of show that but when we talk about the influences of.
Margin and inflationary pressures.
Probably three areas that we can touch on labor cost of sales.
And reinvestment so from a labor perspective, our wage rates are competitive with best in class competitors in the valley.
And we are seeing some wage inflation.
But that wage inflation is offset by active management of workforce labor.
And so net net we've been able to mitigate.
Any of the labor wage inflation, and we seem to see that cloud totally over the last couple of months.
Secondarily, we are seeing some cost of sales inflation.
Inflation.
In predominantly the food and beverage areas. So we are seeing a cost per color growing up in the teens, but at the same time through dynamic pricing and menu engineering, we have been able to offset that with a 25% increase in revenue per cover and there's that brings its way down through the department are.
Total food and beverage revenues are up 8% and we had record profitability in that business segment.
And then lastly from a reinvestment and promotion Harry.
The basis, we continue to see rationality and stability in the promotion dairy market and we're enjoying being able to reinvest in our products.
Our team members and to bring new new amenities to our guests.
So all in all and all of these measures we've been able to control.
These pressures and still produce margins that are top of the class.
Thank you guys and Steve corporate expense was a little bit higher.
Just a good run rate for you guys to be in the near term.
Yes, I think it is Joe as you know last quarter, we articulated a growth strategy for the future and so what we did this year is we did have slight reallocation of recalibration of corporate expenses, because we wanted to really allow the investors to see and from our management team to manage the <unk>.
True property allocation.
<unk> corporate this designated to growth in other enterprise wide initiatives. So yes, what youre seeing right now is a good corporate run rate.
Thank you guys.
The next question comes from Carlo Santarelli with Deutsche Bank. Please go ahead.
Oh, Hey, everybody good afternoon.
Steve to the extent you guys could talk about it a little bit right.
As far as the development right now is going on obviously you guys have nicely out of the ground.
Going through kind of a harder construction.
When you look out to kind of that fall 'twenty three opening in between here and now what are some of the areas, where perhaps there's a little bit more uncertainty around the construction schedule and timeline.
And that you know rebating kind of.
Cost bridge to get there.
What does that look like just in terms of the schedule of cash flows.
Yeah. The scheduled cash flows the way we're looking at it right now to date, we spent about $124 million as of 930 out the door. So to $750 million project you figure, there's probably about $75 million of retainers that will extend into 2024 and the remainder will be spread out probably the most likely in the first half of 2023.
So again, the majority of that construction well on the way of construction as I mentioned, we topped out in October we expect to be fully and close by February we're going to have the plant.
The building powered up by March so in terms of hiccups in the schedule. We're on schedule and we're working hard it's a day to day fight to keep this on schedule on budget, but from a cash flow perspective, Q1, Q2, most likely youre going to be the biggest outflows of capital from a construction standpoint.
Great credit to Steve and then if I could just a follow up.
Obviously, you talked about two of them or two of the drivers that are one of the drivers I should say, that's a little bit less obvious as to how it impacts the businesses that are in place.
Thank you guys.
You know cycles before and it's probably a long time since we've seen in places like this but when you think about what youre seeing in the housing market today.
How sticky the customer remains relative to kind of the inflationary environment.
That could have what's what's a bit sooner would you say your.
Your line is a little bit more concerning for the outlook at this point.
Okay.
Well I think we've been we've been living through inflation.
Inflation for the.
The last several quarters.
The performance has been fairly consistent even given those headwinds with inflation.
So we.
We don't see anything at this point in time that would.
Have us change our outlook that we've had on the company.
Great. Thank you Mark.
Mhm.
The next question comes from Shaun Kelly with Bank of America. Please go ahead.
Yeah.
Thanks for taking my question.
Maybe just wanted to go back to the the broader call out on.
Wage inflation I think that's the key topic that we're all keeping an eye on I believe the comment was that things are actually you asked.
Are you starting to see things plateau, a little bit maybe if you could just give a little bit broader background on whats going on in the Las Vegas Valley right now on the hospitality side that'd be helpful.
