Q4 2022 Summit Hotel Properties Inc Earnings Call
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Good day, and thank you for standing by walk up to the summit cultural properties Q4, 2022, which will your earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session.
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Like if you're on the cops of your speaker today, Adam Odell Senior Vice President Finance capital markets and Treasurer, you may begin.
Thank you Kevin and good morning, I am joined today by stomach Hotel properties, President and Chief Executive Officer, John Scanner, and Executive Vice President and Chief Financial Officer trade technically.
Please note that many of our comments today are considered forward looking statements as defined by federal Securities laws.
These statements are subject to risks and uncertainties, both known and unknown as described SEC filings.
Forward looking statements that we make today are effective only at that today February 28th 2023, and we undertake no duty to update them later.
You can find copies of our SEC filings and earnings release, which contained reconciliation to non-GAAP financial measures referenced on this call on our website at Www Dot SHP Reed dotcom.
Please welcome Summit Hotel properties, President and Chief Executive Officer, John Standard.
Thanks, Adam and thank you all for joining us today for our fourth quarter and full year 2022 earnings conference call.
2022, with a year of meaningful growth for summit as we augmented rapidly accelerating operating fundamentals with the acquisition of more than $900 million of high quality hotel.
Reinstated our quarterly dividend and made our initial strategic investment and a high growth clamping segment.
Today train I will discuss our results from last year, our outlook for this year and how our recent transaction activity physician summit to continue to be a leader in the lodging recovery.
Overall, we were extremely pleased with the improving operating trends throughout our portfolio, which exceeded our expectations for the year.
Pro forma revpar increased 38% year over year, driven by a 10% increase in accuracy and a 26% increase in average rate.
And our portfolio of 92 hotels with comparable 2019 data repertoire recaptured 90% of 2019 levels and 85% of 2019 EBITDA levels led by average rates, which exceeded 2019 by 2%.
Importantly, these rep or recapture rates improve sequentially each quarter from 80% in the first quarter to a postpay endemic high of 97% in the fourth quarter.
Leisure demand led the recovery as we can Rev. Par for the full year surpassed 2019 levels by 3% driven by average rate, which finished the year, 12% higher than 2019.
Midweek in corporate demand began to improve meaningfully in the second half of 2022, most notably post labor day weekend.
The acceleration of business transient midweek and urban demand helped drive October Rev. R. Two $130, our highest nominal rep parts of the pandemic started.
While the natural seasonality of our business resulted in lower nominal revpar and the last two months of the quarter or December rep or recapture for our 92 comparable hotels with 97% another post pandemic era hi.
Fourthquarter pro forma Rev. R increased 18% year over year, driven by a 3% increase in occupancy and a 14% increase in average range.
Despite the normal seasonal decline in demand experienced in the fourth quarter average rates were essentially flat quarter over quarter, and 6% above 2019 levels, demonstrating our ability to maintain strong pricing power even in softer demand periods.
While leisure demand remained robust during the fourth quarter is weekend ADR surpassed 2019 levels by 16% weekday ref par improve sequentially throughout the year and finished the fourth quarter and and 88% recapture to 2019 levels with ADR, surpassing the comparable period of 2019 mid week.
Our asset and revenue management teams continued to drive impressive operating results as Rep Har index for our pro forma portfolio finished both the fourth quarter and full year at 112%, primarily driven by strong occupancy premiums and further demonstrating our ability to capture market share while maintaining pricing power throughout the portfolio.
Holyoke.
Trade will provide more details on the cost side of our business shortly but we have been successful growing margin. Despite well documented waging cost pressures as we add back critical staff services and amenities to address the rapid acceleration of demand across the portfolio.
The improving operating trends, we experienced throughout 2022 have continued into the first quarter of this year.
Preliminary January Rep par increased approximately 28% from the prior year, despite being negatively affected by cold for us across the country and severe rainstorms and flooding in California, and the first half of the month.
Similar to last year President's day weekend served as a catalyst for a meaningful acceleration of demand with Revpar results exceeding 2019, and 2022 by 15% and 11% respectively for the holiday weekend.
February and March are pacing up 26% in 2001%, respectively month over month, putting us on track to finish the first quarter with Rev par growth between 17, and 19% year over year.
We continue to be confident in favorable demand backdrop for our portfolio, particularly with our concentration of newer hotels and key high growth Sunbelt markets.
As I mentioned 2022 is another extremely successful year for summit on the transaction front.
