Q1 2025 Kennedy-Wilson Holdings Inc Earnings Call
Speaker Change: and welcome to the Kennedy Wilson first quarter 2025 earnings conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: Today's call will be webcast live and will be archived for replay a replay will be available by phone for one week and by webcast for three months. Please see the Investor Relations website for more information with me today are Bill Mcmorrow, CEO, Matt Windisch, President Justin and body CFO.
Speaker Change: <unk> President of Europe on this call, we will refer to certain non-GAAP financial measures, including adjusted EBITDA and adjusted net income you can find a description of these items along with a reconciliation of the most directly comparable GAAP financial measure and our first quarter 2025 earnings release, which is posted on the Investor Relations section of our website.
Speaker Change: Payments made during this call may include forward looking statements actual results may materially differ from forward looking information discussed on this call due to the number of risks uncertainties and other factors indicated in reports and filings with the Securities and Exchange Commission I would now like to turn the call over to our chairman and CEO Bill Mcmorrow.
Speaker Change: Thanks, Kevin and thank you everybody for joining our call.
Speaker Change: Yesterday, we reported our results for the first quarter of 2025, Reluct, reflecting our solid start to the year and continuing the momentum we saw in 2024.
Speaker Change: Justin will discuss our results in detail in just a moment.
Justin Body: We deployed or committed approximately $1 billion of new capital in Q1, driven primarily by originations within our credit platform.
Justin Body: Activity has picked up in Q2 with our current committed pipeline totaling two $5 billion loan originations and real estate equity acquisitions of.
Justin Body: All within the rental housing sector.
Justin Body: Should drive our total capital deployment to $3 5 billion for the first half of 2025.
Justin Body: Just 4 billion for all of 2024.
Justin Body: During the quarter, we saw strong fundamentals within our rental housing business and continued growth of our bus my management team as well.
Justin Body: Any progress on a number of noncore asset sales and recap initiatives, a meaningful portion of which should be completed in Q2.
Justin Body: We'll discuss this in further detail in just a moment.
Justin Body: Yes.
Justin Body: On today's call I'll review, our portfolio and the progress we've made across our 2025 strategic initiatives and in particular, our asset sales and unsecured debt reductions.
Justin Body: Starting with our portfolio assets under management have grown by 26% in the past two years to 29 billion, producing approximately $575 million and estimated annual NOI and fees to kw.
Justin Body: Rental housing our core sector represents 66% of our assets under management comprised of approximately 65000 units that we either have an equity ownership interest in or our financing.
Justin Body: We expect this sector to grow to over 80% of our assets under management over the next three years.
Justin Body: Real estate market fundamentals continue to see an improvement in Q1, and the U S real estate transaction volumes increased by 23%.
Justin Body: And we have not seen any material changes in sentiment in Q2.
Justin Body: We believe the best risk adjusted returns are found in the rental housing sector, given the demand tailwind driven by a housing shortage across all kw markets single family affordability issues and declining new supply that began in 2024 through a combination of absorb.
Justin Body: And fewer new construction Sars.
Justin Body: This healthy backdrop was evident in our Q1 results, where we were able to increase our same property multifamily occupancy to 95% and grew same property revenue by 3% and same property NOI by four 3%.
Justin Body: Capital deployment in Q1 was focused primarily on Russell housing crowded we completed an additional 725 million of new loan originations, 100% of which related to construction of new multifamily or student housing projects.
Justin Body: Our that business is on track to surpassed $6 billion in new loan originations since we completed the.
Justin Body: The purchase of the regional bank portfolio in the summer of 2023.
Justin Body: Making kw one of the top construction lenders in multifamily in the student housing sector.
Justin Body: We also completed approximately $200 million of real estate acquisitions, which related to the expansion of our U S apartment and European single family rental and then industrial platforms.
Justin Body: Investment management growth continues to be a key initiative for K W fees grew by 17% in Q1 to 25 million.
Justin Body: Over the last 15 years, we have extensively extensively grown our group of strategic partners to include some of the world's largest institutional investors spanning North America Asia, the middle East and Europe.
Our longtime partners, who are very well capitalized are actively looking to deploy capital with kw across both equity and debt investment opportunities at an increasing rate.
Justin Body: Given our strong Q2 pipeline I'm confident our of our ability to reach our fee revenue growth targets of 20% to 25% annually.
