Kennedy-Wilson Holdings Inc. Q1 2023 Earnings Call
Good day and welcome to the Kennedy Wilson first quarter 2023 earnings conference call and webcast.
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I would now like to turn the conference over to Devin bumped back. Please go ahead.
Thank you and good morning. This is Devin bhavsar and joining us today for Kennedy Wilson are Bill Mcmorrow, Chairman and CEO , Mary Ricks, President, Matt Windisch, Executive Vice President and Justin and body CFO .
Today's call will be webcast live and will be archived for replay a replay will be available by phone for one week and by webcast for three months. Please see the Investor relations website for more information.
On this call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income.
You can find a description of these items along with a reconciliation of the most directly comparable GAAP financial measure and our first quarter 2023 earnings release, which is posted on the Investor Relations section of our website statements made during this call may include forward looking statements.
Actual results may materially differ from forward looking information discussed on this call due to a number of risks uncertainties and other factors indicated in reports and filings with the Securities and Exchange Commission I would now like to turn the call over to our chairman and CEO Bill Mcmorrow.
Thanks, Kevin and thank you everybody for joining the call.
Yesterday, we reported our Q1 results and I'm pleased with the performance of our global portfolio.
The record levels of estimated annual NOI and fee bearing capital that we achieved and the progress we have made on our $3 billion of new developments many of which are nearing completion.
Our assets under management totaled 23 billion, which has increased by $5 billion since the end of 'twenty 'twenty.
Starting in July and through year end, we will begin delivering almost 1500 multifamily units in the U S in Dublin.
The iconic 150 room Ocean front Kona village resort.
And in Dublin, a mixed use property comprised of 471 multifamily units and two office buildings totaling 400000 square feet.
In Dublin.
Both office and apartment leasing fundamentals remain very strong.
Our portfolio is concentrated in asset classes, where you're seeing cash flow growth, including apartments logistics hospitality and our floating rate loan book.
These sectors account for approximately two thirds of our portfolio.
Occupancy remains solid totaling 94% for our multifamily and office at 98% for our industrial portfolio.
Goldman transaction market for real estate remain quiet in the quarter, primarily as a reaction to higher interest rates.
In the U S transaction volumes dropped by an estimated 60%.
We remain patient on new investments with our capital deployment limited in Q1, two our debt origination platform, where we completed $113 million in new originations and additional fundings and towards finishing our construction projects, where we deployed 60.
Millions of dollars of capital in the quarter.
In total over the last three years, we have spent $500 million of capital on these long term value add construction developments.
The disposition front, we made further progress on our noncore asset sale program and completed a $118 million of a wholly owned asset sales from our consolidated portfolio generating $82 million of cash to kw.
Looking ahead, we remain very focused on executing several important strategic initiatives aimed at growing the recurring cash flow to kw.
The first is the completion and leasing of several large development projects.
The majority of our development pipeline will be completed by the middle of 2024.
Total our development and lease up portfolio is expected to generate $97 million of additional NOI to kw.
70% of which is expected to stabilize by the end of 2024.
Another important initiative is to capitalize on the momentum in our investment management platform, which allows us to grow our recurring fee revenue and a capital light manner.
Our debt and logistics strategies were launched in 2020 and have seen rapid growth.
Backed by very strong institutional strategic partners.
That are still very keen to continue deploying capital with K W.
It's going public in 2009, KWE has now completed over $9 billion and data investments and since 2020, we have grown our global logistics portfolio to over $1 $7 billion in assets.
We have ample dry powder and both of these platforms as opportunities present themselves.
And third our multifamily portfolio, which is our largest asset class continues to see revenue in class cash flow growth.
With meaningful new cash flow expected as we complete our 5000 units under visit development in both the U S in Dublin.
90% of our U S apartment assets our suburban.
And offer a high quality lifestyle at an affordable price point and are located in cities and states with lower costs.