Yeah. So just to follow along with that we do see pockets of spin.
Specific job classifications, where we have to adjust rates on time.
Time to time basis, but overall, we are very competitive we think we offer a best in class package benefits and wage to our employees and I think the important thing to note is we're able to staff all of our business verticals.
At 100%, so we don't see any impact to our ability to operate.
At the same time.
We don't have a crystal ball, but we're hoping that we've seen the most of the wage increase at this point.
Thank you very much that and then.
A follow up just thinking out to the development side a little bit.
Talked about the site purchase that you made and obviously, there's a few different I think portfolio moves that are happening here could you I mean, I know you've probably got enough Gary long term plan behind that but can you just talk a little bit about the acreage purchased and kind of how youre thinking about it.
Yes, I think from a purchasing standpoint, there are two predominant purchases that I can highlight.
First.
Is located or low <unk> in the $2 15 in north Las Vegas. So that is one of the fastest growing areas of the Las Vegas Valley, There's a UNLV campus going in over there and a large medical campus.
And it fits our thesis of being right on the beltway and in a high development area. So we look at that as probably farther down the development cycle than some of our others.
But we're really excited to be able to close on that property in the next month.
And then secondarily.
We purchased a large piece of property on the south side of Cactus, which sits between the <unk> and Las Vegas Boulevard, we already own a parcel on the other side of the street.
When this parcel came available we looked at the key tenants of success for our development of bridges, ingress and egress and the ability to have optionality of master planning based on the acreage.
So we're super excited to be able to move across the street and acquire that piece of land. When we look at the demographic profile of that area. It's very similar.
In structure to the Durango project, so while it has a bit more competition in the Durango project does it's still really exciting piece of land and we have closed on that.
And then we have about 100, and we had 180 plus acres of real estate that we're currently actively marketing.
Yeah.
Thank you very much.
Yeah.
The next question comes from Stephen Grambling with Morgan Stanley . Please go ahead.
Hey, Thanks for taking the questions following up on Carlos comment on the macro realizing youre not seeing anything concerning yes. If you did see any kind of decline in demand what levers do you have given the labor cuts made already and how might your approach to buyback and perhaps tolerance for leverage change.
Of that I wouldn't classify them as the labor cuts I mean, I think we've just done a good job as Scott explained Lorenzo.
Andre.
Nutrition, and making sure that we're scheduling labor according to demand.
Beyond that.
Think as you see that we are generating very high margins relative to historical numbers.
If you did start to see a degradation.
And revenue, obviously, we would have.
The ability to.
Sure.
And various other lever levers that we can.
Uh huh.
To maintain margin at higher than historical level. So.
We're hoping that that doesn't happen and like we said I mean, what we're seeing right now is fairly consistent with what we've seen in the last couple of quarters or so.
But we manage this literally on a daily basis right.
It's even it goes without saying this is the same operating team that managed for the 79 day shutdown with zero revenue.
So these guys, they're very comfortable manage both on the downturn and also the ability to capture the upside.
And from a leverage perspective, we have a $1 billion revolver. We have ample liquidity, we are prepared to weather a storm if one was to come.
It makes sense and maybe an unrelated follow up can you just remind us.
Maybe how the management agreement for North Fork is either structure to how to frame the potential contribution from that asset once up and running compared to some of the other management contracts you've had in the past.
Well I think it's still being developed and worked on so that is going to be consistent with.
Okay.
You agree a seven year contract, but we're still.
Beginning with our National Indian Gaming Commission going through the management agreement and what the final outcome will be.
From a projection standpoint think of it more of a gun lake than a great.
Okay.
Helpful. Thanks, so much.
The next question comes from Jordan Bender with <unk>.
Securities. Please go ahead.
Great. Thanks for taking my question in the current operating environment can you comment on your <unk>.
Your share repurchase outlook in the face of pretty elevated capex over the next four quarters.