And the first quarter, we acquired a high quality portfolio of 27 hotels and various other assets from new crest image for total consideration of $822 million through our joint venture with GIC.
Or basis in the hotel portfolio is just over $200000 per key which represents a meaningful discount estimated replacement cost and compares quite favorably to research rates of comparable quality hotel.
The portfolio has performed ahead of our initial expectations. Despite a labor intensive transition period during which we implemented numerous operational initiatives such as complex in multiple hotel operation and creating sales clusters to optimize revenue.
When excluding the canopy, New Orleans, which opened subsequent to the initial closing of the transaction. The portfolio was more than 3% ahead of our underwritten hotel EBITDA and resulted in a hotel EBITDA yields of just under 7% in 2022.
We have emphasized repeatedly that much of the hard work needed to position. These assets for future success was completed in 2022.
And we believe we are just now starting to see the real benefits from those efforts.
For example, in the fourth quarter repertoire recapture in the NCI portfolio increased to 97% and eight percentage point increase over the third quarter, culminating with 102% recapture rate in December .
The 800 basis point improvement and recapture right in the fourth quarter compares to approximately 150 basis point improvement in our same store portfolio.
Our outlook for the portfolio remains extremely positive and we expect it to generate outsized revpar and EBITDA growth in 2023 compared to the same store portfolio as our operational initiatives drive better performance and the newer hotels continue to ramp.
As you will recall many of these hotels are newly constructed and have never participated in a traditional RFP season, creating ample opportunity to grow midweek negotiated business in 202003.
In June we close on our equity purchase option to acquire a 90% interest in the 264 Guestroom AC element dual Brandy hotel in downtown Miami, Brooklyn neighborhood, and evaluation of $89 million or $337000 per key.
The hotel features the acclaimed Rosa Sky rooftop bar, which has been a resounding success generating on average nearly $500000 of revenue per month since its opening in March of last year.
The hotels have ramped quickly since December 2021, opening generating a full year 2022 hotel EBITDA, approximately 50% higher than our initial underwriting and generating a 7.5% hotel EBITDA yields.
The longterm outlook for this market remains incredibly positive and are attracted basis in the asset demonstrates the value creation potential of our unique mezzanine lending program.
In October we announced the acquisition of a 90% ownership stake in our first high end Glamping asset a distinctive 11 unit property in Fredericksburg, Texas.
In 2022, the properties full first full year of operations on era, Fredericksburg generated revpar of approximately $440.
Tell EBIT margin EBITDA margins of more than 60% and a net operating income yield of approximately 17% on our initial cost basis.
Alongside this transaction, we announced a strategic partnership with one era, which includes a right of first refusal on their next 10 projects designed to be a growth pipeline for the company.
Yesterday, we announced the initial development of our next to narrow branded projects the expansion of our own era Fredericksburg site and a newly funded in Bethany alone for a separate Glamping project, both of which are expected to open in 2024.
Combined with our initial acquisition of the Fredericksburg property, we expect to invest between 40 and $45 million. In these first three projects, which are forecasted to generate mid teens unlevered stabilized yields.
In addition, we have several other exciting projects under review that feature similar return profiles to our existing projects and would allow us to continue to scalar investment in this rapidly growing segment of our industry.
And our earnings release yesterday, we also announced several pending asset sales through three separate transactions, including the sale of four non-core hotels in suburban Chicago and suburban Minneapolis, the sale of two hotels located in Atlanta, and Kansas City, and the sale of a vacant land parcel in San Antonio.
The six hotels under contract for sale generated to combine Rev. R of $78 in 2022.
<unk>, 30% discount to our overall portfolio and EBITDA margin that were nearly 18 percentage points below our total portfolio.
Proceeds from the sale that six hotels in total $78.6 million, which equates to a 4% net operating income yields on 2022 results.
Importantly, all six of these hotels are due for significant renovations and the sales would allow us to forego near term capital expenditures of between 35 and $40 million.
Including the foregone capital spending the equivalent of 2022 net operating income is approximately 2.7%.
We expect the two transactions for the sale the six hotels to close in the second quarter and the land parcels fail to close in the fourth quarter.
Our recent transaction activity highlights our ability to identify opportunistic and value accretive transactions.
Since the onset of the pandemic, we've acquired 32 high quality hotels located in high growth markets totaling nearly $1 billion of assets with minimal capital needs.
Again, excluding the canopy, New Orleans, which was delayed an opening our acquisition portfolio finished 10.5% ahead of our 2022 underwriting generating an additional $6 million of EBITDA compared to our expectation rough.
Roughly one third of these assets opened in 2019 or after and are still in the early stages of ramping towards stabilization, implying considerable growth and upside remain.
In total or acquisition portfolio generated a full year 2022, net operating income yield of more than 6%.
This compares favorably to a recent in pending disposition, including the 2022 sale of the Hilton Garden in San Francisco, which collectively totaled nearly $155 million of gross proceeds. According to a 2022 net operating income yield of approximately 3% or sub 2% net of the estimate.
Deferral of nearly $45 million of near term capital expenditures.
With that I'll turn the call over to our CFO trade conflicts. Thanks.
Thanks, John and good morning, everyone throughout 2000, 2000 to our portfolio demonstrated significant improvement across all location types.
While urban hotels lag in the first quarter of the year relatives of 2019. These hotels demonstrated strong recovery beginning in the second quarter as red far recapture rates increased from 72% in Q1 to 92% in queue for the.
The recovery in our urban portfolio was driven by robust pricing power due to the acceleration of business travel professional and college sporting events, and citywide group and leisure demand and market such as Dallas, Boston, Miami Nashville in Chicago.
This resulted in 2019, ADR recapture rates of 105% and 107% in the third and fourth quarters of 2022, respectively versus a 93% recaptured right in the first quarter of the year.
The fourth quarter was highlighted by October month, which typically produces the portfolio is highest nominal revpar as our urban hotels generated 135 dollar red part, representing a 5% premium to the pro forma portfolio at a 93% recovery to 2019 levels.
Strength was particularly evident in Dallas, our largest market where are comparable hotels posted a fourth quarter recapture rate of 102%.
Nominal red par for these hotels grew 20% in the fourth quarter in comparison to last year.
Given by a $19 or 15% increase in average rate.
Red Star for the non urban portfolio was $109 in the fourth quarter, representing a recapture rate of 98% to 2019.
This was driven by continued strength in our resort properties, which generated a fourth quarter revpar of $132, an increase of 11% compared to 2021 and 104% recapture rate to 2019.
Additionally, the suburban portfolio experienced the largest year over year growth of any location type as fourthquarter, Redcar increased 18% compared to 2021, driven by a 4% increase in occupancy and a 13% increase in average rate.
Shifting to portfolio segmentation, while seasonality translates to slowing roommate demand in the fourth quarter average rate for the fourth quarter exceeded 2019 levels and all segments apart from the negotiated statement.
Notably the group's segment solid improvement relative to 2019 as occupancy mix increased by 30 basis points on a full week basis, an average rate increased by $4 or 2.4%, primarily driven by weekend rates, which finished $12 or 8% ahead of the comparable period in 2019.
Our asset management team continues to deliver strong results. Despite a labor market dynamic that has resulted in material wage growth and challenges, adding back necessary staff services and amenities over the past year.
These cost increases appear to be moderating as evidenced by operating costs per occupied room in the fourth quarter that increased only 1.4% from the third quarter displayed lower occupied room base.
As a result fourth quarter gross operating profit margin and hotel EBIT margin for the pro forma portfolio, where 44%, 36%, respectively, which were in line with the prior quarter. Despite a decline in absolute revpar of approximately $4, 2% from the third quarter due to <unk>.
A real seasonality.
Fourth quarter Hotel EBIT margin and are pro forma portfolio was 120 basis points above 2019 levels largely attributable to favorable property tax returns.
We have demonstrated an ability to grow margins relative to 2019 in months with higher nominal revpar is driven by strong right Cross.
GOP margins and are comparable portfolio estate exceeded 2019 levels in September and October and.
In hotel EBIT margins exceeded 2019 levels and three of the final four months of the year by nearly 100 basis points.
We are encouraged to see periods of margin expansion in our portfolio relative to 2019, despite the significant expense growth experienced throughout the industry in 2022.
Expense growth was particularly acute on the labor side, where the industry experienced well documented increases an hourly wages and outsized reliance on more expensive and less productive contract labor.
Looking ahead, we expect wage growth to moderate in 2023.
Pro forma hotel EBITDA for the fourth quarter and full year, 2022 was $62.1 million and $243.9 million, respectively, representing increases of 27% and 63% year over year.
Fourth quarter and full year, adjusted EBITDA was $46.1 million and $188 million respectively.
Secondly, which reflects increases of 62% 100% from 2021.
Adjusted FFL in the fourth quarter was $33 million or 25 cents a share an increase of $15.5 million from the fourth quarter of 2021 and.
In full year, adjusted FFL was $114 million or 94 cents a share an increase of $77.2 million from 2021.
From a capital expenditure standpoint in the fourth quarter and for the full year 2022, we invested approximately $27.7 million and $76 $5 million, respectively. In our portfolio on a consolidated basis and approximately $22.2 million and 63.6 million.
Respectively on a pro rata basis.
Capex spend for the full year in fourth quarter was driven by the completion of significant renovations at our Hilton Garden in Houston Energy corridor and.
The highest place Orlando Universal studios as well as ongoing transformative renovations and our residents in downtown Portland, and our Hilton Garden in San Jose Milpitas.
We continued to ensure the quality and relative age of our portfolio positions the company to drive profitability and market share.
Turning to the balance sheet, our current overall liquidity physician remains robust and more than $500 million pro forma for the four pack and to pack asset sales that John discussed earlier the.
$79 million of gross proceeds from those asset sales continues to further deleverage some its balance sheet.
In addition, during the fourth quarter with the fees are only remaining 2023 that maturity is $32 million MBS loans set to mature in August of this year.
Which eliminated all remaining debt maturities until the fourth quarter of 2024 after consideration of extension options.
The defeasance unlocked $7 million of restricted cash and his accretive to nsfl given net cash savings of approximately $300000 over the next six months.
In combination these transactions demonstrated strong progress towards our long term stated leveraged target of three five times to four to five times net debt to EBITDA.
Finally in the fourth quarter, we submitted notice to exercise the first of four six month extension options available under our $400 million senior revolving credit facility.
The extended maturity date will be September 30th 2023, and when considering all available extension options. The facility has more than two years of remaining term with a final the charity of March 2025.
From an interest rate risk management perspective, our balance sheet as well positioned including an average pro rata interest rate of 4.5%.
Proximately, 65% of our pro rata share of that fixed after consideration of interest rate swaps at year end 2022.
In addition to address the recent maturity of $200 million in notional swaps. We recently entered into to 100 million dollar interest rate swap agreements that fixed one month's sofa and carry fixed rates of 2.6% and 2.56% respectively.
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 became effective in January of 2023.
When accounting for the company series E F N Z preferred equity within our capital structure, where approximately 70% fixed.
On January 26th our board of directors declared a quarterly common dividend a four per share.
Annualized 16 per share.
The current dividend represents a prudent nsfl payout ratio, leaving ample room for meaningful increases over time.
Included in our press release last evening, you will note, we reinstated full year guidance for 2023 operational metrics. In addition to certain non operational items.
Outlook is based on management's current view and does not account for any unexpected changes to the current operating environment.
For the full year, we anticipate revpar growth of 6% to 11% the.
The high end of the range assumes continued strength and leisure demand and accelerating growth in business transient and group demand.
The low end of the range reflects an economic slowdown that would result in low single digit revpar growth in the back half of the year.
Red par growth of 6% to 11% translates to an adjusted EBITDA range of $194 million to $205.9 million.
And then adjusted FSFR range of 92 cents to one dollar and five cents per share.
The mid point of our Revpar guidance range implies hotel EBITDA margins to be essentially flat year over year.
We expected interest expense, excluding the amortization of deferred financing costs to be approximately $85 million theories EE and series F preferred dividends to be $15 $9 million series Z preferred distributions to be $2.6 million.
And pro rata capital expenditures to range from $60 million to $80 million.
It's also worth noting that given the increased size of the GIC joint venture.
Income payable to summit now covers nearly 15% of annual cash corporate G&A expense, excluding any promote distributions summit they earned during the year.
I also want to point out that we are furnished a new financial supplement is part of our fourth quarter earnings.
We believe this supplement will more clearly outlines the performance and relative contribution of our various portfolio ownership structures.
We have also outlined additional detail on our balance sheet, which has continued to be a strength for the company and allowed us to acquire nearly $1 billion in acquisitions since July 2021.
And with that we'll open the call to your questions.
Ladies and gentlemen, if you have a question or comment at this time. Please press star one one on your telephone. If your question has been answered you wish to <unk> yourself from the queue. Please press star one one again, we will pass for a moment, while we compiler Q Renee roster.
Our first question comes from Austin worst smoother without Keybanc capital market. Your line is open.
