Q1 2024 LTC Properties Inc Earnings Call
Good day.
Speaker Change: Welcome to the L. P. C properties incorporated first quarter 2024 earnings conference call.
At this time all participants are on a listen only mode and a question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Speaker Change: Please note this conference is being recorded.
Yeah.
Before management begins its presentation.
Speaker Change: Please note that today's comments, including the question and answer session may include forward looking statements.
To risks and uncertainties that may cause actual results and events to differ materially.
Speaker Change: These risks and uncertainties are upstairs it.
Sorry are detailed in LTC properties filings with the Securities and Exchange Commission from time to time, including the company's most recent 10-K dated December 31st 2023.
D C undertakes no obligation to revise or update these forward looking statements to reflect events or circumstances. After the date of this presentation.
Speaker Change: Please note this event is being recorded.
Speaker Change: I would now like to turn the call.
Over to Wendy Simpson Maam.
Bob.
Wendy L. Simpson: Thank you operator, and welcome everyone to Ltc's 2024 first quarter conference call.
Wendy L. Simpson: I'm joined today by Pam Kessler, co President and Chief Financial Officer, and Clint Malin co President and Chief investment Officer.
Wendy L. Simpson: In 2023, we completed more than $260 million in investments.
Wendy L. Simpson: While our team devoted a significant amount of time to optimizing our portfolio now.
Wendy L. Simpson: Now after successfully selling $77 million of assets last year and re tenant the others. We are concentrating our efforts on producing strategic long term and sustainable growth, which is our key focus for 2024.
Wendy L. Simpson: With that in mind, we are evaluating multiple investment opportunities and are confident we have both the bandwidth and resources necessary to strategically allocate capital to enhance our portfolio and achieve the best risk adjusted returns for our shareholders.
Wendy L. Simpson: The seniors housing and care industry is on a promising upturn after setbacks related to COVID-19. Thanks.
Wendy L. Simpson: Thanks to favorable demographic trends, improving margins and rising occupancy rates, all signs point to a more robust market.
Wendy L. Simpson: We also are encouraged by the reimbursement landscape, particularly with the anticipated four 1% increase under the sniff payment rule for fiscal 2025.
Wendy L. Simpson: Reimbursement in several states also is expected to rise in Florida, where we own seven centers are operators will benefit from an unprecedented 8% Medicaid rate increase which will result in increased coverage for L. P C.
Wendy L. Simpson: Last week as expected CMS issued its final sniffs minimum staffing world our industry pushed back and the proposed rule during the comment period with more than 46000 letters mainly related to the concerns that the mandate is unfunded and that the level of staff required.
Wendy L. Simpson: Third simply does not exist. According to the American Health Care Association, 81% of skilled nursing centers do not currently meet the rural staffing requirements. We will continue to monitor the situation and support industry organizations and initiatives to oppose this rule look.
Wendy L. Simpson: Going ahead to the second quarter, we expect F. F O F F O excluding nonrecurring items to range between 65 66 cents per share. We also are introducing full year 2024 guidance, which assumes no additional investment activity asset sales finding.
Wendy L. Simpson: Dancing for equity issuances, but does assume our loan receivables pay off at maturity and includes the rent increase associated with an H M. G lease amendment.
Wendy L. Simpson: S F O. Excluding nonrecurring items is expected to be between $2 63.
Wendy L. Simpson: And $2.65.
Wendy L. Simpson: Per share for the full year.
Wendy L. Simpson: Nonrecurring items include the payment of rent related to a property sale in January and $900000 of credit reserves that get reversed as loans pay off.
Wendy L. Simpson: In summary, as we redirect our efforts toward strategic growth the entire LTC team is geared up for a highly productive 2024, now I'd like to turn the call over to Pam.
Pamela J. Shelley: Wendy can all numbers I will discuss today are for the first quarter of 2024 compared with the first quarter of 2023, unless otherwise stated total.
Pam: Total rental revenue increased by $1 8 million due to several factors first the receipt of $2 4 million of rent in connection with the sale of a property in Wisconsin and the 'twenty 'twenty four first quarter second property acquisition in Ohio in the 2023 second quarter third more rent paid by H M G and laugh.
Pam: Annual Escalations and other lease adjustments the increases were partially offset by lower rent related to property sales and operator transitions.
