Q4 2023 Urban Edge Properties Earnings Call
Operator: Good morning, and welcome to Urban Edge Properties' 2023 Year-End Earnings Conference Call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer, Jeff Mualim, Chief Operating Officer, Mark Langer, Chief Financial Officer, Rob Milton, General Counsel, Scott Oster, EVP and Head of Leasing, and Andrea Drazen, Chief Accounting Officer. Please note that today's discussion may contain forward-looking statements about the company's views of future events and financial performance, which are subject to numerous assumptions, risks, and uncertainties, and which the company does not undertake to update. Our actual results, financial conditions, and business may differ. Please refer to our filings with the SEC, which are also available on our website, for more information about the company. In our discussion today, we will refer to certain non-GAAP financial measures. Reconciliations of these measures to GAAP results are available in our Earnings Release and Supplemental Disclosure Package in the Investors section of our website. At this time, it is my pleasure to introduce our Chairman and Chief Executive Officer, Jeff Olson. Great. Thank you, Areeba, and happy Valentine's Day to everyone.
Good morning, and welcome to urban edge properties 2023 year end earnings Conference call. Joining me today are Jeff Olson, Chairman and Chief Executive Officer, Jeff Marlins Chief.
Reading Officer, Mark Langer, Chief Financial Officer, Bob Milton General Counsel, Scott Auster, EVP and head of leasing and Andrew Dreesen Chief Accounting Officer. Please note today's discussion may contain forward looking statements about the company's views of future events and financial performance, which are subject to numerous assumptions.
Risks and uncertainties and which the company does not undertake to update our actual results and financial conditions and business may differ.
Please refer to our filings with the SEC, which are also available on our website for more information about the company.
Our discussion today, we will refer to certain non-GAAP financial measures.
Conciliations of these measures to GAAP results are available in our earnings release and supplemental disclosure package in the investors section of our website.
At this time it is my pleasure to introduce our chairman and Chief Executive Officer, Jeff Olson.
Great. Thank you, everybody and happy Valentine's day to everyone.
Jeff Olson: As highlighted in our press release, 2023 was a record year from virtually every perspective: leasing, development, refinancing, acquisitions, dispositions, executive and board refreshment, simplification, and earnings growth. Our total return to shareholders was 35 percent, the highest in the shopping center REIT sector, outperforming our peers by 2,300 basis points. Moreover, we are optimistic about our future, particularly due to several points of differentiation relative to our peers. First, our portfolio is concentrated in the D.C. to Boston corridor, the most densely populated, supply-constrained area in the country. This not only results in high embedded land values but further limits new supply due to the lack of available land and high costs to develop in our market.
As highlighted in our press release 2023 was a record year from virtually every perspective leasing development refinancings acquisitions dispositions executive and board refreshment.
<unk> and earnings growth.
Our total return to shareholders was 35% the highest in the shopping center REIT sector outperforming our peers by 'twenty 300 basis points.
Moreover, we are optimistic about our future, particularly due to several points of differentiation relative to our peers.
First our portfolio is concentrated in the DC to Boston corridor, the most densely populated supply constrained area in the country.
It's not only results in high embedded land values, but further limited new supply due to lack of available land.
And high cost to develop in our markets.
Jeff Olson: Second, we have executed leases that will generate $27 million of rent upon commencement, representing 11% of our current NOI. We also have $168 million of anchor repositioning and redevelopment projects underway, expected to generate a 15% return. Importantly, over 90% of this pipeline is pre-leased. Third, our size.
We have executed leases that will generate $27 million of rent upon commencement, representing 11% of our current N O I.
We also have a $168 million of anchor repositioning and redevelopment projects underway expected to generate a 15% return.
Importantly over 90% of this pipeline is pre leased.
Third our size with an equity market cap is approximately $2 billion, we have a greater opportunity to increase per share earnings through higher internal growth and modest acquisition activity.
Jeff Olson: With an equity market cap of approximately $2 billion, we have a greater opportunity to increase per share earnings through higher internal growth and modest acquisition activity. For example, we have one $80 million property in our acquisition pipeline, which, if closed, should increase FFO by a penny a share on a leverage-neutral basis. Fourth, our balance sheet and secure debt strategy. Our long-term debt consists solely of non-recourse, single-asset mortgages.
For example, we have $180 million property and our acquisition pipeline, which if closed should increase <unk> by a penny a share on a leverage neutral basis.
S F O growth targets for 2024, and 2025 reflect minimal acquisition activity.
Fourth our balance sheet and secured debt strategy. Our long term debt consists solely of non recourse single asset mortgages. This has allowed us to eliminate nearly $100 billion of debt during market dislocations.
Jeff Olson: This has allowed us to eliminate nearly $100 billion of debt during market dislocation; only 13% of our debt is maturing through 2026, and we maintain a well-laddered debt maturity profile. 5th, we own nearly all the anchors in our shopping centers, which is why our top tenants include Home Depot, Lowe's, Target, and Walmart. These four tenants alone generate $35 million in annual rent; many of these anchor parcels would likely trade in the five and a half to six percent cap rate range, as evidenced by our recent sale of Freeport Common. We also own most of the out parcels on our properties, which would also trade at similar cap rates in the private market. All of these factors position us well for 2024 as we continue to take advantage of the significant opportunities we see to drive increased value and long-term growth.
Only 13% of our debt is maturing through 2026, and we maintain a well ladder debt maturity profile.
Jeff we own nearly all the anchors in our shopping centers, which is why our top tenants include home depot Lowes target and Walmart.
These four tenants alone generate $35 million in annual rent.
Many of these anchor parcels would likely trade in the 5.5% to 6% cap rate range as evidenced by our recent sale of Freeport comments.
We also own most of the out parcels on our properties, which would also trade at similar cap rates in the private market.
All of these factors position us well for 2024 as we continue to take advantage of the significant opportunities, we see to drive increased value and long term core rock.
Jeff Olson: Now, turning to our 2024 outlook. Our goals for the year include achieving same property NOI growth of at least 4%, advancing our $27 million SNO pipeline, and increasing our leased occupancy back to our historical high of 97 to 98%. Mark will provide further details of our guidance, but I can confidently say that our team is highly focused on achieving the targeted growth we outlined at Investor Day, which is to generate FFO of $1.35 per share or higher in 2025. To that end, we increased our annual dividend by 6%, reflecting our confidence in our earnings and cash flow growth. Finally, I want to extend my gratitude to the UE team for their tremendous execution and accomplishments in the past year. We are excited to build on this momentum and continue executing our growth strategy in 2024. I will now turn it over to our Chief Operating Officer, Jeff Mueller. Thanks, Jeff, and good morning, everyone.