Hey, good morning, guys.
John or tray, I guess I'm just curious on the six pack.
Hotel.
For sale can you just speak to how you guys arrived at the number of assets that you selectively marketed presumably in the amount of proceeds you were looking to solve for.
Yeah, Good morning Austin.
First of all the first thing I would point out is there is two separate transaction involves here. There's a sale of the four pack that too suburban Chicago into Minneapolis assets in a separate sale for the asset in Atlanta in Kansas City.
Look I think we've talked for a while now about.
Exiting some of these suburban assets that are lower Rev. R hotels lower margins and.
And particularly in Minneapolis, which has been a market that has been much slower to recover we just felt like it was a prudent and opportunistic time to exit those assets I think the one common theme that you'll see across the fixed assets is just the need for significant capital to be spent across those for the next over the near term over the next probably 12 to 18 months and so between the fixed assets we think.
Well avoid spending somewhere between 30 and $35 million over that time period.
The other thing I would just point out is I think where we seen while it's not the easiest transaction Mark the day, where we've seen the most liquid part of that transaction market has been for some of these smaller hotels in some more secondary and tertiary locations, where it appeals to a smaller one or a local owner operator that can finance it through a loca.
[noise] lender that isn't reliant on big money center banks of the <unk> market to get a financing done and so we feel like the execution here is the appropriate one you know I'll I'll caveat. This with as we did in our press release by saying that these deals are not closed yet they are under contract. We're optimistic that they will close and we're happy with the execution.
If and when they close.
Thanks for the detailed there and then how do we think about the other side of that coin and capital deployment. This year. I know you guys are are very focused on returns more so than maybe markets, but are there any specific assets or markets. You currently have your eye on.
If.
Pricing makes sense and.
Given some of the benefits you highlighted in your opening remarks about.
Putting assets into the joint venture I guess, how do we think about sort of wholly owned purchases down the road versus.
Continuing to use the joint venture vehicle with GIC.
Yeah, well, we'll look we still really like the joint venture I think Tre highlighted the fact that it's getting to a size where particularly the fee income has become a meaningful source of income for us they'd been wonderful partners, it's allow us to to execute on transactions that we otherwise wouldn't be able to execute on so we still liked that is.
Vehicle, we don't have to put everything into the vehicle I think it will be a case by case basis.
As we've said I think a lot historically, we don't necessarily have a map with a bunch of downtown of it says that we need to be in certain markets you can see through our transaction activity.
Post pandemic, we have had a bias towards investing in some markets that we liked the demographic changes, where we see more and migration of people more corporate relocation that's put us in places like the Sun belt, It's put us in some of these mountain towns and it performed really really quite well since the onset of the pandemic, but we're certainly opportunity.
Sticking again through some of the dispositions, we will create some capacity to continue to be opportunistic where we see just better risk adjusted returns on a relative basis.
And then just the last one for me maybe for tray, you mentioned that the midpoint of guidance.
Guidance assumes roughly flat hotel EBITDA margin can you share what that ranges at the high and low and.
Yeah, I think if you look at the high and the low end of the range. We would say that's kind of minus 50 basis points to plus 50 basis points from from 6% to 11% with kind of flat at the midpoint.
Perfect. Thanks, guys.
One moment.
One moment for our next question.
Our next question comes from Bill <unk> was Raymond James Your line is open.
Yep. Thanks, good morning, guys.
I'm, just looking for a little bit more detail on the expense expectations for this year I think you mentioned the wage rates would be growing at a slower pace, but.
You also have a higher fte's I assume at least the anniversary and those that were added.
Last year.
So how are you thinking about overall expense Grove, what's going on with property taxes would you actually were able to appeal, but what do you expect their property insurance et cetera.
Yeah sure. Thanks, good morning as.
As we said the prepared remarks, we do expect to see some moderating of expense growth I think as we as we've gotten later into last year in the first part of this year, we've seen some of particularly on the wage pressure side, a fair amount of that moderate trade articulated a little bit on the expense on a per occupied room basis at the operating level was up less than 2%.
And the fourth quarter are actually aggregate dollars of expenses in the fourth quarter actually declined from where it was in the third quarter. So we have started to see some moderating there I think you can tell by his.
Tray just mentioned are implied.
Margin guidance, which is flat at a mid pointed 8.5% ramp our growth still does contemplate some level of expense pressure persisting into next year and I think what we'll see that a little unique from this year is if you look at our results in 2000 2000 to our EBITDA margins expanded more than our GOP margins, our expectation is that that will flip.
