Q3 2024 Red Rock Resorts Inc Earnings Call
Please note this conference is being recorded.
I would now like to turn the conference over to Stephen <unk> Executive Vice President Chief Financial Officer, and Treasurer of Red Rock Resorts. Please go ahead.
Thank you operator, and good afternoon, everyone. Thank you for joining us today on Red Rock Resorts' third quarter 2024 earnings Conference call. Joining me on the call today are Frank and Lorenzo Fertitta, Scott Kreger, and our executive management team.
I would like to remind everyone that our call. Today will include forward looking statements under the safe Harbor provisions of the United States Federal Securities laws.
<unk> results may differ from those projected.
During this call. We will also discuss non-GAAP financial measures for definitions and complete reconciliation of these figures to GAAP. Please refer to the financial tables in our earnings press release form 8-K, and Investor deck, which were filed this afternoon prior to the call.
Also please note that this call is being recorded.
Let us start off by stating that the third quarter represented another strong quarter for the company by any measure.
In terms of net revenue and adjusted EBITDA, Our Las Vegas operations had the best third quarter in our history in our history, while operating at near record adjusted EBITDA margin in the quarter.
In addition to showing strong financial results in the quarter, we continue to be pleased with financial performance of our Durango Casino resort.
Durango continues to grow the Las Vegas locals market as the team continues to execute and improve the properties of operational performance. While at the same time driving incremental play from our existing customers and attracting new customers to our brand.
With three full quarters under our belt the property increased visitation and net theoretical win in the surrounding Durango area by approximately 91%, 92%, respectively, while signing up over 70000, new customers to our database.
Durango continues to ramp up and remains on track to become one of our highest margin properties as well as generate a return of approximately 15% net of cannibalization through its first year of operation.
Cannibalization remains in line with our expectations and its impact is primarily felt at our Red rock property.
Distant with our past performance history, we expect to backfill. This revenue over the next couple of years, given the strong long term demographic growth profile of Las Vegas Valley and in particular within the <unk> area, which between downtown Summerlin and the someone west communities. We expect to have approximately 34000 new households upon final buildout.
As stated on our last earnings call. We are planning to move forward with and with the expansion of our Durango property later this year.
Our current plans for the next phase of Durango will add over 25000 square feet of additional casino space, including a new high limit slot and bar area.
In total the expansion will add 230 slot machines to the Durango casino floor, including 120 slot machines dedicated to a new high limit room.
In addition to the expanded casino space, who will be adding an additional covered parking garage with almost 2000 convenient parking spots significantly improving customer access to the property, while providing us flexibility for future expansions at Durango.
The current budget for the project is approximately $116 million and the expansion is expected to take around 12 months to complete.
We are expecting some disruption to the south side of the property during the construction period.
Regarding the rest of the portfolio, we remain operationally disciplined within the quarter and we're continuing to execute on our core strategy of reinvesting in our existing properties to deliver fresh and relevant amenities to our guests all while remaining focused on best in class customer service.
As we return to a more traditional seasonal pattern. The company continues to manage our expenses generate record financial performance maintained near record margins reinvest in our properties and return capital to our shareholders within the quarter.
Now, let us take a closer look at our third quarter.
With respect to our Las Vegas operations, our third quarter net revenues was $464 7 million up 13, 9% from the prior year's third quarter.
Our adjusted EBITDA was 202.
$6 million up five 8% from the prior year's third quarter.
Our adjusted EBITDA margin was 43, 6% a decrease of 333 basis points from the prior year's third quarter.
On a consolidated basis, our third quarter net revenue was $468 million up 13, 7% from the prior year's third quarter. Our adjusted EBITDA was $182 7 million up four 3% from the prior year's third quarter. Our adjusted EBITDA margin was 39% for the quarter a decrease of 353 basis points.
From the prior year's third quarter.
In the quarter, we generated operating free cash flow of $46 4 million or <unk> 44 per share.
This brings our year to date cumulative free cash flow to $292 $6 million were $2 70 per share. This significant level of year to date free cash flow was either reinvested in our long term growth strategy reinvested into our existing properties or returned to our stakeholders via debt paydown share repurchases and dividends.
As we finished the third quarter, we remained focused on our core local guests as we continue to grow our regional and national segments across our portfolio.
When comparing our results to last year's third quarter, we continue to see strong visitation and carded slot play across the majority of our database, including a regional and national segments.
This strength, coupled with our strong spend per visit across majority of our database.
Allowed us to enjoy near record revenue and profitability across our gaming segments in the quarter.
Turning to non gaming segments, both our hotel and food and beverage continued to grow year over year and deliver record revenue and profitability in the third quarter.
Our hotel division experienced its highest third quarter revenue and profit in our history driven by the team's success and continued to drive higher ADR, while maintaining occupancy across our hotel portfolio.
Not to be outdone, our food and beverage division also experienced its highest ever third quarter revenue and near record profit driven by higher average check and cover counts across our food and beverage outlets.
With regard to our group sales and catering business as mentioned on our last earnings call, we face a tough third quarter comparable and expect to face tough comparables for the remainder of the year.
As we look forward to the fourth quarter of them playing unlucky in sports in October and the previously discussed softness in our group sales and catering business lines, we are seeing strength and stability of our core slot and table business in the locals market and across our card a database as we remain confident in our business prospects moving forward.
Now, let's cover a few balance sheet and capital items.
Companys cash and cash equivalents at the end of the third quarter was $117 $5 million and the total principal amount of <unk>.
With $3 48 billion, resulting in net debt of $3 35 billion.
As at the end of the third quarter, the company's net debt to EBITDA ratio remained flat at four two times.
Also during the third quarter, we made distributions of approximately $72 8 million to the LLC unitholders of station Holdco, which included a distribution of approximately $42 4 million to Red rock resorts. The company used the distribution to make it required tax payment and pay its previously declared dividend of 25 per class a comp.
Sure.
Capital spend in the third quarter was $80 4 million, which includes approximately $47 4 million in investment capital inclusive of Durango project for <unk> as well as $32 9 million in maintenance capital.
For the full year 2024, not including the spend to close at our Durango project, We now expect capital spend to be between $185 $195 million spread between maintenance and investment capital.
We also remain committed to strategically investing in offering new amenities to our guests in order to drive incremental visitation and spend to our properties.
was either reinvested in our long-term growth strategy, reinvested into our existing properties, or returned to our stakeholders via debt paydown, share repurchases, and dividends.
Month, we successfully opened a yard house restaurant at Sunset station.