Pam: Interest income from sale leaseback financing was comparable year over year, but interest income from mortgage loans increased by $1 2 million principally related to mortgage loan originations in 2023, and the funding of a construction loan in 2024 interest and other income decreased by $1 2 million, primarily due to the payoff of two mezzanine.
Pam: Loans and the related exit IRR and prepayment fee received in 2023, partially offset by income from our mezzanine loan origination in the third quarter of 2023 inter.
Pam: Interest expense increased by 436000, mainly due to higher interest rates and a higher outstanding balance on our revolving line of credit partially offset by scheduled principal paydowns on our senior unsecured notes.
Pam: Our provision for credit losses decreased by 1.7 million, mostly due to a higher dollar volume of loan originations in the prior year first quarter. Upon origination we record a loan loss reserve estimate equaled two 1%, which amortize this as a long principal is repaid.
Pam: Net income available to common shareholders decreased by $8 9 million, primarily due to lower gains on sale of real estate compared with last year's first quarter as well as the receipt of exit IRR and prepayment fees in connection with mezzanine loan payoffs and last year's period. This was partially offset by an increase in rental income higher interest income.
Pam: Loan originations and a lower provision for credit loss fully diluted <unk> per share was <unk> 69 cents compared with 66 cents.
Pam: Excluding nonrecurring items <unk> per share was 64 cents compared with 67 cents.
Pam: The decrease in S. S. Though excluding nonrecurring items was principally due to dilution from sales under our ATM program. The proceeds of which were used to fund investments and reduced our leverage during the quarter. We sold a total of six properties in Florida, and Texas with 268 combined units and sold our interest in a joint venture in.
Pam: Wisconsin, the combined sales price was $26 3 million, we received proceeds of $25 4 million net of transaction costs and recorded gains of approximately $3 3 million you can find more details about these sales and the press release, we issued yesterday afternoon Subsys.
Pam: Subsequent to the end of the first quarter of 2024, we sold two assisted living communities in Texas with a combined 70 units that were built in 1995 and previously had been closed the combined sales price with 500000, and we received approximately 400000 of proceeds net of transaction costs during.
Pam: During the first quarter, we funded $2 9 million of a previously disclosed 19, and a half million dollars mortgage loan commitment for the construction of an assisted living and memory care community in Michigan Ltc's investment represent 62% of the estimated project cost during the first quarter, we sold approximately 139.
Pam: 1000 shares of LTC common stock for net proceeds of $4 5 million under our ATM program.
Pam: Subsequent to the end of the quarter, we sold approximately 205000 additional shares of common stock for $6 5 million in net proceeds proceeds from the ATM sales were used for investments and to reduce our leverage. Additionally.
Pam: Additionally, we repaid $25 2 million under our unsecured revolving line of credit and repaid $6 million and scheduled principal paydowns on our senior unsecured notes. We also paid $24 6 million in common dividends, marking our 216th consecutive monthly dividend payment, which continued throughout the pandemic.
Pam: <unk> when other healthcare reach decreased theirs.
Pam: Our debt to annualized adjusted EBITDA for real estate stands at five five times and our annualized adjusted fixed charge coverage ratio was three and a half times, although our debt to annualized adjusted EBITDA for real estate metric remains higher than our long term target. We anticipate we will achieve this metric by year end as a result of recent.
Pam: Investments anticipated pay downs on our line of credit using proceeds from loan payoffs and scheduled principal paydowns on our senior unsecured notes.
Pam: You can find more detail about our loan receivable maturities on page 12 of our supplemental.
Quit: Currently we have total liquidity of nearly $197 million, including $9 million of cash on hand $123 million available on our line of credit with 277 million outstanding and roughly 65 million available under our ATM now I'll turn the call over to quit thank you Pam.
Quit: I'll start my remarks today with recent transactions as well as a few brief updates on some of our operating partners.
Quit: We have resolved the remaining 10 non revenue generating properties discussed on last quarter's call.
Quit: Three of these properties, we re leased and the remainder were sold you can find specific details in yesterday's press release.
Quit: Subsequent to the end of the quarter, we announced the origination of a $12 $7 million senior loan to ignite medical resorts at current LTC upward.
Pam: One which was primarily funded using our ATM is secured by a skilled nursing and assisted living campus, which was built in 2017 and is located in the Houston suburb.
Pam: Five year loan is interest only at a rate of 9.15%.
Pam: In accordance with GAAP, we were accounting for the loans of the unconsolidated joint venture and we expect to generate approximately 884000 of revenue in 2024.
