Earnings Call: Q2 2021

Aug 11, 2021

Earnings release

Morning. My name is Anas, and I will be your conference operator today. At this time, I would like to welcome everyone to the BSRE Q2 2021 Financial Results Conference Call. All lines have been placed Thank you. Mr. Bailey, you may begin your conference. Thank you, Enid, and good morning, everyone. Welcome to BSR REIT's conference call to discuss our financial results for the Q2 ended June 30, 2021. I'm joined by Susie Kane, our Chief Financial Officer. Also with us are Dan Oberstein, President and Chief Investment Officer and Blake Brazil, Co President and Chief Operating Officer, We will be available to answer questions following our prepared remarks. I'll begin the call by providing an overview on the Q2 performance and other corporate developments. Susie will then review the financials and I'll conclude by discussing our outlook and strategy. After that, we will hold a Q and A session. Before we begin, I want to remind listeners that certain statements about future events made on this conference call are forward looking in nature. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially. Please refer to the cautionary statements and the forward looking information in our news release and MD and A dated August 10, in 2021 for more information. During the call, we will reference certain non IFRS financial measures. And do not have standardized meanings under IFRS. Please see our MD and A for additional information regarding our non IFRS financial measures, including for reconciliations to the nearest IFRS measures. Also, please note Results demonstrated the benefits of our strong management team and capital recycling strategy, which is substantially complete. By reorienting our portfolio to high modernized quality properties in primary Texas markets, 21.9% year over year growth in net asset value. AFFO will continue to increase at the end of Q2 was $1206 a 21.8% increase from $9.90 placed at the end of Q2 last year. This increase reflects the impact of the capital recycling program, which has been transformational. To put this point in perspective, at the time of our IPO in 2018, primary markets represented 22% of our NOI. Following the Hanger 19 acquisition announced July 29, that figure has increased to 97% And the weighted average of our properties in our portfolio has decreased from 29 years to 13 years. At quarter end, weighted average occupancy was 96.2%, an improvement from 94.9% at the end of Q2 last here. This too is a significant accomplishment and not just because it was achieved during the pandemic. Our 3 core Texas markets, Dallas, Houston and Austin are among the best in the country and we're generating simultaneous growth quarter over quarter growth in NAV and we expect this strong NAV growth to continue. Susie will take I will note for now that we generated same community revenue growth 5.4% and same community NOI growth of 5.2%. We also generated positive growth in in total revenue and NOI even though we divested far more properties than we acquired over the past year. Those results highlight The underlying strength of the Austin, Dallas and Houston MSAs. Subsequent to quarter end and July 2021, We were excited to see our same community rental rates for new leases increased 16.3%. So you'll understand our confidence in AFFO and NAV growth going forward. During the second quarter, We completed sales of non core assets in our portfolio. We are now focused on deploying our acquisition capacity in our target primary markets, Subsequent to quarter end, we acquired Hanger 19 Apartments in the Dallas Fort Worth market for $82,750,000 Hangar 19 is a newly constructed garden style community with 351 high quality apartment units. It is a new property that was constructed just last year and is equipped with many of the amenities of our residents that our residents like. As you might have guessed, the name it is located close to the Dallas Fort Worth International Airport as well as major highways. With Hanger 19 included, we now have 3,014 Apartment Units in Dallas Fort Worth. We are excited to realize the benefits of this new scale in one of our core primary markets. Following the Hanger 19 transaction, we have debt to TBV up 44.9 percent and approximately $200,000,000 of acquisition capacity. We expect to complete, however approximately $167,000,000 of additional acquisitions before the year end of 2021. We expect these transactions will increase AFFO by approximately $4,000,000 or $0.08 per unit on an annual basis, Assuming similar economics to the Hanger 19 deal. At that point, our portfolio will be stabilized. Therefore, before I turn it over to Susie, I would like to provide a brief update related to COVID-nineteen. We collected 99% of expected monthly rent in the Q2 and again in July 2021, which