Gregory Zimmerman: Yes, I mean, I think it’s safe to say, Rob, it’s millions of dollars. And so what we take that on is, commitment to the existing location. If someone is spending millions of dollars to continue to refurbish an existing location, two, it talks about the wear and tear and how busy they are. And B, it talks about the commitment of the tenant to the ongoing operations of that location. But now we don’t invest, we don’t spend any of our dollars on that. It’s totally Topgolf’s investment.
Rob Stevenson: Is that because of their cost of capital or is that because you guys would rather that they do it? I mean, are you turning down this type of stuff? Because a lot of times it’s the landlord that does this and then you extend the lease, etc on improvements. And so it’s — to your point, it’s rare that the tenants go in and invests money on their own.
Gregory Silvers: Again, they have not approached us, but it would be our indication that this much like we see in our theater business and everything as [FF&E] (ph) and other things need to be replaced that it’s their responsibility. We have certain standards that we put in our lease that they have to maintain too and we would just see this as part of an ongoing responsibility that we see with all of our tenants.
Gregory Zimmerman: Yes, and it’s not unique. I mean, Vail has refreshed their assets of ours and so as Six Flags. So, not unique.
Mark Peterson: We generally invest in real estate, not FF&E, in sort of refurbishment or painting and sort of for the best use of the tenant.
Rob Stevenson: Okay. And then how are you guys thinking about incremental investment in California these days? There’s been some talk about potentially expanding the $20 minimum wage to other industries with multiple locations nationally and wondering how that would impact your types of tenants and your desire to invest in that state going forward?
Gregory Silvers: Well, obviously, we are in the midst of opening the Murrieta Hot Springs Resort in Murrieta, California. We had a soft opening in February, and it’ll be fully open this summer. So we continue to feel like good locations in California are worth investing in. I would say, as a general proposition, we’re investing in larger assets. So looking at the value over time.
Rob Stevenson: Okay. Thanks, guys. Appreciate the time this morning.
Gregory Silvers: Thank you, Rob.
Operator: Stand by for our next question. Our next question comes from Michael Carroll with RBC. Michael, go ahead with your question.
Michael Carroll: Yes, thanks. I guess, Greg, earlier in your prepared remarks you talked a little bit about some new potential investment opportunities that you’re continuing to kind of mine your relationships to define those deals. I mean, should we think about these as different property types that you’re currently not investing in? I guess, what are those discussions and what type of properties are we talking about?
Gregory Silvers: I think they’re all solid within the verticals, Michael, but I’ll give you an example, a couple of examples. We did the deal at the end of the year with Miraval, which is a family business, great fitness asset, and we have a relationship agreement with them. So we feel like that’s helping to expand our fitness and wellness category. As Greg and I both mentioned, we’re really happy with Water Safari in Old Forge. It’s been around for probably 50 years. It’s a great asset in central New York in the Adirondack’s. And again, we have a new operator. And as Greg mentioned, a relationship agreement with them. And then, obviously, we’ve had an ongoing relationship with Andretti, so we’re thrilled to be able to do a couple of more Andretti deals. So we’re always looking within the verticals. And what I like to tell my team is, we’re expanding the aperture of the vertical.
Michael Carroll: Okay, and then I guess what are you doing specifically to kind of strengthen those relationships? Is it just kind of like talking to those stakeholders within the space and deploying capital and these smaller deals that you can make sense and then when your cost of capital improves, then you can be prepared to be more aggressive deploying capital into those verticals.
Gregory Zimmerman: And I’ll jump in on this. I think Greg and his team have done a great job and we talked and you hear him talk about this phrase, relationship agreement. What we think about a relationship agreement is, not only are we going to do this deal, but we’re going to see every deal that you’re involved in as we go forward, and we have a right to do those deals. So it’s not an obligation, but it’s creating pipeline for us as they grow their businesses, we are their preferred capital partner. So when we are in an environment where we have limited capital, it’s not good enough for us to have this deal. We want this deal and an opportunity to grow with that tenant going forward. And every one of the instances that Greg just mentioned, not only did we do a transaction, but we got a relationship deal which will give us a pipeline to future growth.
So it’s not only about deploying capital today, it’s about creating that opportunity to deploy capital for years into the future. And Greg and his team have done a great job of doing that.
Michael Carroll: Thanks, Greg. And then I guess just last one for me, historically where do these tenants typically get financing? I’m assuming that that market is pretty dried up right now and they’re looking to create these relationships with people like you so they can grow their business?
Gregory Silvers: Again, I would say that for most of these groups that they have grown with banking relationships and at this point in time they’ve either outgrown those banking relationships because they’ve gotten to a next tier of size, or as always, the regional banks are not as aggressive on doing more real estate loans. So I would say it’s primarily in that world.
Gregory Zimmerman: Yes, and I would also say, Michael, look, if you want to grow and maybe not within a certain jurisdiction, then a regional bank’s probably going to be less helpful than we are because we’ll go anywhere over the US as long as our underwriting supports the location. So — and I think once people start to deal with this, they learn that we bring a lot to the table, that your typical banking relationship [Technical Difficulty] in terms of advice and things that we see trends across the industry.
