Q2 2023 Apartment Income REIT Corp Earnings Call
Yeah.
Welcome and thank you for attending today's era communities second quarter 2033 earnings Conference call. My name is JP and I will be your moderator for today's call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would.
I'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question. Please press star two.
I'd like to pass the conference over to Lisa Cohn, President and General Counsel of Air communities. You May proceed.
Thank you Jamie and good day.
My name is Lisa Cohn, and I am President and General Counsel of Air communities. During this conference call.
Once we make are based on management's judgment, including projections related to our 2023 expectations.
These statements are subject to certain risks and uncertainties, a description of which can be found in our SEC filings.
Actual results may differ materially from what may be discussed today.
We will also discuss certain non-GAAP financial measures such as <unk>. These are defined and are reconciled to the most comparable GAAP measures in the supplemental information that is part of the full earnings release published on <unk> website.
Prepared remarks today come from Terry Considine, our CEO Tim.
Chemo, a president of property operations.
So on the graph, our co Chief investment Officer, and Chairman of our investment Committee and Paul Beldin, Our Chief Financial Officer.
Other members of management are also present.
All of us will be available during the question and answer session, which will follow our prepared remarks, I will now turn the call to Terry Considine Terry.
Thank you Lisa.
And happy 21st anniversary Ed here.
Thank you for your leadership of so many functions that are the foundation of what we do.
In another call, we should spend more time discussing their importance and all that you do so well.
Thank you to everyone on this call for your interest in the air.
There was organized to build a business based on its comparative advantage in property operations.
Today I plan to comment on our progress during the second quarter by addressing six subjects.
More detailed reporting to follow up from my colleagues.
First <unk>.
Keith and his team delivered solid customer satisfaction are record customer retention rates of 62% low controllable operating expenses and high operating margins.
Ethernet teams steered a steady course as rent growth cooled across eight markets.
Navigated the turbulence in Los Angeles from the wind down of some limitations on landlord remedies and the strike by the writers yield now joined by the screen actors Guild.
With growth in same store and acquisition portfolio has taken together.
NOI grew at low double digits.
This will flow through to gross in <unk>, which is already increasing at the highest of the apartment Reits that have reported pro forma last year's prepayment of the income note.
It's earn in next year, we will drive 2024, <unk> <unk> higher.
Second John .
John sold $32 million and lower rated properties to invest in property upgrades with IRR is greater than 10%.
John and Joshua <unk> and his team have a pipeline of opportunities to buy additional properties with target returns 200 basis points greater than <unk> cost of capital.
Third Paul kept the balance sheet, bulletproof, reducing leverage and extending its duration.
There is very little re pricing risk in the next two years and almost no refunding risk in the next five.
Air enjoys abundant liquidity.
Fourth.
Meadow, Grady and Josh Medics again, combined to access $600 million and equity capital provided by two of the largest and most sophisticated global real estate investors.
Increasing errors joint ventures from two to four.
And increasing assets under management to 120% of <unk> JV.
The sale of partial interests is another form of errors familiar paired trades.
Most investors provided capital, which areas used to delever repaying all debt with an interest rate greater than 4%.
The balance will be used to buy real estate with target returns 200 basis points over cost of capital and to fund share buybacks as part of our balanced investment program.
Both joint ventures undertake taking include undertakings to co invest with air and future acquisitions, bringing are substantial resources to invest at a time of great opportunity due to frozen transaction markets.
That expects to sell down the air position in some of the existing joint ventures to enhance the expected return on investment on areas continued investment and to generate additional liquidity to invest in paired trades.
Yes.
Most important fact of todays report.
And the report of other apartment Reits is that rental rates and inflation are dropping and dropping fast.
Some pure cases, new lease rents are negative.
This is not a surprise and is consistent with our January guidance, which assumed earn in and other factors, but no market rent growth.
The most important question is what happens next.
The apartment business will return to the blocking and tackling of property operations.
<unk> has demonstrated comparative advantage for example, with peer leading retention, we do more of our business and higher price renewals less exposure to new lease rates.
For example, we have delivered lower flat controllable operating expenses for more than a decade.
The most important.
<unk> opportunity is to acquire properties at distressed prices distressed by the relative shutdown of transaction markets as sellers trying to hold on for lower rates to arrive.
Here are has the advantage of access to abundant equity capital and the opportunity to use the air edge to improve our property operations of acquired properties as demonstrated and reported in our earnings release.