But we are in early days, we are pleased with the guest response and the early results from this new amenity.
As we finish the third quarter we remain focused on our core local guests as we continue to grow our regional and national segments across our portfolio. When comparing our results to last year's third quarter we continue to see strong visitation and carded slot play across the majority of our database including our regional and national segments.
We expect to continue to invest in our existing properties throughout 2024, including adding local favorite China Mama at our power station property later this year.
In addition to these amenities, we expect to make investments in both our Sunset station and Green Valley Ranch properties in 2025 at.
At our Sunset station property, we are building off the success, we're seeing with our recently renovated race and sports book and partial casino remodel by continuing to refresh the podium in order to better position the property to capture the continued growth in Henderson, including the Masterplan communities of the Sky and cadence, which are expected to add over $12 five and a new household to quantify.
This strength coupled with the strong spend per visit across the majority of our database allowed us to enjoy near record revenue and profitability across our gaming segments in the quarter. In terms of non-gaming segments, both our hotel and food and beverage continue to grow year over year and deliver record revenue and profitability in the third quarter.
Our hotel division experiences highest third-quarter revenue and profit in our history driven by the team success and continue to drive higher ADR while maintaining occupancy across our hotel portfolio.
Completion of both communities.
As part of this project will be adding and an all new country Western bar, a new Mexican restaurant and all New center of our along with completely renovated casino space.
Not to be outdone, our Food and Beverage Division also experiences highest-ever third-quarter revenue and near-record profit, driven by higher average check and cover counts across our food and beverage outlets.
Work is already commenced on this project and the total cost of the renovation is expected to be approximately $53 million.
At our Green Valley Ranch property, we are expecting to start a complete refresh of our room product.
With regard to our group sales and catering business, as mentioned on our last earnings call, we face a tough third quarter comparable and expect to face tough comparables for the remainder of the year.
Aligning the hotel with our most recent renovations made to our well received high limit table and slot room rooms at the property.
As we look forward to the fourth quarter, other than playing unlucky in sports in October, and the previously discussed softness in our group sales and catering business lines, we are seeing strength and stability in our core slot and tables business, in the locals market, and across our Carta database, as we remain confident in our business prospects moving forward.
Work is expected to start in June of 2025, and will continue through November of 2025.
The cost of the room renovation is expected to be approximately $150 million.
Our other recently introduced amenities, we expect these to be solid investments are looking forward to moving beyond the disruption challenges at these properties as we introduce these new amenities to our customers next year.
Now let's cover a few balance sheet and capital items.
The company's cash and cash equivalents at the end of the third quarter was $117.5 million and the total principal amount of the company was $3.48 billion resulting in net debt of $3.35 billion.
Turning now to North Fork, we are extremely excited about this project, which is situated on a 305 acre site located north of Fresno, California.
With great Ingress egress off the heavily traveled highway 99. The project is one of the most convenient and accessible locations in central California with over $5 8 million people located within two hours of the development site.
As of the end of the third quarter the company's net debt to EBITDA ratio remained flat at 4.2 times
Also during the third quarter we made a distributions of approximately 72.8 million to the LOC unit holders of Station Holco which included a distribution of approximately 42.4 million to Red Rock Resorts.
When complete this best in class resort will include approximately 100000 square feet of casino space with over 2400 slot machines, including 2000 class III games, 42 table games, and two food and beverage outlets and a food court with many exciting options.
The company used the distribution to make its required tax payment and pay its previously declared dividend of 25 cents per Class A common share.
We have started site work in construction as we continue to finalize design. The total construction time for the project is currently anticipated to between 18 to 20 months, putting the opening of the resort into 2026.
Capital spent in the third quarter was $80.4 million, which includes approximately $47.4 million in investment capital, inclusive of Durango project retainage, as well as $32.9 million in maintenance capital.
The current cost of the project is expected to be approximately $785 million, which includes all design cost construction hard and soft costs, preopening expenses, and any financing and development fees associated with the project.
For the full year 2024, not including the spend to close out our Durango project, we now expect capital spend to be between $185 and $195 million spread between maintenance and investment capital.
We are excited to be making progress and we'll continue to provide further updates on our quarterly earnings calls.
We also remain committed to strategically investing and offering new amenities to our guests in order to drive incremental visitation and spend to our properties.
Lastly, the Companys Board of directors has declared a cash dividend of <unk> 25 per class a common share payable on December 31, two class a shareholders of record as of December 16th.
Last month, we successfully opened a Yardhouse restaurant at Sunset Station. While we are in early days, we are pleased with the guest response and the early results from this new amenity.
When we combine our share repurchases with our special and regular dividends.
We expect to continue to invest in our existing properties throughout 2024, including adding local favorite Chinamama at our Palace Station property later this year.
We have returned approximately $194 $8 million to our shareholders in 2024.
In addition to these amenities, we expect to make investments in both our Sunset Station and Green Valley Ranch properties in 2025.
The company continues to have a strong year and Durango continues to validate our long term growth strategy and demonstrate the power of our own development pipeline and real estate Bank, which consists of over 450 acres of developable land position in highly favorable areas across the Las Vegas Valley.
At our Sunset Station property, we are building up the success we are seeing with our recently renovated race and sports book and partial casino remodel by continuing to refresh the podium in order to better position the property to capture the continued growth in Henderson, including the master plan communities of Eskaya and Cadence.
This pipeline coupled with our current best in class assets and locations gives us an unparalleled growth story that will allow us to double the size of our portfolio and capitalize on the very favorable long term demographic trends and high barriers to entry that characterized the las Vegas locals market.
which are expected to add over 12,500 new households upon final completion of both communities.
As part of this project, we'll be adding in an all-new Country Western Bar, a new Mexican restaurant, an all-new Center Bar, along with a completely renovated casino space.
We'd like to recognize and extend our thanks to our team members for their hard work.
Our success starts with them and they continue to be the primary reason why our guests return time after time.
Workers already commenced on this project and the total cost of the renovation is expected to be approximately 53 million dollars.
Great. Thank you again for voting as top casino employer in the Las Vegas Valley for the fourth consecutive year as well as being certified by great place to work for a third year in a row.
At our Green Valley Ranch property, we are expecting to start a complete refresh of our room product, aligning the hotel with our most recent renovations made to our well-received high-limit table and slot rooms of the property.
Finally, we thank our guests for their loyal support each of the last six decades.
Operator. This concludes our prepared remarks, and we are now ready to take questions.