Now turning to our 2020 for outlook.
Our goals for the year include achieving same property NOI growth of at least 4% advancing our 27 million dollar pipeline.
And increasing our leased occupancy back to our historical high of 97% to 98%.
Mark will provide further details of our guidance, but I can confidently say that our team is highly focused on achieving the targeted growth we outlined at Investor day, which is to generate <unk> of $1 35 per share or higher in 2025.
And we increased our annual dividend by 6%, reflecting our confidence in our earnings and cash flow growth.
Finally, I wanted to extend my gratitude to the <unk> team for their tremendous execution and accomplishments in the past year.
We are excited to build on this momentum.
We continue executing our growth strategy in 2024, I will now turn it over to our Chief operating officer, Jeff Luella. Thanks.
Thanks, Jeff and good morning, everyone.
Jeff Mualim: I echo Jeff's appreciation for the amazing job our team did in 2023, my first year at Urban Edge. As we look into 2024 and beyond, I feel confident that our efforts around capital recycling, leasing, and development will continue to produce these strong First Acquisitions and Dispositions. Our October 2023 sale of an industrial portfolio in East Hanover, New Jersey and our simultaneous purchase of Shoppers World and Gateway Center in Boston were our most notable transactions of the year. We're delighted to add these two great retail assets to Urban Edge, and I can tell you that retailer demand has already exceeded our initial expectations. We've been active on other fronts as well.
I Echo Jeff's appreciation for the amazing job our team did in 2023, my first year at urban edge as we look into 2024 and beyond I feel confident that our efforts around capital recycling leasing and development will continue to produce these strong results.
First acquisitions and dispositions our October 2023 sale of an industrial portfolio in East Hanover, New Jersey, and our simultaneous purchase of shoppers World in Gateway Center in Boston, where our most notable transactions of the year. We're delighted to add these two great retail assets to urban edge and I can tell you that retailer demand.
Has already exceeded our initial expectations.
We've been active on other fronts as well.
Jeff Mualim: In December, we sold an additional $101 million of non-core assets at a blended 5.8% cap rate, and we're now under contract to sell two small non-core properties for a total of $38 million by the end of this quarter at a blended 5% cap rate. We've also continued our buying momentum with last week's acquisition of Heritage Square in Wachung, New Jersey, for $34 million. Heritage Square is anchored by two TJX concepts, has four out parcels, and is diagonally across Route 22 from our existing Green Brook Commons, anchored by BJ's and Aldo's.
In December we sold an additional $101 million of noncore assets at a blended five 8% cap rate and we're now under contract to sell two small non core properties for a total of $38 million by the end of this quarter at a blended 5% cap rate.
We've also continued our buying momentum with last week's acquisition of Heritage Square and watch on New Jersey for $34 million.
Heritage Square is anchored by two T. J Maxx concepts has four out parcels and is diagonally across through 'twenty two from our existing Green Brook comments anchored by Bj's and all of these.
Jeff Mualim: We love the critical mass, stable national retailer lineup, and flexibility that this property provides. We acquired Heritage Square at a going-in cap rate above 7.75%, making it immediately accretive and providing future growth through below-market rents with minimal turnover risk. It's worth mentioning here that the investment sales market is continuing to come back to life as both buyers and sellers have adjusted to the new normal for interest and capital.
We loved the critical mass stable national retailer lineup and flexibility that this property provides.
We acquired heritage square at a going in cap rate above, 775%, making it immediately accretive and providing future growth through below market rents with minimal turnover risk.
It's worth mentioning here that the investment sales market is continuing to come back to life as both buyers and sellers have adjusted to the new normal for interest in cap rates, we're seeing more and more deals both on market and off market and our team is busy underwriting everything that fits our profile.
Jeff Mualim: We're seeing more and more deals, both on the market and off the market, and our team is busy underwriting everything that fits our profile. In leasing, we also finished the year strong with our best quarter of 2023 in terms of the number of deals, square footage leased, and leasing spread. Fifty-one deals were executed in the fourth quarter for a total of 650,000 square feet, and same-space deals generated an average cash rent spread of 18%. Of the 51 deals this quarter, 22 were new leases, with a very strong same-space average spread of 38%. Kennan's signing leases this quarter included a national single-credit tenant to backfill our 94,000 square foot space in Totoa, New Jersey that was previously occupied by Bed Bath & Beyond.
In leasing we also finished the year strong with our best quarter of 2023 in terms of number of deals square footage leased and leasing spreads 51 deals were executed in the fourth quarter for a total of 650000 square feet and same space deals generated an average cash rent spread of 18 <unk>.
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Of the 51 deals this quarter 22 were new leases with a very strong same space average spread of 38%.
Tenants signing leases this quarter included a national single credit tenant to backfill, our 94000 square foot space in total and New Jersey that was previously occupied by bed Bath <unk> beyond <unk>.
Jeff Mualim: While we can't announce the tenant just yet, we're excited about the use and the credit that they will bring to the property, not to mention the leasing. For full year 2023, we completed about 2 million square feet of leasing transactions, about 500,000 square feet of which is attributable to new leases, with an overall spread of about 12% and a new lease spread of almost 25%. It was a year of both quantity and quality leases.
While we can announce the tenant just yet we're excited about the use and the credit that this one they will bring to the property not to mention the leasing spread.
For full year 2023, we completed about 2 million square feet of leasing transactions about 500000 square feet of which is attributable to new leases.
With an overall spread of about 12% and a new lease spread of almost 25%. It was a year of both quantity and quality leasing.
As we've said before the record low supply of available space in our core northeast markets, coupled with healthy retailers investing more money to improve the in store experience has really helped propel our leasing efforts and the results are evident in the numbers.