There is a related opportunity in the stock market to buy back shares priced at a discount.
Part of a balanced program of investment just as air did last year when are bought back 5% of our outstanding shares.
Six.
<unk> has a highly engaged board. This is a great resource to me and the entire management team.
Of particular note the board has a shareholder bent and is recommending various amendments to the air charter to strengthen shareholder rights.
You will see these of the proxy statement with the <unk> annual meeting scheduled for September 15th.
As we turn to the challenges and opportunities I.
I feel fortunate to work with such a remarkable and motivated team I. Thank each of them my colleagues on the board.
Teammates here in the Denver office, and especially my teammates in the field, who is good work sets the standard for excellence in our industry. Thank you. Thank you I'll now turn the call to Keith Kimmel President of property operations Keith.
Thanks Jerry.
The second quarter was good.
At a high level, we are seeing solid demand, which has improved further in July .
Tension at historical high levels.
With only 38% turnover in the past 12 months.
Rents continue to increase.
Albeit at a slowing rate and are ahead of our plan.
Bad debt of 60 basis points closer to normal.
Because of <unk> continued focus on resident quality and fewer court delays.
And revenue ahead of plan, resulting in an increase to <unk> operational guidance.
We are now more than 80% complete with leasing for the year and have the perspective to share three takeaways.
First.
The market is playing out a bit better than we anticipated.
With solid rate and demand.
In the second quarter, signing new lease rates were up 6%.
Renewals were up 7% leading to assigned blended average increase of six 5%.
Leasing volume in the second quarter was in line with 2020 two's record level of activity in July is 10% ahead of last year.
By design occupancy decreased during the quarter in line with our expectations as we are transacting leases at peak volume.
We call this frictional vacancy, which will begin to wane in August .
<unk> occupancy growing by approximately 2% by quarter end.
This cadence is predictable and <unk> business and as part of our annual plan.
Second.
Youre seeing financial results tracking ahead on both revenue growth and expense management.
In the second quarter revenue was up eight 8% from last year.
<unk> were up four 1% with controllable operating expenses up only 1%.
As a result, net operating income increased 10, 6% from last year.
<unk> operating margin was 74, 2%.
Up 120 basis points from 2022, and the highest second quarter margin in <unk> history.
As a result of the outperformance to our plan in the first half we raised our revenue guidance lowered our expense growth guidance and raised our net operating income guidance.
A moment Paul will discuss these in more detail.
Sure.
<unk> continues to be a powerful engine for growth.
The implementation of <unk> operating model creates above market revenue growth and margin expansion.
Our acquisitions from 2021 now owned for approximately two years.
Net revenue up 19%.
And net operating income growth of up 35%.
These marks were both better than double their same store portfolio in the second quarter and added 90 basis points to same store revenue growth.
As we've implemented the air edge margins at these communities have grown 420 basis points from 67% during <unk> first quarter of ownership to over 71% today.
Our class of 2022, and 2023 communities owned for one year or less had sequential income growth of three 4% in the second quarter and are expected to contribute revenue and income growth in 2024, roughly double that of air stabilized communities.
Looking ahead, we see a solid start to the second half of the year pricing remains solid with July signed new leases up four 7% renewals up five 7% and blended lease rates up five 1%.
Demand is robust and leasing volume is 10% ahead of last year.
July occupancy is 94, 6%.
On our plan and our seasonal low point by design with peak frictional vacancy.
Due to solid leasing velocity and retention our lease percentage, we are leading indicator of occupancy has increased 170 basis points, thus far in July and.
And points tour our points toward our expected occupancy increase of approximately 2% between now and the end of the third quarter.
My final takeaway for the quarter is that the business is returning to normal after three tumultuous years.
Since 2020 results have been driven by the Covid response.
Urban or suburban locations sunbelt versus coastal markets and the impacts and reactions to generationally high inflation.
These factors are normalizing and what we're left with is an industry in which operations matter.
This is a time when the <unk> will be increasingly apparent.
<unk> demonstrated expertise and combining data process and most importantly people.
Our acquisition portfolio drive sustainable higher revenue growth.
And in our stabilized portfolio leads to higher margins and better income growth.
This long term engine makes our portfolio of properties and in particular, our new acquisitions much more valuable.
My thanks to all of their team members for your consistently providing world class customer service, which is the true foundation of the year rich.