Justin Body: As market volatility has increased this year, we're also seeing a corresponding increase in attractive investment opportunities.
Justin Body: With our own capital base and the support of our major global strategic partners, we are well positioned to capitalize on any opportunities that may emerge.
Justin Body: This approach has served us well over the last 35 years, where where are we have demonstrated our ability to navigate periods of uncertainty similar to what we see today.
Justin Body: Shifting to our asset management sale, our asset sale program. The disposal of identified assets is an important focus in the near term.
Justin Body: Q1, we progressed, a number of sale and recap initiatives keeping us on track to generating between $400 million to $450 million of cash from asset sales and recaps by year end <unk>.
Justin Body: Including 150 to 200 million, we currently expect to close by the end of Q2.
Justin Body: These proceeds will be used to reduce our unsecured debt, including our KWE bonds due in November which we have already paid down by $250 million over the last two years we.
Justin Body: We will also look to reduce our line of credit balance while also recycling capital into higher return opportunities in our investment management platform.
Justin Body: We're ending the second we're entering the second quarter with an existing portfolio that is well positioned strong pipeline of activity centered around rental housing simplifying our business through asset sales delevering, the balance sheet and increasing free cash flow.
Justin Body: Importantly, we believe we have a best in class team that is well equipped to drive growth across our core platforms and rental housing credits and industrial.
Justin Body: With that I'll turn the call over to adjust to that body.
Justin Body: Thanks, Phil I'll begin with a review of our Q1 financial results and then discuss our balance sheet.
Justin Body: GAAP EPS for the first quarter totaled a loss of <unk> 30 per share compared to income of <unk> 19 per share in Q1 of 2024, which included 47 cents per share related to the sale of the Shelburne Hotel.
Justin Body: Baseline EBITDA for Q1 came in at $108 million, a 5% increase year over year. This brings our trailing 12 month baseline EBITDA to $412 million.
Justin Body: Our consolidated our co investment portfolio is now 90% comprised of multifamily industrial and credit investments that we owned with partners. In Q1. This portfolio saw minor valuation increases primarily as a result of positive cash flow growth from our multifamily assets.
Justin Body: Turning to our balance sheet as Bill mentioned, we anticipate reducing our unsecured debt in the near term as we execute our asset sale plan in particular, we have $330 million remaining on our final tranche of our KWE euro bonds, which mature in November.
Justin Body: Digitally we have $200 million of cash expected from Q2 asset sales and recap activity that is well underway.
Justin Body: We also have 163 million of consolidated unrestricted cash and $277 million of Undrawn availability on our $550 million credit facility.
Justin Body: Looking at our 2025 secured maturities in Q2 as previously announced we successfully completed a $510 million refinance of our Irish apartment portfolio with a rate today of four 1%.
Justin Body: As a reminder, our Irish apartment portfolio is owned in a partnership that's 50 50 with Axa.
Justin Body: The strong demand received for this financing reflects the underlying strength in asset quality of our best in class portfolio of apartments in Dublin.
Justin Body: This maturity represented approximately 40% of our 2025 secured mortgage maturities entering the year.
Justin Body: We are actively working through the remaining 25 secured maturities, which represent only 3.5% of our total debt.
Justin Body: Our total debt is 96% fixed or hedged with a weighted average maturity of four eight years and a weighted average effective interest rate of four 7%.
Justin Body: Interest rate hedges generated $5 million of cash received during Q1, which as a reminder are not included as an offset to interest expense.
Speaker Change: And with that I'd now like to turn it over to Matt Windisch for a portfolio update.
Matt Windisch: Thanks, Justin our stabilized portfolio generates estimated annual NOI of $473 million.
Matt Windisch: And remains highly concentrated in rental housing and industrial which together account for 72% of our stabilized NOI.
Matt Windisch: We anticipate that these two sectors will grow as a percentage of our overall NOI as we look to expand within these two asset classes through both our real estate and credit platforms. While also disposing of noncore assets.
Matt Windisch: Our apartment investments continues to be the foundation of our portfolio.
Matt Windisch: Since 2010, we have completed over $15 billion of apartment transactions.
Matt Windisch: In the U S strong apartment demand was apparent in Q1 as seen through growth in both occupancy and rents.
Matt Windisch: Blended leasing spreads increased to one 5%, including 3% growth on renewables.