We believe rental demand will remain strong as the cost of homeownership remains high and in the U S and Ireland. Both places continue to face an under supply of quality housing over the long term.
With that I'd like to turn the call over to our CFO , Justin <unk> to discuss our financial results.
Thanks Bill.
On a year over year basis, our consolidated revenue grew by 6% driven by higher levels of rental and hotel income looking across our entire portfolio our share of property NOI loan income and base management fees increased by 4% to $127 million in Q1 were $508 million on an.
Basis.
As Bill just mentioned our Q1 results highlight our achievements of improving our recurring investment income, which has been and continues to be an important focus for us.
This improvement along with higher levels of realized gains on sale were offset by decreases in the level of noncash unrealized fair value adjustments and performance allocations on a year over year basis.
As such.
GAAP EPS totaled a loss of <unk> 30 per share and adjusted EBITDA for the quarter totaled $91 million.
Turning to our balance sheet and debt profile at quarter end, we had $349 million of consolidated cash and $249 million drawn on our $500 million line of credit.
During the quarter, we paid down that line of credit by $34 million.
We continue to execute on our strategy of minimizing our interest rate exposure and we ended the quarter with 97% of our debt either fixed or hedged as a reminder, we generally hedge using interest rate caps and these hedges have a weighted average maturity of two years. We also have a handle on our near term debt maturities with less than 3% of our debt maturing. This.
Sure.
Overall, our debt has a weighted average maturity of five six years and it has an effective interest rate of four 3% when taking into account the caps and swaps.
With that I'd now like to turn the call over to Matt Windisch to discuss our multifamily in that portfolio. Thanks, Justin as Bill mentioned, our multifamily portfolio is our largest sector.
Representing 54% of our global portfolio and $270 million of annual NOI to kw.
Our portfolio totals over 32000 and stabilized units with another 5000 units in lease up or development that are expected to add $45 million in multifamily NOI to kw.
Our ownership in our lease up and development assets is approximately 60%.
Our global market rate portfolio produced same same property revenue growth of 6% and NOI growth of 5% in Q1.
And are largely suburban apartment communities in the Western U S leasing spreads increased by 5%, resulting in same property revenue growth of six 4% and NOI growth of five 4%.
Operating expenses increased by eight 4%, primarily due to increased labor costs as we've held positions that were open in Q1 of last year.
However, compared to Q4 of 2022, our operating expenses actually declined by 3%.
Sequentially at quarter end, our in place rents were 7% below market.
Looking at this regionally our strongest performance came out of our top two apartment regions, the mountain West and the Pacific Northwest.
Which generated same property NOI growth of 9% and 10% respectively.
Leading the charge in the mountain States, where our assets in Utah were same property NOI grew by an impressive 12% from Q1 of last year.
Our assets in Colorado saw NOI growth of 15%.
In our smaller and in our smaller but growing portfolio of new Mexico same property NOI grew by a robust 23% from Q1 of 'twenty two.
We believe that our mountain west portfolio is positioned to continue generating strong demand for rental housing supported by a solid combination of lower cost of living.
Large growing university systems steady job growth and low unemployment large cap companies such as micron technology in Boise, and Texas instruments in Utah are investing billions into the development of large chip facilities.
We also continue to see expansion by local universities and health care facilities to keep up with some of the fastest population growth in the country.
In the Pacific Northwest, our second largest region occupancy has remained stable and same property revenue grew by 8%, resulting in NOI growth of 10%.
We expect we expect this region to benefit from increased demand from employees, who returned to work such as Amazon who started to have workers in person starting on May one.
We are already seeing signs of increased traffic at our properties in and around Seattle.
Finally in our northern and southern California assets.
Similar to what we saw in Q3 and Q4 last year, the ending of the eviction Moratoriums has resulted in higher bad debt and property level expenses, along with lower occupancy.
Over the next few quarters, we will go through the process of recapturing units from non paying tenants and look forward to resetting these units to market rents as both of these regions in California have a loss to lease nearing 10%.