I'll now turn the call over to John Graff, the chairman of our investment Committee John Thank.
Thank you Keith.
Pat had a busy year.
On the transactions front.
<unk> side, we sold approximately $1 8 billion in 2021 and 2022 at good prices and good markets. It is harder now where we have completed much of our planned reduction in older properties and have reduced our exposure to regulatory risk and uncertain rule of law.
During the quarter, we sold two properties, reducing our capital allocation to New York and we expect to exit the market entirely through the sale of our loan remaining property in New York City, perhaps before year end.
We also formed joint ventures with two institutional investors to recapitalize 11 properties.
And in aggregate of $1 2 billion generating approximately $600 million in proceeds to air.
These sales are partial ownership like the sales of 100% ownership.
Our exposure to older properties.
We consider the long term cost of capital on an unlevered IRR basis to be 8% and near term cost to be about 6%, but blended down to mid fives by fees and reduced capex obligations.
We are confident that we can reinvest by purchasing brand new properties and superior locations for returns up 200 basis points or higher.
As I've said before we're spread investors, our JV partners provide us capital that is not cheap.
Given pes operating skills, we can make good money buying new properties in great locations.
And at a discounted price due to the onerous interest and refunding or paying down maturing loans.
We are in advanced negotiations on opportunities to invest approximately $200 million.
If successful the transactions are expected to close later this year or early in first quarter 2024, with current returns neutral to 2023, <unk> and a penny accretive to 2024, <unk> with long term unmet irr's in excess of 10%.
I will provide additional information if and when the transactions close.
Beyond capital recycling debentures provide are the opportunity for outsized future growth by co investing with two of the world's largest real estate investors enhancing.
Enhancing our access to more and larger opportunities and enabling us to grow AUM and to generate recurring fee income as incremental <unk>.
We are indeed bullish on our growth prospects and are energized and prepared to capitalize on the opportunities being presented in these exciting times.
We remain firmly committed to disciplined capital allocation and expect our future portfolio growth will be opportunistic.
We will continue to work to improve portfolio quality by allocating capital into well located high quality properties that will benefit from the air edge sufficiently to generate enhanced returns with limited business risk and within our leverage policies.
In short we will continue to look to invest in neighborhoods and addresses that are attractive to high quality residents and have some protection from competitive new supply.
And we will maintain broad portfolio diversification and invest only when returns magnified by the air edge are highly accretive to our cost of capital.
That I will turn the call over to Paul Beldin, Our Chief Financial Officer, Paul. Thank you John today, I will discuss <unk> high quality balance sheet report second quarter results and our expectations for the full year and conclude with a brief comment on our dividend.
Their balance sheet is extremely well positioned proceeds from two new joint ventures were used primarily to repay debt with an average interest rate of approximately 6%. Thus offsetting the loss of net operating income from the sale.
As a result leverage to EBITDA is reduced by six tenths of a turn.
Additionally, the refinancing of higher cost shorter term debt lower average borrowing costs and lengthen our weighted average maturity.
Our leverage to EBITDA is now $5 91, and within Arris targeted range avail.
Available liquidity of approximately $2 3 billion.
Adjusting for size. This is over three times the peer average.
We have a 10 year $1 billion financing commitment.
Which combined with cash on hand is sufficient to refinance efficient essentially all maturing debt through 2028.
And 96% of air Leverages fixed rate.
When combined with no debt maturities until the second quarter of 2025 and has little exposure to repricing of risk.
1% change in interest rates would affect earnings by less than a penny per share per year.
Turning to second quarter results.
Second quarter <unk> 58 per share is up 13, 7% year over year as adjusted to exclude the nonrecurring benefit received in 2022 from the Aimco note prepayment.
And second quarter <unk> is a penny above the midpoint of guidance, a result of lower than anticipated controllable operating expenses and higher fee income in our same store and acquisition portfolios.
Looking forward.
As a result of our strong operating performance to date and the success of peak leasing season.
We are increasing our expectations for same store revenue growth to be.
Between 788, 6% an increase of 20 basis points at the midpoint.
Reducing our expectations for same store expense growth.
Between 5% and five 6% a decrease of 45 basis points at the midpoint.
Resulting in increased NOI growth to be between eight 6% to nine 8% an increase of 40 basis points at the midpoint.
Yeah.
We're also narrowing our expectations for full year <unk> to be between $2 38, and $2 44 per share while maintaining the $2.41 midpoint.
