Modiv Inc. (NYSE:MDV) Q4 2022 Earnings Call Transcript

Modiv Inc. (NYSE:MDV) Q4 2022 Earnings Call Transcript February 25, 2023

Operator: Good day and welcome to Modiv’s Fourth Quarter and Full Year 2022 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to Margaret Boyce, Investor Relations for Modiv. Please go ahead, ma’am.

Margaret Boyce: Thank you, operator and thank you all for joining us today to discuss Modiv’s fourth quarter and full year 2022 financial results. We issued our earnings release and investor supplement before the market opened this morning. These documents are available in the Investor Relations section of our website at modiv.com. I am here today with Aaron Halfacre, Chief Executive Officer of Modiv and Ray Pacini, Chief Financial Officer. On today’s call, management will provide prepared remarks and then we will open up the call for your questions. Participants may also ask a question by e-mailing ir@modiv.com. Before we begin, I would like to remind you that today’s comments will include forward-looking statements under the federal securities laws.

Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts such as statements about our expected acquisitions or dispositions are also forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of the factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including our reports on Form 10-K and 10-Q. With that, I would now like to turn the call over to Aaron. Aaron, please go ahead.

Aaron Halfacre: Thank you, Margaret. Hello, everybody and thank you for joining our fourth quarter and full year conference call. Joining me today is Ray Pacini, our CFO. In a few minutes, Ray will review our results in detail and then I will close our prepared remarks before we open the line for Q&A. Our team successfully navigated our first full year as a public company and what was undoubtedly the worst decline in public REIT valuations experienced since 2008. When you measure the fundamental results that are in the direct control of our management team, Modiv experienced a tremendous year of execution. Here are a few highlights. Our full year adjusted funds from operations grew by 45% to a total of $16.6 million or $1.63 per fully diluted share.

Total revenue increased 22% to $46.2 million compared to $37.9 million in 2021. We acquired over $162 million of real estate properties at attractive cap rates and we sold over $70 million of our non-core legacy assets with even more sales of the non-core assets on the horizon. Our weighted average lease term nearly doubled to 11.9 years. We decreased our office exposure by nearly 30%. And with careful expense management, we decreased our G&A by $1.9 million. We believe our goal to be a pure-play industrial manufacturing REIT is a key differentiator for Modiv within the net lease sector. Nearly daily headlines call out the need for the reshoring of manufacturing capabilities in the U.S. and the importance of creating supply chain independence.

Following the global pandemic and the increasing geopolitical risk environment, the public rhetoric surrounding a desire to strengthen our nation’s manufacturing capabilities and supply chain independence has reached the highest levels. To quote our current President from his most recent State of the Union speech, we need to make sure that the supply chain for America begins in America. We believe the growing importance of U.S. industrial manufacturing facilities has only just begun and we see tremendous long-term opportunity under what we view as a super national paradigm shift away from the lowest cost provider towards supply chain security. Based on this conviction, Modiv is intently, albeit selectively focused on increasing our exposure to manufacturing assets, where demand for their manufactured products is consistent and relatively defensive in nature.

You will find us acquiring such assets exclusively concurrent with our continued disposition of non-core legacy assets. While the market and interest rate volatility remained high in the fourth quarter, we displayed patients remain committed to our investment discipline and paced our transaction activity until we found opportunities that fit our criteria. While we didn’t acquire any assets until this January, we were very busy visiting properties and conducting due diligence throughout the fourth quarter. As a result, our outlook for acquisitions in 2023 is robust. This leads me to our goals for 2023. Modiv believes this year will be even more transformational than last year, and I want to share the following corporate goals that we believe will have an impact on modems earnings growth and share price over the balance of the year.

We anticipate our 2023 acquisition volume to be at least $100 million of industrial manufacturing properties. You will see us enhance the delineation and reporting of our non-core and legacy assets from our core portfolio. Further, we expect the continued disposition of our non-core office and retail assets to accelerate as the company focuses on its goal to become a pure-play industrial manufacturing REIT. We do not anticipate any material changes in G&A or property expenses, if anything, they could decline. As evidenced by our most recent net asset value per share, the company does not intend to issue equity at our current low share price levels and has no planned need for new debt sources beyond our current credit facility capacity. Following increase recently received, Modiv will begin to explore long-term and strategic investment proposals from large institutional investors that have identified Modiv’s growth potential and management capabilities.