<unk>, our California multifamily assets.
Our U S same property portfolio produced NOI growth of nine 2% quarter.
Quarter over quarter versus five 4% when including California.
We also made progress on our renovation program completing another 330 units at an average cost of $12000.
Which resulted in a 21% increase in rents we have another 6000 units that are remaining to be renovated in the U S with 75% of those units located in the mountain West and Pacific Northwest.
Regions, which positions us well for future portfolio growth.
April leasing look solid in the U S with blended leasing spreads of 5% across our market rate portfolio.
Turning to Dublin, where we have a 50% ownership in over 2500 units, we continue to see the highest levels of occupancy at 99%.
Demand for our institutionally managed high quality rental apartments remains strong in Ireland.
Similar to the U S. There remains an under supply of housing.
We look forward to beginning to deliver our approximately 1000 units under development in the third quarter.
And finally at our vintage housing affordable portfolio, which totaled 9200 stabilized units.
2400 underdevelopment.
We continue to see strong demand with occupancy of 97% and same property NOI growth of 5% in the quarter.
Post quarter end, we sold the wholly owned apartment community in Reno into our vintage portfolio.
Sale generated $11 million of cash to kw separately, we expect vintage to produce another $20 million of cash to kw.
In the short term, primarily driven by the sale of tax credits, resulting in robust quarterly distributions from this platform.
Turning to our investment management business.
Our fee bearing capital picked up to $6 billion in Q1.
Our growth over the last few years has been driven primarily from our debt and logistics platforms.
The launch of our debt investment strategy back in 2020 has been very has been very beneficial as the private credit asset class continues to generate attractive returns in the current lending environment, we've seen tightness in the banking sector and a pullback in lending from traditional providers of capital, which benefits our platform.
Here rates and spreads have resulted in solid unlevered risk adjusted returns north of 20% inclusive of our asset management fees.
In Q1, we completed $113 million of new floating rate originations and fundings with an average spread of 390 basis points over sulfur and an LTV of 50% <unk>.
Resulting in growth of the platform by 5% to $2 8 billion.
We have additional loan capacity of approximately $3 billion and look forward to growing this business as opportunities arise.
With that I'd like to turn the call over to our President Mary Ricks to discuss our industrial platform.
Thanks, Matt.
The rapid expansion of our global industrial portfolio has been a key driver of growth for our investment management platform.
Our portfolio now totals 11 million square feet with over 80% of our stock comprising institutional quality last mile assets located across the U K, where we continue to see solid fundamentals indoor.
Industrial vacancy rates in the U K remains very low at two 7% significantly below long term averages.
Occupier demand for quality assets remains strong as they seek to build supply chain resilience and achieve greater operational efficiency.
On the supply side higher financing and construction costs are slowing new developments, which we anticipate will support further growth in rents.
These attractive fundamentals resulted in a solid quarter of leasing during which we completed lease trends transactions.
637000 square feet.
Average term of seven six years.
These transactions delivered rental growth well ahead of our expectations in place rents growing by 50%.
Even with our successful leasing in the quarter, our portfolios in place rents remain 30% under market, providing us with a runway for future growth.
We have over $1 billion in capacity in our logistics joint venture and are actively looking for new opportunities to continue growing our portfolio in Europe , as well as our logistics footprint and our U S markets.
In total our investment management platform has an incremental $3 $4 billion of non discretionary capital, which we're looking to deploy across all of our announced platforms.
It will add significantly to our existing $6 billion of fee bearing capital, which has doubled since the start of 2020.
Turning to our office portfolio.
The majority of our stabilized office assets are owned through partnerships or signs within our co investment portfolio in total our consolidated portfolio sits at $3 9 million square feet and is centered around well located high quality office buildings with leading tenant amenities and strong ESG credentials.
As the polarization in the office market between great a stock and the rest accelerates we are well positioned to continue attracting tenants who are relocating to the highest quality space.
