CTO Realty Growth, Inc. (NYSE:CTO) Q2 2023 Earnings Call Transcript

CTO Realty Growth, Inc. (NYSE:CTO) Q2 2023 Earnings Call Transcript July 28, 2023

Operator: Good day, and thank you for standing by. Welcome to CTO Realty Growth Second Quarter 2023 Operating Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Matt Partridge, Chief Financial Officer. Please go ahead.

Matt Partridge: Welcome, everyone. Thank you for joining us this morning for CTO Realty Growth’s second quarter 2023 operating results conference call. Joining me today is our CEO and President, John Albright. Before we begin, I’d like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company’s actual future results may differ significantly from the matters discussed in these forward-looking statements. And we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company’s Form 10-K, Form 10-Q and other SEC filings. You can find our SEC reports, earnings release, supplemental and most recent investor presentation on our website at ctoreit.com. With that, I’ll now hand it over to John.

John Albright: Thanks Matt, and good morning everyone. We’ve had a busy second quarter as we’ve made progress on a number of fronts. During the quarter, we invested in several high-quality assets in what has been an otherwise quiet transactions market. We continued to make progress on our property repositioning programs, delivered another quarter of strong leasing activity, and we continue to build on our foundation for future growth. Starting with our investments for the quarter, we made additional progress in converting our Exchange at Gwinnett development loan into fee simple ownership. We acquired three buildings within the 28,000-square foot retail portion of the Sprout grocery-anchored Phase II at The Exchange at Gwinnett in the Atlanta submarket for $11.3 million.

Following these acquisitions, there is one small parcel remaining for us to acquire, which we anticipate will occur in the fourth quarter for approximately $2.3 million. Additionally in June, we purchased Plaza at Rockwall in the Dallas-Fort Worth MSA for $61.2 million. This property is a 446,000-square foot multi-tenanted retail power center located on 42 acres along I-30 just 20 miles northeast of downtown Dallas. For us this acquisition checked a lot of boxes, high-quality construction, multiple opportunities to organically drive future cash flow growth by recapturing below market rents, the ability to invest below, replacement costs in one of the wealthiest fastest-growing counties in Texas. And the property is anchored by a number of well-performing national credit retailers such as Best Buy, Ulta Beauty, DICK’S Sporting Goods, Five Below and HomeGoods.

With this acquisition the Dallas-Fort Worth metroplex is now the second largest market in our portfolio, behind Atlanta representing nearly 18% of our in-place cash-based rent. Year-to-date, we’ve invested nearly $76 million into five retail properties and originated one structured investment for $15 million. In aggregate, we invested at a blended going-in cash yield of 8.1%. From a funding perspective, we took down these investments with proceeds from our credit facility. However, we anticipate increased disposition activity in the back half of the year as we look to pay down this incremental debt by largely match funding our year-to-date investment activity with non-core asset sales. During the quarter, we did sell a Jollibee outparcel at our property just outside of Las Vegas in Henderson Nevada for $2.1 million at a very attractive cash cap rate of 4.8%, generating a healthy gain on sale of $800,000.

On the leasing front, we signed 24 new leases renewals, options and extensions in the quarter, totaling 107,000 square feet at an average rent of $26.58 per square foot. Comparable rental rates, which excludes vacancy existing at the time of acquisition grew 8.6% during the second quarter. Most importantly as we look at the progress we’re making on resetting rents to market on comparable new leases, we grew comparable rents by more than 25% during the quarter and nearly 17% year-to-date. This is a product of mark-to-market opportunities, we identified when we purchase these properties as well the strength of our property locations and markets. Our strong leasing momentum has been driven by some of our most recent acquisitions, including Collection at Forsyth and West Broad Village.

At Collections alone we’ve signed or renewed a total of 13 leases representing over 52,000 square feet at an average rent per square foot of $27.85. For new comparable leases at Collection, we’ve grown rents by more than 35%. At West Broad Village, the momentum has been just as notable where we’ve signed new leases on more than 7% of the property’s total leasable area, all of which was taken at the time of our acquisition. From a lease perspective, we’ve seen strong performance from the majority of our existing tenants and we continue to make progress on getting tenants open and operating. Camp recently opened its first Atlanta location at our Ashford Lane property. And its initial sales performance has been impressive. Grana, which is set to open at Ashford Lane before the end of the month in the former Carrabba’s space has been highly anticipated as a new opening.

On the flip side, we are in the process of bringing in a much more established food hall operator to take over our food hall tenant at Ashford Lane. We expect that the new operator will be up and running in the fourth quarter. Overall, even with the interim closure of food hall, we’ve maintained our full year earnings guidance as leasing momentum continues to be robust. We’ve made good progress implementing our operational efficiency programs and we have confidence our high-quality portfolio will drive long-term cash flow as we continue to execute our operating plan. With that I’ll hand the call back over to Matt.

Matt Partridge: Thanks, John. I’ll start with a snapshot of our portfolio. At quarter end, we had 24 properties totaling $4.2 million square feet in 15 markets. We ended the quarter with occupancy of 91.4%, an increase of 150 basis points from the first quarter. And leased occupancy was largely unchanged quarter-over-quarter at 93.4%. As John mentioned with our acquisition of the Plaza at Rockwall Atlanta and Dallas are now our top two markets followed by Richmond, Jacksonville, Phoenix and Raleigh. We expect to benefit from our considerable Sunbelt exposure for the foreseeable future given our markets’ outsized population growth, robust retailer demand and the long-term benefits from being in business and tax-only states. Jumping into our earnings results for the quarter.

Q2 2023 core FFO decreased 8.5% to $0.43 per share and Q2 2023 AFFO decreased 2% to $0.48 per share when compared to the same period in the prior year. Year-to-date, core FFO was $0.82 per share and AFFO was $0.91 per share representing year-over-year per share decreases of 12.8% and 8.1%, respectively when compared to the first six months of 2022. Core FFO and AFFO benefited from the full quarter impact of our second half 2022 acquisitions, which included Madison Yards, West Broad Village and Collection at Forsyth as well as the partial quarter impact of Plaza at Rockwall rent commencements at several properties where we’ve made strong gains in occupancy and positive year-over-year growth in our external management fee from PINE. From a revenue perspective, core FFO was negatively impacted by the write-off of $500,000 of straight-line rent receivables related to non-performing tenants the vast majority of which was associated with The Hall at Ashford Lane.

While The Hall was open and operating at quarter end, we were proactive in shifting to cash-based revenue recognition during the second quarter in consideration of their ongoing challenges. The straight-line rent receivable write-off does not impact our AFFO results given that we’ve always adjusted for non-cash straight-line rent in our AFFO reconciliation. G&A expense in the quarter and year-to-date is up year-over-year due to overall organizational growth as well as growth in our talented team. Interest expense increased due to higher rates and higher overall debt balance as compared to this time last year. Same-property NOI decreased in the second quarter and year-to-date by 2.5% and 2.4%, respectively. This can be attributed to bad debt expense related to The Hall at Ashford Lane, reduced rent associated with the bankruptcy of Regal at Beaver Creek Crossings and negative effects from 2022 CAM reconciliations at The Strand in Jacksonville and Crossroads Towne Center.

These items were positively offset by increased percentage rent from our Daytona Beach restaurants, regular weight contractual rent growth at numerous properties and new tenant rent commencements most notably at Westcliff Shopping Center, Ashford Lane and Exchange at Gwinnett. As a reminder for our same-property NOI, we only include properties owned for the entirety of the current period and the comparable prior year period. As a result, some of our largest investments are not currently included in our same-store results. As we announced in May, we distributed a second quarter regular cash dividend of $0.38 per share. This marks a 1.8% increase compared to the second quarter 2022 cash dividend resulting in a Q2 2023 AFFO payout ratio of 79% and an attractive annualized yield of approximately 8.5%.

As of the end of the second quarter, our net debt to total enterprise value was 53.5% and our net debt to pro forma EBITDA remained steady quarter-over-quarter at 7.9 times. We ended the second quarter with total liquidity of more than $100 million, which includes undrawn commitments on our revolving credit facility, cash and restricted cash. While we did increase our near-term floating rate debt exposure with the funding of our second quarter investment activity, we do intend to utilize future disposition proceeds to pay down the outstanding floating rate revolver balance in the coming months as the transactions materialize. We had a relatively quiet second quarter in terms of capital markets activity. But we did opportunistically repurchased 3,931 shares of common stock at an average price of $15.73 per share.

And we also repurchased 746 shares of our Series A preferred stock at an average price of $18.82 per share. As we shift focus to the back half of the year, we reaffirmed our 2023 core FFO and AFFO earnings guidance, while making slight adjustments to our investments and disposition outlook. For the full year 2023, we now anticipate investing between $95 million and $150 million at an initial yield between 8% and 8.25%. And we’re now forecasting to sell between $15 million and $75 million of assets at an exit cap rate between 6% and 7.25%. In closing, we’re excited about the progress we’re making on our financial and operational initiatives. And we’re confident our terrific team and high-quality portfolio will have us well-positioned to drive long-term value for our shareholders.

With that I’ll now turn the call back to the operator to open the line for Q&A.

Q&A Session

Operator: Thank you. [Operator Instructions] And our first question comes from the line of Matthew Erdner with JonesTrading. Your line is now open.

Matthew Erdner: Hi, guys. Good morning. And thanks for taking my questions. You mentioned the strength in robust retailer demand. Do you have any line of sight or expectations, as to how long that will continue? And then with the acquisitions at Gwinnett, could you talk about the lease-ups there and how those are going?

John Albright: Sure. So, on the leasing activity, we’ve actually seen an uptick in leasing activity in the last 60 days. So that’s been really interesting. And so it feels like the summer slowdown happened earlier this summer. And even kind of going into what traditionally, is a really slow month the activity is good. So, I don’t see anything unless something that happens in the broader macro economy, something happening to slow things down. So, we’ll take it as much as we can get it. With regard to Exchange, everything is leased there. It’s 100% leased. So there’s no lease-up to do.

Matthew Erdner: Awesome. Thank you. And then last quarter, you guys did a first mortgage loan on the Founders Square. Are those opportunities still out there in the market? And should we expect any of those to come on later in the year?

John Albright: We’re being very selective in picking. We are looking at some opportunities. I’m not sure, if we’ll transact on them. But if we do ,we’ll probably pare back one of the existing investments.

Matthew Erdner: Awesome. Thank you.

John Albright: Sure.

Operator: Thank you. One moment for our first question, please. Our next question comes from the line of Rob Stevenson with Janney Montgomery Scott. Your line is now open

Rob Stevenson: Good morning, guys. Matt to follow up on the leasing question, how much vacancy have you leased that hasn’t yet, commenced rent payments? How material is that?

Matt Partridge: In terms of dollar amounts, it’s over 3% of existing base rent. It’s about 200 basis points of occupancy. So, it’s meaningful. And to John’s point, it’s been pretty active lately, so it’s also growing.

Rob Stevenson: And when does the bulk of that start to pay? Is that 2024, or is that fourth quarter? How should we be thinking about that as we play around with our models?

Matt Partridge: Yes, it’s really more in the fourth quarter and then into the first quarter of 2024. So, there’s not a huge benefit from all of that all of that lease occupancy in the Q. But it will obviously, have an impact on 2024 growth.

Rob Stevenson: Okay. And John can you give us an update on the office assets and any timing there in terms of sales or what the thought process at this point?

John Albright: Yes. We’re actually making some good progress there. I can’t really — I won’t go in too much detail. But we are negotiating on one asset, as far as the contract. And then, one asset there’s been leasing activity — subleasing activity that is providing more investor interest. So I would say, that on the property we’re negotiating, with on selling there’s actually almost, a little bit of multiple bidders and as far as I won’t say, a bidding war, but a competitive bid environment so kind of surprising on the office side. And then the other property that I’m kind of mentioning on the sublease side, this is going to provide a good path for us to find an investor and sell that property. So we hopefully, will be active late in the fourth quarter on that as we kind of talk to investors.

Rob Stevenson: Okay. And so one office asset that’s got the multiple bidders is that contemplated in the second half disposition guidance?

John Albright: Yes.

Rob Stevenson: Okay. And then how big is your tenant credit watch list at this point?

Matt Partridge: So, I mean whether you want to call it good or bad, a lot of the tenant credit issues that we have historically identified sort of came to fruition in the first and second quarter with The Hall and Regal and WeWork. So, the tenant credit watch list is actually in pretty good shape. We just have to work through obviously the replacement of those credits.

Rob Stevenson: Okay. And how far along are you at this point on the Regal space?

John Albright: We have several different parties that want it. We’re trying to obviously, look for the best one for the company and the property. And so we’re — there are some others that we’d like to see that have expressed interest. So, we’re kind of taking our time a little bit here to find out, which path we want to go down. So the good news is, given it’s Raleigh, given the box size there’s not a lot of opportunities in the market for tenants. And so we’re seeing that expression of interest from a variety of different users. And we’re just really trying to choose the path there. So I would say, the next 60 days we’ll figure out a path on which way we want to go.

Rob Stevenson: Okay. And then last one for me Matt. The proceeds from dispositions, is that to pay down portions of the $210 million out on the revolvers, or is there some other tranche of debt that you’re eyeing as more opportunistic at this point?

Matt Partridge: No. I mean, given that we’re fixed out on all of the debt other than what we largely drew down in the second quarter, those proceeds will be used to pay that floating rate back down.

Rob Stevenson : Okay. Thanks. Have a good weekends guys.

Matt Partridge: You too.

Operator: Thank you. One moment for our next question, please. And our next question comes from the line of Ed Najarian with EF Hutton. Your line is now open.

Ed Najarian: Good morning guys.

Matt Partridge: Good morning.

Ed Najarian: So, I guess my first question is pretty simple. I mean, it looks like you beat the quarter pretty significantly on both core FFO and AFFO. What is holding you back from raising the full year guidance a little bit?

Matt Partridge: Yes, it’s a good question. Just a little bit of detail, I won’t go too deep. The second quarter did benefit from about $250,000 of increased percentage rent at some of the Daytona Beach restaurant properties. So that’s adding some strength to the quarter that we’re not forecasting to repeat although they continue to perform really well. So we’re hopeful that it’s not in the numbers. The other big piece of what the drop-off would be from the second quarter into the third and fourth would be both the expectations that that floating rate debt that we borrowed in the second quarter the rate is going to continue to increase in the third quarter before we pay that down with assumed dispositions in the third and fourth quarter as well as the loss of the rent from The Hall that John talked about in the prepared remarks that obviously we’ll look to replace here. But it probably won’t be replaced until the beginning of 2024.

Ed Najarian: Okay. And so I don’t know how — maybe how to ask this question better, so I’ll just ask it. So you’re not feeling like you’re being a little bit overly conservative with your forecast at this point and just kind of wanting to be conservative, but we can hit the top end or potentially beat it, or is that forecast still feel like the realistic range of expectations without sort of an extra dose of conservatism in there? Is that — I’m just trying to think about it the right way given, obviously, some of those headwinds near-term headwinds that you pointed out just trying to frame them from a size standpoint thinking about the linked quarters?

Matt Partridge: Yes. No, I can appreciate that. So, I would say, there’s call it an appropriate amount of conservatism in our guidance. I think it’s a reasonable range set. Obviously, we would hope to be towards the top end or even beat it if things go our way on a number of items. But given some of the movement that we’ve experienced with tenants and the broader economy in the first half of the year, we’re being a little bit conservative in terms of our expectations. And certainly, if some of those expectations don’t hit the right way then we would be towards the bottom end. So I think it’s an appropriate range with the potential for more upside. And certainly all of those items that I’m talking about assuming they get resolved as we move forward that’s going to significantly benefit 2024.

Ed Najarian: Okay. Thank you. And then could you just remind us what you’re paying currently on the — how much debt you took down for the Dallas — the Plaza at Rockwall the Dallas property and what the rate is on that right now? Because how quickly that gets paid off obviously makes a difference.

Matt Partridge: Yes. So the Plaza at Rockwall and the acquisition activity with Exchange in the second quarter it was a little over $70 million of incremental debt that we took down. And that’s high 6s around a 7% today in terms of a floating rate. So if we can sell some assets at attractive cap rates that’s obviously going to be a better trade that we’ll benefit from in 2024.

Ed Najarian: Okay. But it sounds like you expect that 7% to weigh on the numbers to weigh on FFO and AFFO in the third quarter a little bit. Is that fair?

Matt Partridge: That’s correct. That’s correct.

Ed Najarian: Okay. Okay. Thank you. And then leased occupancy at 93.4%. Where can we expect — where should we think about that potentially being by the end of the year just if you have a thought on that?

Matt Partridge: Yes. So we have some guidance out there or some indications that will be in that 94% to 95% range. And then hopefully we can build on that as we get into the first half of 2024.

Ed Najarian: Okay. Thank you.

Matt Partridge: Thanks, Ed.

Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Craig Kucera with B. Riley Securities. Your line is now open.

Craig Kucera : Yes. Thanks. Good morning. John you mentioned that the Plaza at Rockwall, which I believe is 95% occupied is a below-market rent story. Can you give us some color on how meaningful the opportunity might be there?

John Albright : Well, I think, the opportunity would be meaningful. But we don’t expect it to come anytime soon. In other words JCPenney is one of the largest tenants and the rent is maybe even 1/10 of market rental rate. But they’re very profitable. They are profitable. And so I don’t – there’s no expectations that we’re going to be able to grab that space anytime soon. But you never know. One of the other large box could be more of a potential depending on their – what happens to their business. So it’s all there. And it’s a great optionality for us. And we hope that there may be some possibilities in the future. And after we kind of do the regular way of leasing of some of the direct vacancy, we’ll start maybe having those dialogues and see what we can do.

Craig Kucera: That makes sense. In the quarter you had pretty positive leasing momentum in nearly all your properties except for Santa Fe. Can you talk about those assets and maybe leasing activity in that market?

John Albright: Sure. So on Santa Fe we had – as you may remember, the luxury hotel across the street wanted to lease up. We had a lease with them for the top floor where they’re going to do some presidential suites or executive suites. And the build-out costs were just prohibitive. So the lease got canceled. We’re now basically pretty close to a potential tenant on half of that space. And then we’re basically doing some cost estimates for roughly 10,000 square feet on another space that hopefully, we’ll get some indications on build-out costs here in the next 30 days. So the good news is the leasing activity has been steady. We actually have one tenant who had downsized with us and now wants the space back. So that’s an unusual turn of events in our favor. So the activity and momentum has actually been a lot better in the last 45 days.

Craig Kucera: Okay great. Shifting gears to the guidance, you lowered the high end I think by about $50 million in regard to acquisitions. Is that due to a lack of potential opportunities? I know you mentioned that things are pretty quiet. Or is that really more related to your cost of capital?

John Albright: A little bit of combination. Right now we’re not seeing any opportunities that are completely compelling. I will give you kind of a little bit of color on the market that cap rate dialogue from broker/sellers is basically coming down, as there’s been more entrants into – investors coming into the space. And so we have buyers coming off the sidelines that had been on the sidelines for a while, that’s basically providing a bid to the market. So we’re not seeing any really compelling opportunities right now. We hear of some that should be coming out in later this year that we would have an interest in at a particular price. But we also want to get some asset sales done, pay down our line kind of get back to our leverage down, where we like to have it and then wait for a good opportunity.

Craig Kucera: Got it. And I know last quarter you discussed sort of a couple of different directions you might go with the WeWork situation. Do you have any update on sort of where things are tilting at this point?

John Albright: Yes. I mean we’ve spent clearly the last quarter in basically cost-estimating the build-out cost of a tenant that we basically have terms agreed to. The cost estimates have been higher than what we want to provide as far as capital there. So we’re having that negotiation of either they need to value-engineer it or they’re going to put up more money to make it happen. And then outside of that particular party that we’re talking with there’s – the activity for leasing that sort of space has actually picked up. And we have answered three RFPs of active tenants looking for that amount of space at least. Actually the RFPs are actually for more space than what we have. So unfortunately, we can’t accommodate somebody with the actual demand that they have.

But we’re hoping that because the space is unique in its walkability, which is highly desirous by office tenants, we feel like if somebody has a 75,000-square foot demand, they’re going to take a hard look at us at 58,000 square feet just because the space is so attractive for an office user. As you as we all know, no one wants to go into just a plain vanilla office building, a standalone office building that is separated from activity as far as retail and living. And so we’re getting the tours and the looks. And so that’s very positive for getting the space leased. So we’re pretty happy with the activity right now.

Craig Kucera: Great. And just one more for me. I know you mentioned that you’re going to be focused on selling assets and paying down the floating portion of the line of credit. But Matt, are you contemplating sort of once that’s completed, entering into any swap, or are you most likely to just sort of leave that balance outstanding on a floating basis?

Matt Partridge: So, of the $209 million, $100 million is already swapped. And so, we’d like to pay a substantial portion of that $109 million that’s floating down. I think, it always makes sense for us to have a little bit of floating rate debt just, so we can — when we have free cash flow we can pay that down if it’s not readily investable on the transaction side. So, unless we have a significant growth opportunity where we’ll need to originate some more debt I wouldn’t anticipate us swapping out any more of the existing floating rate balance just to maintain some flexibility for additional prepayments.

Craig Gerald: Okay. Thanks.

Matt Partridge: Thanks, Craig.

John Albright: Thank you.

Operator: Thank you. One moment for our next question please. Our next question comes from the line of R.J. Milligan with Raymond James. Your line is open.

R.J. Milligan: Hey good morning guys. A couple of follow-up questions. John, what’s the expected timing on the backfill of The Hall? And how do you — who do you think might take that space?

John Albright: Well, we had discussions with the potential tenant operator this week and over the weekend. And we’re pretty much there on an agreement. So, we’re going to paper it down. So, we expect — and this tenant operator is — has wanted this space for a while. So it’s not like a new opportunity. And so they’re very engaged and interested and are actually starting on their operational plans and basically bringing in — setting up with chefs and so forth. So, we feel very, very good that we have a solution here and as I mentioned in the prepared remarks, that we expect them to be open in the fourth quarter.

R.J. Milligan: Okay. And then for the 300 basis points of rents just from a modeling perspective, how should we think about that coming online?

Matt Partridge: Yes R.J., I would say the vast majority of it is going to come online in the fourth quarter and really more in the first quarter of 2024, just given the build-out timelines that we’re working through with a number of the tenants. So, not a huge benefit for 2023 other than in the same-store NOI with what comes online in the fourth quarter. And then obviously 2024 will more benefit from when all of that converts to rent pay.

R.J. Milligan: That’s helpful. And then my last question is, given the dispositions being more back-end loaded to the second half of this year, I’m curious the expectation as to where you think leverage will fall out by year-end.

Matt Partridge: Yes, I think it will probably stay in the 7s in terms of net debt to EBITDA and probably plus or minus that 50% range from a debt to total enterprise value although that can move around with the stock price. So hopefully, we’ll have some delevering here, but it’s probably not going to get us into the 6s from a net debt-to-EBITDA perspective.

R.J. Milligan: Okay. Thank you. Thanks. That’s it from me.

Matt Partridge: Thank you.

John Albright: Thanks.

Operator: [Operator Instructions] And our final question comes from the line of Michael Gorman with BTIG. Your line is now open.

Michael Gorman: Thanks. John, just quickly and I’m sorry if I missed this following up on The Hall. Just given the timing, it sounds like it’s going to be — it would be a pretty even trade-out. Is that a fair way to think about it there isn’t going to be any kind of new TI package or any kind of rearranging of The Hall or a material shift in rents with the new operators?

John Albright: I mean I’ll mention on the TI side there’s no additional TI. They can basically use everything that’s there. They do have some operational differencing as far as plans where they’ll do some changes at their expense. And then on the rent, I’ll let Matt discuss that.

Matt Partridge: Yes. From a rent perspective, it’s not going to be a dollar-for-dollar replacement. But I think on a risk-adjusted basis obviously, given the challenges that the prior tenant had this will be an upgrade. And given that we’re really not going to get much in the way of rent this year, it will benefit same-store NOI for Ashford Lane in particular next year.

Michael Gorman: Okay. And I’m sorry, just remind me again, was there any — from a run rate perspective how much rent was in the second quarter from The Hall?

Matt Partridge: Only about $157000. And so, that will get removed obviously with guidance for the back half of the year.

Michael Gorman: Got it. And then just last one for me, obviously looking to make the change-out in the operator there. But in the meantime, are there any either pending or current leases at Ashford that are co-tenancy with The Hall that could become an issue, or is there nothing else tied to that?

Matt Partridge: No, there’s no tenancy issues with The Hall.

Michael Gorman: Great. Thanks for the time guys.

Operator: Thank you. And I’m currently showing no further questions at this time. This concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.