Barring any uniquely compelling and accretive opportunities, Modiv has no current knowledge of any actionable proposals and does not anticipate providing further updates unless required. Given this is a catalyst year for Modiv and considering the meaningful impact future changes can have on our currently small asset denominator, the company has chosen to be prudent and not provide specific AFFO guidance at this time. I will now turn the call over to Ray to review the financials.

Ray Pacini: Thank you, Aaron. I will now discuss our fourth quarter and full year 2022 operating results, provide an update on our portfolio and cover our balance sheet and liquidity. We reported fourth quarter AFFO of $6.9 million or $0.68 per diluted share, more than double AFFO of $2.4 million or $0.27 per share reported in the fourth quarter of 2021. The $4.5 million increase in AFFO was primarily attributable to early termination fee revenue of $3.8 million related to our property in Rancho Cordova, California. Rather than wait for the tenant in this property, Sutter Health, to end their lease without a renewal and squander an opportunity to bring in a new long-term tenant. We negotiated an early termination fee with Sutter and simultaneously negotiated a new lease with the State of California.

AFFO per diluted share also reflects an increase in fully diluted shares outstanding from our dividend reinvestment program and the issuance of 1.3 million Class C units in our operating partnership, at $25 per unit in connection with the January 22 acquisition of a Kia auto dealership property in Carson, California. AFFO for the full year was $16.6 million or $1.63 per diluted share compared with AFFO of $11.4 million or $1.30 per diluted share reported in the prior year. The $5.2 million increase in AFFO was primarily attributable to a $2.4 million increase in early termination fee revenue and a $1.9 million decrease in general and administrative expenses. AFFO for 2021 included $1.4 million in early termination fee revenue from our property formerly leased to Dana Incorporated in Cedar Park, Texas, which we sold in July 2021.

Excluding the $3.8 million early termination fee revenue for 2022, AFFO per diluted share was $1.26. Fourth quarter revenue was $14.4 million, a 63% increase over $8.8 million in the year ago quarter. The increase in fourth quarter revenue reflected growth in our portfolio and the $3.8 million early termination fee revenue I just described. For the full year, revenue increased 22% to $46.2 million compared to $37.9 million in the prior year, reflecting the growth in the company’s portfolio and the $2.4 million increase in early termination fee revenue I just described earlier. Excluding the increase in early termination fee revenue, 2022 annual revenue increased $5.9 million or 16% year-over-year due primarily to rental income from 16 acquisitions, partially offset by the sale of 8 non-core properties in 2022.

On the expense side, fourth quarter G&A costs were $2.3 million compared with $2.2 million in the fourth quarter last year. This increase reflects a $500,000 accrual for expected costs of relocating the corporation to Reno, Nevada. For the full year, G&A expenses were $7.8 million, a $1.9 million decrease from $9.7 million in 2021 as a result of our exit from the crowd funding business when we listed our shares and other cost savings initiatives. Our property expenses were $2.1 million in the fourth quarter, an increase from $1.6 million in the prior year period. Tenants reimbursed $1.6 million of the fourth quarter 2022 property expenses compared to $1.2 million of reimbursements for the 2021 period. For the full year, property expenses were $8.9 million, an increase from $6.9 million in 2021.

Tenant reimbursements were $6.6 million in 2022 compared with $5.8 million in 2021. Annualized adjusted EBITDA for the fourth quarter was $41.2 million, an increase of $19.3 million over the prior year quarter, primarily reflecting the increase in revenue from our acquisitions and the early termination fee. Adjusted EBITDA for the full year 2022 was $31.7 million, an increase of $7.3 million from last year, reflecting the increases in revenue described above and the $1.9 million decrease in G&A expense. Now turning to our portfolio. During 2022, we invested a total of $162.7 million in real estate properties, including an opportunistic acquisition of one retail property leased to a key auto dealership for $69.4 million, where we issued $32.8 million of equity at $25 per share and 15 industrial manufacturing properties for a total of $93.3 million.

The combined initial cap rate for the industrial manufacturing properties was 7% and the weighted average cap rate was 8.9%. We have a strong pipeline of potential acquisitions under review, and we will continue to pursue accretive opportunities as the year progresses. During 2022, we completed the sale of 6 office properties, 1 flex property and 1 retail property with total contract sales prices of $73 million, generating net proceeds of $48.7 million and gains on sale of $12.2 million. Now I will provide some color on our portfolio management activities, which are a key component of our ability to generate long-term returns for our shareholders. As I mentioned earlier, in December 2022, we signed a new 12-year lease on our property in Rancho Cordova, California, for the State of California.