With that said, we're pleased to report we have seen a pickup in leasing activity in 2023, and we completed 380000 square feet at global office leasing through April with a weighted average term of six two years. This is more than double the leasing activity. We saw for the same period last year.
Approximately 70% of our office NOI comes from our European assets predominantly U K and Ireland in the UK the left as great a supply and absence of speculative.
The chip development activity across the country, it's a very different backdrop to previous downturns supporting headline rents and encouraging occupiers to secure the best face while still available.
In Dublin location and sustainability remain pivotal themes behind Q1 deals with no space occupied in the core areas of Dublin City Center, it good energy and sustainable credentials.
In Q1, we saw strong improvement in occupancy in the U K and we completed successful rent reviews in Ireland's leading to an increase in our global same store office NOI of 6%.
Our European office portfolio has many resilient characteristics, which reduces our risk exposure in today's market.
Including strong occupancy of 95% and eight year weighted average lease term to maturity landlord friendly lease structures with 97% of our office leases in Europe fully repairing and insurance insuring or fri leases similar to a triple net lease in the U S.
<unk> roster of high quality credit tenants, which make up 90% of our European rental income, including State Street, KPMG and Pfizer to name a few and stable in place income, which we continue to grow through rent reviews and active asset management.
For example in Ireland are best in Class office portfolio is made up of nine properties at a weighted average lease term of 11 years to exploration and average occupancy of over 95%.
Inactive type leasing pipeline for our limited remaining space, which we look forward to executing over the remainder of the year.
Turning to our development and lease up portfolio.
As we've been discussing on our last few calls we are nearing completion on many of our developments as well as making progress on our lease up portfolio.
Our development and lease up portfolio is expected to add $97 million to our estimated annual NOI over the next several years.
One of the projects. We're very excited about is the redevelopment of the iconic and historic Kona village resort situated on an unmatched location on the symbolic because of.
The Big Island of Hawaii.
W has a 50% ownership interest in this reconstructed luxury resort, which totals a 150 standalone guest holidays and suites, and we'll be providing incredible guest amenities across 81 acres. The property will also feature solid sustainability features such as genera.
<unk> and storing 100% of renewable energy on site and it's targeting LEED certification.
Travel demand has remained robust as we are seeing very strong forward bookings for the second half of the year.
We look forward to welcoming our first guests in July .
We're also making great progress at our sixth market rate and affordable multifamily developments in the U S and our three Devlin developments all expected to complete construction later this year.
In total the development and lease up we expect to complete this year represent $64 million of estimated annual NOI to kw when stabilized.
The foundation for strong future growth with that I'd like to pass it back to bill.
Thanks Mary.
Over our three decades of investing in real estate equity and debt.
There's a long history of uncovering opportunities in periods of economic uncertainty like we're in today.
We are prepared to react alongside our well capitalized strategic partners to take advantage of any new opportunities, which generally are sourced through our global network of established relationships that enable us to find off market negotiated transactions.
We have a great team with extensive experience in acquiring renovated building an asset management.
Which will allow kw to continue growing in a sound manner.
I'd like to thank our entire global team for their dedication and hard work.
With that Devin and I'd like to open it up to any questions.
We will now begin the question and answer session.
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At this time, we'll pause momentarily to assemble our roster.
The first question today comes from Derek Johnston with Deutsche Bank. Please go ahead.
Hi, good morning out there and thanks for taking the question.
Really excited about the development portfolio that that's going to deliver.
And stabilize hopefully by year end 'twenty, four and married did touch on the hotel and in Hawaii.
I just had a question I hear that there are bookings coming in but you know how is how are the initial bookings tracking towards your underwriting initially and then secondarily on this question how is the labor situation, which tends to be difficult in Hawaii, how have you been able to staff the hotel.
And.
<unk> for the Grand opening.
Thanks, Eric This is Justin I'll take that call that question.