is in line with our historic norms. So the pandemic is not impacting our collections. I also want to note that as of July 31, we have collected 600,000 placed in rental assistance through the federal government's emergency rental assistance program, which assist households that are unable to pay rent and utilities Due to COVID-nineteen, the money was collected through eligible residents at our properties. We are continuing to monitor the spread of COVID-nineteen I'll now invite Susie to review our Q2 financial results in more detail. Susie? Thank you, John. Same community revenue increased 5.4% in the 2nd quarter to $13,900,000 from $13,200,000 last year. The improvement reflects an increase in average rental rates for the same community property from $10.44 per apartment unit as of June 30, 2020 to $10.79 per apartment unit as of June 30 this year, as well as increases in late rental payments, placed on the slide deck. Fees associated with moving in and out of a community and utilities reimbursement revenue. Total portfolio revenue for Q2 2021 increased 2.8 percent to $28,000,000 compared to $27,300,000 in Q2 last here. This reflected organic rental growth as well as the contribution from property acquisitions and non stabilized properties, on the call, which added $8,300,000 $800,000 of revenue, respectively. Property in the quarter. The company's position reduced revenue by $8,900,000 compared to Q2 2020. To clarify, non stabilized reverse new properties that were undergoing lease up or renovation during at least part of the comparative period. NOI for the same community properties was 7,400,000 an increase of $5,200,000 from $7,000,000 in Q2 last year. This increase was attributable to higher same in the past. Community revenue, reflecting the strong rental market dynamics that John referenced and a decline in real estate taxes, partially offset by increased utility costs, higher costs associated with preparing apartment units for new residents placed at higher property insurance costs. NOI for the total portfolio increased 1.1% to 14,400,000 from $14,200,000 in Q2 2020. FFO for Q2 2021 was $7,000,000 or $0.13 per unit compared to $6,600,000 or $0.15 per unit last year. The increase in FFO reflects higher NOI plus reduction in finance costs, on the balance sheet. Excluding the loss on extinguishment of debt, the decline in FFO per unit reflects the temporary dilutive impact to $7,900,000 in Q2 2021 or 0 point 15 in the quarter. The increase reflects the higher FFO as well as the $1,500,000 escrow rent guarantee that was realized in the quarter. As John noted, we expect that AFFO will significantly benefit in the second half of twenty twenty one and throughout 2022 placed on our financial results. Net asset value increased 42.1% year over year to $769,000,000 from $541,000,000 in Q2 last year. On a per unit basis, NAV rose 21.9 percent to $14.77 in Q2 2021 compared to $12.12 last here. The REIT paid quarterly cash distributions of $0.12 per unit in to both years representing an AFFO payout ratio of 79.2% in Q2 2021 compared with 90% last year. All distributions were classified as a return of capital. We expect the AFFO payout ratio to continue to decline as we deploy our acquisition capacity. Turning to our balance sheet. Debt's gross book value ratio at June 30, 2021, was 41.5%, And we had total liquidity of $96,900,000 including cash and cash equivalents of $8,200,000 $53,400,000 available on our credit facility and $35,000,000 available on the line of credit. Following the Hanger 19 acquisition, which was completed subsequent to quarter end, our debt to GBV is 44.9 percent. Acquisition capacity is approximately $200,000,000 without the need for additional equity. As of June 30, we had total mortgage notes payable of $403,000,000 excluding the credit facility and the line of credit, with a weighted average contractual interest rate of 3.3% and a weighted average term to maturity of 6.1 years. Total lines and borrowings were $524,000,000 excluding the debentures and 78% of the REIT's debt was fixed or economically hedged fixed rates. In July 2021, through the refinancing of debt, 84% of the REIT's debt was fixed or economically hedged to fixed rate. In addition, as of June 30, we had $42,500,000 of convertible debentures outstanding at on a contractual interest rate of 5%. The debentures mature on September 30, 2025, with a conversion price of $14.40 per unit. I will now turn it back over to John for some closing comments. John? All right. Thank you, Susie. The upcoming weeks months Are going to be a very busy period for BSR team. We have set an ambitious goal of completing about 167,000,000 in Houston are highly liquid and quite robust. Our corporate investment team is always busy reviewing opportunities, We also expect to continue achieving solid organic growth. The economic recoveries in our primary markets have been impressive since the start of the pandemic. That has supported strong growth in rental rates at our properties and continuing high levels of occupancy. We fully expect these trends to continue. The Q2 of 2021 was an important period for us And it demonstrates how the reorientation of our portfolio to high growth primary markets generates Stronger financial performance and expansion of our NAV. This is what we have been talking about since we initiated the capital recycling program in 2019. We expect our financial results to continue strengthening in the months ahead as we deploy our acquisition capacity placed in our target markets and continue benefiting from our exposure to these high growth regions. Obviously, COVID-nineteen remains an issue. While the pandemic could create additional challenges for us in the months ahead, we have proven over the last year and a half in the pandemic and we will apply those lessons learned as needed going forward. Please allow me to take this opportunity to thank fit for taking BSR to the next level and I am blessed to board for such a fine and professional team. That concludes our remarks this morning. Susie, Dan, Blake and I would now be pleased to answer any questions you may have. So operator, Please open the lines for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Placed. One moment for your first question. The first question comes from Kyle Stanley with Desjardins. Please go ahead. Thanks. Good morning, everyone. Good morning, Kyle. Hey, good morning, Kyle. Just wanted to quickly say congratulations to both John and Dan on the upcoming changes. I think things are looking fantastic here. Thank you, John. We're excited. So just taking a look at the healthy leasing velocity and spreads achieved in June July, I'm just looking for general market commentary. Is this activity being experienced portfolio wide or maybe more specific to certain submarkets? And in your opinion, what is the primary driver of this market rent growth. Kyle, this is Blake. Hello to everybody out there. Probably content about listening to me. And I've grown up in The Dallas area, was a banker for 20 years. I'm going to rehash this because I think it's really important. Placed on the line for the past 2 years. And I've seen different dynamics in different cycles in the real estate market in Dallas, Houston and Austin during my years. Scratches and when it comes to occupancy growth and rental growth that I've seen in my time. And I expect this to continue. And the question that you brought up, I'm going to answer it in a couple of different ways. You asked what's causing it. Well, we've been talking over the last two quarters and I think The numbers now are bearing this out about the migration into Texas. Placed on the line and you can look it up. There's articles everywhere. It's probably not as well known or the gravity of it in Canada as it is in the United States. But I think it would be interesting for everybody to look at the companies that have moved into Texas Over the last 2 to 3 years, why are they doing that and continue to do that? Well, As I've stated before, Dan stated before, it's a business friendly stage. There's no personal income taxes. It has tremendous public schools. Add all that up and it's a pretty good place to move to when you look at some of the bigger cities on the coast on what they've gone through during this pandemic. Well, that has all helped us with the strategy that we laid out to you 3 years ago. And our strategy really has 3 main components to it. It's the product that we buy, the quality of it. It's the location, location, location in this particular placed in the past several years. And we talk about our people all the time, but it's really important to Go over again the fact that our turnover rate with our people is half the national average and continues to be that way. And that is driving all of these things that have Contributed to the numbers that you're looking at. So I think it's really important to put that in perspective and for everybody to realize what is happening in these locations and continues to happen and I see it happening well into 2022, if not Now to answer your question, Kyle, as far as is there a Region or something that's carrying this. No. All of our main MSAs Oklahoma City, which is our smaller MSA, It had a 12.3% increase in new leases for July. And for the quarter, year over Here, it's an OI growth of 7.4%. I know we've had some of our competitors trumpeting their OKC growth. And I think you can check and look at our growth in all of our MSAs, but and we've done better Then they have. One thing that I do think is very interesting in looking at this is that How do I think or what am I facing some of this that is going to continue on? Well, when I look at Our leads, which I bring up to you guys every quarter, but it's important. Our leads sequentially, 1st quarter to 2nd quarter, 21%. That's really important to look at. That's the people that are on the Internet Are they coming in and coming into our properties? I mean, where are they coming from? Well, it ties back into migration comments that We discussed that I've discussed earlier. And I always bring up to you guys the virtual tours, the self guided tours and the in person tour. This is really important because this is another stat that is showing that there's no let up in sight. Those are up 25% sequentially and our closing rate on those went from I can go over a lot of these things. I'm sure I will later on lease up some things. But to answer your question, I hope I did because there's a lot going into this and the numbers are starting to reflect that. Maybe just one last one for me. OpEx inflation looks to be a bit of an issue across your U. S. Sunbelt peer group. Could you just talk about a bit of the fact a few of the factors that are contributing to that and Maybe thoughts on how that trends in the second half of the year? Yes. I'd be happy to. When you look at our numbers, I think it's really important to as most of you know, the age of our portfolio has decreased dramatically Over the last year to 1.5 years, which you look at the last 6 to 7 purchases, which Dan placed. And look at the age of the properties. This has contributed to the fact that We're not as susceptible to cost and the cost inflation. Is there some cost inflation? Yes. But when you look at our numbers year to date, we're sitting at total expenses about 2.8% year over year and our renting expenses Employee wages and that's something that I had concerns about going in because Texas is such a dynamic state. It's very competitive And there's a lot of construction going on competitive for employees. But year to date, if you look at our employee cost, We're down 0.55. So we've done a really good job of controlling that. I would say that a lot of that has to do with Divested ourselves and that has helped us not have to go out placed at higher, in some bigger, cost, sour categories, new people. So We've kept that in control. And to answer the question for the end of the year, I do not think that that's going to affect our numbers placed on a scale that would be anywhere near the rent increases that we're seeing. Your next question comes from Brad Sturges with Raymond James. Please go ahead. Hi, good morning. Good morning, Brad. Good morning, Brad. Maybe just a follow-up on Kyle's question there on cost inflation, but maybe 0 in on property taxes. Can you just walk through the accounting treatment so far in terms of the accruals? And then what would be I think the final build come in near the end of the year. So what would be your expectation for property taxes given the recent changes in valuation that's happening in markets like Texas? Pleasing. If you look at the base of our income statement, you're going to see a credit sitting in real estate taxes and that's because We recognize tax expense under IFRS when the tax is actually assessed. The credit relates to refunds received during the year and then true up based on assessments as well. You have to combine that The IFRS twenty one adjustment that's also on the income statement to get a true accrual basis accounting look What our real estate tax liability would be as of June 30. Right now, we're on track with our real estate taxes as We budgeted maybe even a little bit better based on some of the refunds that we've received. And at this point, We underwrite when we value properties for increases in real estate taxes. So we don't expect to be surprised. What are you underwriting in terms of increase in taxes for this year? The average increase, I guess. Hey, this is Dan. I think on average, we see our taxes increased about 4% year over year. I want to remind the group that I believe Texas passed a statute capping property ad valorem tax increases in any commercial asset, I think at 3.5% a couple of years ago. That created some tailwinds for those of us that underwrite taxes into NOI and cash flow, helped us become a little bit more aggressive placed in our future tax expectations and took some beta out of ownership in the state of Texas. That's helpful. In terms of Hanger 19, the guidance on accretion of $0.04 a unit, what type of rent growth Would you be baking into that assumption? Brad, that's a great question. So That submarket in south of the airport and DFW is looking at about an 8% to an 8.5% organic rate growth from the date of acquisition. Now I wish being a landlord was as easy as charging 8% rent to 10% rent growth and collecting 100% of that revenue over a 12 month But it's not. So we'll probably blend that year 1 number. We'll probably offset that 8.5% rent growth by about 5% in loss to lease As we, I would say, otherwise stabilize the year 1 pro form a. Thank you. Your next question comes from Matt Logan with RBC Capital Markets. Please go ahead. Thank you and good morning. Good morning, Matt. Good morning, Matt. Susie, in terms of the fair value gains this quarter, can you tell us how much was driven by Higher NOI versus cap rate compression? Yes. Hey, Matt, sure. So and also you want to take out The dispositions we've had as well because I can skew it. And the answer is that the guidance is exactly half and half. 50% The growth comes from increases in NOI and the other half is compression in cap rates. So we've got 15.15 basis points if we kind of split it evenly? 17. Perfect. And in terms of what you're seeing For the real time transaction market, things that perhaps aren't factored into the appraisal rent rolls, would that indicate to you that there could be further cap rate placed in the back half of the year. Hey, Matt, this is Dano. Yes, we're seeing July bids. I want to remind everybody this is Q2 end reporting and I know everybody knows the date today. So just to evidence The velocity that we're seeing in trade outs in this market, we're seeing July bids for properties at 10% to 20% outside of the money relative to evaluations we're seeing trade at today. A lot of that cap rate compression It's built into what Susan just talked about, which is NOI increases. Anytime an acquirer can underwrite to 10% to 20% organic rent growth on a going in pro form a. It's going to increase that purchase price and lower that going in cap just a little bit, but that's a healthy cap rate reduction. Been You're going to collect that revenue. You're going to collect the NOI that drives the cap rate reduction. I would contrast that with a market where you're seeing Pancake growth opportunities and low interest rates. That's just a straight line going in cap with not a lot of hope of expansion. The market that we're looking at, looks to produce some tailwinds through the end of 'twenty two and perhaps ongoing. That helps us, I'll say, underwrite to a lower day 1 cap rate and in place NOI expansion over a period of 2 to 3 years in the horizon. Now unfortunately, it helps our competitors underwrite to those low cap rates as well and and kind of used leverage to push property prices up a little bit further. And that's a little bit of what we've seen go on in the months of June July August is probably some higher leveraged offers, taking advantage of more debt on the trade and driving cap rates down. But with all that to be said, anytime you can underwrite the higher rent growth, it's a healthy cap rate compression environment. And in terms of your acquisition cap rate for Hanger in 'nineteen, can you give us a sense for where that would be just in the general ballpark? Yes, sure. 50 basis points spread, we could say between 3.75% and 4.25%, somewhere around there in a cap rate. I mean cap rates are like everybody on the phone think about a dog and we're all thinking about different dogs. Cap rates are no different. Economic, nominal, before CapEx, these are all things that all of us use to establish a cap rate. I think a 50 basis point spread between 3.75% and 4.25% is a good evidence of where the market sits for a property like Hanger 19 right now. And last one for me. In terms of the NOI margin for 2022, Susie, how should we be thinking about that on a stabilized basis Everybody knows that right now, we have properties in lease up, and we're not including the rent guarantees in NOI. So that's producing Excellent. Appreciate the commentary everyone. I will turn the call back. Thank you. Thank you. Your next question comes from Frank Lee with BMO. Please go ahead. Hi, good morning everyone. So my first question coming as you know We witnessed that people moving back to your core markets and you also mentioned that earlier and we continue to see the home ownership costs to rise. I wonder, does that do you think that's going to further drive people back to the rental markets and is that part of the driver We live in a time of uncertainty and uncertainty calls for flexibility to maintain balance. I think that In this environment, multifamily products within the markets that we have, in the right markets, they allow our residents placed to better adapt to the rising home prices. And to your point, you take Dallas, for example, it's a great market. Average home price there is $341,000 So you take your mortgage and you take your payment, your mortgage interest and principal is about $13.50 a month on a Thirdly, your note, that's before having to pay real estate tax and insurance. So that value for the medium home price in Dallas has gone up 26% From May of 2020 to May of 2021. That as a result has driven HomeCo's closings down by about 7% in the month of June, quarter month over month sequentially. It's I mean with a if you can do the simple math with a 10% rent increase or 15% in a market where your competitors are charging a 26% cost increase. I'd say apartments are more affordable in the month of July in Dallas than they were relative to home purchasing than they were in the month of July of 2020. That's great tailwinds for our sector. And Blake hit on another issue that we can elaborate on. We've got a great supply problem in our markets. Austin, Dallas and to a certain extent Houston are unable to keep up with the net migration trends and the move ins that are coming in from other states. So you got a supply and demand issue. The natural result over the last year has been about a 25% to 30% increase in medium home values. Rents haven't picked up 25 to 30. They've been a healthy 10 to 20. The developers For COVID and other reasons, call it inflationary pressures for construction costs or call it COVID related lack of employee retention in order to build out a house, They simply can't deliver the single family or multifamily product to absorb I'll look back, you're seeing some of the highest net absorption numbers coming in our markets and United States, but more importantly in our markets that you've seen since the mid-90s. It's resulting in a vacancy reduction to about a U. S. Average of about 4%, which is where our markets kind of sit right now. And we don't see any reason that that trend is going to not are going to turn around. And part of the reason for that We saw starts drop in our markets by 20% to 50% on a year over year basis. So there's simply just not the product to deliver From a single family home size or a multifamily size that will support the number of housing moving into those three markets. Okay. Thanks, Ann. Great color. And I just want to follow-up on that. So I've seen like strong demand for And also like total supply. And we've seen we have seen a great like trend on rental growth. And I just want to like ask like From your perspective, how stabilized this rental growth moving forward, let's say, like in 2022 and 2023 because we're leaving we're currently leaving unprecedented situation like you said, it never happened in the history, never seen in the history. So how stable is this rental growth moving forward like Is that 2022 or 2023? Yes, sure. I mean, moving on, I mean, if we knew what rental price We're going to be in 2023. We'd be sitting under a shade tree right now. So the future is uncertain. But as far as I'd want to rely on our data providers and what they're projecting the CBREs and the CoStar and the RCAs and the Ron Witten's of the world. These individuals are talking about continued a sustained tailwind of rent and occupancy growth right now through the end of the Q4 of 2022. Those are positive Tailwinds. Those are numbers that we so we look at for call it the next 18 months, they all look positive to us. Thank you. Your next question comes from Matt Kormak with National Bank. Please go ahead. Hi, guys. Just a few quick technical ones on my side. With regards to the rental guarantee, Great approach on that front. Yes. Okay. And then second to that, maybe you could speak to you spoke The OpCos impact as a result of the newer asset age, but also with regards to your CapEx reserve and just ongoing maintenance CapEx, can you speak to how that will trend or if it's already incorporated in your view on maintenance CapEx at this point? Thanks, guys. Not sure. Can you clarify that question just real quick again? What are you asking for Ongoing or where it is right now? Well, yes, just I guess I didn't look at the figure in a lot of detail that was used for the maintenance CapEx this quarter, but maybe if you could give a sense as to the trajectory of maintenance CapEx, Because I'd assume given the newer age of the assets that you're buying and the selling of some of the older ones that the maintenance CapEx profile for this portfolio would have come down? Yes. I mean that's absolutely right. I mean I think that the That goes without saying due to the fact of what the age and you pretty much answered the question. I mean, we're looking at anywhere from $250,000,000 to $300,000,000 per unit. That is what we're Anticipating going forward. Okay, perfect. No, that's helpful. Does that answer? That's great. That's exactly what I needed and I appreciate it and congrats on a very strong quarter and I've got to Thank you. Your next question comes from David Crystal with Echelon. Please go ahead. Hey, good morning guys. I just want to build on Kyle's question from earlier and I I apologize, I got disconnected. So you may have already given an answer to this. Leasing lifts accelerated throughout in Q2 and into July. Do you have a sense of how lifts on new leases have trended so far in August? Yes, I do. Obviously, I'm limited. Sude looks at me every time a question like That's asked and I've learned over 3 years to be careful because it isn't in our MD and A. I do have a sense of that. And it is very it looks very good compared to the July numbers. The trends are just positive across the board in all three categories. Okay. And If I look at the renewal spreads, obviously, they're much lower. Could you push harder on the renewals? Or is there a strategic reason I thought you're holding off a little. Well, obviously, we can always push more and we will, And I'll answer this in a couple of ways. As everyone knows, we use LRO and it placed on rental rates. Now in most cases, in my career through the years, Rental rates follow the new rates. And in our case, and I think In most people's cases of our competitors, if you look, there is a pretty big, at this point, As we are able to push rates on renewals, that is something that we're going to do. We've discussed it internally. But I'm going to say this to answer probably a question coming later is there is a balance New rates and you're balancing that against occupancy too. So that's something that I probably spend and our group, has as much time on discussing as anything Because as I addressed earlier in my conversation that These are some pretty lofty new rates that we're seeing Compared to history. So we're wanting to make real sure that we balance our occupancy That's pretty good, pretty good thing to look at right now. So I think going forward, To answer the question, we will be seeing a shrinkage, but there's a lot that goes into that. Okay, fair. And I think Matt asked this question, I cut out. If I look at the rent guarantee, how should we look at that burning off in Q3 and Q4? Yes. So right, we still have plenty of rent guarantee left, but we also have with the properties are easing up way faster than we anticipated at a higher rate. So we expect to have stabilized NOI for those properties, whether it comes through the rent guarantee or through just actual lease ups through the end of the year. Okay. And given the mid quarter acquisition of Alea, was the guarantee contribution from that asset only for the period it was owned? Yes. Okay, perfect. And on the acquisition front, you're still very confident on executing another $170,000,000 by year end. How have the Economics evolved, are you still confident in the kind of unblowing economics as in any cap rate compression is going to be off I'd say we're very confident, but we're careful not to become overly confident in this market. And what I mean by that is we want to know for sure that any on the Investor Relations website. Our Example, I mean these cap rate compressed markets have not just shown up, they've been around for a while. And in the second quarter we've assessed, call it 41 potential acquisitions. That's about 17,000 suites. Value on that is about $3,850,000,000 That's an average purchase at a price of about $93,750,000 Now out of those $41,000,000 we looked at, we offered on 4,000,000 we bought 1, in Hanger 19. Those sound like they're pretty astounding numbers, 10% of your underwritten properties you offer on and out of those 25% you close. That's about our average closing ratio for reviewed properties over the course of the last 5 to 10 years. We continue to see depth in these markets. But with that said, on the $167,000,000 I look forward, We're looking at the playing field and not the scoreboard. And what I mean by that is we're going to score ourselves on how well we can acquire, Not whether we can hit acquisition volume or timing benchmarks. There's going to be another $8,000,000,000 of apartments to trade in our markets between now and Thanksgiving, and we'll look at about half of those. And if those any one of those properties hit our benchmarks placed and hit our underwriting criteria and our disciplines, and we think it's a good fit for this portfolio, then we will acquire that property. We feel very confident in that. The market is not for lack of depth. The market is not for lack of good fundamentals. And so long as we can continue to see, call it, a 200 basis points to 2 50 basis points spread above our cost of capital, We're going to continue to acquire and all green lights are in those we see green lights in every discipline that I just referenced right now. So yes, we're pretty confident we can drop another $160,000,000 to $200,000,000 in the market on acquisitions between now year end. But we're not going to just buy for buying sake. We're going to buy good properties in the right side of the road at good values. There are no further questions at this time. You may proceed. Okay. That concludes our remarks for today. And we will be speaking with you again at the end of Q3.