Jeff Mualim: As we've said before, the record low supply of available space in our core Northeast markets, coupled with healthy retailers investing more money to improve the in-store experience, has really helped propel our leasing efforts, and the results are evident in the numbers. Our same property occupancy rate increased 150 basis points from the prior quarter and now sits at 96%, with our anchor lease occupancy up to approximately 98% and our shop occupancy up 230 basis points to approximately 88%. We are laser focused in 2024 on increasing our shop occupancy back to and above Urban Edge's historical high watermark of 91%, a potential 300 basis point. We expect this increase to be driven by two components, 150 basis points of deals underway in our leasing pipeline and 150 basis points from converting temporary tenants to permanent. We continue to see demand from fast casual restaurants, discounters, and health care providers, which gives us confidence we'll meet our shop leasing goal. And finally, on the development side, we completed seven projects with aggregated costs of $38 million in the fourth quarter. This includes the opening of Sector 66, a 123,000 square foot indoor entertainment destination at the Shops of Caguas in Puerto Rico.
Our same property occupancy rate increased to 150 basis points from the prior quarter and now sits at 96% with our anchor leased occupancy up to approximately 98% and our shop occupancy up 230 basis points to approximately 88%.
We are laser focused in 2024 on increasing our shop occupancy back to and above urban edge as historical high watermark of 91% a potential 300 basis point increase.
We expect this increase to be driven by two components 150 basis points of deals underway in our leasing pipeline and 150 basis points from converting temporary tenants to permanent tenants.
We continue to see demand from fast casual restaurants, discounters and health care providers, which gives us confidence we will meet our shop leasing goals.
And finally on the development side, we completed seven projects with aggregated cost of $38 million in the fourth quarter. This.
This includes the opening of sector 66, or 123000 square foot indoor entertainment destination at shops are caguas in Puerto Rico.
Jeff Mualim: And we commenced another $38 million of redevelopment projects during the quarter, bringing our active project total to $168 million at year-end, which we expect will generate a 15% increase in leverage. Overall, we remain very bullish, not only on what was accomplished in 2023 but on where the business is headed. We have low-basis assets in the most densely populated part of the country, allowing us to generate healthy spreads and development yields as leases mature and weaker tenants depart. We have a more stable transaction market, where interest rate volatility has effectively boxed out high-leverage and debt-dependent buyers and provided way better opportunities for companies with strong balance sheets and strong relationships, and, most of all, we have a tight leasing market where, According to Cushman and Wakefield's most recent market study, 2023 was a year of more than 4% retail rent growth, the lowest level of retail vacancy since 2007, and a record low year for retail construction. And nowhere are these trends more pronounced than in the Northeast.
And we commenced another $38 million of redevelopment projects during the quarter, bringing our active project totaled to $168 million at year end, which we expect will generate a 15% on leverage yields.
Overall, we remain very bullish not only on what was accomplished in 2023, but on where the business is headed.
We have low basis assets in the most densely populated part of the country, allowing us to generate healthy spreads and development yields as leases mature and weaker tenants depart.
We have a more stable transaction market, where interest rate volatility has effectively boxed out high leverage and debt dependent buyers and provided way better opportunities for companies with strong balance sheets and strong relationships.
And most of all we have a tight leasing market where for the first time in at least 20 years.
Manned meaningfully exceed supply.
According to Cushman <unk> Wakefield most recent market study 2023 was a year of more than 4% retail rent growth there.
Lowest level of retail vacancy since 2007, and a record low year for retail construction and nowhere are these trends more pronounced than in the northeast. We expect this to continue and we intend to take advantage of the wind at our backs.
Mark Lange: We expect this to continue, and we intend to take advantage of the wind in our backs. I'll now turn it over to our Chief Financial Officer, Mark Lange. Thanks, Jeff. Good morning.
I'll now turn it over to our Chief Financial Officer, Mark Langer.
Thanks, Jeff Good morning, I will comment on our fourth quarter results provide insights on our balance sheet and liquidity and conclude with an outline of key assumptions impacting our 2020 for guidance.
Mark Lange: I will comment on our fourth-quarter results, provide insights on our balance sheet and liquidity, and conclude with an outline of key assumptions impacting our 2024 guidance. Starting with our results for the quarter, we reported FFO as adjusted at $0.31 per share in the fourth quarter and $1.25 per share for the full year, achieving the high end of our guidance range. Same property NOI growth, including redevelopment, was down 1.3% compared to the fourth quarter of 2022 and up 2.5% for the full year compared to 2022. However, when excluding the impact of out-of-period collections, state property NOI growth with redevelopment was up 0.6% in the quarter and up 4.3% for the year. The 4.3% growth rate was at the high end of our prior guidance range of 3.5% to 4.5%.
Starting with our results for the quarter.
We reported <unk> as adjusted of 31 per share in the fourth quarter and $1 25 per share for the full year, achieving the high end of our guidance range.
Same property NOI growth, including redevelopment was down one 3% compared to the fourth quarter of 2022, and two 5% for the full year compared to 2022.
When excluding the impact of out of period collections same property NOI growth with redevelopment was up 6% in the quarter and up four 3% for the year.
The four 3% growth rate was at the high end of our prior guidance range of three five to four 5%.
As we expected there was a noticeable swing between headline NOI growth and the growth rate excluding collections an out of period receivables given nearly $2 million of collections in Q4 of last year compared to about $700000 received in Q4 of 2023.
Mark Lange: As we expected, there was a noticeable swing between headline NOI growth and the growth rate excluding collections on out-of-period receivables, given nearly $2 million of collections in Q4 of last year, compared to about $700,000 received in Q4 of 2023. We also expected fourth quarter NOI to be impacted by the timing of certain deferred maintenance projects that were completed towards the end of the year.
We also expected fourth quarter NOI to be impacted by the timing of certain deferred maintenance projects that were completed towards the end of the year.
On the financing front, we obtained a new six year $43 $7 million nonrecourse mortgage secured by Huntington comments Adam.
Mark Lange: On the financing front, we obtained a new six-year, $43.7 million non-recourse mortgage secured by Huntington Commons at a fixed rate of 6.29%, executed at a spread of 185 basis points, and we paid off our $20.7 million maturing mortgage at Hudson Mall. After the quarter, we prepaid three variable rate mortgages, aggregating $76 million that bore interest at a rate of SOFR plus 200 basis points, or Looking ahead, as Jeff highlighted, our debt maturity profile is in great shape as we have minimum maturities aggregating $213 million through 2026, representing only 13% of outstanding debt. Our total mortgage indebtedness has a weighted average term to maturity of 5 years with a weighted average interest rate of 5%.
Fixed rate of 629%.
Executed at a spread of 185 basis points.