Okay, guys I think it all starts at the balance sheet as I mentioned, Steve and we're very comfortable liquidity position.
We have.
Solid balance sheet very low cost of capital no short term maturities are very flexible credit agreement. So I think the position the board and management team is taking a balanced approach and we feel that we can accomplish both our long term growth objectives, which Durango is the one staring us right in the face as well as Opportunistically and systematically return cash.
Total to shareholders.
Great and then just my follow up.
Yes.
Okay.
Go ahead I'm sorry.
Yes, yes, sorry, just on my follow up you mentioned last call that.
You wanted to get Durango up and running before you started your next Newbuild project is there a scenario where the supply demand becomes attractive enough for you guys to start building on one of your parcel before Durango is finished next year.
No we want we want to be very disciplined in what we do and we are working on programming, we're working on entitlements and order it would be in a position to be ready to go on future projects, but until we get Durango up.
Operating and hitting stride, we're going to be patient and make sure Durango was working before we moved forward with the <unk> project.
Great. Thank you.
The next question comes from Steve Fleishman with Stifel. Please go ahead.
Hey, guys good afternoon.
So I wanted to ask you about the older demographic and maybe what you guys saw there during the quarter in terms of visitation and spend patterns.
From that demographic.
If there were any material changes to what you've witnessed over the let's say the last six months or so and then maybe how youre thinking about that demographic moving forward given the higher rate environment.
Yeah, Steve basically in a nutshell when you talk about 55, plus there is two factors one.
We look at that segment of our business is stable at this point and we've also kind of looked at that part of our business over the past quarters as having essentially fully return.
And so when we look into the future we see a lot of dynamic growth in the 55% and 65 plus ranks in the valley.
From an incoming resident growth, where there are about four five times.
The growth profile in the next five years as the under 55 and then our own database, we're seeing about twice the spend per visit.
And we're also anticipating over the next five years about a 16% increase in their household income. So we continue to have that as our core customer base and we continue to market to them and we're seeing stability in regard to their visitation and spending.
Okay. Thanks for that Scott and then.
Second question I'm, not sure, Steve if youll comment or not Kevin on this but can you give us an indication as to how October has trended so far relative to September I guess I'm just trying to gauge if there had been any.
No material deviations.
I suspect that answer is probably going to be now.
Yes, I think we said what we wanted to say in our prepared remarks, we don't see anything thats changed or out changed.
For the business.
Okay got you thanks, guys appreciate it.
Okay.
The next question comes from Barry Jonas with <unk> Securities. Please go ahead.
Great. Thanks can you guess.
More color on how the sales process is progressing in the current environment for the close properties as well as the other land that youre marketing. Thanks.
Yes so.
What I would classify as active so as Frank mentioned, we have about.
86 acres that are currently being marketed.
And all of those properties have interested buyers that were in discussion with at this time.
Got it and any update on the closed properties still still seeing healthy interest there.
Yes.
The hardest part of the 186, Oh I got you. Okay, and then just as a follow up question I don't think you've talked too much about your downtown Fremont project, but curious if you could talk about the strategy there and if we could see more smaller projects coming down down the road.
Scott maybe you can talk a little bit about that we do have a small property.
Okay.
Yes, we have our core six.
Large properties and they have a unique age.
Mo to them.
And then as we look diversifying different products across the brand as you go from large properties to kind of smaller regional market and then even down into the micro markets you start to see a differ customer profile and age and behavior and so the wildfire brand for us which.
We've had for a while is something that we're focusing on and growing.
<unk> existing assets in the form of capital improvements and then the wildfire Fremont property, which would be the newest flagship of that brand category.
We opened at the end of the year here.
Right before Super Bowl, sorry, right before Super Bowl.
And we're excited to continue to invest into this brand because it's got a bit of a younger demo while it still has really good crossover with our core properties allows us to penetrate into smaller submarkets in Nevada.
Yes.
Great. Thank you for all the color.
Okay.
The next question comes from Chad Beynon with Macquarie. Please go ahead.
Afternoon, Thanks for taking my question.
With the convention business and tourism coming back on the strip.
At a pretty high clip are you seeing anything in your spillover properties I guess, namely Palace station, that's benefiting I know you talked about.
F&B and in hotel growth continuing in the quarter, but wondering if youre starting to see a positive benefit from any compression nights on the strip.
Yes, we are seeing.
Very favorable growth in hotel bolt on the ADR side on the power side were up in the mid teens in both of those categories and then as we continue to.
See reoccurring.
Over quarter growth in catering.
We are looking at.
Probably in somewhere in the order of 40% increase.
That segment of the business and then as we look forward into our forward bookings were about to surpass the pace that we were at pre COVID-19 levels as far as sales in group business.
Thank you.
And then on sports betting the September numbers came out in Nevada today.
Very strong from a handle from a hold standpoint.
We've been seeing strong hold mainly because of single game parlay on the mobile side, but this was probably a little higher than what we expected.
Nevada are there things you were able to do to kind of help that hold rate or maybe even.
We offer some of the single game parlays that people like around the.
The country offer it in more of a retail fashion. Thank you.
Well I think it starts with the fact that we book our own business and we are really skilled group of guys that do our bookmaking.
We have a lot of confidence in what they do.
We're always trying to provide as many different ways to wager on sports and.
If we feel that there is a need in the market for a new vehicle, we would work on that and a lot of that has to do with it being able to be programmed into our mobile application, which we are seeing a lot of conversion on.
Great I appreciate it thanks.
Your next question comes from Cassandra Lee with Jefferies. Please go ahead.
Hi, Good afternoon. Thank you for taking my question.
You mentioned the Empire calls.
Potential to double your portfolio by 2030.
And then once you get your thoughts on some of the factors that may delay or accelerate that timeline. For example, what kind of performance do you have to see from Durango.
Do you feel comfortable moving into the next phase.
Look I mean gen.
Generally that's kind of what the plan is obviously, we've got some great pieces of property that is.
As Frank mentioned, we're working on entitlements, we are working on the master plans.
And the idea is to get Durango up and running and get it stabilized generating an acceptable return or target return that we have been able to achieve on historically on our portfolio and then from there it's going to be dependent upon.
How strong the overall macroeconomic market is.
And.
But those are different micro markets look like so I mean right now we're very bullish on our ability to develop those properties and I guess lack of better word for long term.
To roll it out you may have some ebbs and flows here and there, but I think we feel very strongly that the long term secular trends of the law.
Vegas Valley or continue which is projected to have very strong.
Yeah.
Population, but the mix of population is growing here moving here.
It tends to be at higher income levels.
And particularly in the areas, where we actually own.
These undeveloped pieces of property.
Many of which are in the highest growing areas with the highest income.
Areas of the Las Vegas Valley, So, yes, the intention.
<unk> to develop and roll these properties out.
And as.
As Frank said, though we're going to take.
We're going to take a.
And approach that.
How's us to get each development up and running and stabilized before we start the next one.
Great. Thank you and if I may follow up there's been some expansion plan announced recently and.
Southern area.
How may that.
Did that impact your plant investment there.
I don't think it affects our planned investment or timing I think it's actually probably a good sign I think you're referring to the M resort, who announced hotel expansion and I think maybe there they may be expanding food and beverage outlet and some convention banquet space to us that that's a great positive, which it means that they are very bullish on their busy.
And the trends that Youre seeing are very positive in their ability to drive rate and occupancy out in that part of town I think bodes very well for the for the positioning that we have out it gets broader and on the cactus II piece of property. So so we think thats a positive.
Great. Thank you very much.
Thank you.
Okay.
This concludes our question and answer session I would like to turn the conference back over to Stephen Cooney for any closing remarks.
Well. Thank you everyone for joining the call when we look forward to talking to you next quarter. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Okay.
Thank you.
[music].
Okay.