Q4 2022 CTO Realty Growth Inc Earnings Call

February 24, 2023

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Yeah.

Thank you for standing by and welcome to the C. T O royalty growth fourth quarter and year end 2022 operating results conference call.

At this time all participants are in a listen only mode.

The speakers present cases, there'll be a question and answer session to ask a question at that time. Please press star one on your telephone.

As a reminder, today's conference call is being recorded I would now turn the conference Mr. Matt Partridge, Chief Financial Officer. Please begin.

Good morning, everyone and thank you for joining us today for the CTO royalty growth fourth quarter and year end 2022 operating results conference call with me today is our CEO and President John Albright.

Before we begin I'd like to remind everyone that many of our comments today are considered forward looking statements under federal Securities law. The company's actual future results may differ significantly from the matters discussed in these forward looking statements.

Undertakes no duty to update these statements factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K Form 10-Q, and other SEC filings.

Can find our SEC reports earnings release supplemental and our most recent investor presentation on our website at <unk> Dot com with that I'll now turn the call over to John .

Thanks, Matt and good morning, everyone our activity during the fourth quarter capped off another record year, which resulted in full year core <unk> per share growth of 35% and full year <unk> per share growth of 26%.

The fourth quarter was especially noteworthy because it was our largest quarter ever in terms of investment volume and included the first follow on equity offering in the history of the company while.

While 2022 was very productive across all aspects of our business.

A highlight of few of the more notable accomplishments excluding the fourth quarter acquisitions, we signed new leases renewals and extensions on 8% of the total portfolio square feet at an average cash rent of more than $31 per square foot.

We grew same property NOI by 13%.

Total investments were a record $375 million.

Meaningfully derisked, our balance sheet by match funding, our fourth quarter acquisition activity and extending all of our debt maturities out to 225 or beyond.

Grew our common cash dividend by 12% year over year, and we delivered 2022 total shareholder return in the top quartile of the entire REIT industry, including outpacing most of our retail focused peers.

It was a great year and our team's execution has us well positioned for long term success, notwithstanding some near term tenant challenges that will discuss as part of our 2023 guidance. We believe we've built our company in the underlying portfolio for long term growth and value creation as we've invested in properties with very attractive.

Or active demographics within markets that are projected to have some of the highest population and job growth in the country.

During the fourth quarter, we completed three transactions for a quarterly record of nearly $195 million and a weighted average going in cash cap rate of 8%.

All three investments have meaningful upside through a combination of leasing and light repositioning at an average price of less than $200 per square foot. These.

These acquisitions represent a terrific opportunity to invest in high quality real estate significantly below replacement cost.

Our acquisition of West broad village in the short pump Submarket of Richmond, Virginia is a high quality whole foods Homegoods Rei anchor property that comes with significant leasing upside through the acquired vacancy.

In the four months, we've owned the property, we experienced very strong leasing demand and we expect this property will be an excellent driver of same property NOI growth as our teams leasing efforts in 2023 convert to rent paying tenants in 2024.

Our other two acquisitions in the quarter include a five parcel assemblage in the tourist district of Daytona Beach, and the largest acquisition in the Companys history. The collection at foresight in the affluent Forsyth County Submarket of Atlanta.

Data on a beach property was a unique off market opportunity to acquire at a set of complementary parking and restaurant parcels near the beach from a successful retiring owner operator.

Given our existing investment in two high performing Daytona Beach side restaurants, we're confident in the near term cash flow opportunity as there is significant operator interest in these properties.

I'll move from our smallest investment during the year to our largest which is our acquisition that collection of fore sight. This is a property. We were very excited about and one we think will provide considerable growth in 2020 for 2025 and beyond.

To be a strong believer in the long term prospects of the broader Atlanta market and the collection that foresight with a terrific opportunity to invest in a property similar to our Ashford Lane asset, where we can up here the quality of the tenant mix increase rental rates as leases rollover and really establish this property as a go to destination.

For residents of foresight county, and the surrounding area.

We've engaged our leasing team, who helped us reposition Ashford Lane, which is just 20 miles down the road.

Already started to have a number of conversations with some very exciting concepts. Additionally, there is a vacant former earth fare grocery out parcel that we're hopeful will be a future grocer location for the property and we believe that there are opportunities that potentially at green space to enhance the overall property experience.

For the year, we completed five mixed use our retail income acquisitions for $314 million at a weighted average going in cash cap rate of seven 5% and supplemented these acquisitions with our structured investments program, where we originated $59 million of funding towards the development or redevelopment.