And we paid off our $20 7 million maturing mortgage at Hudson Mall.
After the quarter, we prepaid three variable rate mortgages aggregating $76 million that bore interest at a rate of <unk>, plus 200 basis points or 734%.
Looking ahead as Jeff highlighted our debt maturity profile is in great shape, as we have minimal maturities aggregating $213 million through 2026, representing only 13% of outstanding debt.
Our total mortgage indebtedness has a weighted average term to maturity of five years with a weighted average interest rate of 5%.
Mark Lange: We continue to see strong interest from lenders for retail properties in our ongoing discussions with life companies and regional banks. The CMBS market is showing increasing interest in retail properties, but pricing levels haven't been as competitive, although we expect that market to strengthen during the year. We have made great progress reducing our leverage, consistent with the plan we outlined during our April Investor Day. Our net debt to annualized EBITDA decreased to 6.6 times in the fourth quarter due to the execution of our capital recycling efforts and the growth in recurring EBITDA, which was up over 8% compared to 2022.
We continue to see strong interest from lenders for retail properties and are in active discussion with life companies and regional banks.
They see MBS market is showing increasing interest in retail properties, but pricing levels haven't been as competitive although we expect that market to strengthen during the year.
We have made great progress, reducing our leverage consistent with the plan we outlined during our April Investor day.
Our net debt to annualized EBITDA decreased to six six times in the fourth quarter due to the execution of our capital recycling efforts and the growth in recurring EBITDA, which was up over 8% compared to 2022.
As we continue to execute our plan and benefit from EBITDA growth of our pipeline. We expect this level to decrease below six five times in 2025.
Mark Lange: As we continue to execute our plan and benefit from EBITDA growth in our S&O pipeline, we expect this level to decrease below six and a half times in 2025. Turning to our outlook for 2024, our initial 2024 FFO as adjusted per share guidance range is $1.24 to $1.29, or about $1.27 at the midpoint. Our guidance incorporates the following key assumptions.
Turning to our outlook for 2024.
Our initial 2024 <unk> as adjusted per share guidance range is $1 24 to $1 29.
Or about $1 27 at the midpoint.
Our guidance incorporates the following key assumptions.
Mark Lange: We expect same property NOI growth, including properties and redevelopment, to increase 4% at the midpoint of our range, driven by the full-year impact of leases that commenced, including $8 million of annualized gross rent that commenced in the fourth quarter of 2023, and an additional $6 million from the S&O pipeline that is expected to be recognized in 2024. I will point out that $4.5 million of the $6 million coming online in 2024 is weighted towards the second half of the year. Another thing to recall is that snow removal costs in the first part of last year were significantly lower than normal, which will provide a headwind for the NOI growth rate this year.
We expect same property NOI growth, including properties in redevelopment two increased 4% at the midpoint of our range driven by the full year impact of leases that commenced including $8 million of annualized gross rent that rent commenced in the fourth quarter of 2023.
And an additional $6 million from the <unk> pipeline that is expected to be recognized in 2024.
I will point out that $4 5 million of the $6 million coming online in 2024 is weighted to the second half of the year.
Another thing to recall is that snow removal costs in the first part of last year were significantly lower than normal, which will provide a headwind in the NOI growth rate this year.
Mark Lange: While we don't guide on a quarterly basis, our expectation is that the 4% NOI annual growth rate will not be evenly generated throughout the year but will be strongest in the third and fourth quarters. Additionally, our guidance assumes that credit loss reverts to a more normalized level of 75 basis points to 100 basis points of gross revenue, or approximately $4 million. Our guidance at the midpoint assumes about $500,000 of collections on past amounts deemed uncollectible compared to approximately $3 million that will be received in 2023.
While we don't guide on a quarterly basis, our expectation is that the 4% NOI annual growth rate will not be evenly generated throughout the year, but it will be strongest in the third and fourth quarters.
Our guidance assumes that credit loss reverts to a more normalized level.
A 75 basis points to 100 basis points of gross revenues or approximately $4 million.
Our guidance at the midpoint assumes about $500000 of collections on past amounts deemed uncollectible compared to approximately $3 million that was received in 2023.
One item to note outside of cash NOI that is impacting <unk> guidance is our expectation that we will incur a year over year decline of <unk> <unk> per share and straight line rent and noncash amortization driven by the timing of previous anchor contractual rent increases that are.
Mark Lange: One item to note outside of cash NOI that is impacting FFO guidance is our expectation that we will incur a year-over-year decline of $0.02 per share in straight-line rent and non-cash amortization, driven by the timing of previous anchor contractual rent increases that are now in the back half of their lease terms, as well as non-recurring gap-free rent in the impact of dispositions executed last year. As Jeff Mueller mentioned, our guidance assumes that leased occupancy grows to 97 to 98 percent, with shock occupancy growing to 91 percent, and anchor occupancy growing above 98 percent. Interest and debt expense guidance of $83 to $85 million includes $6 million of regular and default interest that is accrued but not being paid on Kingswood Center given the property is going through the foreclosure process. However, the full FFO impact of the property, including interest expense, is not included in FFO as adjusted, so any changes regarding the ultimate resolution of the foreclosure will not impact our guidance on that matter.
Now in the back half of their lease terms as well as nonrecurring GAAP free rent and the impact of dispositions executed last year.
As Jeff mentioned, our guidance assumes that leased occupancy grows to 97%, 98% with shock occupancy growing to 91% and anchor occupancy growing above 98%.
Interest and debt expense guidance of $83 million to $85 million includes $6 million of regular and default interest that is accrued but not being paid on kings with center given the property is going through the foreclosure process.
We have assumed Kingswood center remains on balance sheet for the full year.
However, the full <unk> impact of the property, including interest expense is not included in SFO as adjusted so any changes regarding the ultimate resolution of the foreclosure will not impact our guidance on that metric.
Mark Lange: The primary factors driving the interest expense guidance reflect the full-year impact of new and refinanced mortgages obtained in 2023 that we disclosed in our earnings release and in our 10-K. Our 2024 guidance assumes that we will add $60 to $80 million of new leverage during the year at rates of approximately 6 to 6.5%. So all things considered, when excluding the impact of Kingswood, interest in debt expense is expected to increase $7-9 million in 2024. We assume recurring G&A will be $35.5 to $37.5 million in 2024, up 4% from the prior year but down 3% from the 2022 level. Moving to transactions, our guidance includes the $34 million acquisition of Heritage Square that we announced today and the non-core dispositions that Jeff Muellem just described. We have no other material capital activities assumed in our guidance.
The primary factors driving the interest expense guidance reflects the full year impact of new and refinanced mortgages obtained in 2023 that we disclosed in our earnings release and in our 10-K.
Our 2024 guidance assumes that we will add $60 million to $80 million of new leverage during the year at rates of approximately 6% to six 5%.
So all things considered when excluding the impact of Kingswood interest and debt expense is expected to increase 7% to $9 million in 2024.
We assumed recurring G&A will be 35, five to $37 5 million in 2024.
Up 4% from the prior year, but down 3% from 2022 levels.
Moving to transactions our guidance includes the $34 million acquisition of Heritage square that we announced today and non core dispositions that Geoff Morrell Im just described we.
We have no other material capital activities assumed in our guidance.
Mark Lange: As we announced, our board recently approved an increase in our dividend to an annualized rate of 68 cents a share. As we have stated in the past, we expect the dividend to grow as earnings and taxable income grow while we maintain an emphasis on preserving free cash flow to fund our anchor repositioning pipeline that is generating unleveraged returns of 15%. To conclude, our team is committed to executing the growth strategy we outlined at Investor Day in April, achieving $1.35 per share in FFO in 2025, and we are on track to achieve that. We appreciate the hard work exhibited by the entire UE team as their efforts have been instrumental in driving our success.
As we announced our board recently approved an increase in our dividend to an annualized rate of 68 a share.
As we have stated in the past, we expect the dividend to grow as earnings and taxable income grow while we maintain an emphasis on preserving free cash flow to fund our anchor repositioning pipeline that is generating unlevered returns of 15%.
To conclude our team is committed to executing the growth strategy, we outlined at Investor day in April achieving $1 35 per share in <unk> in 2025.
And we are on track to achieve that we.
We appreciate the hard work exhibited by the entire <unk> team as their efforts have been instrumental in driving our success with.
Operator: We look forward to building on our momentum during 2024. Thank you for your continued support and interest in the UE. I will now turn the call over to the operator for questions. Thank you. We will now be conducting a question and answer session. If you'd like to ask a question at this time, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the start key.
We look forward to build on our momentum during 2024.
Thank you for your continued support and interest in UAE.
I will now turn the call over to the operator for questions.
Thank you, we'll now be conducting a question and answer session.
If you'd like to ask a question at this time. Please press star one from your telephone keypad, a confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Flores Van Dyckum: One moment, please, while we poll for questions. Thank you, and the first question comes from the line of Flores Van Dyckum with CompassPoint. Please proceed with your question. Morning, guys. Hey, good morning.
<unk>. Please so we poll for questions. Thank you.
Thank you and the first question comes from the line of Floris Van <unk> with Compass point. Please proceed with your questions.
Good morning, guys.
Hey, good morning.
Thanks for allowing me to ask a question Ive got it I've got here, let me, let me start with <unk>.
Jeff Mualim: Thanks for allowing me to ask your question. I'm going to start with something that Jeff talked about, which I think is actually really interesting and potentially massive incremental upside, I think, from where we stand today, even though your pipeline is already, I think, 11% of NOI growth, something like that, your 12% vacancy in your shop, which is, based on my math, it's almost 12 million in incremental ABR upside. What is going to move the needle there? Is that dependent on you doing more anchor repositionings and upgrading, redeveloping the assets, or are you now finding... greater demand from retailers just to take the space as is, or is it dependent on you spending money on the centers? And how much, potentially, can you get at that $12 million potential bogeyman? Hey, Floris, good morning.
Something that Jeff talked about which I think it's actually really interesting.
And potentially massive incremental upside I think from where we stand today, even though your pipeline is already I think 11% of NOI growth something like that.
Your 12% vacancy in your shop space, which is based on my math, it's almost $12 million of incremental.
Abi AVR.
Upsides.
What is going to.
Move the needle there is that dependent on you doing more.
Anchor repositioning and upgrading redeveloped the assets or are you now finding greater.
Demand from retailers just to take the space as is or is it dependent on you're spending money on the centers and how do you and how much potentially can you get at that.
That $12 million potential bogey.
Hey, Floris good morning. Thanks for the question, Yes, I mean like anything else. There's a few different answers I wonder, which as we've done so much anchor repositioning work over the last few years that we will start to see the fruits of that labor coming through in the shop occupancy. So a lot of our centers, where new anchors have opened for instance, we mentioned earlier in the call our asset.
Jeff Mualim: Thanks for the question. Yeah, I mean, you know, like anything else, there are a few different answers, one of which is that we've done so much anchor repositioning work over the last few years that we will start to see the fruits of that labor coming through in the shop occupancy. So a lot of our centers where new anchors have opened, for instance, we mentioned earlier in the call, our asset in Washington, New Jersey, we just had an all-open there in the fourth quarter. So there'll be some shop leasing, that's a result of better anchor repositioning over the last few years. The second answer I can give you is that the team is super focused on retail this year; we're pretty much where we need to be on an anchor portfolio occupancy basis. So we're really looking harder at all of our shops, spending more time canvassing, spending more time on the ground with brokers and with smaller retailers. And we think that'll also lead to some results.
Washington, New Jersey, we just had and all the open there in the fourth quarter. So there'll be some shop leasing that as a result of better anchor repositioning over the last few years, the second of which answer I'd give you is that the team is super focused on shop. This year, we're pretty much where we need to be on an anchor portfolio occupancy basis. So we're really looking harder at all of our shops.
Ending more time canvassing spending more time on the ground with brokers and with smaller retailers and we think that will also lead to some results and then the third component to keep in mind is a lot of the shop occupancy gains we're expecting do come from converting temporary tenants to permanent tenants. So in Puerto Rico. For example, we have quite a bit of temporary tenant space that we.
Jeff Mualim: And then the third component to keep in mind is a lot of the occupancy gains we're expecting do come from converting temporary tenants to permanent ones. So in Puerto Rico, for example, we have quite a bit of temporary tenant space that we know those tenants are anxious to either get converted into permanent ones, or we have other people sort of waiting to take those spaces. So we'll see some shop occupancy gains that won't necessarily be, you know, fresh dollars. It'll be the incremental dollars between the temp and the perm, which will hurt your little $12 million number there a little bit.
No those tenants are anxious to either get converted into permanent tenants or we have other people sort of waiting to take those spaces.
So we will see some shop occupancy gains that won't necessarily be fresh dollars it'll be the incremental dollars between the temp and perm, which which will hurt you a little $12 million number there a little bit, but there's still we're expecting about $1 million of total gains from converting temp to permanent over the next year.
Jeff Mualim: But there's still We're expecting about a million dollars of total gains from converting temp to permanent over the next year. And Floris, the only thing I'd add is we actually made that part of an STI goal for the executive team and, obviously, for the leasing team, specifically on shop leasing. And I believe our targeted amount is around $6.5 million this year. Great. And maybe a follow-up question, if I may. I'd love to get an update on what's going on at Sunrise as well as Hudson. I saw that you paid off the mortgage at Hudson. Any particular reason why you wanted to do that?
And Florida, the only thing I'd add is we actually made that part of an STI goal for the executive team that obviously for the leasing team specifically on shop leasing and I believe our targeted amount is around $6 $5 million this year.
Great and maybe a follow up question if I, if I may I'd love to get your update on what's going on at Sunrise as well as Hudson I saw that you paid off the mortgage at a Hudson any particular reason why you wanted to do that does that give you more.
Jeff Mualim: Does that give you more flexibility? And talk a little bit about the entitlement process at those properties. Yeah, at Hudson, it does give us more flexibility. It was not that large of a loan to begin with.
<unk> ability.
And talk a little bit about the entitlement process.
Process at those properties.
Yes at Hudson It does give us more flexibility it was not that large of a loan to begin with.
Jeff Mualim: So, we want to keep it unencumbered while we go through the process of redeveloping that asset, which is still in the early stages, but it has so much potential. Lots of stuff going on at Sunrise, but we can't get into any specifics, just given the confidential nature of the discussions underway. But we're very optimistic, and we hope to provide, you know, more guidance once it's appropriate for us to do so. That's it for me.
So we want to keep an unencumbered while we go through the process of of redevelop that asset which is still in the early stages, but it has so much potential.
Lots of stuff going on at Sunrise, but we can't get into any specifics just given the confidential nature of the discussions underway, but we're very optimistic and we hope to provide.
More guidance once it's appropriate for us to do so.
Great. That's it for me thanks, Thank you Floris.
Samir Upadhyay Khanal: Thanks. Thank you, Claude. Our next questions come from the line of Samir Khanal with Evercore ISI. Please proceed with your questions. Hey, Jeff, good morning.
Our next questions come from the line of Sameer <unk> with Evercore ISI. Please proceed with your question.
Hey, Jeff Good morning, I guess with the lease occupancy at 98% now, especially on the anchor side.
Jeff Mualim: I guess with the lease occupancy at 98% now, especially on the anchor side, you know, just generally, what's the conversation been with anchor tenants today, right? I mean, given all the comments you made on supply and strong demand, historically, they've paid lower rent. So try to understand how much more runway there is on pricing power. Yeah, hey, Samir. It's Jeff Mualim.
Just generally what's the conversation been with anchor tenants today, alright, I've been given.
All the comments you made on supply the strong demand I mean, historically, they've paid lower rent so trying to understand how much more runway there is on pricing power.
Yeah, Hey, Sameer.
Jeff Mualim: Good morning. Yeah, I would say that a 98% leased anchor portfolio allows us to play a little more offense than defense. It's certainly more offense than we've been able to play in the past. We only have a few anchor boxes left, but we have other anchor boxes that we view as being under-leased, meaning if we have the opportunity to get them back and those conversations can get started, we think there's a lot of room for growth in the rents. Some of those are tenants that are potential watchlist tenants, so we keep a close eye on those and, you know, kind of think about who we want to put in and at what kind of rent rates if we get certain space back. But, you know, your question is a good one.
No Alan good morning.
Yes, I would say that a 98% leased anchor portfolio allows us to play a little more offense than defense is certainly more offense than we've been able to play in the past we only have a few anchor boxes left but we have other anchor boxes that we view to be under leased meaning if we have the opportunity to get them back in those conversations can get started we think theres a lot of <unk>.
And the rents some of those are tenants that are potential watch list tenants. So we keep a close eye on those and kind of think about who we want to put in and at what kind of rent rates. If we get certain space back but your question is a good one there's certainly an opportunity now to push not just rents but to push other things that are important to us.
Jeff Mualim: There's certainly an opportunity now to push not just rents but other things that are important to us, increases, restrictions, all of that sort of stuff. The amount of capital we put into space, that all goes into the deals. And, of course, if we have the leverage of less vacancy or more users for our vacancy, we can cut a better deal.
Increases.
Stricture.
All of that sort of stuff the amount of capital we put into space that all goes into the deals and of course, if we have the leverage of less vacancy or more more users for our vacancy we can cut a better deal.
Got it and I guess mark on the same store NOI growth, 3% to 5% I mean, it's still a pretty wide range there.
Mark Lange: And I guess, Mark, on the same story, NOI growth, the three to five percent, I mean, it's still a pretty wide range there. Maybe you could talk us through what needs to happen to sort of get us to the top end and the low end. Sure. Good morning, Samir.
Maybe talk us through what needs to happen to sort of get to get us to the top end and the low end there.
Sure. Good morning, Sameer, So really the main pillars, when we look at our NOI growth in that range. It gets down to the pace and rate at which the incoming leases get executed and filled so from in RCD space basis, you saw my comments on the <unk> and the timing of that so that's one element in it.
Mark Lange: So really, the main pillars when we look at our NOI growth in that range, it gets down to the pace and rate at which the incoming leases get executed and filled. So from an R&D point of view, you saw my comments on the S&O and the timing of that. So that's one element.
Mark Lange: And another big element, of course, is the tenant credit loss provision, which has its own range. So in order to get to the high and low ends, it's really a function of taking, for the low end, the more conservative levels of bad debt, some tenant fallout, and some slowdown in the pace of the rent commencements. And on the upper end of that range, Samir, it's really getting to low levels of reserve, low fallout, and full execution on the S&O. So those are really the biggest drivers. And maybe as a follow-up, I mean, is it taking longer to open up vacant units these days, given, you know, some of the approvals you'll need, just trying to maybe talk around that. Samir, you're hitting all my hot buttons today.