Matt Windisch: Importantly on new leases the change in rent flipped from being negative in Q4 to positive in Q1 with an improvement of over 300 basis points.
Matt Windisch: Our apartment portfolio is well positioned as we head into the strong summer leasing months due to a number of factors.
Matt Windisch: The loss to lease totaled three 3%.
Matt Windisch: We continue to see solid leasing traffic at our properties.
Matt Windisch: The challenges of the availability and affordability of single family homes is creating strong tenant retention.
Matt Windisch: In fact in Q1 turnover with some of the lowest on record with an annualized rate of 28% compared to 35% in Q1 of 2024.
Matt Windisch: Let me highlight a few regional stats, our Pacific northwest portfolio.
Matt Windisch: The strongest NOI growth of six 6% with our assets in and around Seattle.
Matt Windisch: Benefiting from return to office mandates from the likes of Amazon and others. We also saw declining real estate taxes in the quarter.
Matt Windisch: The mountain West has seen the strongest population supply pressures I should say in our portfolio over the last two years.
Matt Windisch: The majority of the supply has now been delivered while new starts have fallen to a decade low in many markets, which should be supportive of future rental growth.
Matt Windisch: In California, our portfolio continues to recover with our Q1 results driven by reduced delinquencies and the highest same property occupancy growth across our portfolio.
Matt Windisch: Complementing our market rate portfolio as our 13000 unit vintage housing affordable portfolio.
Matt Windisch: As a reminder, this portfolio utilizes low income housing tax credits for the development of high quality rental housing for families and seniors below median income levels and their respective counties.
Matt Windisch: In Q1, we achieved five 5% NOI growth, primarily as a result of higher median incomes as well as lower levels of bad debt.
Matt Windisch: We continue to actively look for opportunities to expand our affordable housing portfolio, given the growing need for accessible housing across all of our markets.
Matt Windisch: In Ireland, the same property NOI in our apartment portfolio was up three 5% driven by occupancy growth and strong strong operating expense management.
Matt Windisch: Our stabilized portfolio is 99% occupied with our one remaining lease up asset, which is 75% leased as of today and are on track to stabilize in Q2.
Matt Windisch: Our portfolio here is comprised of 3500 high quality highly of monetized class a units that continue to benefit from the long term structural under supply of housing.
Matt Windisch: Moving over to our office portfolio, our stabilized assets remained resilient with an occupancy of 90%.
Matt Windisch: Same property NOI grew at almost 1% in Q1 70.
Matt Windisch: 75% of our portfolio is located in Europe, primarily in the UK and Ireland, where office dynamics are healthier than the U S with stabilized occupancy totaling 92%.
Matt Windisch: In Dublin office leasing saw the strongest Q1 activity in the last three years. The Irish economy was once again the fastest growing economy in the eurozone in Q1.
Matt Windisch: Our high quality Irish stabilized office portfolio has a robust occupancy of 96%.
Matt Windisch: At our Coopers Cross asset momentum remained strong after signing Wells Fargo has our first tenant in January we anticipate continued demand for modern well located sustainable space driven by return to office mandates and limited new supply.
Matt Windisch: In the U K viewings for our available office space continue to pick up with.
Matt Windisch: With leasing completed in Q1, resulting in a 17% increase from previous rents.
Matt Windisch: We continue to remain confident in the continued demand for our high quality space with our largest two London assets essentially with no vacant space.
Matt Windisch: Yes.
Matt Windisch: Turning to our investment management business Q1 saw a $25 million in fee revenue, which is an increase of 17% from the prior year.
Matt Windisch: Reflecting strong performance in our credit platform and continued growth in our equity platforms.
Matt Windisch: Fee bearing capital currently stands at $8 7 billion and is positioned to grow meaningfully as we have capital that has already been raised are committed that we expect to deploy during the balance of 2025.
Matt Windisch: For example, in our credit platform, we have $4 5 billion in future fundings, we expect that capital to be funded over the next couple of years and as we put it to work it will be reflected in our fee bearing capital base.
Matt Windisch: During the second quarter, we expanded our credit solutions to include mezzanine debt and preferred equity investments through a partnership with a large Japanese developer Tokyo land in which our ownership in the platform is 10%.
Matt Windisch: This strategic expansion enhances our ability to capture growing opportunities within the credit space, particularly within our key core sectors.