Work is expected to start in June of 2025 and will continue through November of 2025.
Speaker Change: Thank you I'd like to ask a question. Please press Star then one on the telephone keypad.
The cost of the room renovation is expected to be approximately $150 million. Like our other recently introduced amenities, we expect these to be solid investments and are looking forward to moving beyond the disruption challenges of these properties as we introduce these new amenities to our customers next year.
Speaker Change: Move yourself from the queue. Please press Star then two.
Speaker Change: Today's first question comes from Joe Grills, Ajay Jpmorgan. Please go ahead.
Joe Grills: Good afternoon guys.
Speaker Change: Looking back at the performance in the <unk> is there anything that you would call out as sort of one time or.
Turning now to North Fork. We are extremely excited about this project which is situated on a 305 acre site located north of Fresno, California.
Speaker Change: Kind of a unique trend change outside of normal seasonality, whether that's extreme heat or renovation disruption and maybe a sort of directional or or mathematical way of answering it is if you look at the performance of.
With great ingress-egress off the heavily traveled Highway 99, the project is one of the most convenient and accessible locations in Central California, with over 5.8 million people located within two hours of the development site.
Speaker Change: Durango less bedrock cannibalization, how did the rest of the portfolio perform I know <unk> mentioned that the $30 million year over year EBITDA Delta was basically Durango net of Red rock cannibalization with the balanced portfolio flat you can answer it in that way.
When complete, this best-in-class resort will include approximately 100,000 square feet of casino space with over 2,400 slot machines, including 2,000 Class III games, 42 table games, and two food and beverage outlets and a food court with many exciting options.
Speaker Change: We have started site work and construction as we continue to finalize design. The total construction time for the project is currently anticipated between 18 and 20 months, putting the opening of the resort into 2026.
Speaker Change: And then I have a quick follow up.
Joe Grills: Hopefully just a quick Joe let.
Joe Grills: Let me start with the first piece of the question is no real unusual items throughout the quarter other than.
Joe Grills: Just that return of that typical third quarter seasonality.
Speaker Change: The current cost of the project is expected to be approximately $785 million, which includes all design costs, construction hard and soft costs, pre-opening expenses, and any financing and developing fees associated with the project.
Joe Grills: For example, if you look at past years in 2019, Q2 to Q3 was down almost 19%.
Joe Grills: So when you kind of look at Durango, what we talked about here is we expect to deliver about net 15% mechanical net 15% return on our investment in the first year investments. So it's actually higher than we promised we actually promised 10%. So when you do the quick math, if you had an $800 million costs, it's implying a $120 million net of direct net of cannibalization.
Speaker Change: We are excited to be making progress and will continue to provide further updates on our quarterly earnings calls.
Speaker Change: Lastly, the company's Board of Directors has declared a cash dividend of 25 cents per Class A common share payable on December 31st to Class A shareholders of record as of December 16th.
Joe Grills: When you apply some impact of cannibalization, what you end up getting is at the core portfolio was down low single digits in terms of revenue.
Speaker Change: When we combine our share repurchases with our special and regular dividends, we have returned approximately $194.8 million to our shareholders in 2024.
Speaker Change: Great and then margins 43, 3% with 43%.
Speaker Change: The company continues to have a strong year and Durango continues to validate our long-term growth strategy and demonstrate the power of our own development pipeline and real estate bank which consists of over 450 acres of developable land positioned in highly favorable areas across the Las Vegas Valley.
Joe Grills: Sure.
Joe Grills: What sort of expenses.
Joe Grills: Sort of drove that increase.
Joe Grills: And then how do you think about flow through.
Joe Grills: <unk> margins going forward, particularly as we think about 2025.
Speaker Change: This pipeline, coupled with our current best-in-class assets and locations, gives us an unparalleled growth story that will allow us to double the size of our portfolio and capitalize on the very favorable long-term demographic trends and the high barriers to entry that characterize the Las Vegas local market.
Joe Grills: And maybe being more of a reinvestment in existing assets kind of year and maybe you can talk about 25 in terms of renovation and disruption that you might anticipate.
Joe Grills: So in terms of just the margin I'll, just kind of frame. It very simply I think about 150 basis points of that margin is contribute to cannibalization of revenue moving to our existing properties over to Durango.
Speaker Change: We would like to recognize and extend our thanks to our team members for their hard work. Our success starts with them, and they continue to be the primary reason why our guests return time after time. We thank them again for voting us Top Casino Employer in the Las Vegas Valley for the fourth consecutive year, as well as being certified by Great Place to Work for a third year in a row.
And then you couple that with lower revenues as part of the Q3 seasonality and then we did we are bearing the brunt of minimum wage which cost us about $1 2 million for the quarter.
Speaker Change: Finally, we thank our guests for their loyal support each of the last six decades.
Joe Grills: Okay.
Speaker Change: And then maybe can touch on 2025 in terms of anticipated renovation impacts.
Speaker Change: Operator, this concludes our prepared remarks and we are now ready to take questions.
Speaker Change: Thank you. If you would like to ask a question, please press star then one on your telephone keypad. To remove yourself from the queue, please press star then two.
Speaker Change: Yes, sorry about that sorry, so in terms of the renovation FX impact if I run it down by property.
Speaker Change: So our initial estimates on <unk>, roughly about $11 $5 million from an EBITDA impact.
Speaker Change: Today's first question comes from Joe Groth at J.P. Morgan. Please go ahead.
Speaker Change: Sunset station, approximately $5 $4 million and then Durango about five nine.
Good afternoon, guys.
Thank you.
Speaker Change: Looking back at the performance in the 3Q, is there anything that you would call out as sort of one time or kind of a unique trend change outside of normal seasonality whether that's extreme heat or renovation disruption and maybe a sort of directional or mathematical way of answering it is if you look at the performance of
Speaker Change: Thank you guys.
Speaker Change: Youre welcome.
Speaker Change: And our next question comes from Carlos <unk> with Deutsche Bank. Please go ahead.
Hey, guys good evening.
Speaker Change: Steve.
Speaker Change: Obviously in the third quarter seasonality as you said kind of returned to normal and when you go back and look at your model in particular, the local segment.
Speaker Change: Durango, less Red Rock, cannibalization, you know, how did the rest of the portfolio perform? I know in the 2Q you basically mentioned that the
Speaker Change: A lot of noise with palms and that stretch how do you generally think about <unk> seasonality relative to <unk> and obviously acknowledging the moving parts of the stub period of Durango last year makes that a little bit harder for comparability, but just thinking about <unk> relative to <unk> seasonality.