The lease includes an option for the State of California to purchase the property. On December 30, 2022, we sold a retail property in San Antonio, Texas, which was leased to raising cans for a sales price of $4.3 million, representing a 5.7% exit cap rate and $669,000 gain on sale. On January 26, 2023, we acquired an industrial manufacturing property in Princeton, Minnesota for $6.4 million. This property has a remaining lease term of 5.75 years and is leased Plastics Products Company, Inc., a custom thermoplastic metal and ceramic injection molder that has been in business since 1962. The rent on this property will increase by 20% on November 1, 2023, with annual increases of 3% thereafter. The initial cap rate is 7.5%, and the weighted average cap rate is 9.2%.

Also in January, we signed a 2-year lease extension with solar turbines, who has occupied our property located in San Diego, California since 2008. This is the third lease extension executed by the tenant, and this renewal includes a 14% increase in the first year rental rate, followed by another 3% increase in the second year. As of December 31, 2022, our portfolio consisted of 46 properties located in 17 states. The portfolio had approximately 3.2 million square feet of aggregate leasable space, which was 100% leased to 28 different commercial tenants doing business in 16 separate industries. The portfolio breakdown is as follows: 27 industrial properties, representing 59% of the portfolio, 12 retail properties, representing 20% of the portfolio and 7 office properties, representing 21% of the portfolio.

As part of our long-term strategy to reduce office exposure, we have decreased our office allocation by nearly 30% since December 31, 2021. Moving on to the balance sheet and liquidity, as of December 31, 2022, we had total cash and cash equivalents of $8.6 million and $197.5 million of outstanding indebtedness consisting of $44.5 million in mortgages and $153 million outstanding on our $400 million credit facility. Our leverage ratio was 38% as of December 31, 2022. Based on our credit agreement with KeyBanc and 6 other lenders, we define leverage debt as a percentage of the aggregate fair value of the company’s real estate properties plus the company’s cash and cash equivalents. Our credit facility is comprised of a $150 million revolving credit facility and a $250 million term loan, of which $100 million is expected to be drawn during the first 4 months of 2023.

The credit facility includes an accordion option that allows us to request additional revolver and term loan lender commitments up to a total of $750 million. The revolving maturity is in January 2026 with options to extend for a total of 12 months, and the term loan maturity is in January 2027. The credit facility is priced on a leverage-based grid that fluctuates based on our actual leverage ratio at the end of the prior quarter. Based on the December 31, 2022 balance sheet and interest rate swap agreements entered into during 2022, approximately 98% of our indebtedness holds a fixed interest rate. The weighted average interest rate on the total debt outstanding of $197.5 million as of December 31, 2022, was 4.03% based on the 38% leverage ratio as of September 30, 2022, and December 31, 2022.

As previously announced, our Board of Directors declared a multi cash dividend per common share of approximately $0.96 for the months of January, February and March 2023, representing an annualized dividend rate of $1.15 per share of common stock, which represents a yield of over 9% based on the recent price of our common stock. I will now turn the call back over to Aaron.

Aaron Halfacre: Thanks, Ray. I will keep my closing remarks short and sweet so that we can jump right into Q&A. In 2022, Modiv showed that it could execute our plan and deliver results. In 2023, I am personally very confident that we can do even better. I will now open the call for questions.

Q&A Session

Operator: Thank you. Thank you. And our first question comes from Gaurav Mehta with EF Hutton. Please state your question.

Gaurav Mehta: Thanks. Good morning. I wanted to go back to your remarks about the 2023 guidance. You talked about some investment proposals from institutional investors. Are you able to provide any color on what those proposals would look like?

Aaron Halfacre: No. What I can say though is the totality of what I stated in the goals sort of acquisition floor versus a range sort of constrain the common equity and the debt on the balance sheet and the fact that we have received multiple interest. I just think that this year will be a year that will be €“ if we have given a range, it would be so very wide that it would be meaningless. And so we know we need to execute. And I think last year, our view was we’re going to come out with guidance because we have €“ there is no real basis. We didn’t do a traditional IPO, and we wanted to show that we could execute on that range. We did. And so this year, it’s a little bit trickier. We’re clearly in a stage of growth, unlike some of our larger brethren who can better articulate it.

So suffice it to say that we have increased. We’re going to look at them. We’re not meant to be €“ we’re not trying to be coy. We just €“ there is some potential big movements associated with any of those.

Gaurav Mehta: Okay, second question on your acquisition guidance of $100 million, should we expect that you guys would fund those acquisitions purely with that given that you intend to issue equity or would it be a mix of debt and proceeds from expected sales of properties?

Aaron Halfacre: So I would say that we certainly can fund with both of those instruments, the recycling of assets and the facility. I think what you’ll see is the staging of that over the course of the year. So some might be €“ might first be facility, subsequent recycling or rights versa. But yes, I think those two sources are where we’re looking at for that acquisition floor.

Gaurav Mehta: Okay, thank you.

Aaron Halfacre: Thanks.

Operator: Thank you. Our next comes from John Massocca with Ladenburg Thalmann. Please state your question.

John Massocca: Good morning. Thank you. With potential sources of proceeds, as you look at the disposition market today, what should we maybe kind of roughly expect in terms of timing on dispositions over the course of the year? And I guess, how are cap rates trending primarily in the office side of things just as we think about dispositions?

Aaron Halfacre: Good questions. I’d say, look, I think the bulk of the dispositions will occur in the second half of the year. There is two reasons for that. One, we’re mindful of AFFO and two we’re not trying to throw them away. So that’s the timing. In terms of cap rate and the distribution market, we’ve seen on the retail side, really effectively no impact. I think it depends on the margin if you’re going institution are you going 101, but we’ve not really seen anything that’s of concern. I think office is part. Like we’ve been selling office for all last year. I think we were relatively successful in getting those moved. I think as we look this year, there is been very few comps, right? Because the individual office buyers need the individual debt market, and that hasn’t been around since from September to until now.

The institutional purchases that you’ve seen either be the Workspace GIC deal or some others, those are €“ I think they are taking advantage of the fact that they have a large capital and someone wanted to move a bulk. So I think the cap rates are very idiosyncratic, right? So if you have an empty building in a rural market, that’s just going to be a lot worse cap rate than if you have an occupied long-term thing in an important market. I mean, obviously, I’m sitting at whatever knows. We’ve underwritten fairly dire cap rates in our models in terms of what we know our recycling effort. So that way, we’re not disappointed. But we did that last year, and we didn’t see that happen.

John Massocca: Okay. And then maybe kind of on specific assets, with Rancho Cordova, does the new tenant impact kind of run rate, rent and NOI going forward? And also with the other €“ with the renewal at the property in the San Diego area was there any kind of change in run rate rent from either of those?

Aaron Halfacre: Ray, do you want to take that one?

Ray Pacini: Yes. So the Rancho Cordova lease the state rent kind of phases in over time. So roughly, they are paying roughly half of the rent between now and March of €“ I’m sorry, May of 2024 and then they’ll pay full rent starting them. In terms of the €“ repeat your again on the €“ yes. So that rent goes up significantly. They were below market. And as we stated, I think on August 1, it goes up by 14% and then a year later, it goes up another 3%. So we call them up to market.

Aaron Halfacre: I’d add to the OES California. It was a unique situation. So they actually own €“ the state already owns the building adjacent to it. They were leasing another space, and they had 2 more years on this lease. And so €“ but they wanted to move into this because they want to sense the perimeter of the two buildings and turn it into a campus. The Office of Emergency Services is the office that handles forest fires, heavy floods, all the natural disasters in the state of California, so they get both state and federal funding. And so they were relatively hot to trot. Otherwise, I don’t think we would have moved as fast as we did. And one thing that did take us a little bit of time to negotiate was this purchase option.

They wouldn’t sign a lease unless they had this purchase option, and so I think it was fortuitous to do that. But that’s part of the reason because they have 2 years, they had to eat the rent and there is other place for 2 years. We worked with them on graduating the rent into it over the first 2 years of the lease term.

John Massocca: That makes sense. And then maybe with that property mind, are there any other properties in the portfolio today where you could anticipate a lease termination fee coming through?

Aaron Halfacre: No. I don’t think so in this calendar year. We’ve had some conversations about us going to them. But for instance, if we find someone that opportunistically likes the property, we kind of find out where they feel about it and their timing. And so €“ but I don’t €“ no, I don’t expect any this year.

John Massocca: Okay. There is nothing structural we should bake in is the model?

Aaron Halfacre: No, no, no. There is nothing now.

John Massocca: Okay. That’s it for me. Thank you very much.

Operator: Thanks. Our next question comes from Andrew Cedar with B. Riley Securities. Please state your question.

Bryan Maher: Hi, good morning. I’m in for Bryan today. My first question is, can you provide any color on like what you have in the acquisition pipeline in the sense of are you moving toward or way any specific markets geographically?

Aaron Halfacre: So €“ good question, thank you. Industrial manufacturing tends to be in certain markets, right? So you’re going to see Midwest markets some of the Carolinas some €“ you don’t tend to have sort of coastal markets so much or certainly gateway centers. So where that business is, and it’s probably been there for 20 to 30 years or more, is where the property is. So if you try to filter industrial manufacturing first, I’m only going to go into these Toughened markets. You’re either going to find a very limited supply or ridiculous cap rates. I think that’s different for distribution, which has a different mission. So there is no direction that we’re going in terms of geographic exposure. I think we’re always mindful of it, but it’s sort of €“ that’s not the tail.

I do think what we do drive for is really looking for sort of recession resilient types of manufacturers. We’re looking with those that have, what I’d call, particularly unique hard skills. So, abilities to do complex production or machining or can work with €“ have stability in their infrastructure that they could switch product lines, they could do things, but they are not making things that are typically consumer-driven. So we’re looking at things that, yes, they could be automotive components, but they are not OEM. They are more Tier 1 type suppliers. It could be infrastructure-based, things that are providing for municipalities or others. So where that purchase dollar is not the 22-year-old with a credit card. And so that’s the direction.

On our pipeline, we were really actually pretty busy in the fourth quarter, putting out LOIs, and it was a weird quarter. In two instances, we had deals that we had been verbally awarded and they said the LOI was getting to be signed that a day or two turned into 3 days, and we found out that €“ in both €“ there was two instances where the seller just decided not to sell. And I think it was because they were just confused about where the market was, things like that and those deals, I’m unfortunately for those brokers in commissions, but those deals didn’t get sold. We’ve been looking at this in the first quarter or first half of the year. I’d say the pipeline right now €“ well, certainly the ones we looked at in considering the ones where we’ve engaged in the process, it’s probably about $250 million, maybe $300 million.

Cap rates, we’re seeing range from $7 million to $8 million sometimes wider, never tighter. And so it’s been a really interesting first start of the year. I think bright in his comments on time was spot on for retail, we’re seeing it here is that there were fewer buyers in the fourth quarter. There was less inventory as we started to see the role of this year, January was fairly slow. Inventory is starting to come back on, and I think buyers are coming back. I think there is a pressure to put it quarterly numbers or something like that for a lot of the bigger REITs. But most of the buyers tend to be the REITs, not private.

Bryan Maher: Great. Thank you, that was informational. My next question is, in your move to become a predominantly industrial manufacturing REIT. How long do you think it will take to get to that point?

Aaron Halfacre: Well, I’ll gladly pay you a large bonus check if you can give me a crystal ball how quickly I can normalize interest rates. But no, not to be facetious. Look, I think it’s clear that office assets are less liquid than the other types. And so as a seller of office assets, you have the choice of trying to hold on to cap rate, which could mean taking time because there eventually are people who like your properties or you can give on cap rate and sell faster. I don’t feel any pressure to sell fast. We want to sell smart. If we get to the point where we’re almost cleaned up and there is like one asset and maybe that changes the story, but we still have got more work to do. We’ve obviously reduced office materially. You saw that we sold a raise in cans already. I think the retail will sell relatively quickly. The office is case by case. And so I don’t know that we will be there by end of the year, but we could be, for sure.

Bryan Maher: Okay, that was it for me. Thank you for your time.

Aaron Halfacre: Sure. Thanks.

Operator: Our next question comes from John Massocca with Ladenburg Thalmann. Please state your question.

John Massocca: Just a quick follow-up based on your kind of prior commentary, are you still seeing €“ it kind of sounded a bit like you were seeing at 4Q, but are you still seeing kind of buyer-seller disconnect on the industrial side in terms of cap rate? And I guess, maybe can you put brackets around how wide it is from a basis point perspective if it does exist?

Aaron Halfacre: So fourth quarter, absolutely big disconnect. I think what I would argue is the disconnect and what was it before it was probably, if I’m going to guess, at least 50 basis points, probably more, right? You still had a lot of brokers wanting Phase 6. And then sometimes you have buyers saying, well, that’s an 8 because it was just the volatility. And so maybe they be $675. But realistically, though, where deals were getting done, it was probably more like 50 to 75 bps of disparagement between the two. I think what I’ve noticed this year is that the inventory that’s out now seems to have €“ they need to close, whereas I think some of the times in the fourth quarter, they were testing the market. I think more of these deals seem like they need to close or they are just committed to closing their tire to the volatility.

This is where it’s going to be. They have gotten a better read on rates are for their own business. And so that the sellers are getting more realistic, right? I think that’s also a function of the brokers have run a couple of all of these now and seeing that they didn’t get what they thought they could deliver. And so that’s impacting the expectations. At the same time, though, I think buyers have realized like, I’m not €“ I can’t be super greedy because there is other buyers. And so I think they have come in in the margin. So I think it’s tightened. It’s hard to know. We’re in the process of a number of them. So it’s still hard to know. But I think that we’re finding ourselves first rounds are much first and second runs are much more accurate than they were 3 months ago in terms of where your first on where you end up at?

It seems to be a lot closer and more accurate.

John Massocca: Okay, very helpful color. Thank you.

Aaron Halfacre: Sure. Thanks.

Operator: Thank you. And there are no further s at this time. So I will now turn the call back to Aaron Halfacre for closing remarks.

Aaron Halfacre: Thank you very much, operator. Thank you all for joining the call. Look, I think we executed €“ we understand that we’re not giving you €“ we’re not on fitting everything we need for this year, but we just think there is a lot of positive potential change on the horizon. And that’s why I think if anything, we hope that after how many four or five earnings calls we have, that you can see that we are no-nonsense, we execute. I think if you look at it from an acquisition volume, I mean we did amount of acquisition volume in our first year without any raise that was on par with like pine and good and a lot of the other bigger, more established teams, so we can do it. I think that’s important. I think we’ve shown that we didn’t make any sort of foolish capital market decisions that you might see typically or what you expect typically of a very small REIT.

I think we’re obviously disappointed in our share price. The NAV that we had Cushman calculate shows that there is still intrinsic value there. What we’re suffering from is very idiosyncratic. I think our average daily volume going in today was 14,000 ships. That’s a very small amount of the 7.8 million shares that are freely tradable. I actually did a little bit of a liquidity analysis €“ and if you look at our net lease peers and you look at sort of the 12 months of average trading volume and you €“ as your numerator and you look at weighted average shares outstanding as a denominator, most of our larger broaden trade anywhere from 125% to sort of 200% volume, right? So there is €“ shares are turning over fairly healthy. And if you look at sort of microcap names and Metals or square foot or GPR, some of that some people like us to, even they trade sort of like 100% to 125% volume.

And I did the math on ours, and we’re trading like 75%. So we’re hardly trading at all, which is evident by the float. And then I also looked at analysis. Our record suggests that more than 60% of our investors did not do anything. They did not sell from prior to listening to now. And in fact, many of them are tripping. So it’s a very sticky base. And I think our investor base is unlike any other. So if you go to think about PECO or you think about use non-trade retail to come out, they were institutionally raised FA-type of accounts. These are the €“ they are legacy non-traded, not probably dissimilar than BREIT type. Ours were true retail. I mean these were people who came in off the Internet and they were writing $5,000 checks. And so there is a difference in that.

And you can see it in our share price in the sense that we €“ the people who did sell sold and there wasn’t any buying volume to support it and then the others haven’t sold. And so we are understanding that we’re almost trading by appointment and that there are a given day, I can watch and see 1,000 shares trade in like 8 hours. And you can move us up 5% or down 5%. And so we understand that over time, we have to solve for that float. And we understand the dilemma trying to solve that float with such a low share price. I think we’re executing. And when we get to a spot where the capital markets are more favorable, and I don’t think they are favorable right now, I think there is still uncertainty. And I get €“ my guess is that’s where our peers will lead and we will lag still because of being under followed is that we will be a compelling opportunity, and we will have executed efficiently and the price will reflect that.

Right now, what we’re doing is execution because we can control for that. And I think over time, the market will start to see that we know what we’re doing, and we’re going to get to the size we need. We’re going to get the float that we need, and that’s going to allow all the gears to work properly. Until then, thank you for your time and look forward. We will keep our heads down. I got to get on an airplane tomorrow and look at another property, and we’re going to keep busy. Thank you.

Operator: Thank you. Thank you. And that concludes today’s conference. All parties may disconnect. Have a great day.