Matt Windisch: And supports the continued growth of our investment management platform.
Matt Windisch: We also have incremental investment capacity in our new.
Matt Windisch: U K.
Matt Windisch: Single family rental platform, which we launched in Q4 alongside our partner C. P. P. I B. This platform is currently targeting $1 3 billion in assets.
Matt Windisch: We have a strong pipeline in advanced stages totaling $375 million, which would bring the platform to over 40% committed in a few short months.
Matt Windisch: We are already seeing strong demand from our initial delivered units and look forward to scaling this platform and providing.
Matt Windisch: Much needed high quality housing in the quarters ahead in.
Matt Windisch: In closing, we continue to make progress on our initiatives.
Matt Windisch: Including executing our noncore asset sale plan, reducing leverage and simplifying our company by focusing in on our core sectors of rental housing and industrial.
Matt Windisch: We have also laid the groundwork to continue scaling our capital light investment management platform.
Matt Windisch: With that operator, we can open it up to Q&A.
Matt Windisch: We will now begin the question and answer session.
Matt Windisch: To ask a question you May press Star then one on your telephone keypad.
Matt Windisch: If you were using a speakerphone please pick up your handset before pressing the keys.
Matt Windisch: To withdraw your question. Please press Star then two.
Matt Windisch: At this time, we will pause momentarily to assemble our roster.
Matt Windisch: Okay.
Matt Windisch: Yeah.
Speaker Change: Our first question today comes from Anthony Powell loan with J P. Morgan. Please go ahead.
Matt Windisch: Thank you.
Speaker Change: First question relates to fee bearing capital I think you mentioned that you still feel strongly about the 20% to 25% I think it is annual growth. So just wondering about your conviction level of achieving that this year. When you kind of look out and you talked a bit about.
Speaker Change: The pipeline of capital to be deployed but not sure what youre also getting paid back on to kind of net to that growth.
Speaker Change: Yes, Tony I think in terms of the number that bill put out there and on fees, that's really a growth in fees as opposed to specifically fee bearing capital and so you know we grew at 17%.
Speaker Change: Quarter over quarter here from Q1 to Q1, and we do believe.
Speaker Change: Just on the pipeline we have in the future fundings that we will be able to achieve that growth in fees.
Speaker Change: As we mentioned before the future funding commitments don't show up in fee bearing capital. So there can be timing differences on payoffs.
Speaker Change: When money is funded but between the recurring investment management fees origination fees et cetera, we do feel comfortable with that number we put out there.
Speaker Change: Okay got it and then.
Speaker Change: Just as liquidity comes back to CRE just can you comment on just your your partner capital costs are required returns.
Speaker Change: And just you know.
Speaker Change: The ability to continue to to land if if it gets competitive like do their capital costs come down as well or do you feel like you can move with the market if things get get more competitive.
Speaker Change: Yeah, I mean, we have a healthy pipeline of deals we've already signed up.
Speaker Change: Some of those at lower spreads than we were able to achieve a year ago. So we definitely have certainly in Q1, we saw more competition from life insurance companies banks and some other private lenders I think that's where the relationships come into play there's a lot of repeat business were doing with existing sponsors and borrowers.
Speaker Change: We do have some flexibility and we have moved pricing down somewhat.
Speaker Change: And we still think will be competitive in this space.
Speaker Change: It is a fair point, there has been a bit more competition here.
Historically some of the some of these lenders are more active in the first half of the year and then they run out of allocations and so if you look at last year. For example, we had a lot more in terms of closings in Q3 and Q4 when some of these lenders were stepping away from the market. So we feel confident given.
Speaker Change: Given the relationships and the platform that we can continue to grow this business.
Speaker Change: Okay, and then just last one if I can.
Speaker Change: Where does the stock buyback fit in right now if at all just especially given that it sounds like.
Speaker Change: You're going to have a pickup in dispositions here in the next couple of quarters.
Speaker Change: Okay.
Speaker Change: Well I think Tony its good point I mean, we still have capacity left in that program.
Speaker Change: But the focus of our cash usage right now is to focus on paying back our unsecured debt and particularly the 2020 by bond.
Speaker Change: When you when you think about it in totality.
Speaker Change: We will have continued to grow the company and we will have paid back close to $800 million worth of unsecured debt by the time, we get that done including the line of credit.