Speaker Change: 30 million year of your EBITDA Delta was basically Durango net of Red Rock cannibalization with the balanced portfolio flat. Maybe you can answer it in that way and then I have a quick follow-up.
Speaker Change: Hopefully it's just quick, Joe. Let me start with the first piece of questions. No real unusual items throughout the quarter other than just that return of that typical third quarter seasonality?
Speaker Change: So what <unk>.
Speaker Change: We've got a couple of factors in here.
Speaker Change: Carload, but in general if you took a pre COVID-19 year, taking out the noise of the palms you ebitdas.
Speaker Change: For example, if you look at past years in 2019, Q2 to Q3 was down almost 19 percent.
Speaker Change: EBITDA is up usually around 12%, but you have to factor in that we did play a little bit.
So when you kind of look at
Speaker Change: In terms of sports or this tune about $7 6 million.
Speaker Change: Durango, what we talked about here is we expect to deliver about a net 15% return on our investment in the first year of investment, so it's actually higher than we promised. We actually promised 10%. So when you do the quick math, if you have an $800 million cost, that's implying $120 million net of cannibalization.
Speaker Change: October in October sorry.
Speaker Change: Okay. So think about it is kind of up 12, less almost 8 million bucks from from the sports assuming that.
Speaker Change: File in November and December.
Correct.
Speaker Change: Okay and then just this is just an item of Claire just to.
Speaker Change: When you apply some impact to cannibalization, what you end up getting is that the core portfolio is down low single digits in terms of revenue.
Speaker Change: By something.
Speaker Change: Capex for the year, you said 185 to 195 am I correct in that.
Great. And then margins, 43.3% or 43%.
Speaker Change: It excludes Durango closeout Durango close out for the year was about $95 million is that accurate.
Speaker Change: Yes, Durango Durango Durango closed up for the year is about 90% almost $97 million, we still have about $1 million left to close that out.
Speaker Change: What sort of expenses, you know, sort of drove that increase?
Speaker Change: and then how do you think about flow-through or margins going forward, particularly as, you know, we think about 2025 as...
Speaker Change: Perfect.
Speaker Change: Thank you guys.
Speaker Change: and maybe being more of a reinvestment in existing assets kind of year and maybe can talk about 25 in terms of renovation impact disruption that you might anticipate.
Speaker Change: And our next question today comes from Steve <unk> with Stifel. Please go ahead.
Speaker Change: Hey, guys good afternoon.
Speaker Change: Steve You mentioned that group sales.
Speaker Change: So in terms of just the margin, I'll just kind of frame it very simply. I think about 150 basis points of that margin is contributed to cannibalization, so revenue moving to our existing properties over to Durango.
A little bit softer than you might.
Speaker Change: Thank you guys have been expecting.
Speaker Change: Just wondering if you could give some more color.
Speaker Change: Potentially what you guys think are.
Speaker Change: Driving that softness.
Speaker Change: And then you couple that with lower revenues as part of the Q3 seasonality, and then we are bearing the brunt of minimum wage, which costs us about $1.2 million for the quarter.
Speaker Change: If we look at the margin on that food and beverage line.
Speaker Change: A little bit lower than what we'd been expecting over the last couple of quarters I'm just wondering if thats.
Speaker Change: Somewhat due to that lower group business.
Speaker Change: Yes, Steve This is Scott let me.
Speaker Change: That one we'll take it into two pieces one group sales hotel.
Speaker Change: So in terms of the renovation impact, if I run it down by property, so our initial estimates on GVR, roughly about $11.5 million from an EBITDA impact, Sunset Station approximately $5.4 million, and then Durango about $5.9 million.
Respond and catering when you look at the quarter.
Speaker Change: Most notable piece.
Speaker Change: Piece of the quarter, we still are digesting, a tough comp year over year as it relates to Covid rebooking, so theres about $1 million.
Speaker Change: Good news in last year's number relative to Covid re bookings if you were to add that.
Thank you, guys.
Speaker Change: And our next question comes from Carlos Santorelli with Deutsche Bank. Please go ahead.
Speaker Change: And then with just basically flat when it comes to the hotel sales room nights.
Hey guys, good evening.
Speaker Change: We expect that we're going to have tough comps into the fourth quarter and somewhat into the first quarter because of the Super Bowl as well and hotel, but if you look a little farther up to 25 and 26, we're very encouraged with our on the books pace.
Speaker Change: a lot of noise with palms and and that that stretch
Speaker Change: We go into those future years, and then catering really kind of mirrors the same.
Speaker Change: How do you generally think about 4Q seasonality relative to 3Q? And obviously acknowledging the moving parts of the subperiod of Durango last year, you know, makes that a little bit harder for comparability, but just thinking about 3Q relative to 4Q seasonality.
Speaker Change: <unk> as group room night sales does as well, where we're going to have a tough comp.
Speaker Change: Next two quarters, and then better better outcomes in the 25 inventory six.
Speaker Change: We've got a couple factors in here, Carlo, but in general, if you took a pre-COVID year taking out the noise of the palms, EBITDA is up usually around 12%, but you have to factor in that we did play a little bit unfriendly in terms of sports to this tune, about $7.6 million.
Speaker Change: And Steven to answer that last follow up in terms of the softness you're seeing in F&B is exactly what Scott said its premium predominantly all catering is F&B experienced a record revenue quarter.
Speaker Change: Okay. Thanks for that guys and then Steve.
Speaker Change: Steve I understand you guys don't give formal guidance, but.
October in October
Speaker Change: As we start to think about next year in 2025 is there anything you would call out in terms of.
Speaker Change: Okay, so think about it as kind of up 12 less almost 8 million bucks from the sports, assuming that doesn't reconcile in November and December.
Speaker Change: Whether it's headwinds, whether it's tailwind or anything.
Speaker Change: That would disrupt the normal cadence as we start to think about 2025.
Wrecked.
Speaker Change: Okay and then just this is just an item of Claire just to clarify something CapEx for the year you said 185 to 195 am I correct in and that excludes Durango closeout Durango closeout for the year was about 95 million is that accurate
Speaker Change: Yes, I think I think I mean from a group perspective or entire the entire company.
Speaker Change: Higher company sorry.
Speaker Change: Okay, I think I think the I think the one we just talked about graph is probably one of the bigger one time issues.
Speaker Change: If you kind of add all that together, you're going to experience about $23 million worth of disruption as we as we start the <unk> Memorial Green Valley continue the podium a remodel at Sunset and then.
Speaker Change: Durango close up for the year is about almost $97 million. We still have about a million dollars left to close that out.
Speaker Change: We attach the garage too and the high limit room of Durango, and Thats really those are really the big one time items.
Perfect. Thank you, guys.
Speaker Change: And our next question today comes from Steve Wyzynski with Speed Polls. Please go ahead.
Speaker Change: And youre going to Youre going to go up against the Super Bowl in Q1.
Speaker Change: Hey guys, good afternoon. Steve, you mentioned that group sales have been a little bit softer than I think you guys have been expecting. I'm just wondering if you could give some more color.
Speaker Change: As well as Con AG in a couple of others I think generally fluence is important to note that.
Most all of the operators have said that Q3, the seasonality seems to have come back a bit of a challenge, but October who to bounce back.
Speaker Change: on potentially what you guys think are driving that softness. And if we look at the margin on that food and beverage line, it's been a little bit lower than what we've been expecting over the last couple quarters. I'm just wondering if that's somewhat due to that lower group business.
Speaker Change: It is very favorable both on slots table games.
Speaker Change: Sports handle right.
Speaker Change: Asleep.
Speaker Change: The whole percentage due.
Speaker Change: Due to the NFL hasn't been great, but our core business.
Speaker Change: Feel good going into Q4.
Speaker Change: This is Scott. Let me take that one. We'll take it into two pieces. One group sales hotel and then we'll correspond in catering. When you look at the corridor, probably the most notable
Speaker Change: Okay. Thanks for the color guys I appreciate it.
Speaker Change: And our next question comes from David Katz with Jefferies. Please go ahead.
Hi, good evening, everyone. Thanks for taking my question.
Speaker Change: piece of the quarter. We still are digesting a tough comp year over year as it relates to COVID rebooking, so there's about a million dollars.
Speaker Change: Can we just.
Speaker Change: I've entered the Super Bowl comps a little bit it came off a couple of times.
Speaker Change: Was was.
Speaker Change: of good news in last year's number relative to COVID rebookings. If you were to add that in and adjust, we're basically flat when it comes to hotel sales room nights.
Speaker Change: It was the Super Bowl volume levels in terms of hospitality is strong.
Speaker Change: Perhaps the sports betting was not.
Speaker Change: What's the hard part and what's the easy part within the Superbowl piece.
Speaker Change: We expect that we're going to have tough comps into the fourth quarter and somewhat into the first quarter because of the Super Bowl as well in Hotel. But if you look a little farther out to 25 and 26, we're very encouraged with our on-the-books pace as we go into those future years.
This is Lorenzo I think if you look at obviously hotel and food and beverage things like that not having the Super Bowl.
Speaker Change: It's going to be along the tough comp versus last year I would say of all the events that the city has had citywide events, whether it be F. One you name. It I think Super Bowl, which is a huge benefit to the overall city and obviously, we benefited from that as well.
Speaker Change: And then catering really kind of mirrors the same effect as group room night sales does as well, where we're going to have a tough comp in the next two quarters and then better outcomes into 25 and 26.
Speaker Change: Actually I think we lost money on the Gaia sphere, so that hopefully.
Speaker Change: Hopefully it will not be a headwind, we'll repeat it but from.
Speaker Change: And Stephen, to answer that last follow-up, in terms of the softness you're seeing in F&B, it's exactly what Scott said. It's predominantly all catering. Has F&B experienced a record revenue quarter?
Speaker Change: From a comp perspective.
Speaker Change: Okay awesome.
Speaker Change: So overall volume levels were very strong but the.
Speaker Change: There was some sports styling impact.
Speaker Change: okay thanks for that guys and then Steve you know I understand you guys don't give
Speaker Change: That came out in a negative last year negative historically over time, we typically would win money to the Super Bowl.
Speaker Change: is whether it is headwinds whether it is tailwinds or anything that would disrupt the normal cadence as we start to think about 2025.
<unk> okay.
Speaker Change: Okay.
Speaker Change: Perfect.
Speaker Change: As my follow up the last time, we walk through Durango, we talked about sort of longer term with expansions et cetera.
Steve Wyzynski: Yeah, I think what you're, I mean, from a group perspective or the entire company.
Speaker Change: Anything today.
Speaker Change: Good.
Speaker Change: Characterize how soon or what those expansions putter would look like and when you would get to them.
The entire company, sorry.
Steve Wyzynski: Okay, I think the first I think the one we just talked about graph is probably one of the bigger one-time issues You know if you kind of add all that together, you're going to experience about 23 million dollars worth of disruption
Yes, David this is Scott.
First just want to reiterate that the garage and casino in higher limit expansion is really kind of a preliminary phase for Durango, we need to do that in order to set ourselves up for the optionality of the other two phases.
Steve Wyzynski: as we start the room remodel at Green Valley, continue the podium remodel at Sunset, and then we attach the garage and the high-limit room at Durango. Those are really the big one-time items.
And.
Steve Wyzynski: You're going to go up against Super Bowl and Q1, as well as CONAG and a couple others. I think generally, Floreza, it's important to note that
Speaker Change: As we look at those wages, we also compare our greenfield opportunities as well I know we've spoken about it it's broader than cost as potential.
Steve Wyzynski: You know, I think most all the operators have said that Q3, that seasonality seems to have come back. It's a bit of a challenge. But October has bounced back and is very stable both on slots, table games.
Speaker Change: Opportunities I think what we wanted to do is we've got a lot of irons in the fire and to the first and second quarter with the <unk>.
Speaker Change: Existing property Remodels in the garage, probably are going to want to see how the markets going into the first half of the year before we make a decision.
Steve Wyzynski: sports handle right. Obviously the whole percentage due to the NFL hasn't been great but our core business
Speaker Change: I think that's fair thank you very much.
Speaker Change: And our next question comes from Stephen Grambling of Morgan Stanley. Please go ahead.
feels good going into Q4.
Okay, thanks for the color guys, appreciate it.
Stephen Grambling: Well I guess, when we think about the election and then some of the policies. They put it out there aside from perhaps corporate taxes, what is on your radar that could impact your business.
Speaker Change: The next question comes from David Katz at Jefferies. Please go ahead.
David Katz: Evening, everyone. Thanks for taking my question. Can we just dive into the Super Bowl comps a little bit? It came up a couple of times.
Speaker Change: No.
Speaker Change: No tax or tariffs I think.