Pam: To date, we have managed approximately 80% of our lease maturities through 2025.
Pam: First we executed a term sheet with <unk>, whereby we have reached an agreement in principle to amend the mass release, covering 11 skilled nursing centers in Texas to extend its term through December 2028.
Pam: Annual rent in 'twenty 'twenty, four is $9 million, a $1 million increase over 2023.
Pam: Rental increased to $9 5 million for 2025.
Pam: $10 million for 2026.
Pam: Escalating three 3% annually thereafter.
Pam: The amended mass release will provide <unk> with two five year renewal options.
Pam: With rent in the initial year of the first renewal term adjusting to fair market rent subject to a collar between two and a half and 12.5%.
Pam: As a condition of the amendment.
Pam: <unk> will repay 11.9 million on its $13 5 million dollar working capital note in the 2020 for second quarter.
Pam: On repayment of the remaining balance of adult will be interest free.
Pam: It will be paid in installments through 2028.
Pam: Proceeds from this 4% working capital note will be used to pay down higher interest debt or to fund accretive investments.
Pam: In addition, an operator of five properties not in our top 10 has exercised its renewal option.
Pam: This release for another five years and its contractual rates from March 2025 through February of 2013.
Pam: Quickly occupancy for the prestige healthcare loan secured by 15 properties in Michigan was 77% in March 2024, an increase from 73% in the year ago period.
Pam: Up from 75% in January this year.
Pam: Regarding our assisted living portfolios with quarterly market based rent resets. We received 525000 during the first quarter of 2024 and continue to expect to receive $3 3 million in total for 2024.
Pam: Now I will provide insight into our portfolio numbers, which exclude properties transitioned on or after October one 2022.
Pam: Q4, trailing 12 month, EBITDAR and EBITDAR coverage for our assisted living portfolio as reported using a 5% management fee was 131 times and 1.07 times respectively.
Pam: Excluding stimulus funds received <unk> coverage was 128 times and 1.03 times respectively.
Pam: For our skilled nursing portfolio as reported EBITDAR and EBITDAR coverage was 184 times at 1.3 or four times, respectively. Excluding stimulus funds received by our operators coverage was 171 times and 121 times respectively as.
Pam: As a result of occupancy increases and margin improvement same store Q4, trailing 12 month EBITDAR coverage has improved.
Pam: The prior quarter's same store coverage by 11 basis points for our assisted living portfolio and three basis points for our skilled nursing portfolio.
Pam: Recent general occupancy trends include private pay occupancy of 88% at March 31 up from 87%.
Pam: Both January 31 and September 32020.
Pam: For our skilled nursing portfolio average monthly occupancy grew to 75% in March from 74% in January and 72% in September. So data include approximately 66% of our total same store private pay units and approximately 87% of our same store skilled nursing beds.
Pam: Our business development team is continuously refining our offerings to meet dynamic customer demands from traditional triple net leases to structured finance products, including mezzanine loans preferred equity investments creative joint ventures, and construction of unit tranche loans, we pride ourselves on crafting these customized solutions.
Pam: To cater uniquely to operators needs, while ensuring any transactions. We complete are aimed at further driving shareholder value.
Pam: Looking forward inflation remains somewhat of a wildcard and banks continue to consider their options prior to any decision, making about maturing loans on their books.
Pam: Regardless, we are building our pipeline with interesting opportunities that are very by financing vehicle property type operator and size now I will turn things back to Wendy for her closing remarks, Thank you Pam and Clint.
Wendy L. Simpson: I'll conclude today with this LTC is a compelling investment one we have consistency of leadership with a successful track record to our monthly dividend is well covered.
Wendy L. Simpson: Three we have ladder debt maturities matched to cash flow, which reduces refinancing risk for we have built a diversified portfolio balanced between skilled nursing and private pay seniors housing employing various financing structures to provide LTC with a steady stream of them.
Wendy L. Simpson: And liquidity and to match our operators needs last but not least our smaller asset base. It makes it easier to drive growth because smaller investments can contribute meaningful accretion.
Wendy L. Simpson: We can achieve significant growth without making a large scale transformative investments.
Wendy L. Simpson: We recognize that our current stock price multiple is below our historical average we believe this reflects our focus on asset management initiatives. During the pandemic. The majority of our internal resources are dedicated to growth.