Speaker Change: And so I think that that is where we're planning on using most of our cash.
We'll just have to see if the stock continues to.
Speaker Change: Behave like it how's that we've gotten through the 2025 payoffs then that's clearly something that we would.
Speaker Change: Reconsider.
Speaker Change: Because we obviously think that the stock is highly undervalued at the current prices I would just add to that bill that I agree that the discount seems significantly overdone given that two thirds of our portfolio sits in multifamily and the private market valuations remain at.
Speaker Change: In the low fives.
Speaker Change: Certainly in the private market, we've seen no movement over the past couple of months, even with all of them public market volatility.
Speaker Change: And then if you think about that.
Speaker Change: GAAP that we see out there I think as we continue to simplify the business reduce leverage grow the fee business and grow the recurring cash flow, we hope to see that gap shrink and as Bill said, depending on the size of the disposition program. If we can get above our targets I think there'll be some excess liquidity to.
Speaker Change: We utilize the stock buyback.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Speaker Change: The next question is from Jana Galan with Bank of America. Please go ahead.
Speaker Change: Hi, Thank you.
Speaker Change: Just going back to the dispositions for the 150 to 200 million expected to close this quarter can you, let us know how much already has closed or you know a little bit more around timing any color around kind of potential cap rate and then.
Speaker Change: You mentioned you may be looking to do even more than 400 million. This year, just curious if that's already being marketed or putting put out in the sales process.
Speaker Change: Yeah.
Speaker Change: Good question.
Speaker Change: I will start by answering it slightly differently. The as I said in my remarks, the capital deployment piece of that that's the loan originations in the particularly the multifamily assets. We're purchasing right now those are all contractually obligated right now so youre going to see all of that close.
Speaker Change: Here in the second quarter, which it was.
Speaker Change: Somewhere around two $5 billion, which.
Speaker Change: Two.
Speaker Change: Point that Matt made some of that although it's on funded there's some portions that will immediately become fee bearing capital.
Speaker Change: On the on the disposition side.
Speaker Change: I would answer that by just telling you were.
Speaker Change: We're well down the road on on the Q2.
Speaker Change: Dispositions, but almost all of those are going to close in the latter part of June.
Speaker Change: Thank you and anything around kind of the cap rates on that.
Speaker Change: Uh huh.
Speaker Change: I'd, rather not really comment on that.
Speaker Change: Until they are a reality and they're done it's really not.
Speaker Change: Appropriate to comment on that.
Speaker Change: But I would say that in general I think that particularly in the apartment sector.
Speaker Change: There.
Speaker Change: As plentiful global capital that is chasing multifamily and like US most people see the supply declining.
Speaker Change: Particularly here in the United States and in other markets.
Speaker Change: We all see the issue of housing affordability on the purchasing side, particularly with the fed making the decision that they're going to continue to maintain this level of interest rates.
Speaker Change: Which is actually very surprising to some.
Speaker Change: Many of us.
Speaker Change: So you've got.
Speaker Change: Car loans interest rates at a historic high you've got housing interest rates are pretty much at historical high credit card rates at a historical high and so it's forcing people to make a decision to two <unk>.
Speaker Change: Rent rather than buy.
Speaker Change: So we think there is really really good.
Speaker Change: <unk> around our multifamily business I would just add one thing to that part.
Speaker Change: Part of the disposition plan relates to European assets and the interest rate environment. The UK just cut rates.
Speaker Change: That rates in the Eurozone a couple of times now so we are dealing with a slightly different interest rate environment for some of the assets that we have on our plan and our hope.
Speaker Change: Which we think will prove out is that youll see favorable cap rates on those when we exited just given.
Speaker Change: The different interest rate dynamics in some of those markets. Yes. This is really an important employer matches made and I think when you think about the axa transaction sort of keep repeating this the significance of it there were 35 banks in lending institutions that bid on that financing in Europe.
Speaker Change: And.
Speaker Change: His points.
Speaker Change: We close that financing with two banks.
Speaker Change: But the interest rate is four 1%, which is at least 100 to 150 basis points below what you would be doing similar financing here in the U S and so.
Speaker Change: The.
Speaker Change: Given the uncertainty, it's very interesting I think that the United Kingdom.
Speaker Change: Ireland.