Speaker Change: Would be a positive for our business, yes, we've looked at some economic analysis.
Speaker Change: I don't know if anything has really been published on it but we think it could add somewhere in the neighborhood of about $200 million a year to the local economy here, which obviously, we would benefit from and I think it would save the company about $2 million to $3 million in payroll tax as well.
David Katz: It was the Super Bowl volume levels in terms of hospitality strong And you know perhaps the the sports betting was not You know what what's the hard part and what's the easy part within the Super Bowl piece?
Speaker Change: That's helpful and is there anything thats on the radar in terms of.
Accelerated depreciation or other tax incentives for <unk>.
David Katz: Well, this is Lorenzo. I think if you look at obviously, you know, hotels, food and beverages, things like that, not having the Super Bowl, it's going to be a tough comp versus last year. I would say of all the events that the city has had, citywide events, whether it be F1,
Investment.
Speaker Change: No I mean, I think we've accomplished that with Durango or effective tax rates below 13% and that's due to I think.
Speaker Change: Good work on the tax side for <unk>, but.
Speaker Change: So my sense is that we will look to do that on our sunset asset as well as <unk> <unk> and the Durango garage. Once they are put in service later in 2005.
David Katz: You name it. I think Super Bowl was just a huge Benefit to the overall city and obviously we benefited from that as well Actually, I think we were we lost money on the game we did here so that's saying that hopefully will not be a headwind or repeated but from a comp perspective
Makes sense, thanks, I'll jump back in the queue.
Speaker Change: Thank you and our next question comes from Barry Jonas with tourists Securities. Please go ahead.
Speaker Change: I see, I see. So the overall volume levels were very strong, but there was some sports betting impact.
Speaker Change: Hey, guys you added a new slide in the deck on cactus at the front of the new development pipeline section I'm, just curious where that stands in terms of what you'll be focused on next thanks.
Speaker Change: that that came out of the negative last year, you know, historically over time, we typically would win money to the Super Bowl and just that last drive by home turf.
Yes, I think that.
Speaker Change: As we look at all of our Greenfield projects.
Speaker Change: Yeah, perfect. And just as my follow-up, you know, the last time we walked through Durango, we talked about sort of longer term with expansions, etc.
Speaker Change: The good thing about a lot of them is the population growth is getting to a maturity point.
Speaker Change: They are up for consideration so when we look at cost as it has different positive attributes and saying.
Speaker Change: you know, anything today that would, you know, characterize how soon or what those expansions could or would look like and when you'd get to them?
Speaker Change: Or Kyle Canyon.
Speaker Change: Site.
Speaker Change: The specifics around.
Speaker Change: It is a hybrid location it sits on the Las Vegas strip.
Speaker Change: Yeah, David, this is Scott. First, just want to reiterate that the garage and casino and high limit expansion is really kind of a preliminary phase for Durango. We need to do that in order to set ourselves up for the optionality of the other two phases.
Speaker Change: Well as it is surrounded by a very lucrative local markets as well so it makes it easier.
Speaker Change: Development opportunity because you can take advantage of the hybrid aspect of the property or the location it would probably be something of larger scale than say, an inspiron us so.
And, you know, as we look at those phases.
Speaker Change: We also compare our greenfield opportunities as well. I know we've spoken about Inspirata and...
Speaker Change: We weigh the pros and cons of that capital contribution.
cactus as potential opportunities.
Speaker Change: I think what we want to do is we've got a lot of irons in the fire into the first and second quarter with the Existing property remodels and the garage probably are going to want to see how the markets going into the first half of the year Before we make a decision
Speaker Change: As one.
Speaker Change: Yes.
Speaker Change: <unk>.
Speaker Change: Got it got it and then just are there any other tribal or non Vegas yields youre looking out at the moment or is really the focus just your Las Vegas development pipeline.
I think that's fair. Thank you very much.
Speaker Change: As I think we mentioned during the prepared remarks, we are incredibly excited.
Speaker Change: Excited about North Fork. So after working on this project over 20 years, where in ground looking forward and we haven't and we're in the throes of an 18 to 20 month construction period, and $5 8 million people on a two hour drive.
Speaker Change: And our next question comes from Stephen Grambling of Morgan Stanley. Please go ahead.
Stephen Grambling: Well, I guess when we think about the election and some of the policies that are out there, aside from perhaps corporate taxes, what is on your radar that could impact your business?
Speaker Change: We're going to have.
Speaker Change: Dominant property in the market by far the best.
Speaker Change: I think no tax on chips I think would be a positive for our business. Yeah we've looked at some economic analysis you know not I don't know if anything's really been published on it but we think it could add somewhere in the neighborhood of about 200 million a year to the local economy here which obviously we would benefit from.
Designed and built product in the market.
Alright ill, just sort of clarify outside of North Park.
Speaker Change: Alright, yes, I mean, our core focus obviously is Las Vegas, Las Vegas locals market.
Speaker Change: Sure.
Speaker Change: However, we do have a core competency of developing and managing tribal casinos. So in addition to north work, which Steve and Frank mentioned, we are in the ground with its great location. We are active on the development side looking for new opportunities as we have been for the last 25 years on the driver side.
Speaker Change: Yeah, I think it would save the company about two to three million dollars in payroll tax as well
Speaker Change: That's helpful. And is there anything that's on the radar in terms of, you know, accelerated depreciation or other tax incentives for investment?
Speaker Change: I mean I think we've accomplished that with Durango that's our effective tax rates below 13 percent and that's due to I think some good work on the tax side for Durango but you know so my sense is that it will look to do that on our Sunset Asset as well in GDR and the Durango Garage once they're put in service later in 25.
Speaker Change: But it's just got to be the right opportunity the right.
Speaker Change: Timing and it all has to kind of line up but I mean, we've actively look probably at five or six weeks over the last year.
Speaker Change: We haven't we haven't found one that works for us yet, but we will continue to look from a development standpoint.
Speaker Change: That's really helpful. Thank you.
Makes sense. Thanks. I'll jump back into the queue.
Speaker Change: And our next question today comes from Brian <unk> with Barclays. Please go ahead.
Speaker Change: Thank you. And our next question comes from Barry Jonas with Truist Securities. Please go ahead.
Speaker Change: Hello, everybody. Thanks for taking my question.
Barry Jonas: Hey guys, you added a new slide in the deck on Cactus at the front of the new development pipeline section. Just curious where this stands in terms of what you'll be focused on next. Thanks.
I'm curious we went through a lot of the headwinds.