<unk> of retail and mixed use properties in Submarkets of Atlanta, Dallas and Orlando at a blended initial yield of eight 2%.

The year end balance of these investments is just over $30 million.

We continue to recycle assets through opportunistic dispositions as we look to drive attractive returns on equity through the reinvestment of low cap rate asset sales into a higher upside higher yielding core investments.

While we did not have any asset sales in the fourth quarter, we sold a total of six properties, including our sole remaining multi tenant office property for $81 million at a weighted average exit cap of six 2%.

These sales and their subsequent redeployment generated 130 basis point net investment spread between our weighted average acquisition cap rate and our weighted average disposition cap rate representing terrific value creation as we navigate a volatile transit transactions environment.

Overall as we evaluate our execution in 2022, we've been fortunate to invest in property is anchored by high quality tenants such as whole foods, Homegoods Publix Rei Ross dress for less and best buy.

Further diversifying our overall tenant exposure and getting our portfolio more long term upside through lease up of acquired vacancy in re tenanted in units that currently have below market rents.

While our investments provide additional long term opportunities for growth, we're highly focused on maximizing the value of our existing portfolio through active asset management leasing and our capital investment programs.

In 2022 was a record year of leasing for our team and we generated 17% comparable growth in new cash base rents versus expiring cash base rents. This helped drive our 13% same store NOI growth, which will be more muted for 2023, but should see substantial increase in <unk>.

<unk> 24 from tenants opening in the back half of 2023 and into 2024 across many of the properties in our portfolio.

This is not only a testament to our team and the quality of the assets, but it is a direct reflection of the demographics surrounding our properties and long term prospects of our markets.

Our properties average five mile household incomes of more than $136000 and serve an average five mile population base of over 217000 people.

While our portfolio is not the largest.

What these demographics do indicate is that our properties are in close proximity to more than 4 million people and that represents a very strong base of the demand, which is especially important as we are preparing for continued volatility in the broader economy.

Furthermore, as we look out over the next three to five years some of our top markets such as Atlanta, Dallas, and Raleigh are anticipating outside population and employment growth, which should only benefit our tenants and properties and especially given the limited supply projected for the foreseeable future.

In the near term, we are dealing with specific issues, including a few larger tenants such as we work at the shops at legacy Regal at Beaver Creek in the Hall at Ashford Lane.

Matt will provide more detail around our 2023 same property NOI growth guidance, but I will note that in most instances the haul being the outlier. We underwrote these tenants to vacate following our acquisition of their respective properties.

The anticipated concessions are loss of these tenants do rep present near term disruptions as evidenced in our guidance, but each presents a unique longer term opportunity to explore value maximizing options, which gain as we underwrote during our acquisition process.

More specifically with rework vacating the shops at legacy we have an opportunity to re tenant the space with the alternative use that should drive additional traffic to the property improve overall existing tenant performance and helped to strengthen the future leasing efforts.

<unk> sold Regal location at Beaver Creek property, just outside of Raleigh is separately parcel with development rights for more than 200 apartment units. We're currently reevaluating the viability of taking a mixed use approach to the property with a potential integration of apartments, which is in addition to the more traditional <unk>.

Parcel development opportunities, we identified at acquisition and are beginning to take shape and finally, the hall at Ashford laying we provided some near term relief as a tenant has experienced delays in opening as a result of supply chain disruptions and increasing costs of their build out which has presented an opportunity for us to obtain more.

Operational transparency and a more attractive percentage rent thresholds.

Overall, the vast majority of our tenants are performing well and we believe there is substantial embedded value in our high quality portfolio as we look to mark rents to market and grow free cash flow, we've taken a prudent approach to our guidance and we continue to remain disciplined as we allocate capital for long term benefits of our shareholders.

And execute on our strategic initiatives.

I'll now pass it over to Matt to talk about our results and balance sheet in 2023 guidance. Thanks.

Thanks, John transaction activity, John highlighted continues our portfolio multi year transition into larger grocery lifestyle traditional retail and mixed use assets as of the end of 2020% to 90% of our portfolio's annualized cash base rents are now coming from retail and mixed use properties up from.

Just over 75% this time last year with the majority of those rents coming from grocery anchored lifestyle and power center assets.

Furthermore, this transaction activity has increased the total square feet of our portfolio by 37% compared to year end 2021 and from a tenant makeup perspective, our top tenant list now includes well known retailers such as whole foods Publix Darden restaurants.