Big element of course is the tenant.
Credit loss provision, which has its own range. So in order to get to the high and low end, it's really a function of taking for the low and the more conservative levels of bad debt, some tenant fallout and some slowdown in the pace of the rent commencements and on the upper end of that range Samir, it's really getting too low.
Levels of reserve low fallout and getting full execution on the SNL. So those are the really the biggest drivers.
And maybe as a follow up I mean is it taking longer to open up open tenants. These days given.
Some of the approvals in the just kind of maybe talk around that a little bit.
Thanks Sue.
Sameer Youre hitting on all of my Hot buttons today.
Jeff Mualim: Yeah, listen, I mean, it's just the nature of the business where we are today. Things take a little bit longer to negotiate. Things take a little bit longer to get approved. There's more municipality involvement than there has historically been in the past.
Listen I mean, it's just the nature of the business, where we are today things take a little bit longer to negotiate things.
Things take a little bit longer to get approved there's more municipality involvement than there has historically been in the past we are in some very.
Jeff Mualim: We are in some very, you know, high-density, good-income demographic locations, and generally those are the places that have towns that get very involved in the permitting process. So you get the bad along with the good of these kinds of, you know, first-ranked suburban locations. It is taking longer than we'd like.
High density good income demographic locations and generally those are the places that have talents that get very involved in the permitting process. So you get the bad along with the good of these kinds of.
First ring suburban locations it is taking longer than we'd like we've had a couple of deals where we've pushed delivery back a quarter or two quarters. We are getting it done, but certainly we'd love to expedite the process.
Ronald Camden: We've had a couple of deals where we've pushed delivery back, you know, a quarter or two quarters. We are getting it done, but certainly, we'd love to expedite the process. Thank you. Our next question is from the line of Ronald Camden with Morgan Stanley. Hey, just two quick ones for me. Just on the same store in Hawaii, both sort of the 4Q number, you talked about sort of the... out of period stuff that happened there. I mean, can you just provide a little bit more color on what happened, why the first half versus the second half, as a guide?
Okay.
Okay.
Thank you.
Our next question is from the line of Ronald Camden with Morgan Stanley. Please proceed with your question.
Hey, just two quick ones for me just on the.
Just on the same store NOI, both sort of the <unk> number you talked about sort of the.
I think there was some out of period stuff that happened in there maybe can you just provide a little bit more color on what happened in <unk> and why and the diversion between the first half versus second half and that 24 guidance as well.
Sure. Good morning, Ron It's Marc <unk>, who was the specific answer was really the timing we as we noted in the press release of deferred maintenance the big dollars really come from some parking lot and paving projects that was the big driver. So it was just a function of timing. If you look on a full year basis as I said in my comment that the.
Our number for the year.
Was in line or even the high end of our guidance in particular, when you exclude the other big variable in this quarter on a year over year basis was the collections from out of period receivables I mean that was a meaningful difference of about 1 million three and that we had expected as well. So the combination of just the timing of spend and so I would just say.
Mark Lange: Right, and then so for the guide for next year, I think you talked about the first half potentially being lower before wrapping in the second half of the year. Is that sort of timing, lease commencements, what's sort of driving that? Yeah, two factors driving that. One is just seasonality on the OPEX side. Snow removal costs, obviously, much more pronounced in 1Q and sometimes even a little in Q2.
If you look at it more on a full year basis, you'd get a better picture than just looking individually at Q4, which is evident when you look at our guide for next year.
Right and then so for the guide for next year I think you talked about the first half potentially being lower before.
Ramping in the second half of the year is that sort of similar timing is it lease commencement, what's sort of driving that.
Yes, two factors driving that one is just seasonality on the opex side snow removal costs, obviously, much more pronounced in <unk> and sometimes even a little in Q2.
Mark Lange: And then, secondly and importantly, what I commented on in the opening remarks about the cadence and pace of the S&O delivery, Ron, 75% of that S&O amount that we disclosed this year is really coming in the back half of the year. So NOI and FFO will be a gradual build and not ratable for those two factors, both on the expense side and just the timing of rent commencement. And so just my last one, if I may, it's just on, so I saw the Harriston Square deal. If you just talk in just broad strokes about the acquisition market, are you seeing? more opportunities, less opportunities, how are you guys thinking about sort of that pipeline? Yeah, I mean, I think we're seeing more opportunities. You know, we do have a nice pipeline that's building. We closed on heritage.
And then secondly, and importantly, what I commented on in the opening remarks about the cadence and pace of the SNL delivery, Ron 75% of that SNL amount that we disclosed this year is really coming in the back half of the year, So NOI and <unk> will be a gradual build and not ratable for those two factors.
Both on the expense side and just the timing of rent Commencements.
Great and just my last one if I may is just on so I saw the has just square deal maybe just talk just broad strokes about the acquisition market or are you seeing sort of more opportunities less opportunities. How are you guys thinking about for that pipeline. This year.
Yes, I mean, I think we're seeing more opportunities.
We do have a nice pipeline that's building we close on heritage. We've got probably another 80 ish million dollars under serious negotiation at the time.
Jeff Olson: We've got probably another 80 ish million dollars under serious negotiation at the time, and we do hope to close on more acquisitions this year. You know, we're finding that the market is tough to find an asset that meets all of the characteristics that we're looking for. So maybe every one out of 100 deals sort of fits our profile. But Heritage Square certainly was one of those.
And would you hope to close on more acquisitions this year.
We're finding that the market is tough to find an asset that meets all of the characteristics that we're looking for so maybe everyone out of 100 deals sort of fits our profile, but heritage square certainly was one of those and the one that we have.
Jeff Mualim: And the one that we have that we're negotiating fits that as well. Jeff, do you want to add anything to that? No, I would I would echo that the market is a little bit, you know, it's still tough, it's still tight. But what is a little different, Ron, from maybe in past cycles is that interest rates are not at historic lows anymore. The highly levered buyers or the buyers who are, you know, maybe dependent on raising capital for investment deals don't show up at the table quite as often. And when they do, they don't have quite the same credibility and certainty with the sellers that we do as a well-capitalized, all cash buyer.
That were negotiating fits that as well, Jeff do you want to add anything to them.
I would echo that the market is a little bit.
It's still it's still tough it's still tight but what is a little different Ron for maybe in past cycles is because interest rates are not at historic lows anymore.
The highly levered buyers are the buyers who are may be dependent on raising capital for investment deals don't show up at the table quite as often and when they do they don't have quite the same credibility uncertainty with the sellers that we do as a well capitalized all cash buyer.
Jeff Mualim: So we are seeing some competitive advantages as a buyer in the market today versus where it might have been a few years ago. Thanks so much. Thank you. As a reminder, if you'd like to ask a question, simply press star 1 on your telephone keypad. The next questions are from the line of Paulina Rojas with Green Street. Please proceed with your questions. Good morning.
So we are seeing some competitive advantages as a buyer in the market today versus where it might've been a few years ago.
Great. Thanks, so much.
Thank you.
As a reminder to ask a question today you May press star one from your telephone keypad.
Next question is from the line of Paulina Rojas with Green Street. Please proceed with your question.
Okay.
Good morning.
Paulina Rojas: And following up with a prior question, so you have the plan to do modest acquisitions, and you have, Your preferred option has been recycling assets. But if you were to see an opportunity, a larger opportunity, what do you consider an issue equity to take advantage of that considering how well your stock has done? Hi Paulina.
So now we have with a prior question so.
Do you have the crunchy and do modest application and you have it.
Your preferred option has been recycling assets, but if you were to see them.
And opportunities larger opportunities.
What do you consider them.
Issue equity to take advantage of that considering.
How well your stock has done recently.
Hi, Paulina.
Jeff Olson: I think we would, provided again that all the boxes are checked, where the portfolio is accretive in terms of cap rate and yield relative to implied cap rate, growth relative to the growth of our portfolio, and risk relative to risk levels in our portfolio. But yeah, I think that could be a source of capital for us under the right circumstances. Okay, and then. And again, Paulina, what I would come back to, which I think is different from many of our peers in this space, because of our company's size, there aren't that many companies that can do an $80 million deal and actually show a penny a share in FFO accretion. So this could play to our advantage if everything lines up.
Think we would provide it again that all the boxes are checked.
Where the portfolio is accretive in terms of cap rate imply relative to implied cap rate growth relative to the growth of our portfolio risk relative to risk levels in our portfolio.
But yes.
I think that could be a source of capital for us under the right circumstances.
Okay and then.
I'm curious, though.
And again Paulina, what I would come back to which I think is different from many of our peers in this space because of our company's size. There arent that many companies that can do an $80 million deal and actually show a penny a share in <unk> accretion.
So this could play to our advantage if everything lines up.
Yes, I agree.
Jeff Olson: I do. And then I'm looking at the heritage property you acquired, it's anchored by pricey Ulta, and it has no grocer. And that sparked a thought. So the industry, in general, investors love grocery-anchored centers. So I'm intrigued by your thoughts about what you see is the benefit of adding a grocer to centers like this. Well, I mean, I mean, I mean, in particular, this center is anchored by two TJX concepts and, you know, in total, I would say they bring the same amount of traffic to the center as a grocery store. By the way, TJX is now our largest tenant, and we love TJX. We think they are a phenomenal company. So, we looked at it from that perspective.
And.
And then looking at the Heritage property you acquired at Suncorp.
Goodbye.
Uh huh.
And it has no closer and that Sparks, Nevada, so the industry in general investors loved grocery anchored centers.
So I'm intrigued by your thoughts about what do you see is the benefit of adding grocer to Suntrust like this.
And in particular this center is anchored by two T. J X concepts and in total I would say they bring the same amount of traffic to the center as a grocery store or the way T. J X is now our largest tenant and we'd love T. J X. We think they are phenomenal company. So so we looked at it from that.
<unk>, Paul I would add to that I would add to that.
Jeff Olson: Pauline, I would add to that. This center has four out parcels to, I believe, the best in class tenants in each of their categories. You have a Miller's Alehouse, a CityMD, a Chick-fil-A, and a Starbucks that's under construction. So those out parcels alone drive a tremendous amount of traffic.
The center has four out parcels to I believe the best in class tenants in each of their categories. You have a Miller's ale House City MD, a chick Fil a in a Starbucks that's under construction. So those out parcels alone drive a tremendous amount of traffic we own the property across the street, which has a bj's warehouse club, adding all these grocers. So we're very familiar with the trade.
Jeff Mualim: We own the property across the street, which has a BJ's Warehouse Club and an Aldi's grocer. So we're very familiar with the trade area. In our view, more important than having a grocer in the property is really understanding the market, and this is a market we know really well. We feel very comfortable with the tenants.
Area in our view more important than having a grocer in the property is really understanding the market and this is a market we know really well, we feel very comfortable with the tendency there.
Yeah.
Jeff Mualim: That's very interesting. And do you think... that there is a cap rate compression for having a grocer even if it's unwarranted? No question. No question, Paulina.
That's very interesting and do you think.
There is a cap rate compression for heavy growths or even your seats and Werent. No question. No question Paulina This could have been a sub six.
Jeff Olson: This could have been a sub-six asset, a 6% cap rate asset with a grocer, with high quality for a round six. And then, if I may, the last one, we have talked about how good the fundamentals are, big picture, do you think this is a business that could, on a central basis, earn more than 3% in the coming years? I think it's more likely to be a 2-3% business for the next several years. I think that trend could move in a positive direction, but it's only as leases expire, which takes a longer time period. And I think it's possible that we could get above that 3%, but it's going to take some time to get there, as an industry.
That 6% cap rate asset with a grocer with a high quality grocery.
We're around six.
And then if I'm if I may the last one.
We have talked about how good fundamentals are.
Thank you.
Do you think this is a business that could.
Grow and.
On a same store basis more than 3% in the coming years.
I think it's probably a two different I think it's more likely at 2% to 3% business for the next several years I think that trend could.
Could move in a positive direction, but it's only as leases expire, which takes a longer time period and I think it's possible that we get above that 3%, but it's going to take some time to get there.
As an industry.
Jeff Olson: Thank you. Thank you. At this time, we've reached the end of our question and answer session, and I'll now turn the floor back to Jeff Olson for closing remarks. Great. We appreciate your interest in UE, and we look forward to seeing many of you soon. Thank you very much. Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you.
Great. Thank you.
Thank you at this time, we've reached the end of our question and answer session I'll now turn the floor back to Jeff Olson for closing remarks.
We appreciate your interest in <unk> and we look forward to seeing many of you soon thank you very much.
Thank you. This will conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.