So far what we're seeing we have meaningful amount of bookings ahead of the opening.
And we're seeing the ADR is far in excess of what our underwriting was there's significant demand. This hotel as you know has a lot of followers and you know historically has been open for a very long time, and we're seeing a lot of people who can't wait to get back. So we're very pleased with what we've seen so far in the future bookings and as it relates to employment, obviously as you can.
No on the island, it's difficult there's a limited supply of employees, but so far we've stopped a meaningful amount of the property already the.
The team on site has done a great job Rosewood has done a great job. So we're excited to be opened on July one and start welcoming our guests.
Okay. Okay.
Okay, great. Thank you.
And then on the debt platform.
It makes to see it grow here in first quarter in a tough environment and I would assume your positioning is pretty favorable giving banks are pulling back and even non banks like like private equity they use repos, which obviously a part of the banking system.
The secret sauce that you Guy.
Guys have you know clearly is your partners and mostly insurance companies have you seen any pullback or differences in their ability to underwrite deals that you bring to them is the success rate remained high and any insights you can give us on the debt platform strategic position.
Positioning would be would be helpful.
Yeah happy to answer that Eric So you hit the nail on the head there I mean, we're not relying on the banking system.
To utilize our platform. So we're not using any repo financing, we're using primarily insurance company and sovereign wealth money.
Globally throughout our platform and.
And so we're in a unique situation right now although the transaction volumes are certainly down so the kind of the overall pie for debt financings is smaller we've been able to capture a bigger market share just given our platform and our certainty of close.
We've been able to attract very high quality sponsors, we've been able to keep our pricing level.
Levels, you know kind of inline with where they were last quarter.
But we've also been able to bring down the loan to values.
Our most recent originations.
And so we feel very comfortable kind of where we are in the capital structure being at you know like we said, 50% LTV last quarter on the origination.
And you know there are certainly fewer players in the market, but we're being very selective.
And how we deploy capital that all being said the demand from the institutional side to place money with the platform remains extremely robust with our existing partners and certainly demand from others, who have gotten some incoming calls from people wanting to participate as well. So we feel very positive about the future growth prospects.
The other thing I'd say is in terms of pay offs, they've been very limited because the availability of financing from other lenders.
It's a bit more limited than it was historically, but the level of payoffs. We expect this year, we're gonna be relatively low as well.
Very helpful. Thanks, and understood and I guess lastly for me and then I'll I'll pass the mic.
Could you talk about your office portfolio outperformance what has contributed to clearly is completely different.
And what we've seen from other public office Reits that are primarily based here in the U S. If you can kind of just walk us through some of the competitive advantages that you secured in your portfolio and why is bucking the trend versus all other office Reits even.
Though it's a small piece of the pie and you're basically be a residential REIT your office portfolio really surprised me this quarter.
Sure I'm happy to answer that.
I mean, I would start by saying in the U K and Ireland.
Completely different office market, then and in the U S.
And I think the U K in general it has seen needed new supply and not spending over the last probably eight years.
You know overall, the U K office markets or perhaps a vacancy of 8%.
Example.
<unk> has a vacancy rate of 2% so you're really seeing you know not a huge vacancy and this has been going on now for many many years and I would say you know unlike the U S. C. B D. Some of which are are struggling to European markets really don't have those those factors.
I would also say that tenants are paying up for best in class.
With ESG credentials.
You really don't have an overhang of space, which I just described.
So really I think corporates are prioritizing employees, the workplace and and highly monetized.
Let's switch, which is really what characterizes our assets. So when you think about our portfolio.
And if you think about the same store for example, our Buckingham Palace Road asset, which is our largest office upset.
In Victoria, which is the west end.
Western has low single digit vacancy. So there's really just no space to speak of and that sounds fully let and pharmaceutical.
They're actually incorporate and security company Gaming company took the remainder of the space and then at Embassy Gardens, which is in London, a pharmaceutical company kick the remainder of that space and that's just long walls.
If you turn to our Irish portfolio, we have nine office assets, there and we have a very little wallets.
Over 11 years.
And it's just a solid office market, there and our assets I would say are new and they have ESG credentials and as I've been talking about the amenities, which I think is really whats. The corporates are bringing people back to work given all the amenities that our office assets are providing so I.
I think we just have a different portfolio and the market itself is quite different than in the U S.
Good stuff. Thank you that's it for me.
Great.
Your next question comes from Anthony Pallone with Jpmorgan. Please go ahead.
Great. Thank you I.
I guess first question is around just share issuance in the quarter you guys. It seems like you tap the ATM and just curious thoughts around that and desire to either do more raise liquidity or however, you were thinking about it.
Yeah, Hey, Toni it's Matt. So you know our view on that as we thought it made sense to add a little bit of liquidity in Q1, just given the current environment and what we expect to be some pretty interesting opportunities that will present themselves over the short to medium term.
We were able to utilize you know significantly higher volumes in the stock as a result of the index inclusion that took place. So that's when we did the vast majority of the issuance under that program I'd say going forward, we have a number of options.
Our disposal to create additional liquidity.
I think it's worth noting we're kind of past the peak of our development spend in.
Q1 was really the peak and we now expect to have cash flow coming off those investments soon.
So I guess, what I'd tell you is we'll continue to be very thoughtful towards any future use under this ATM program.
Okay. Thank you for that.
And then just as you mentioned thinking about opportunities.
You do have some developments in Ireland, you've done well there what's just the desire to own more there or just increase the scale of our platform versus say other parts of the world where you're operating.
Yeah, Hey.
I would say on the multifamily side, we definitely have.
A big appetite there our portfolio is operating at 99% occupancy.
So really virtually no space.
We continue to see demand Irish unemployment is at a 22 year low.
It's up 4%.
It's just it's a market that we like and you know it is I'm sure as you know we have a very well capitalized a French insurance company as our partner.
Great relationship with Lyft, and incredible portfolio that we'd like to grow and you've seen us put.
Quite a lot of capital into that portfolio and building.
Or assets that we're adding to a lot of that land that we built loan we acquired during the last downturn with very low basis. So we feel really good about our basis in our portfolio and we'd like to continue.
Where would you put you know cap rates and Dublin are.
Yeah, I guess in multifamily, particularly right now.
Have a better sense for the U S, but it's hard to tell there.
Yeah, I mean in Dublin, we've seen some recent trades in the low four cap rate range. It it really just depends because there's a mixed bag of stock you have some debt that's older.
You can't compare our portfolio to the older stuff. That's trading you also have some assets that kept zero amenities, we have assets that have parks and gyms and dog Park city.
Nurseries for kids at restaurants, and so I wouldn't really.
Obviously in <unk>.
But I would say that our portfolio is the best in class multifamily portfolio in Ireland and that will just continue with the roughly 1000 units that were adding to that portfolio. So if you think about our portfolio and there's really no com.
Long winded answer, but I would say low four cap rate range.
Okay. That's helpful.
And then just I guess last one on the debt platform I think most of what you've done with that thus far has either been you've originated or participated in originations but.
Is there an appetite to also just by existing debt and also just if so just how youre thinking about that and I ask partly in the context of I think bill your historical strong suit you had for a long time with just our relationships with banks and working through some of the issues. They had and here we are in this environment.
Yeah, Tony So actually a handful of the assets we've originated under the desk platform have been.
Purchases and a number of those discounted.
But you are correct I mean, if you look historically at where we have participated in the.
That space. The majority of it has been you know heavy discounted no purchases. So we're very well equipped to handle that we have obviously the teams that understand the assets and the teams that understand the debt.
And so we think that will be a big opportunity that may be coming here in the next several quarters.
Out of the banking system. So we're monitoring everything we're watching what's happening and where we've got the capital ready to the extent those opportunities present themselves.
Yes, I think 22 this bill the only thing I would add to that is that you know.
It's a very good point you made.
Think about it over the years, we've probably.
Transacted with over 100 different banks around the world.
We're viewed as a very.
Trustworthy County, or counterparty I mean, I think I can remember married during the last great recession, we probably.
Transacted with authority individual banks in Europe .
And so this is something we've always.
Really made sure we cultivated where these types of relationships.
<unk>.
Because as I said in my remarks, the most important thing to us is to try to find transactions that.
Our directly negotiated with.
Somebody that we're buying from.
And.
So we you know we will see how this all one fold zero over the next 12 to 18 months.
But that's a very.
Important.
Part of our.
Strengths I would say and I think as I've said, a number of times. The other part of this is that.
Team of people here at Kennedy Wilson are basically the same people that have been together for.
Pretty much a couple of decades.
And so those relationships are maintained.
We've all worked through one recession and all weighed in all nine.
Of course, we've all come through this period of three years, where we've worked through.
And as the challenges that any of us had related to the pandemic and so you know you've got a time tested group of people with all of these are existing relationships.
I'd say the last thing is the.
The biggest difference between all the way to know nine for us.
We have a very significant stable base of recurring cash flow.
And maybe just as important.
Oh wait no nine there was a dearth of cow there wasn't capital available around the world at the beginning.
And today.
Unlike them for US we have the capital partners that were already doing business with who in themselves are very well capitalized.
And so as opportunities present themselves all of these factors are going to play into it.
What we do.
Great. Thank you for that.
As a reminder, if you would like to ask a question. Please press Star then one can be joined into the question queue.
The next question comes from Josh <unk> with Bank of America. Please go ahead.
Yeah. Good morning, everyone. Thanks for the time.
I just wanted to touch base on the vintage housing platform.
It's pretty unique platform you guys have just kind of thoughts on your expectations of future growth within it.
Yep.
So vintage yeah, it's definitely a unique platform and we've only been an owner in the business now since 2015, and certainly has exceeded our expectations from when we made the investment.
In terms of kind of growth and adding units to the platform we've been building.
Building ground up using.
Using tax exempt bond financing and tax credits primarily to fund those developments.
And you know we've got a handful of those assets coming online here in the next year and we continue to look for opportunities in that space to find new off to find new investments.
You know historically, we've been doing these more one off you know finding one investment in building it.
We're always out there looking for other entities that may have more scale.
But it's a very fragmented industry and so we've been able to grow at a very good pace, but certainly would be.
Out there looking and always trying to find bigger opportunities, but for the time being.
You know, we're generally adding three to four new assets per year to the platform.
Which adds great recurring cash flow and then in terms of just growth within the portfolio itself like NOI growth.
You know, it's all tied to area median income in terms of how you can grow the rents and so.
With the inflation, we've seen over the past couple of years.
And wages, we've been able to raise rents in that platform at a higher growth rate than we thought initially.
I appreciate that color one thing that's come up on it came up on another earnings call on the on the broader.
Housing starts and permits that it was that it might have been an elevated level of affordable housing.
Coming online through through that is that something that you guys are seeing and does that impact your platform at all.
Yes, I mean in the markets. We're in we haven't seen a you know an.
The oversupply of affordable housing in fact, I mean, we're running at 97% occupancy most of the assets we're building.
We generally are 50% to 60% pre leased before we even open.
And Theres a couple of instances, where we actually have a waitlist of people to get in.
And so you know certainly in the markets that we operate in we haven't seen any of that in fact in certain states, it's becoming more challenging to get tax credits and bond allocation.
And so if anything there's certainly we're seeing more of an under supply of affordable housing in our markets and an oversupply right now.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Bill Mcmorrow for any closing remarks.
Well listen thank you everybody for taking the time to listen to our story today.
As I always say, we're always available offline that anybody has any follow up questions that you think of.
So thank you very much and have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.
Okay.
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