T J Maxx, Homegoods AMC Ross dress for less hobby lobby, Burlington Academy sports and Rei.

Occupancy at year end, 2022 was 92% and our leased occupancy was 92, 9%.

Our operational metrics for the year were very strong with same property NOI growth of 13% comparable leasing spreads increasing by 17% and overall portfolio occupancy growth of 170 basis points.

Most notably comparable new leases signed during the year increased 58% when compared to the previous comparable cash base rent and comparable renewals options and extensions signed during the year resulted in a five 5% increase when compared to the expiring comparable cash base rent.

Comparable leasing spreads exclude new leases that were signed for space that has been vacant since our acquisition.

For the quarter same property NOI decreased by six 9% driven primarily by the increased bad debt expense related to the hall at Ashford LN, one time operational and camera related items at Crossroads Towne Center in the shops at legacy and lower year over year percentage rent from the Daytona Beach restaurants, which is largely due to the more active hurricane season.

First quarter 2022 core <unk> was <unk> 34 per share representing a 10, 5% decrease compared to the fourth quarter of 2021 and fourth quarter of 2004th quarter of 2022, <unk> was <unk> 37 per share representing a nine 8% decrease over the fourth quarter of 2021.

Q4 core <unk> and <unk> year over year comparisons were negatively impacted primarily by same property NOI decreases in the quarter higher relative interest expense and the point in time dilution associated with our fourth quarter equity raise and the related timing of the collection at Forsyth acquisition.

For the year core <unk> was $1 74 per share and <unk> was $1 83 per share representing year over year per share growth of 35% and 26%, respectively when compared to 2021.

Full year core <unk> and <unk> year over year comparisons benefited from 13% same property NOI growth increased interest income from structured investments.

In pine related management fees and dividend income and was partially offset by higher relative to interest expense as we previously announced in November the company paid a fourth quarter regular cash dividend of <unk> 38 per share on December 30, <unk> and earlier. This week. The company declared its first quarter 2023 regular common stock cash dividend of <unk> 38 per share which will.

Be paid on March 31 to shareholders of record on March 9th.

Our first quarter dividend represents a five 6% increase over the Companys Q1, 2022 cash dividend and an annualized yield of more than 8%.

On the capital markets and balance sheet front, we had a very productive year, including a very active finish to the fourth quarter issuing approximately 605000 shares of common stock through our ATM program for total net proceeds of $12 1 million at an average issuance price of $20 29 per share.

Also completed our inaugural follow on equity offering during the fourth quarter in anticipation of funding our acquisition of the collection of foresight issuing 345 million shares of common stock at a price to the public $19 per share generating total net proceeds of $62 4 million.

We ended the quarter with approximately $21 million of cash and restricted cash of $186 million of undrawn commitments under our revolving credit facility for total liquidity in excess of $200 million.

Net debt to total enterprise value at quarter end was approximately 46% and our net debt to pro forma EBITDA was seven three times.

With respect to our leverage it's important to note that our 2025 convertible notes currently have a conversion price of just over $16 per share, making it likely those notes will convert into equity at or before maturity. As a result, if we remove the convertible notes from our debt maturity schedule with no debt maturities until 2026. Furthermore, subsequent to year end.

We entered into a seven year $100 million interest rate swap to fixed suffer at 328%.

This swap is currently being used to fixed $100 million of our outstanding revolving credit facility balance effectively eliminating all of our remaining go forward floating interest rate exposure.

As part of the earnings release yesterday, we did introduce 2023 guidance.

Core <unk> per diluted share is projected to be between $1 50, and $1 55, and <unk> per diluted share is forecasted to be between $1 64 and $1 69.

Our guidance for 2023 reflects the same property NOI growth forecast of 1% to 4%, which includes the effect of increased bad debt reserves occupancy loss and associated costs related to tenants in bankruptcy or lease defaults.

Winds in our same property NOI growth forecast include lease modifications rejections or lease terminations for Regal at Beaver Creek crossings. The hall at Ashford Lane, we work at the shops at Legacy Party City at Crossroads Towne Center in General reserves between 75 to 100 basis points of property level revenue, which is largely in line with our history.

Brickell run rate.

We're projecting to invest between $100 to $250 million into income producing assets, including through our structured investments program at a weighted average initial investment yield of seven 5% to 8%.

Our disposition guidance assumes 5 million to $75 million of asset sales at a weighted average exit cap rate between 6% and seven 5%.

Other forecasted assumptions for 2023 include general and administrative expenses.

Between 2000 $14 million to $15 million and a weighted average diluted share count for the year between $22 8 million shares and $23 6 million shares.

While near term headwinds related to our year over year interest expense and tenant credit issues do impact our 2023 guidance, we have forecasted to be between 94%, 95% leased by year end 2023.

Year end 2023 forecasted lease leased occupancy is before any potential impact from 2023 income property acquisitions or dispositions and implies a strong base of signed leases that have yet to commence rent heading into 2024.

That will now open it up for questions operator.

Thank you again, ladies and gentlemen, if you'd like to ask a question. Please press star one on your telephone again to ask a question. Please press star one line.

Our first question comes from Gaurav Mehta of Es heightened group your line is open.

Yeah. Thanks, Good morning, I wanted to ask you on your transaction guidance for 'twenty. Three can you maybe provide some color on the expected timing of acquisition and dispositions.

Hey, Rob.

The guidance assumes that.

The acquisition will be back end weighted we have some small steps here.

Towards the end of the first quarter beginning of the second quarter, but most of it's going to be probably late third early fourth.

Okay.

And maybe on the transaction volume.

Distribution side can.

Can you provide some color on the range of $5 million to $75 million.

You guys looking forward to get on the lower end and upper end of that range.

Given the current state of the capital markets.

It is causing a little bit of volatility on the transactional side of things, so theres, a fairly wide bid ask spread and so.

The range reflects that so.

So we have some certainty small single tenant disposition that could materialize here in the next few months, but then the wider end of the range is really related to opportunistic dispositions if the market firms up.

Okay. Thank you.

Hey.

One moment please.

Our next question comes from the line of Rob Stevenson of Janney. Your line is open.

Good morning, guys.

Do you have the Regal at Beaver Creek back now or you have to wait until Regal exits bankruptcy during the summer or whenever that happens to get it.

Yeah, So Rob it's kind of interesting on the whole regal, because a little bit of a surprise to us because.

They did not reject the lease originally.

And and.

Then.

As you know the judge basically told them to go reject a bunch of leases as though they rejected but they had paid us rent like literally a week or two weeks before they rejected it.

So clearly they are intending to keep the lease now.

Now it might be surprising to you is certainly surprising to me, but we've had more than 10.

Theater operators come out of the woodwork wanting that theater.

Plus some other.

Interest from other user.

Users.

They actually larger format than the 45000 square feet, we have there so.

It's interesting and great to see the activity, but to answer. Your question is we are talking to them about a short term deal because they wanted to they wanted to keep the lights on there while they figure out their bankruptcy and maybe come back to us with something more productive. So we're in negotiations with them. So it's not a clear cut.

Right now.

Okay and I guess the question then winds up being from your standpoint.

<unk>.

Thinking about the theater business and being in that longer term versus I assume if it's going to be apartments that thats something that you would sell off that you wouldn't partner with somebody.

Developer to develop that for you to own longer term.

So there's three options are obviously keep it as a theater and obviously there's tons of theater interest.

<unk>, probably doesn't do a lot or.

Residual cap rate on that property for us.

The second is a different retail user which have better credit than we have.

Looking at the property.

A couple of different ones and then of course the apartments. So the apartment obviously.

It's definitely an easy one.

With regards to whether we sell or JV. It we might be more open to JV net because obviously I think that would help quite a bit on <unk>.

The valuation of the property, having that mixed used component with the residential side, but obviously.

We would bring in.

Really strong operator to do that with.

Okay, and then Matt.

In your 'twenty, given the acquisition and disposition volumes, what's in your 'twenty three guidance in terms of assumptions in terms of debt levels and interest expense at this point given the new swap.

Yes.

We're generally assuming we stay leverage neutral to where we are today.

With the transaction guidance being assumed to be weighted towards the back end of the year.

And it's a pretty wide range, just given the uncertainty in the transaction market and the broader economic.

Environment.

That's what's causing the wide range on the share count as well.

So there's a lot of timing factors in there but.

Generally leverage neutral from a debt and equity perspective.

And then one last one for me I mean, what's what's the plan at this point for though we work space at legacy.

So we are talking with several different.

Users one which.

We think would be very complementary to the property and be much better than we work style. So we're in we're in negotiations or discussions with that group. So we probably got at least 30 days to figure out kind of which are out we're going to go.

Okay, Alright, thanks, guys I appreciate the time.

Thank you.

Thank you one moment please.

Our next question comes from the line of Floris Van <unk> of.

Compass point your line is open.

Hey, good morning, guys.

I wanted to Hey, why don't you, maybe if you guys could.

Comment a little bit more on your structured finance part of the business, obviously create some it creates a nice yield but it creates some lumpiness.

I believe you lost one of your one of your loans prepaid, which.

Causes some sort of earnings disruption, but maybe talk about the.

The stuff that you've done for example, the exchange.

That you.

Will these loans lead into future acquisitions, I guess is what I'm, what I'm trying to get at.

In some cases they will.

For sure.

But.

Other cases, where we're looking at deals where it's kind of a short term bridge loan.

Obviously Barry.

Nice risk adjusted yield.

Thank.

So, it's something where John Gray said this week that.

They're leaning in big in the lending business because.

Youre picking up meaningful more.

Meaningful more yield.

With less risk. So we're seeing the same sort of opportunities, but there are other loan opportunities, we're looking at where we'd actually like to own the project in.

Kind of gives us that optionality.

So youll, probably see us be more active on that side, but I don't think we're going to grow the structured finance portfolio a lot more than what the.

The balance was before we got paid down so so it's a great business in this kind of environment, where.

Developers are trying to kind of hang on and our new acquisition, but the financing market is kind of still locked up in frozen. So we will continue to monitor those.

And could you guys maybe comment on.

Your.

I believe you internalize the property management in Atlanta.

<unk>.

What kind of impact that has financially and also strategically.

And could we expect more of that.

Of that internalization of property management.

In other markets.

Yes, it certainly it certainly is.

<unk> given us our largest market it makes a lot of sense and we're well on our way.

And doing that sort of process right now.

With regards to identifying personnel and so forth.

But ill basically let Matt comment on what kind of impact that has on the timing, yes for us it is.

Going to be a process throughout the year. So I would expect the full internalization of property management for Atlanta to happen more in the back half of the year.

The benefit which we think.

It could be between <unk>.

Heading into a penny and a half of earnings.

Once fully stabilized will really come through in 2024.

Great and maybe maybe one last one for me.

If I may.

If you could talk a little bit about.

The deep.

Obviously, the guidance here, which is a little bit lower than that than expectations, but maybe.

Would it be helpful to talk about sort of where you expect.

For the for the current portfolio to be in a couple of years time once it's fully stabilized because one of the issues that investors always have to try to assess with CTO is that it's a you bought some assets.

That need a little bit of work and where you can create some value.

There is obviously a little bit more headwinds in 'twenty, three partly because of the tenant.

Issues.

But also partly because youre repositioning assets.

It might be helpful. If you guys could share some of your where you think stabilized NOI could trend to in two to three years' time.

Yes, all good.

More of the color commentary Matt.

Either Dodge our answer.

Future number.

Basically.

We're just talking about Regal theater.

With them rejecting that leads and maybe doing a short term lease that is less than what they had.

The probably the highest and best value total return for the company and our shareholders would be to do an apartment deal, but that would mean, bringing having income come off the property or a couple of years until that's built.

So.

We're always trying to measure.

The right balance given public company dynamics.

And growing <unk> and that sort of thing with regards to what the total the best total return but.

We are seeing a lot.

Seeing more traction in getting tenants open Super acre just opened at ash.

Ashford Lane.

Looks like <unk> will be opened in may.

And also.

Hawkers will be done probably in April so.

Or tenants that have taken forever too.

You kind of get going and get opened but now we're seeing the fruits of that which will obviously be more productive for our income next year.

Just signed a lease actually yesterday or day before at West broad, where the tenant will probably not be operational until summer of 2024.

So the lead times on these tenants are a little frustrating, but the.

Obviously, what they bear fruit at the end of the day is going to be pretty terrific I'll, let Matt talk about the consequences.

Financially.

I'm not going to give a hard number on NOI, but what I will say is that.

Our expectation for 'twenty four is that we're going to be above where we were for 'twenty two.

<unk> perspective, obviously worked through this near term disruption.

But really the end of 'twenty four going into 'twenty five we should continue to see pretty strong growth.

Same store NOI growth this year was 13%.

As we continue to lease up these assets, where we have meaningful vacancy I think it can be in the high single digits low double digits.

For the next few years.

Thanks, guys.

Thanks Mark.

Thank you one moment please.

Our next question comes from the line of Matthew Earner.

Your line is open.