Wendy L. Simpson: So our multiple should begin to expand as we demonstrate the conversion of our pipeline to accretive investments.
Speaker Change: Thank you everyone. We appreciate your ongoing support and look forward to talking to you again next quarter.
Speaker Change: Operator, we're ready to take questions.
Speaker Change: Thank you.
Speaker Change: This time, we will be conducting our question and answer question and answer session.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue question. You May Press Star two if you would like to remove your question from the kiosk.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset.
Speaker Change: Before pressing the Star SR.
Speaker Change: One moment, please while we poll for question at all for questions.
Speaker Change: Thank you. Our first question is coming from Austin <unk> with Keybanc. Your line is like your line is late.
Austin: Thanks, Good morning, everybody.
Austin: Wendy you highlighted.
Austin: Investment opportunity that was being evaluated today can you share some additional detail around the size and scope of the pipeline.
Austin: And then I appreciate your comment or small orders kind of one off deals moving the needle, but can you just spoke to the competition in the transaction market today.
Austin: Sure.
Austin: It was the quarter when you give a pipeline quote historically, we've given that wouldn't when deals have near term visibility as we're building that pipeline.
Speaker Change: Next quarter, we'll be able to give more visibility on on that but at this point, we're seeing more opportunities to invest on private pay assets and some select opportunities on the skilled nursing side, such as our recent investment with ignite for newer skilled nursing assets.
Speaker Change: Currently the inbound skewed towards senior loans construction loans, Mezz and preferred equity investments.
Speaker Change: But as.
Speaker Change: As we see these loan maturities that are coming.
Speaker Change: We think that'll be an opportunity for us to actually look at equity investments and doing sale leasebacks as well as joint ventures.
Speaker Change: I guess, what's the appetite to do some of those loan type investment.
Speaker Change: What do you think the average duration on those ratios deals are deals arm versus do we just have appetite to do we definitely have appetite and it's going to be I would say probably somewhere in the three to five year range.
Speaker Change: Got it and then just from a funding perspective I mean, how are you thinking how are you funding.
Speaker Change: Pick up in investment and investment.
Speaker Change: Expect that Youll, <unk> and further drive down leverage.
Austin: Hanging around in and around it.
Austin: We will we won't appetite.
Austin: Austin, we will use equity.
Speaker Change: Understood. Thank you.
Austin: Mhm.
Speaker Change: Thank you.
Speaker Change: Our next question our next comes from Juan Sanabria.
Juan Carlos Sanabria: A copy of our South Florida.
Juan Carlos Sanabria: Hi.
Juan Carlos Sanabria: Hopefully pleasantly away.
Austin: Sure.
Juan Carlos Sanabria: Just trying to get it done.
Austin: Great.
Austin: Cap rates you guys are.
Austin: It sounds like still skewed towards whole loans.
Austin: But if you can give color on color on cap rate that would be great. It would be great.
Speaker Change: Sure Juan.
Juan: Your line is cutting out a little bit I think regarding cap rate I mean, right now we're looking at.
Juan: Our new investments in the 9% range plus or minus depending on whether it's.
Juan: Loans or owned assets.
Juan: For Mezz and preferred equity there's usually a.
Juan: Around a 9% target rate that would go with an IRR IRR exit around 12%.
Speaker Change: Thanks, and then hoping you could give a little color on it.
Juan: Normalized <unk> guidance.
Speaker Change: Thanks, Bob.
Bob: Second quarter numbers.
Bob: Okay.
Bob: Provided it.
Speaker Change: Got it.
Speaker Change: <unk> and <unk>.
Speaker Change: If you can give any color on the call here.
Speaker Change: On repayments.
Speaker Change: Are outlined in the smartphone.
Speaker Change: Okay.
Speaker Change: Sure sure one it's really hard to hear you because it is cutting out but I think you asked about.
Speaker Change: Our guidance.
Juan: Orderly and annual guidance. It includes everything that we've announced but we have not included any assumption for additional investments, but it does include the increases in rental rates from HMT and then also our transition portfolio that we gave guidance on last quarter.
Juan: We're reiterating that.
Juan: So there is nothing else in there we kind of give a base rate for guidance and then allow our analysts and investors to layer on their own investment assumptions beyond that and then what was the second part of your question.
Juan: The timing on the all the time.
Juan: No.
Speaker Change: Yes, yes, I'm sorry, the timing on the loan repayments.