In 2023 is operating expenses moderate, but we did as you alluded to we had some nice successful property tax appeals, which helped our EBITDA margins in 2022 and will feel some pressure on expenses on the insurance line in 2023 that well, we'll make our EBITDA margin expansion lower than our GOP expansion.
As in the year.
Okay and then.
Follow up question portray what was the cost of the to swap some $100 million.
<unk>.
The rates, there were 2.6% and 2.5%.
Yeah, but what was the what was the actual cost of giving that transaction done.
Build those are this is Adam those are settled on a monthly basis going forward. There is no initial out of pocket.
Okay, Alright brager.
Thanks, that's it for me.
Thanks for calling it one moment for our next question.
Okay, ladies and gentlemen, if you have a question or a comment at this time. Please press star wouldn't want on your telephone.
Our next question comes from micro Bell, sorry, with bear to your line is open.
Thanks, Good morning, guys.
Just wanted to go back to the asset sales and dispositions I guess six hotels.
Do clothes on your expected timeline, how much EBITDA twenty-three might be sold for the remainder of the year.
Yes, some of that is gonna depend on the timing of the sale, Mike we've kind of outline that we expect them to close in the second quarter, we will update our guidance at the time that they close our expectation where we set in the year is somewhere probably between three and at three and $5 million of reduction in EBITDA.
[noise] got it and then maybe this is sort of just on the margin.
<unk>, but on the margin.
As these asset sales are completed.
The pro forma remaining portfolio will Rev. R B.
Benefited will be dilutive growth that is in.
Margins too much but it's kind of the the growth impacted twenty-three from these fixed asset sales.
Yes, it's relatively marginal Mike it is slightly accretive to both Rev. Our growth and our margin expectations for 2023, not enough that I would expect us to materially change our guidance range. As a result of these again. These are relatively smaller as we mentioned the prepared remarks. They run on average about 30 per cent discount so R.
Nominal Rev higher levels and again, we expect this to be accretive from a rev par growth perspective.
One thing I'll I'll, just kind of point out and reemphasize again is that part of the rationale for the sales that were while the perky prices aren't as as high as maybe you would expect the the cap rates here are quite low combined with the FSA on San Francisco last year were selling $155 million of assets had three cats and if you adjust for the.
Deferred capital needs, it's sub 2% and so one of the things that we like is that it's going to allow us to continue to bolster the balance sheet without giving up a ton of in place earnings.
Yeah understood and then.
Just one more just thinking about the bottom portion of the portfolio I guess, maybe how many more 60000, a key or maybe it's 75000 700000.
Per keep type of asset you guys have left in the portfolio.
Yeah, there's there's some I mean, I think there's always kind of a bottom 10% of your portfolio like we don't have a ton of what I would describe Israel non-core assets I do think we'll try to continue to look opportunistically to sell assets I think the execution again on the six plus the sale on SFO last year.
Represent a really really compelling execution, particularly with where we think we were and how we can redeploy those proceeds and we've shown again I think a really nice delta between the yields on what we sold versus the yields on what we've acquired and so I think you can expect us to continue to look opportunistically for for asset sales as we go through 2023.
Got it and then the last one for me for today, probably just yearend that leverage where does it stand and then what would that have been on a pro forma basis. If those six asset sales put the landfill are completed at 12 31.
Yeah, I think if you look at our leverage out what I would say is that pro forma for the asset sales in the kind of $79 million that we anticipate bringing in from that standpoint, and kind of what the mid point of our guidance ranges were probably ran around five times.
That's obviously about a half a turn higher than where we what our target is but I think it's good progress that we've made over the last year as we've kind of recycled out of some of these non core assets as long as well as the EBIT growth that we've seen.
Got it thanks Debra.
Things like that.
And I'm not showing any further questions at this time I turn the call back over to Jon's banner presidency O for any closing remarks.
Yeah, well. Thank you all for joining US today, we're obviously very encouraged by our operating results for 2022 were excited about the prospects for the acquisition activity that we completed in the year and we are optimistic about the future of summit, we look forward to seeing many of you as we progress through the year. Thank you all again for joining a good day.
Ladies and gentlemen, so conclude today's presentation you may now disconnect and have a wonderful day.
The conference will begin to Pee to raise and lower Johan <unk> you can dial 911.
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