Hey, guys How's it going could you talk a little more about the exchange at Gwinnett in just the construction process and how that's tracking in terms of supply and getting those those things built.

Yes.

The developer, who we bought the first phase of the exchanges and that problem.

Late in 'twenty one is.

It's making good progress.

Do expect that loan to convert into the acquisition of phase III.

So that will probably transact or come onboard here over the next few months and Thats one of the smaller assets or set of assets that I was.

Referring to at the beginning of it.

The questions in terms of the smaller stuff that will close in the first half of this year.

Awesome. That's helpful. And then in terms of other construction loans or preferred equity deals that you guys are looking at where are you guys seeing those most.

We're seeing them on situations, where the debt coming due.

The tendency is a little bit more volatile weather.

Our properties have.

Regal type situation, where lenders won't touch it, but theres a basis, where.

If the tenant blows out you're still very happy to own the property at that sort of basis. So we're seeing those sort of opportunities been.

New acquisitions were.

Somebody wants to transact pretty fast on an acquisition in.

Can't wait on kind of finding a lender and going through that process. The more of a bridge loan acquisition sourcing.

Those two types of opportunities right now.

Awesome. Thanks, guys.

Thank you.

Thank you one moment. Please our next question.

Next question comes from the line of Michael Gorman of BTG again, Michael Gorman Your line is open.

Yes. Thanks, Good morning, John just another question on kind of the current market environment I know we've talked about.

A lot so far on the call but.

Maybe can you just contextualize and apologies if I missed it but when you think about the potential investment activity for 2023, and I know, it's maybe backend weighted how much of that is going to be kind of potentially.

Potentially atypical structured deals unusual transactions, whether it's an assemblage like you did in the fourth quarter.

Just how are you thinking about the weighting between maybe a traditional long term hold asset.

Some of the centers you recently acquired versus maybe some of the more non traditional investments.

Yes, it is definitely going to be.

Primarily.

Long term hold sort of like the type of acquisitions, we made at the at the end of the year.

What we're seeing in the market right now not a lot of activity there.

Her reluctance for sellers to bring properties to market without clear indications of where the pricing is going to be I think they they don't want to have something thats kind of shop worn these or type.

Fairly large shadow inventory of projects that we would like to participate in and try and buy.

<unk> are not on the market had been on the market before year end.

Pandemic before the pandemic.

<unk>.

The holders most likely need to sell so they're trying to kind of pick their spots. So right now it's pretty quiet, we expect as Matt alluded to to be more active later in the year, where we hope that there'll be some more activity for sure I think.

The talk in the market on other product types is that the debt situations, obviously with interest rates rising.

This is going to cause more and more friction which will probably.

So a lot more activity by the summer and so that would.

Backed by summer and back half of the year there'll be some decent opportunities, but that's where.

That's where we want to focus on.

Larger projects in terrific markets that.

We're going to do well over time.

Okay, Great. That's helpful and then maybe just.

As you think about not only the acquisition side of the investment side, but also maybe the disposition side.

Understanding you're always targeting the highest and best return for shareholders. As you think about it with a portfolio thats still on the smaller side and growing how do you balance out.

More stable acquisitions.

Or even disposing of single tenant assets.

For our portfolio, that's more weighted towards I think that kind of value creation component and a market that's kind of choppy like we're expecting in 2023, how do you how do you strike that balance.

Just given as you talked about before kind of the demands of a public company environment.

Yes, I mean, I think I think a lot of our investors understand.

The value creation side of it and taking advantage of the opportunities I think.

For instance.

The collection and being able to buy that asset on 58 acres at $172 per square foot way below where you can build it.

And the activity were seeing there is really.

Just kind of tell.

<unk> tells us that this was a terrific acquisition those are the type of deals we want to make more of where whether we're buying some vacancy or we're buying where you might have some turbulence with regards to a.

Tenant in the future.

But there is a solution to it that's kind of where we want to really grab some some value and opportunity.

So.

<unk> side really we're going to hopefully find a larger type acquisition, where that would allow us to accelerate some of the smaller projects that we have on the disposition side whether it's.

In Santa Fe, and Westcliff, those sort of things and then have more of these dominant centers in terrific locations of kind of where the focus is.

Okay, great. Thanks for the time guys.

Thank you I'm showing no further questions at this time I'd like to turn the call back over to John Albright for any closing remarks.

Thank you very much for attending the call and look forward to talking with you.

The call.

Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.

The conference will begin shortly to raise and lower Johan during Q&A you can dial one one.

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[music].

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[music].

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