Speaker Change: Next year potential headwinds and maybe we could talk a little bit about the tailwind specifically.
Speaker Change: What you would typically see getting added back to Red rock.
Speaker Change: I think that as we look at all of our greenfield projects, the good thing about a lot of them is the population growth is getting to a maturity point where they're up for consideration. So when we look at...
Speaker Change: Mitigating that cannibalization, you've seen so far in sort of a year or two as well as Durango.
Speaker Change: New greenfield year to growth.
Speaker Change: Before the construction disruption there.
Speaker Change: Cactus, it has different positive attributes than say an Esmeralda or a Kyle Canyon site
Scott Kreger: Yes. This is Scott great question.
Scott Kreger: If you take Red rock FERC.
Speaker Change: The specifics around Cactus are that it is a hybrid location It sits on the Las Vegas Strip as well as it is surrounded by a very lucrative local market as well
Scott Kreger: We spoke in the past about Summerland West, which is the final phase of.
Scott Kreger: Howard Hughes Summerlin project.
Scott Kreger: Its completion over the next few years it will add an incremental 34000.
Speaker Change: So it makes it a unique development opportunity because you can take advantage of the hybrid
Scott Kreger: Households, just up behind the Red rock location, so not only do we have a great story as it relates to household growth, but the average income in the area is one of the highest in the volume we continue to see growth in average income in that area. So.
Speaker Change: aspect of the property or the location. It would probably be something of larger scale than say an Inspirata, so we weigh the pros and cons of that capital contribution as well.
Scott Kreger: We're optimistic about the Red rock backfill in the near term.
Speaker Change: Got it, got it. And then just are there any other tribal or non-Vegas deals you're looking at at the moment or is really the focus just your Las Vegas development pipeline?
Scott Kreger: When you look at Durango.
Scott Kreger: <unk> sits in what's called the enterprise district of the city. It is by far the fastest growing area of the city and probably has the largest amount of remaining buildable acreage in the surrounding area. So we're excited about Durango continuing to that.
Speaker Change: Well no, as I think we mentioned during the prepared remarks, we are incredibly excited about North Fork.
Speaker Change: So after working on this project over 20 years, we're in the ground, looking forward, you know, and we're in the throes of an 18- to 20-month construction period. Yeah, and 5.8 million people in a two-hour drive, and we think we're going to have the dominant property in the market, by far the best.
Scott Kreger: AUM growth story into the next year as well.
Scott Kreger: Switch gears, a little bit and you look at Sunset and it's one of the key reasons. We're refreshing sunset is Henderson area around cadence is.
designed and built product in the market.
Speaker Change: Sorry, I was just trying to clarify, outside of North Fork.
Scott Kreger: <unk> got quite dynamic growth.
Speaker Change: Yeah, I mean our core focus obviously is Las Vegas. Las Vegas locals.
And we think we're going to see upside from that continued growth in that area is about as well.
Speaker Change: However, we do have a core competency of developing and managing tribal casinos. So, in addition to North Fork, which Steve and Frank mentioned we're in the ground with, it's a great location.
Speaker Change: That's helpful. Thanks, Thanks for that.
Speaker Change: A second question.
Speaker Change: The election, just now behind us.
Speaker Change: I can't remember it well and so you guys can remember.
Speaker Change: Elections that had distractions to your database and your players before.
Speaker Change: but it's just got to be the right opportunity, the right, you know, timing and it all has to kind of line up but I mean we've actively looked probably at five or six just over the last year just you know we haven't haven't found one that works for us yet but we'll continue to look from a development standpoint.
Speaker Change: But have you gone back and looked at sort of how.
Speaker Change: In your in your stated in the state of Nevada swing state is that.
Speaker Change: The activity.
Hiccup that you've traditionally seen post election, and if you think youll see a similar sort of pick up.
Speaker Change: Post this election.
That's really helpful. Thank you.
Speaker Change: Well when we looked at previous elections, there is definitely.
Speaker Change: Our next question today comes from Brent Montour with Barclays. Please go ahead.
Speaker Change: On impact.
Speaker Change: Impact.
You will during an election year and quite honestly during an olympics year as well.
Brent Montour: Hello everybody, thanks for taking my question. I'm curious, you know, we went through a lot of the headwinds.
Speaker Change: In previous years, it did drag on into December, but right now as low as I said, we're pretty encouraged.
Brent Montour: next year, potential headwinds. Maybe we could talk a little bit about the tailwinds.
Speaker Change: Sure.
Speaker Change: At this point.
Speaker Change: Thanks, everyone.
Speaker Change: Our next question today comes from John Decree with CB. Our EES. Please go ahead.
Brent Montour: mitigating that cannibalization you've seen so far in a sort of a year two as well as a Durango or a new Greenfield year two growth before the construction disruption there.
John Decree: Good afternoon, everyone.
Speaker Change: Covered a lot of ground, maybe one on the promotional environment.
Speaker Change: Largely speaking cross locals market I guess, a couple of your peers have talked about it.
Yeah, this is Scott great question
Maybe stabilizing or abating and I guess.
Brent Montour: If you take Red Rock first, we spoke in the past about Summerlin West, which is the final phase of the Howard Hughes Summerlin project.
Speaker Change: Some of the single asset operators.
Speaker Change: In the neighborhood of maybe been a little bit more aggressive so im curious what youre seeing if you think it's die down at all and or <unk>.
Brent Montour: In its completion over the next few years, it will add an incremental 34,000 households just up behind the Red Rock location.
Speaker Change: Stabilized and if it.
<unk> had any impact one way or another on your business.
Speaker Change: Yes, it remains unchanged in our view.
Speaker Change: And what we think is a stable rational environment.
Brent Montour: So, not only do we have a great story as it relates to household growth, but the average income in the area is one of the highest in the valley and we continue to see growth in average income in that area.
Speaker Change: It's very manageable.
Speaker Change: Got it thanks for that and maybe one.
Speaker Change: Steve just maybe a clarification if I missed it on the <unk>.
Speaker Change: Capex for next year.
Brent Montour: We're optimistic about the Red Rocks backfill in the near term when you look at Durango
Speaker Change: I think I heard a $150 million for CVR and was at 160 for Durango, and then a quick follow up Steve would be a disruption.
Brent Montour: Durango sits in what's called the Enterprise District of the city. It is by far the fastest growing area of the city and probably has
Steve You: I'm, sorry, Steve Yes.
So it was $1 16 for Durango.
Speaker Change: FDA filing Valeant 53 for Sunset.