Juan: That is outlined in the supplemental on page 12, but it is the fourth quarter. We have two loans that are maturing in that fourth quarter totaling about $80 million.
Juan: Yeah.
Juan: Yeah.
Speaker Change: Thank you.
Juan: We're in discussions with.
Juan: The operators on that the borrowers and as we've talked about before in giving loans. It is not our.
Juan: <unk> strategy to do all loans.
Juan: Uh huh.
Juan: Loans that we make available to operators to meet their needs, but we always do look to possibly convert those two long term equity ownership. So if there is an opportunity to do that we will or if theres an opportunity to stay in those investments in some capacity, we would look to do.
Juan: Do that as well we like these two investments.
Juan: So we are in discussions with the operators on that.
Juan: Key balance sheet.
Juan: Next question is coming from Rich Anderson with Wedbush Your line is live.
Richard Charles Anderson: Yes, I'm getting some mental vertigo here with the Echo I Hope you can hear me.
Richard Charles Anderson: But I only have one question you know a lot of structured deals that you talked about Clinton.
Richard Charles Anderson: I'm wondering.
Richard Charles Anderson: You know what what's your comfort level in terms of loans or I should say anything else. Besides fee simple ownership as a percentage of the total how willing how far are you willing to go up on that.
Richard Charles Anderson: Before risking being viewed as a mortgage REIT or something that that you are anywhere near that but I'm. Just I'm. Just curious if you have a threshold in mind about how how up how high you want to go on that level of investment.
Richard Charles Anderson: We don't want hybrid Japan, we don't have that threshold, but we are very mindful of that and we really look at our structured product as a marketing tool and a way to get exposure with operators that might not normally look to refinancing and not want to be.
Richard Charles Anderson: <unk> some ownership in the properties I mean, that's been a big.
Richard Charles Anderson: Hurdle in.
Richard Charles Anderson: Marketing sale leasebacks operators there are operators out there that are like I'll never do a sale leaseback with a REIT well that's a that's a big.
Richard Charles Anderson: A portion of the marketplace that we feel if we can get an inroad with them and they can get exposure to LTC and our way of doing business that they might actually convert to.
Richard Charles Anderson: Ownership equity, we saw that happen with Pruitt had never done.
Richard Charles Anderson: Sale leaseback with a REIT before and they did one with US and we worked a long time on that relationship and that's what our business development team is out there doing looking for operators that are new to two refinancing and getting an inroad with them yes.
Richard Charles Anderson: And it's also it's not just yield focused.
Richard Charles Anderson: So this is really the opportunity to partner with operating companies with an investment structure theyre familiar with that leads us to dialogue and other opportunities. They might have so it's really more marketing as Pam mentioned in but from a mortgage REIT standpoint, we're staying an equity REIT.
Richard Charles Anderson: Okay.
Richard Charles Anderson: I'm sure of that.
Speaker Change: I do have one more question.
Richard Charles Anderson: The question was asked how are you financing that stuff in a quick answer from Wendy was really going to use equity.
Richard Charles Anderson: But you know you through your ATM, you raised about 10 or $11 million this year.
Richard Charles Anderson: <unk>.
Richard Charles Anderson: So you know.
Richard Charles Anderson: That doesn't really fill the gap so much that amount at least in terms of what I'm thinking about for your your activity going forward.
Richard Charles Anderson: So.
Richard Charles Anderson: When you can you expand upon the funding strategy beyond just saying, we're using equities that are.
Richard Charles Anderson: But certainly more in the way of issuance, but also are there other priorities downstream from equity that you might use more dispositions I'm just if we could get more color on the financing side of things that'd be great. Thanks, great. Thanks sure sure its Pam.
Pamela J. Shelley: So equity on the ATM as our primary way of financing your one off investments like the Kt loan that we did.
Speaker Change: This year, we've almost <unk>.
Pamela J. Shelley: Advertised that 100% and going forward for the smaller one offs or two property portfolio as the ATM is great. If we were looking at a large portfolio.
Pamela J. Shelley: <unk> you know.
Pamela J. Shelley: I know it sounds very old fashion, but theres still an overnight.
Pamela J. Shelley: Marketed deal that that could be done and.
Pamela J. Shelley: That's a good way to place stock in the hands of.
Richard Charles Anderson: Of new potential investors, but we don't have anything like that on the horizon right now and as I discussed we have the $80 million in loan proceeds that currently we're anticipating are going to pay off.