Speaker Change: Which is performing so exceptionally well to country of Ireland, they're being viewed really in Europe is a safe place to park capital.
Speaker Change: Great. Thank you for your time, Bill and Matt.
Speaker Change: The next question is from Tayo Okusanya with Deutsche Bank. Please go ahead.
Tayo Okusanya: Hi, yes, good afternoon.
Tayo Okusanya: First question around normal origination could you just give us a sense of like that but youre originating those that like now a model that.
Tayo Okusanya: That has changed at all over the past few quarters.
Tayo Okusanya: Yes, yes, the rates so we've seen in the past few quarters have been pretty steady, but if you kind of look at where.
Tayo Okusanya: Rates were maybe a year ago.
Tayo Okusanya: In particular.
Tayo Okusanya: Coming into the beginning of this year, we've seen definitely some downward pressure on spreads.
Tayo Okusanya: To the tune of 30% to 40 basis points on average.
Tayo Okusanya: What we have seen though is the quality of the projects that are being built the quality of the sponsorship.
Tayo Okusanya: All of those things remain at the very very high level, but just given a bit more competition. There is some pricing pressure. We do think the spreads we're achieving in this business are still.
Tayo Okusanya: Very strong relative to alternatives in the credit space.
Tayo Okusanya: And obviously, we're very wholly focused on.
Tayo Okusanya: Residential side of things so student housing rental apartments. So we feel very very strong about the business, but there has been some.
Tayo Okusanya: Pricing pressure, but we still find it very attractive.
Speaker Change: Okay. That's helpful.
Speaker Change: All of this.
Speaker Change: Loan prepayments as well it seemed like a little bit.
Speaker Change: Higher than I think.
Speaker Change: Excuse me just kind of curious why.
Speaker Change: Are you kind of saw the increase in prepayment speeds, which were ready to go.
Speaker Change: It on there.
Speaker Change: Yes, there was.
Speaker Change: I'd say that from the construction lending business. The prepayments were as expected we did have one.
Speaker Change: Pretty large payment on and actually an office loan that we had originated several years ago that we got paid off on which was about 200 million.
Speaker Change: So that.
Speaker Change: It was I'd say somewhat out of the ordinary in terms of the <unk>.
Speaker Change: What we'd see going forward.
Speaker Change: So that landed in Q1, which pushed the payoffs up a bit but in terms of the construction lending side of it was as it is kind of what we anticipated.
Speaker Change: In terms of hey, Okay. That's helpful.
Speaker Change: That's helpful.
Speaker Change: The affordable housing piece.
Speaker Change: Piece of your business.
Speaker Change: Inkjet side.
Speaker Change: The exposure to things like section eight housing vouchers.
Speaker Change: Vouchers or things that may ultimately get impacted by some of these changes being made by the Trump administration.
Speaker Change: Yeah. Good question. So there's really two parts to I'd say the reliance on government benefits in this business the first really.
Speaker Change: Rates to the financing of the projects themselves.
Speaker Change: So this really has to do with private activity bonds and tax credits.
Speaker Change: There was some initial concern that this could be in play, but our understanding now is there is very little to no concern around the availability of.
Speaker Change: Private activity bonds in this space. So we feel very comfortable with tax credits and the bonds being available.
Speaker Change: In the markets, we operate in the second part relates to rental assistance payments through HUD.
Speaker Change: So there is a portion of the portfolio. It's a relatively small portion of the portfolio, where our tenants are using section eight housing.
Speaker Change: And.
Speaker Change: From our understanding there could be we haven't seen anything any impact to date none.
Speaker Change: There is a potential for some slowness in payments given.
Speaker Change: Cuts to the employment at some of these agencies.
Speaker Change: We don't have any short term or medium term concerns about.
Speaker Change: The capital coming into.
Speaker Change: Our tenants and their ability to pay rent so.
Speaker Change: We're not overly concerned about about this but it is something we're monitoring very closely.
Brian: Can you just size the exposure Brian Israel.
Brian Israel: It's about 15% of the tenants have some sort of HUD.
Brian: Backing.
Speaker Change: Okay on that side of the business. Okay. Thank you very much just in the affordable space, we're talking about.
Brian: 10000 units correct, yes, that's right.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Bill Mcmorrow for any closing remarks.
Speaker Change: Thank you everybody for joining the call and as always we're always available to talk to anybody offline. So thank you very much.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].