One penny of incremental same store contribution is offset by the expectation of greater than originally anticipated casualty losses.
The third quarter.
<unk> <unk> per share of <unk> 63 at the midpoint.
<unk> of sequential growth is due predominantly to NOI growth in our same store and acquisition portfolios.
Implicit in our full year and third quarter F. <unk> guidance fourth quarter, <unk> 66 per share at the midpoint.
Similar to our expectations for the third quarter continued growth in our property NOI will contribute significantly to sequential growth.
Theres business plan results in sequential revenue and in turn NOI growth concentrated in the second half of the year.
You can see this in our 2019 through 2022 results.
For example in 2020 to about two thirds of our sequential rate growth occurred in the second half of the year.
I've noticed this nuance is missed in many sell side models for model property NOI growth is assumed to grow on a more ratable basis through the year.
I encourage analysts to include this cadence in their models.
<unk> self created noise in their reports.
I know, what's appreciation that full year consensus <unk> is in line with our guidance.
One last item regarding our expectations for full year <unk>.
With the completed joint ventures, we now have approximately $2 2 billion of third party assets under management.
As a result asset management property management and <unk>.
<unk> related fees are increasing insignificance.
In 2023, we anticipate these fees net of allocable cost will comprise approximately 4% of <unk>.
Approximately <unk> 11 per share.
Of this amount.
Approximately 6% as by contract and expected to continue for the life of the ventures.
The remaining fees are specific to 2023 activities.
Note that we earn similar fees in 2022, and we anticipate a similar amount will be earned in 2024 and beyond.
This income was anticipated in setting 2023 guidance and our expectations are largely unchanged from the beginning of the year.
Lasse their board of directors declared a quarterly cash dividend of <unk> 45 per share on an annualized basis. The dividend reflects a yield of over 5% based on the current share price.
Additionally, the tax efficient nature of Eris dividend allows taxable investors to retain 40% more of its dividend as compared to peer average.
With that we will now open the call for questions. Please limit your questions to two per time in the queue, operator, I'll turn it over to you for the first question.
At this time I would like to welcome everyone to the Q&A session. If you wish to ask a question at least you finished higher one or your telephone keypad.
6% first question comes from the line of Eric Wolfe from Citi. Your line is now open.
Hey, Thanks for taking the questions. Paul you mentioned that the sequential increase was due to sequential.
NOI growth third quarter than in the fourth quarter.
So just to be clear none of it or very little bit is due to any additional fees.
Good.
Versus the first half so.
At $5.
Transactional fees, if you will.
Steady through the year, it's not going to be the jump that you see in the back half.
Eric you do really good work in the first half of the year, we had about five and a half cents of net fees and for the full year. We expect 11. So the contribution is ratable first half versus second half and what was really driving that second half <unk> growth is incremental property NOI contribution delivered by that both our same store portfolio, which is growing.
At a rate highest amongst the peer groups, but more importantly, the acquisition portfolio, that's growing at a rate about double our same store pool.
Got it Okay. That's helpful and then.
Some of this obviously is going to be determined by the increase that you see in occupancy you mentioned that the lease percentage is up.
70 basis points gives you confidence that you're going to see that 200 basis point increase.
I can start in the quarter.
You see that and when you see that.
Also see the rate stabilizes at that point or potentially re accelerates or are you expecting more of a normal seasonal decline, even though you have that answer to that.
Yes, Scott.
Eric It's Keith.
Thank you for noting this is the way that we've structured our business.
For more than a decade in fact, we take advantage of this peak season and the peak demand.
And then and then showed this acceleration that comes in the second half of the year and so what would traditionally happens as this supply and demand go start swinging in our favor with our occupancy building I don't want to get ahead of myself and call out exactly what the rates will do but we anticipate that we'll be in a stronger position month by month as we find our way through.
The balance or to the end of 'twenty three.
Okay. Thank.
Thank you.
Your next question comes from the line of Rob Stevenson from Janney. Your line is now open.
Good afternoon, guys, Keith how much of the one 2% of gross bad debt is California.
Any of the other markets comprising a disproportionate amount.
Robert This is Paul I'll start and see if he has anything to add is one thing that we've talked about in meetings over the quarter is how we have been quite successful in.
Turning over our resident base, and California, and particularly in Los Angeles. In particular are we had a large percentage of our delinquent residents as we look at where we are as of the end of the second quarter.
Many many of those delinquent residence have now left our portfolio, which is in part contributing to our occupancy levels. At this point in time. So at this point, what I would ask you to focus on bad debt is not necessarily the locations of the folks but more so focus on the fact that as we analyze our portfolio.
Have about the same percentage of our population base that is becoming delinquent, but because of court delays other processing delays, we have a larger number of individuals that are delinquent and that's what's contributing to that relatively high gross bad debt level of one 2% as those backlogs are worked through and are reduced we.
Expect that gross bad debt number to continue to decline through the balance of the year.
Does that is that really a back half of 'twenty three or is that a first half of 2004 to get through that backlog.
We've worked through a lot of it.
Rob already so I mean, there's still some to go we have about another.
80 residents, but.
Kind of work through that.
Would say is in the second half, but if you start with the beginning of the year.
We were north of 250 that we were navigating through so we've worked through a lot of it.
And we're in good shape.
I think that not only will we get a little tailwind towards the end of this year, but it will build into 2024.
Okay. That's helpful and then Paul you.
You talked about on <unk> question about the build from second quarter to third quarter, but what gets you above the mid point, what's gets you at that 64% to 65.
Even higher.
<unk> per share in the third quarter, what's the what's the main delta that gets you higher than the midpoint.
I think the Delta is how quickly we're successful at continuing to build occupancy Keith laid out a target of our expectations, but internally, we want to do better and so I think that's the largest largest lever that we have.
Okay. That's helpful. Thanks, guys have a good weekend. Thanks.
Sure.
Your next question comes from the line of handle thank yous.
From Mizuho. Your line is now open.
Hey, good afternoon out there.
So well.
Well, Paul I wanted to come back to the <unk>.
The 11, you mentioned did I hear you right.
Just saying that all of that was contemplated.
The initial guide or at least how you're thinking about the year when you're setting the budget and then of that 11, how much.
Sustainable from here kind of understand what the impact on 2024.
Also by the way included in your pipeline. Thanks.
Yes, and thank you for the question.
I did indicate you did hear me correctly.
Contribution of fees from services provided to third parties was anticipated in our annual plan for the year. So that's not a surprise as far as breaking into the 11 cents down between items that are by contract and buy right as part of our joint venture agreement that's about six cents of the 11th.
And so the remaining <unk> is related to 2023 activities.
Let me give you a couple of examples of what those are.
And what we have done in the past this is not a new phenomenon for us or for our activities in November 2022, when we sold our portfolio in new England to a small regional operator.
We provide asset management services for about six months post close to help that operator integrate those properties into their platform.
The second example is that oftentimes Keith and his team will start to provide property management services in advance of closing on a future acquisition. We think this is a win win for us because not only do we get to earn property management fees, but we get to start the process of <unk> the communities, even before our ownership the guests and so that just accelerates.
The incremental growth that we expect to achieve through these acquisitions and so while these are all episodic in nature and tied to specific transactions in specific years.
We believe in what we're confident in is that this level of contribution not only did we achieve it in 2020 to earn half of that amount in 2023 and have strong visibility in the remainder of the year and we feel good about this continuing in 'twenty four and into the future.
Got it got it and just to be clear that is an NOI.
As far as where it is recorded.
The costs are in a couple of different places on our supplemental schedule too.
The majority of the costs are either included in our net G&A or net property management expenses and another.
If you want to go through the details happy to do that offline.
Okay I'll follow up.
A quick one for you.
What is the blended lease rate assumptions for the second half of the year in order for you to achieve a two to two 5% at year end and could you also talk a little bit about what the market growth expectations for your markets.
For the back half of the year, even though I don't think you include that.
In your outlook.
And when we look at the second half essentially about somewhere between a mid four to five blend will get us to the.
The number that we have put out as far as the midpoint of revenue guidance.
And then as far as market rent growth, we don't have anything that is <unk>.
Predicted in there, but what we would say is is that.
Going back to.
Erik <unk> question about whether or not we see some acceleration in the second half.
We traditionally see when we're building that acceleration of occupancy we start getting some strength and therefore that also helps us build some of it I think the most important thing is to be thinking about that 80% of our business is done in that 80% is already starting to earn in and of course that will be the earn in that goes into 2024.
That's very helpful can I sneak one in love to lease where that is right now and maybe what the highest and lowest thanks.
It's running about 2% today, but I think that this is there's a lot of questions that have come over the past few years on loss to lease.
Just sort of define it every time, we transact a new lease we reprice it at the market, which it is today. So if I least one Lisa department today full market. It starts at zero and then it starts building again as you get forward importantly, it's about focusing on as it grows and when we get to the end of call. It December that's when the relevance of how much of that.
It's grown really becomes impactful because it gives us the insight of how we'll be able to take advantage of it and recapture as we get into 2024. So.
Now as you can imagine I talk about having 80% of our leasing activity were repriced, we're recapturing all of those losses to leases, we're resetting them all again and now we're rebuilding and began so most importantly is to think about where 2% today building with our strength and power going forward and when we get to December that's when it's most important to look at that number.
Very very helpful. Thank you.
Again as a reminder, if you would like to ask a question. Please press Star then the number one and your telephone keypad.
Your next question comes from the line of John Kim from BMO Capital markets. Your line is now open.
Thank you I had a couple of questions on the new disclosure you provided on your acquisition portfolio. The class a 'twenty one 'twenty two 'twenty three.
Our first question is on.
The class a 'twenty, one can you remind us which markets.
You acquired that year.
What may have driven that.
2% revenue growth a couple of years later.
The second part is the 'twenty two 'twenty three.
What was the blended lease growth rates, we achieved in the second quarter to.
To date, if you have that.
John I'll start with the first question and then turn it over to Keith to talk about lease rate growth. Our class of 2021 is comprised of <unk>.
Five properties.
Four of the five are located in the Washington, DC area and the fifth is located in southeast Florida.
So those as we called out our release those properties have performed very well Keith quoted the contribution to same store growth to just give you. Another data point, our NOI growth benefited by about 170 basis points in the second quarter from the contribution of these properties.
Mentioned earlier.
We anticipate similar levels of contribution as we go forward with our acquisition portfolio, a powerful lever lever for growth for us.
And John as we look at some of those blended lease rates.
Similar to what we've seen in same store, but what I would say is an important to notice is there is a whole bunch of other things that come along with that of course, our lease architecture, a variety of different parking initiatives and non smoking and things that really we repopulate with a different quality of residents. So we focus very much when a resident who wants to stay with us for long term.
In which we get pricing power from retention and Thats really where the emphasis starts really building and then that gives us some pricing power as we look forward.
Will you be providing this disclosure going forward.
Yes, we would intend so if it's helpful.
Okay.
On Miami, you had a pretty significant drop in occupancy of 20 basis points.
During the quarter.
The market, obviously with a lot of new supply I know, you're pushing rents pretty hard.
I guess my question is are you still sending out renewals in that 15% range of Miami.
And can you provide your leased rate.
Maybe currently.
Sure John So the first the first is is that when we look at the.
Occupancy.
I mean, there are a couple of things I would point to the first one is is that we've had an ongoing kitchen and Bath program had a couple of our very particular properties at Bay Parc and Flamingo.
And they will fluctuate up and down as we're taking advantage of some of those.
Units to take advantage of the opportunity to raise the rents.
When we look at the renewal rates and the rates in general and Miami. They are cooling and so I would say that they are not necessarily going out of those 15 that we were seeing called in the first half of the year. There are more in the high single digits.
And as we look into our Gwen.
That are occurring today, there is similar type of range in the in the mid single digits.
And what about the lease rate I know you quoted on the portfolio overall, but what is it.
Florida.
I am I have to see if I have that number on hand here, John I don't know that I haven't right here.
Okay, I don't have it but I can follow up with that exact number for you.
Great. Thank.
Thank you.
There are no further questions at this time I will now turn the call back over to Terry Considine for any additional remarks.
Well. Thank you very much for your interest in air.
Given the questions I'd just like to emphasize two points. One is this second half ramp reflects 80% of the leasing already done so.
Questions of course about what's happening in the market today, we've disclosed pretty well what our expectations are.
Want to encourage you to think about the fact that a lot of it is just the earn in our going forward of work that's already been accomplished.
Secondly, the questions about occupancy and need to be put in the context of the cadence of air property operations.
Theyre not assigned.
Weakness there.
They are a sign of turnover and it's important that the market understand that our deal you have exaggerated importance to a detail.
Beyond that if you have further questions. Please give us a call.
Either me or Matt Grady or Paul Belden, and we'll do our best to be completely transparent. Thank you very much have a great weekend.
This concludes today's conference call you may now disconnect.