Speaker Change: And feature sets and the disruption that you've outlined it I appreciate that that's really helpful.
Brent Montour: the largest amount of remaining buildable acreage in the surrounding area. So we're excited about Durango continuing to have its own growth story into the next year as well.
Speaker Change: The timing of those projects should we expect that to kind of be kind.
Speaker Change: Straight line throughout the year or is there going to be a <unk>, where maybe some of the heavier disruption occurs.
Well Green Valley is really going to be focused in that June and November period.
Speaker Change: That one is really you can really pinpoint sunset is most likely going to bleed throughout the year as the last construction project expected to come online before before holiday at the end of the year and Durango I would say somewhere it's probably in that middle part of the year is where the <unk> portion of the construction is being done.
Brent Montour: Got quite dynamic growth And we think we're going to see upside from that continued growth in that area of the valley as well
That's helpful. Thanks for that. A second question.
Speaker Change: The election just now behind us, I can't remember, well, I'm sure you guys can remember elections that had distractions to your database and your players before.
Got it okay, great. Thanks.
Speaker Change: And as a reminder, if you'd like to ask a question. Please press Star then one.
Speaker Change: Our next question comes from Dan <unk> with Wells Fargo. Please go ahead.
Speaker Change: But have you gone back and looked at sort of how In your in your state in the state of Nevada swing state is that?
Speaker Change: Hey, good afternoon, everyone and thanks for taking my question first you talked a bit about caverns in the past I mean can you just give us an update on how youre thinking about that element of your strategy in terms of capex or units that you expect to open over the next few years.
Speaker Change: at the activity pickup that you've traditionally seen post-election, and if you think you'll see a similar sort of pickup post this election.
Scott Kreger: Yeah, Dan its Scott.
Well, when we looked at previous elections, there's definitely a...
Scott Kreger: Happy to say that a few weeks back we opened our first tower.
Speaker Change: you know, an impact, if you will, during an election year and quite honestly during an Olympics year as well.
Part of town. So early performance is outpacing our expectation.
Speaker Change: In previous years, it did drag on into December, but right now, as Lorenzo said, we're pretty encouraged with more co-opting at this point.
Scott Kreger: So we're happy about that we have two more coming online in the general area.
Scott Kreger: Las Vegas.
Scott Kreger: Happens to be a very underpenetrated area for us.
Thanks, everyone.
Scott Kreger: Product coming online in January and then the third one coming online in June and then we have a total of seven opportunities and the remaining three will be scattered over the next year year and a half.
Speaker Change: Our next question today comes from John Decree with CBRE. Please go ahead.
Good afternoon, everyone.
Speaker Change: We covered a lot of ground, maybe one on the promotional environment, largely speaking across the local market. I guess a couple of your peers have talked about it, maybe stabilizing or abating. And I guess some of the single asset operators in the neighborhood have been a little bit more aggressive. So I'm curious what you're seeing, if you think.
Scott Kreger: <unk>.
Scott Kreger: I think in large part we're attributing the early successes of the first half because of the inner linkage of the boarding pass program.
Scott Kreger: And the fact that we're relatively underpenetrated out in that market.
Speaker Change: It's died down at all and or stabilized and if it's had any impact one way or another on your business
Speaker Change: Got it thanks, and then just on the North Fork, the 4% development fee.
Speaker Change: Presumably the $750 million is it do you get do you receive that upon the property opening or is it along the way do you get kind of pieces of that.
Speaker Change: Yeah, it remains unchanged in our view and what we think is a stable, rational environment that is very manageable.
Speaker Change: Yes, it's on the construction financing and start going to be on the full 750. There is some puts and takes there.
Speaker Change: Got it thanks, so much.
Speaker Change: and the CapEx for next year. I think I heard $150 million for GVR, and was it $160 million for Durango? And a quick follow-up, Steve, would be the disruption... I'm sorry, Steve?
Thank you and this concludes our question and answer session I would like to turn the conference back over to the management team for any closing remarks.
Speaker Change: Thank you everyone for joining the call and we look forward to talking to you again in about three months take care.
Speaker Change: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful evening.
Speaker Change: Yeah, sorry, it was 116 for Durango, 150 for Rain Valley, and 53 for Sunset.
Speaker Change: Okay. And the disruption that you've outlined, I appreciate that. That's really helpful.
Speaker Change: The timing of those projects, should we expect that to kind of be kind of straight line throughout the year, or is there going to be a 1H or 2H where maybe some of the heavier disruption occurs?
Speaker Change: Well, Green Valley, you know, is really going to be focused in that June and November period. So that's the, that one is really, you can really pinpoint.
Speaker Change: Sunset is most likely going to be throughout the year as the last construction project expected to come in line before before the holiday at the end of the year and Durango I would say similar is probably in that middle part of the year is where the yeoman's portion of the construction is being done
Got it. Okay, great. Thanks.
Speaker Change: And as a reminder, if you'd like to ask a question, please press star then 1. Our next question comes from Dan Politzer with Wells Fargo. Please go ahead.
Dan Politzer: Hey, good afternoon everyone and thanks for taking my question. First, you've talked a bit about taverns in the past. I mean, can you just give us an update on how you're thinking about that, you know, element of your strategy in terms of catbacks or, you know, units that you expect to open over the next few years?
Speaker Change: I'm happy to say that a few weeks back we opened our first tavern
Speaker Change: North part of town, so early performance is outpacing our expectation.
Speaker Change: So we're happy about that. We have two more coming online in the general area in North Las Vegas Which happens to be a very under penetrated area for us
Speaker Change: We have a product coming online in January, and then a third tavern coming online in June. And then we have a total of seven opportunities, and the remaining three will be scattered over the next year, year and a half.
Speaker Change: You know, I think in large part we're attributing the early successes of the first TAVRN because of the interlinkage of the boarding pass program and the fact that we're relatively underpenetrated out in that market.
Speaker Change: Got it, thanks. And then just on the North Fork, the 4% development fee on presumably the $750 million, do you get, do you receive that upon the property opening or is it, you know, along the way do you get kind of pieces of that?
Speaker Change: It's on the construction financing and it's not going to be on the full 750. There's some puts and takes there.
Got it. Thanks so much.
Speaker Change: Thank you and this concludes our question and answer session. I'd like to turn the conference back over to the management team for any closing remarks.
Speaker Change: Thank you, everyone, for joining the call and we look forward to talking to you again in about three months. Take care.
Speaker Change: Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful evening.