Q4 2022 Ashford Hospitality Trust Inc Earnings Call
Greetings and welcome to the Ashford Hospitality Trust fourth quarter 2022 results conference call.
But at this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
My pleasure to introduce your host Jordan Jennings Investor Relations. Thank you Jordan you may begin.
Good day, everyone and welcome to today's conference call to review the results for Ashford Hospitality Trust for the fourth quarter and full year 2022 and to update you on recent developments.
The call today will be raw case, president and Chief Executive Officer.
Gareth Eubanks, Chief Financial Officer, and Chris Nexsan, Executive Vice President and head of asset management, the results as well as notice of the sensibility.
This call on a listen only basis over the Internet were distributed yesterday afternoon in a press release.
At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward looking information are being made pursuant to the safe Harbor provisions of the federal Securities regulation.
Forward looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual 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 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 February 21st 2023, and May also be accessed through the company's website at www Dot H two brief dotcom.
Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in that release.
Also unless otherwise stated all reported results discussed in this call compare the fourth quarter and full year ended December 31, 2022, but the fourth quarter and full year ended December 31 2021.
I will now turn the call over to Rob Hey, Please go ahead Sir.
Good morning, welcome to our call.
After my introductory comments, Eric will review, our fourth quarter and full year financial results and Chris will provide an operational update on our portfolio.
The main themes of our call today are first we saw ongoing revpar improvement in the fourth quarter versus 2019, and expect continued strength through the first quarter of 2023.
Second our liquidity and cash position continued to be strong we ended the quarter with approximately $519 million of net working capital, which equates to approximately $14 per diluted share.
With Yesterdays closing stock price of $5 69.
We believe we are trading at a meaningful discount to both our net asset value per share and our net working capital per share.
Additionally to the extent there is a hiccup in the economy, we have the flexibility to add.
Excess undrawn capital if needed via our strategic financing.
Well I mean theme for our call is that we 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 clearly grow our portfolio over time subject to future market conditions.
We believe access to this growth capital is a significant competitive advantage, particularly given the fact that lodging Reits 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, but we may also use some of that capital to pay down debt as needed we.
We continue to build the syndicate for this product and currently have 22 signed either agreements representing 4349 representatives selling this product.
We're still very early in the capital raising process and to date, we have issued approximately $4 million of gross proceeds.
We expect this fundraising momentum to accelerate as we get further into 2023.
Let me now turn to the operating performance at our hotels lodging industry continues to show signs of strength Revpar for all hotels, our portfolio increased approximately 25% for the fourth quarter compared to the prior year quarter. This Revpar result, equates to a decrease of approximately 1% compared to the fourth quarter of 2019.
Which is the best performing quarter versus 2019 in several years.
One of our main priorities for 2023 is maximizing our operating performance to minimize potential paydowns for any extension tests associated with our property level debt. We've already made great progress on this front with our recent refinancing of the loan secured by the lip Pantheon hotel.
The extension and modification of a loan secured by the hotel Indigo Atlanta, and the extension and modification of the J P. Morgan Chase eight hotel loan.
I'll talk about these in more detail.
While we feel well prepared for the remaining upcoming extension tests, there may be situations, where we have loan balances that exceeds the current market value of the underlying hotels. If those situations arise we may give back assets to lenders or allocate capital with a focus to maximize value for our shareholders.
Looking ahead, we believe our geographically diverse portfolio consisting of high quality 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 and really sets us apart Remington has been able to consistently manage costs and optimize revenues aggressively enabling us to outperform the industry from 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. We have identified several assets that we may bring to market for sale Mark 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 a robust outreach effort to get in front of investors communicate our strategy and explain what we believed to be an attractive investment opportunity National Trust. We have attended numerous industry and wall Street conferences, which have led to over 600 investor meetings over the past year we.
We had several conferences coming up this year and we look forward to speaking with many of you during those events.
We believe we have the right plan in place to move forward and maximize value at Ashford Trust. This plan includes continued to grow liquidity across the company optimize the operating performance of our assets 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 and joint ventures and asset sales. We expect they will continue to be a part of our plans moving forward. We ended the fourth quarter was a substantial amount of cash our balance sheet and with the launch of our non traded preferred stock offering. We are excited about the opportunities we see in front of US I'll now turn the call over to Derek to review fourth quarter financial performance.
Thanks, Rob for the fourth quarter, we reported a net loss attributable to common stockholders of $62 million or $1 75 per diluted share for the full year, we reported a net loss attributable to common stockholders of $153 $2 million or $4 46 per diluted share.
For the quarter, we reported <unk> per diluted share of <unk> 16.
Compared to a loss of nine cents per diluted share in the prior year quarter.
And for the full year, we reported <unk> per diluted share of $1 85.
Compared to a loss of $1 23 per diluted share in the prior year.
Adjusted EBITDA for the quarter was $69 1 million, which reflected a growth rate of 70% over the prior year quarter adjusted EBITDA for the full year was $287 $3 million, which reflected a growth rate of 153% over the prior year.
At the end of the fourth quarter, we had $3 8 billion of loans with a blended average interest rate of seven 2% taking into account in the money interest rate caps.
Considering the current levels of LIBOR and sofa and the corresponding interest rate caps are 100% of our debt is now effectively fixed as all of our interest rate caps are in the money.
These caps are typically structured to expire simultaneously with the maturity dates of the underlying loans in many 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 cap at the time of the extension.
In anticipation of these extensions last year, we purchased forward starting interest rate caps as a hedge against these future purchases if interest rates remain elevated the value of these pre purchased caps should help defray the cost of any new caps, we need to purchase on.
On the capital markets front during the quarter, we successfully refinanced the mortgage loan secured by the 226 room <unk> Hotel in New Orleans, Louisiana, which are an extension test in January 2023.
The new nonrecourse loan totaled $37 million the same loan amount as the previous loan and as a two year initial term with three one year extension options subject to the satisfaction of certain conditions. The loan is interest only and provides for a floating interest rate of silver plus 4%.
Additionally, during the quarter, we modified and extended the mortgage loan secured by the 141 room Hotel Indigo Atlanta in Atlanta, Georgia, which had an extension test in December 2022, as part of this extension, we made a small paydown alone and the interest rate was changed from LIBOR, plus two 5% to sulfur plus too.
5%. Additionally.
Additionally, subsequent to the end of the quarter, we successfully modified and extended our $395 million J P. Morgan Chase eight hotel loan as part of this extension, we made a $50 million principal paydown and reduced the 2024 debt yield extension test from $9 two 5% to.
Eight 5%, giving us significantly more flexibility for the next extension.
We only have two loans with a combined balance of approximately $98 million with final maturities. In 2023. We are currently working with lenders on these refinancings.
We have additional loans that are subject to extension tests this year and with our significant cash balance and continued improvement in hotel operations. We believe we are well prepared to meet any potential loan paydowns required to meet those tests are property level hotel loans are all nonrecourse to the company and currently 79%.
Of our hotels are in cash traps, which is down from 85% last quarter cash.
Cash trap means that we are currently unable to utilize property level cash for corporate related purposes importantly, during the quarter, the Marriott Gateway and Keith Poole D portfolio loans came out of their respective cash traps and approximately $9 million of cash that had been trapped was released to corporate after quarter end.
As the remaining properties recover and meet the various debt yield our coverage thresholds any trapped cash will be released to us and we will be able to utilize that cash freely at corporate.
At the end of the fourth quarter, we had approximately $34 million in these cash traps, which is reflected in restricted cash on our balance sheet.
We ended the quarter with cash and cash equivalents of $417 million and restricted cash of $142 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 $22 million 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 $519 million.
As Rob mentioned I think it is important to point out that this net working capital amount of $519 million equates to approximately $14 per share. This compares to our closing stock price from yesterday at $5 69.
Which is approximately 60% discount to our net working capital per share.
Our net working 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.
Rob mentioned that we have commenced the offering for our non traded preferred stock. We are offering this product through the Ashford securities' platform and have been pleased with the progress that's been made in building the syndicate of selling broker dealers. We currently have 22 signed dealer agreements representing 4349 reps that are currently.
Selling this product to their clients, we expect the momentum of this capital raise to ramp up as we progress through 2023.
This is attractive capital for us it can be used for acquisitions debt pay downs or other corporate purposes, and we look forward to reporting back on our progress.
As of December 31, 2022, our consolidated portfolio consisted of 100 hotels with 22316 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 seven.
Oh P units.
In the fourth 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 financing we completed in January 2021.
Assuming yesterdays closing stock price our equity market cap is approximately $206 million.
While we are currently paying our preferred dividends quarterly we do not anticipate reinstating our common dividend for some time.
For the past several months, we've 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 we have an attractive maturity schedule. Our non traded preferred security offering is effective and we believe the company is well positioned to benefit from the improving trends we are seeing in the lodging industry.
This concludes our financial review I would now like to turn it over to Chris to discuss our asset management activities for the quarter.
Thank you Derrick I am proud of the work that our asset management team accomplished during the fourth quarter to drive operating results and closeout, our remarkable year for performance at our hotels.
Comparable revpar for our portfolio increased by 25% in the fourth quarter compared to the prior prior year quarter.
For the quarter, our portfolio recovered, 99% of its revpar relative to the fourth quarter of 2019.
Our team has strategically position and enhance our assets to effectively capitalize on the market's recovery.
We continue to be encouraged by the acceleration, we're seeing in our urban assets during the fourth quarter, 38% of our urban assets exceeded their 2019 Revpar for comparison, only 10% of our urban assets exceeded 2019 revpar levels during the first quarter of 2022.
The improvement in our urban hotels continued through the quarter with December seeing 48% of our urban hotels achieved a revpar above 2019.
Our team has been laser focused on identifying additional opportunities to maximize value or other department revenue, which includes valet spa services corner pantries and more increased 19% on a per occupied room basis to 2019.
Within our urban hotels other department revenues per occupied room in the fourth quarter increased 24% relative to 2019.
An example of the success was demonstrated at the W. Atlanta Hotel, where we utilized services such as parking Spa and interim entertainment to propel fourth quarter other revenues, 34% above comparable 2019 levels.
During the fourth quarter, our portfolio exceeded group room revenue relative to the same time period in 2019 by 2% and we continue to see acceleration from this segment.
Group revenue booked in the fourth quarter for the quarter exceeded comparable 2019 by 24%.
Our long term route momentum shows encouraging signs with group forward bookings during the fourth quarter exceeding the previous three quarters.
December was the best month of 2022 in terms of forward bookings for group. Our lead volume has also improved every quarter this year relative to 2019.
We are excited about this momentum heading into 2023 and what the favorable group volume will mean for our portfolio.
Lastly, I would like to comment on our record performances within our portfolio.
The portfolio had 31 hotel set all time high fourth quarter Records in Revpar and 20 Hotel set all time high fourth quarter Records and comparable hotel EBITDA.
Secondly, these 20 record breaking hotels exceeded their previous comparable hotel EBITDA records by 17%.
We are starting to see this expand beyond the leisure dominated markets and a large urban areas.
During the fourth quarter, we have assets in Atlanta, Philadelphia, Baltimore, Las Vegas, Washington, D C Denver, and New York exceed historical highs in addition to various leisure markets.
Moving on to capital expenditures, we've noted in previous calls that we have taken a proactive approach to renovating and repositioning our hotels that commitment has now resulted in a competitive and strategic advantage as demand continues to accelerate.
We spent approximately $104 million in capital expenditures in 2022, and currently anticipate spending between $100 million and $120 million in 2023.
We recently completed a guestroom renovation at the Marriott Fremont as well as public space renovations at the residence Inn Fairfax Merrifield, the residence in Salt Lake City, and the courtyard Newark Silicon Valley as well as the meeting space at Hyatt Regency Coral gables.
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 fourth quarter, 41% of our hotels exceeded their comparable hotel EBITDA for 2019, which is an increase over 11%.
Achieved during the first quarter.
After meeting with our various partners throughout the budgeting process. We are optimistic about our portfolio is positioned to capitalize on the industry revitalization.
This concludes our prepared remarks, we will now open up the call for Q&A.
Thank you we will now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Relation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Thank you. Our first question is from Tyler battery with Oppenheimer. Please proceed with your question.
Good morning, Thank you.
So there's been a lot of discussion so far this earning season about margins cost structure.
Can you just kind of a general question on that topic.
What are you seeing in terms of.
Wages incremental costs and I know as we book.
23 versus 2020 to sort of a pretty favorable comp.
Earlier.
In the year, but.
On the margin performance you put up.
Q3, Q4, compared with 2019 and when do you think thats sustainable next year.
Yes. Thanks for the question so we're experiencing.
Similar challenges to what others are feeling hourly wages are continuing to increase the labor market while improving.
Is still not quite where we need it to be there's inflationary pressures that are driving cost increases we're seeing increases in utilities I think when we look at that.
The thing we're encouraged most about this portfolio is still has quite a bit of runway ahead of it in terms of its recovery and we're seeing strong sequential improvement each quarter and revenue revenue gains and ADR gains in occupancy gains and so when we look at our margin performance for Q4, we had even.
Margin that was over 400 bps higher than Q4 of 2021, and I think we expect margin growth to continue as we get further along in the recovery of realize some real revpar in real ADR growth relative to 2019.
The biggest thing that we can control really is our staffing models and.
We've done a great job partnering with our hotels to kind of revamp and zero base, our staffing models from a labor standpoint, right now we're at about 845% of pre Covid staffing levels and that does include some contract labor that we're optimistic will transition.
And back to in house labor throughout this year and so there should be some savings associated with that but from a wage standpoint, we're seeing increases still we saw mid mid mid to high single digit increases in Q4, we're seeing signs that that is cooling and we expect that to continue to cool as we kind of get through the year.
And one other data point out I'd say Tyler is we historically speaking at.
Typically talked about EBITDA flows and voice trying to target and a 50% EBITDA flows across our asset management team in our in our property managers that we work with.
For the fourth quarter I think our EBITDA flows.
We're around just over 40% 41, 42%.
Which is about a pretty strong result, given that the headwinds that they're facing and so I think thats, probably more consistent with what we're going to continue to try to achieve is can we keep it in that 40% or higher range, but we'll see because it definitely is tough one out there right now.
Okay, Okay great.
And then in terms of the extension tests this year.
How are you feeling about those.
I can say about perhaps.
Early conversations youre, having and I'm kind of interested.
Any high level thoughts on.
The refinancing environment broadly too.
Yeah, absolutely we've got two significant ones really left this year, we have our Highland portfolio that is in April and our keys pools, which are in June and so we've been having discussions with both those groups and we feel like we're in good shape that we still have some work to do particularly on the <unk> pool.
<unk>.
It's bigger it's a more complicated it's got different tranches or different mezz people Ms players in each tranche. So it's.
A little more of a complicated situation but.
But we do feel good about making progress Fortunately for both of those loans they will be on the backside of the first quarter and so we lastly lap the week.
The weak first quarter of 2022 as most of these extension tests, our TTM tests, so getting rid of the first quarter last year is very very helpful and sizing up.
Any potential paydowns on those tests.
And so as we've continued to see numbers improve.
I think the it's likely at the I think the Highland Paydowns are probably.
Fairly small hopefully less substantial than what we saw with our JP Morgan a pool the <unk> pools that again, it's a little bit more complicated and were still kind of just now.
Beginning substantive discussions with with the Servicers on that one.
And how this is Derek in terms of the refinancing market. It continues to be a difficult time to get hotel financing.
Thankfully, we don't have a lot of final maturities. This year, so we don't need to be in the market.
Seeking much debt financing and the financing that we have in place that's pretty attractive from a spread perspective, so we'd like to keep the debt that we have in place as long as we can by exercising these extension options.
Hopefully as we progress through the year and the market get some visibility on what the fed's going to do with interest rates will start to see spreads come down.
Where it can.
Be a little bit more attractive too.
To get debt financing because obviously, we've got a lot of maturities that we will have to address in the outer years, and we want to get in front of those and so as soon as we can.
Can access attractive debt capital to push out maturities, we will be doing that.
Okay, Great. That's all for me. Thank you.
Hello.
Our next question is from Chris <unk> with Deutsche Bank. Please proceed with your question.
Hey, good morning, guys.
Just to kind of revisit that.
The 2023 maturities Youre talking about Rob I mean, I know you mentioned.
Handing keys back is always an option.
What.
When you think about that is it is it always purely a financial decision or is there more of a strategic decision in terms of not just.
What a hotel can generate in EBITDA.
Your assessment of I guess current market value or NAV.
Well I mean, there is there is a I guess a.
<unk> aspect as you are trying to distill things down into a quantitative decision. I mean, you are trying to figure out where are those pockets of value that may be something can become something else, but today, it's still going to come down to financial decisions I mean, we leave.
Been through situations in our past, whether it's through the financial crisis or the early stages of Covid, where.
Where we work with lenders and try to come up with solutions in order to try to keep assets alive and go and sometimes you just can't come to those agreements and you end up giving back assets.
And those are just financial decisions and we I think we gave back 15 assets. During the early stages of the pandemic and I don't think we regret any one of those from a economic standpoint, as we sit here today.
So I think thats, what we look at we will get.
We will typically get <unk> from.
Some of the big National.
Valuation firms or brokers to see where the market is.
We kind of look through the strategic plan of where do we think this asset is what's the capex required.
Right, because we had some assets that youre right youre willing to keep only because you see some longer term upside after.
Active capex program or something and you have others that.
Maybe you have a big capex numbers coming up and it just doesn't make any sense.
In terms of keeping the asset.
You've kind of Wade through all of that and I think what we try to do is do a rebuy analysis, where we just.
Pretend like we were going to this.
This capital that we're putting in is what it would cost to take down the asset.
And what do we do that today, given what we see and how we would underwrite so we keep it fairly straightforward and to know where we think value is and then all you can do is going with good faith with the lenders and lay out here is a situation, where we are and do they have ideas and do we have some ideas on ways to that makes sense for everybody and you.
Hope to have those work because you are working in good faith sometimes.
The math is what it is and the situation is what it is and.
And you have to give it back so.
We're hopeful that that doesn't have to happen but.
We definitely.
It is possible. So we just try to make the best decisions, we can for our shareholders.
Okay.
That's helpful. Thanks, Rob and then on the keys portfolio.
On the on the different pools, given the dates are always seen is there any thought or any possibility too.
Essentially restructuring the composition of those moves.
Those pools at all.
I mean, I guess there always is.
We will be talking with the Servicers in.
With that loan.
Given the way it was securitized is that effectively the senior pieces are are kind of all secured to secure ties together. So the controlling holder of one is the controlling holder of each so it's a little bit more of a complicated.
Structure, even though each pool in its own right is still treated as a separate pool.
So there's just some.
I guess complexity around that where.
Something like that I think is technically possible.
But I would find breaking up maturity dates and change of maturities.
Less likely as an as an outcome I think it's more of we will look at each of those six pools look to see where we see value look where the capex is over the next few years.
We have the ability in the documents to pay down the loans and order obviously to hit these extension tests.
So we will we've got views around what we think those are given different variations of forecast.
I'll talk to the lenders about those and see if we can't come to.
A situation that works for everybody.
Okay. Thanks, Rob just a quick follow up for Derek probably.
Derek I think you mentioned that the.
The cash trap was released on the on the pool.
It looks like good net income yield on that is the highest but the EBITDA yield is actually higher than the.
E pools.
Is the net income yield the determining factor.
Over EBITDA.
Correct for these for the cash wrap is typically a net in NOI, which.
The EBITDA that we show in our earnings releases before deducting an Epiphany reserve.
So the NOI that yield is calculated after deducting <unk> reserve and Thats.
What's determinative when calculating the cash traps.
Okay, great. Thanks, guys.
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Our next question is from Bryan Mayer with B Riley Securities. Please proceed with your question.
Good morning couple of questions first maybe Derek can you give us an update on the <unk> financing.
With respect to repay that.
If you were to repay what's currently outstanding there could you recap that or could you only re tap or tap the brakes.
It's available now.
Yes. So we've currently got about $196 million outstanding on it.
That's been paid down some from an asset proceeds from an asset sale. It really that portion of it became freely pre payable in January .
This year, there was a prepayment penalty prior to that so it's now it's now open for prepayment if we were to pay that down we would still have access to the additional $250 million is available, it's obviously expensive capital and we'd rather not draw that if we don't need it but it's there if we ultimately do need it and look.
In terms of.
Plans for paying that down I think we'll just have to see how that how the year progresses. We are sitting on a lot of cash that's one of the reasons why we raise capital in 2021 and anticipation of one wanting to pay off this debt. But then also we knew we would be facing these extension tests and there was some uncertainty and there still is some uncertainty in terms of the.
The cash that will be needed to meet those extension test. So I think once we get past. This round of extension tests will probably have some more clarity. We also would like to see how this capital raise ramped up from our non traded preferred which we're still very early days on.
And so I don't know if Rob wants to add I'll, just say it in my mind. It really just dependent upon three different things what happens on the trajectory of this recovery do we have a recession that hits us in a significant way right now we're not seeing that but that's always a little bit of a risk and then just the trajectory of the recovery of the debt markets to the extent that the debt markets can heal up a little bit.
Then we also have the ability to potentially refinance them out.
Lower spread or.
It had some alternatives around maybe.
Other structure, that's materially cheaper and.
And three just kind of the pacing as Derek mentioned of this non traded preferred at this capital.
<unk> continues to accelerate as we're hopeful that it might be able to then that could be also some some proceeds that gives us some cushion to be able to deploy cash to pay it off. So there's just a few of these moving pieces that we'll see over the next months to come.
That will have a term I think how quickly paid off we'd like to and we've got the cash to do it right now, but we just think it's prudent to whole lot of that cash until we have some more clarity on these on these items.
Okay, and then as we think about.
You are positioning with assets and potentially assets for sale and assets that you might hand back to lenders.
Why wouldn't you be in the marketplace now with asset that you know you're kind of on defense you might end up handing back and just see if you can.
E Bay a price above.
The loan value.
I'm curious as to why you wouldn't be in the market with more assets right now in that regard.
We are Bryan So you are exactly right.
We've got a significant.
Significant maybe to start with what we've got a handful of assets that we've identified internally.
As for sale at our potential for sale assets that are maybe not long term core assets.
And are working with a variety of the brokers to figure out what's the best timing some of those are in the market right now.
And somewhere maybe of some size and scale, where we think it's hard to maybe achieve.
Achieving.
Our effective sales sales price, but on some of these where we think it's questionable whether it's value or not linear where they're out in the market right. Now. So we've got a lot of different irons in the fire with that so.
I think our thinking is aligned with you.
Okay, and then last for me and maybe for Derek is there any way to quantify.
What perhaps are hedges like cost as for this year I know that you guys.
It's been the last year that kind of spilled over benefits you this year, but you know.
Is it $10 million into $20 million is it $100 million and can you quantify what we should be thinking about there.
Yes, it's really difficult to quantify because there's a lot of factors that go into that pricing.
If the strike price or whatever.
The cap the strike of the cap needs to be it's what's the market's forward expectation for where rates are going and then it's.
The duration of their or how long that cap needs to be in place for so it is very difficult to ballpark for you.
And like I said, we try to get ahead of it by pre purchasing of a good chunk of those last year and my hope is that well.
Well look I guess I guess, the real help is that those expire worthless the way that we didn't need them and the rates have come down, but if rates stay high then we would hope that those pre purchased caps offset the value of any new cash that we would need to buy it from our perspective, we wouldn't really be having to come out of pocket much. So.
That's that's really all I can say in terms of getting any sort of guidance in terms of what those costs will be going forward.
Okay. Thank you.
Thank you there are no further questions at this time I'd like to turn the floor back over to management for any closing comments.
Thank you for joining us for the fourth quarter call and we look forward to speaking with you on our next call.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.
Yeah.
Okay.