Richard Charles Anderson: And so that should also be used to fund new investments okay.
Richard Charles Anderson: That discipline.
Richard Charles Anderson: We don't go down a lot of dispositions over the past 24 months.
Richard Charles Anderson: And we don't have anything immediately on the horizon. So.
Richard Charles Anderson: We're not looking right now at.
Richard Charles Anderson: Financing growth with any more dispositions.
Speaker Change: Okay. Thanks, that's it for me thank you.
Speaker Change: Thanks.
Speaker Change: Thank you once again, if you have any questions. Please press star one on your phone at this time.
Speaker Change: Our next question is coming from Michael Carroll with RBC capital markets. Your line is life.
Michael Albert Carroll: Yes, sorry, I was missing some of these questions during getting some bad feedback it seems like everything's fine now but.
Michael Albert Carroll: But can you provide some background on the HMD lease negotiations I know last quarter, you temporarily extended that lease to August and today, you announced the amendment through the end of 2028, but guess what changed there I guess what facilitated this lease amendment that increased your rent and extended the lease term.
Michael Albert Carroll: Hey, Mike Glenn So we've been actively working on this.
Michael Albert Carroll: As the buildings have increased occupancy as margins have improved its really trying to say how do we structure that for rent basis.
Mike Glenn: The.
Michael Albert Carroll: The pending staffing rule that was out there. It was just finalized recently so there were these elements that were out there that we needed to collectively focused on with <unk> to be able to look at a longer term horizon, which took some time to do that but as you saw from the rent growth that we're getting off of this not only in 2024, but going forward that was a positive as well.
Speaker Change: Sure.
Speaker Change: Okay, and then correct me if I'm wrong, but are there two assets exclude that for those master leases.
Speaker Change: Are there or not.
Speaker Change: Talked initially about.
Speaker Change: Second about the other the other master lease all the other ones. There's two of them, yes, we have two separate master leases.
Speaker Change: And then also Austin is on the yes, we have a line of credit Outstandings with H M. G. As well that we knew that that was a temporary financing like temporary because of short term financing. We recently took the properties back from senior care centers. So we wanted to be able to get that paid off to redeploy that higher yields because that was a 4% yield on that line of credit.
Speaker Change: Need it to get up the working capital line of credit, Yes, right and then you had a longer term lease to do that right and just to clarify for everybody with HMD. We have two separate master leases. We had we've had one which covers two properties that was preexisting. This new 11 property Master lease I think there was some confusion around that so there are.
Speaker Change: <unk> separate master leases, we're just talking about the 11 property master lease.
Speaker Change: Okay.
Speaker Change: Also on that to US is we want to look at how do we get probably ramp up rent on this what was important to us in this negotiation was getting a fair market rent reset at some point.
Speaker Change: And we were able to negotiate that into the overall terms of the amendment.
Speaker Change: Okay, and then what's the ramp on the two outside Australia, and do you plan on selling those.
Speaker Change: No we don't have any plans on selling those.
Speaker Change: Obviously it was structured before.
Speaker Change: And it's typical when he got it 10 10 year initial term.
Speaker Change: Alright, great.
Speaker Change: Yes.
Speaker Change: Okay, great sorry, the feedback or the echoes back so far to go.
Speaker Change: Question, but just real quick on the market base lease rent forecast.
Speaker Change: You provided that you're capped at the $3 3 million for 2024.
Speaker Change: Does that ran conclude anything related to the ALG April transitions I know there are not paying rent through October but are they expected to pay rent in November and December and is that included in that $3 3 million number.
Speaker Change: Ah Theres no rent included in that number for those buildings.
Speaker Change: You're asking about the non revenue producing that's not in the $3 3 million.
Speaker Change: Okay, Great and do you expect that.
Speaker Change: Hey get rent from those assets after the free rent period.
Speaker Change: Okay perfect. Thanks.
Speaker Change: Thank you.
Speaker Change: Thank you. Thank you we have reached the end of our question and answer a question and answer session.
Speaker Change: I'll now turn the call back over to Wendy Simpson for closing remarks for closing remarks. Thank.
Wendy L. Simpson: Thank you all for joining us for the first quarter and we're really excited about this year and we hope to bring you additional good news.
Wendy L. Simpson: After our second quarter and have a great day.
Wendy L. Simpson: Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation.