Preferred Apartment Communities, Inc.
Q4 2014 Earnings Call Transcript

Published: 10 Mar 2015

[Operator:]

Good morning and welcome to the Preferred Apartment Communities Fourth Quarter 2014 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions]. Please note this event is being recorded. I would like to introduce Lenny Silverstein, President and Chief Operating Officer. Please go ahead Mr. Silverstein.

[Lenny Silverstein:]

Thank you for joining us this morning and welcome to Preferred Apartment Communities fourth quarter 2014 earnings call. We hope that each of you have had a chance to review our fourth quarter earnings report, which we released yesterday after the market closed. In a moment, I’ll be turning the call over to John Williams, our Chairman and Chief Executive Officer for his thoughts. Also with us today are Dan DuPree, our Vice Chairman and Chief Investment Officer; Mike Cronin, our Executive Vice President and Chief Accounting Officer, Bill Leseman, our Executive Vice President for Property Management, John Isakson our Chief Capital Officer, Joe Murphy the President and Chief Executive Officer of New Market Properties which our wholly owned subsidiaries focused on grocery anchored necessity retail shopping centers and Paul Cullen, our Chief Marketing Officer. Following the conclusion of our prepared remarks, we'll be pleased to answer any questions you may have. Before we begin, I'd like everyone to note that forward-looking statements may be made during our call. These statements are not guarantees of future performance and involve various risks and uncertainties and actual results may differ materially. There is a discussion about these risks and uncertainties in yesterday's press release. Our press release can be found on our Web site at pacapts.com. The press release on our Web site also includes an attachment containing our supplemental financial data report for the fourth quarter with definitions and reconciliations of non-GAAP financial measures and other terms, that may be used in today's discussion. We encourage you to refer to this information during your review of our operating results and financial performance. Unless we otherwise indicate, all per share results that we discuss this morning are based on the basic weighted average shares of common stock and Class A Partnership Units outstanding for the period. And now, I'd like to turn the call over to John Williams. John?

[John Williams:]

Thank you Lenny. On a macro level we continue to be on the receiving end of a strengthening accounting. Strong gains and deployment in all our markets, strong demographic growth in our target markets and remember in [indiscernible] growth of household formation which is by far the key driver to the housing market particularly including the most standing industry. From an occupancy perspective the apartment market continues to perform very well. In fact our physical occupancy for the three months ended December 31, 2014 remained stable at approximately 95%. As I mentioned before on a practical level this would be close to full occupancy since you always had to take in account normal resident turnover model units and bed debts. We think of our stockholders as partners, in the spirit of keeping our partners in form we published our 2015 guidance and our key management goals and our earnings release and supplemental financial data report released last night. These goals include increasing our normalized FFO per share by 10% [or more] per annum, increasing our common stock dividend per share by the amount at least the overall dividend growth since our IPOs of 10% on an annualized basis. We think our shareholders enjoy the benefits of a substantial dividend and we intend to pay it to them. Rolling our assets significantly but at the same time creatively. If you look back over the last several years you will see that we have increased our assets by double each year and we think that’s an appropriate growth trend. Achieving and maintaining a ratio of debt to un-depreciated book value of [10%] or less is a very tough goal but as you know un-depreciated book means the purchase price of our assets and it doesn't take into account any of the appreciation in our mezzanine loans but still [it’s a little bit goal] and we are going to strive here to maintain this 6% or less debt ratio. Having a normalized FFO payout ratio to common stockholders and unitholders of less than 75%, we did substantially better than that this year [as what we tell] had an adjusted FFO payout ratio to common stockholders and unitholders of less than 90% and again we have done much better than that. And then listing our common stock on New York Stock Exchange by year-end. Our [indiscernible] that our entire team is committed and focused on reaching or exceeding these goals. Our performance numbers that Lenny then will go over with you are among the very, very best of all the public reach and certainly the most [indiscernible]. On a personal note I believe we have a fantastic management team. The ability this year, this past year is to have added [indiscernible] Joe Murphy, both plenty capable a running a public REIT on their own has added to when it was already an outstanding executives management team along with Lenny who continues to do such a fantastic job for us. One of my personal goals is to create the most unique and positive corporate culture in the industry. [We want] areas such as to have a [indiscernible] to be committed to our company and above all to never lose focus on what is truly important our residence, our retail tenants and our stockholders. Speaking of goals, each of our teams has identified operational goals and everyone is focused on these goals like a laser, in fact these goals are planned and located outside [indiscernible] so every member of our team will be reminded of them every day including me. We will call Lenny to tell you about our achievements in due to the numbers. Lenny?

[Lenny Silverstein:]

Thanks, John. Overall we again produced excellent operating results for the fourth quarter. Our normalized FFO for the fourth quarter was $0.28 per share versus $0.25 per share for the same period last year, which represents a quarter-over-quarter increase of approximately 12% per share. Our adjusted FFO for each of the fourth quarter of 2014 and 2013 was $0.22 per share. Because normalized FFO which some refer to as core FFO adjust for the impact of acquisition expenses we believe it more properly reflects the ongoing performance of our company. Consequently as you saw in last night's earnings release and supplemental financial data report, we're focusing our 2015 guidance on this key operating metric and for 2015 we're estimating our NFFO will be from $1.11 to $1.19 per share with a midpoint of $1.15. We're hopeful of narrowing this range as the year progresses. Switching to other financial statement metrics, our total asset for the fourth quarter, net of depreciation were approximately $696 million, an increase of approximately 355 million or 104% compared to the fourth quarter of 2013. For the fourth quarter of '14 we paid a dividend on our common stock of $17.5 per share to all common stockholders of record as of December '15. This represents a 40% increase from our initial quarterly common stock dividend of $12.5 per share or approximately 11.6% on an annualized basis. In addition, the common stock dividend represents a normalized FFO distribution payout ratio of 64.5% and an adjusted FFO distribution payout ratio of 80.2% for 2014. I want to emphasize our strong performance today since our IPO in April 2011 when we commenced operations. We raised about $51 million in the IPO and used the net proceeds to acquire our initial three multifamily communities. Based on our common stock closing price last night, we now have total capitalization of over $420 million, which includes a $193 million of gross sales of our Series A redeemable preferred stock as of 12-31-14. By the same token, our total assets at the time of our IPO were literally zero. As of the end of 2014, our total assets were almost $700 million, so obviously we're very-very proud of these results. Speaking of success, the key component of our strategic plan is our investment program. I'll now want to introduce Dan DuPree, our Vice Chairman and Chief Investment Officer to provide some more color on our acquisition activity, our mezzanine loan investment program and our retail initiatives. Dan?

[Dan DuPree:]

Thanks Lenny. We continue to actively pursue multifamily and grocery anchored retail acquisitions that fit our business model in addition to making mezzanine loan investments on selected developments on which we have purchase options. During the year we expect to exercise options to acquire several multifamily communities that we previously funded through these mezzanine loan investments. Although we provided guidance for the year I want to be clear that the timing of these acquisitions and investment activities can vary quarter-by-quarter and as a result could affect our quarterly or interim financial results but in the end as always we're very focused on our full year guidance that we released to The Street last night. During the fourth quarter we continue our acquisition of mezzanine loan origination activity in particular in October we acquired a 62,400 square foot of Publix anchored retail shopping center in Nashville. As of the end of the year we owned 10 grocery anchored shopping centers in five Sun Belt states consisting of an aggregate of just under 700,000 square feet of gross leasable area. We also originated a loan this past November to acquire a parcel of land adjacent to the very successful Crosstown Walk development, multifamily development financed by [indiscernible] mezzanine loan as the developer plans to build 180 unit phase two Crosstown Walk I'll talk a little bit more about Crosstown Walk in a minute. In December, we converted an existing land loan for a planned 310-unit multifamily community in Atlanta to a mezzanine loan, in this particular case we participated out 25% of the mezzanine loan to a third-party. We continued this moment into the first quarter with the acquisition in February of two multifamily communities in Huston representing a total 520 units. Just yesterday we announced that we intend to acquire a newly constructed 237 unit multifamily community Lakewood Ranch which is a very desirable sub-market in Sarasota, Florida. This new community will complement our two most successful mezzanine loan finance projects to-date one located in Naples and the other in Tampa. Remarkably both of these projects Naples and Tampa communities are 100% leased less than a year after completion and rents continue to be pushed aggressively. By including the anticipated [indiscernible] acquisition we will own multifamily communities totaling 4,083 with another potential 3,843 units that are currently under construction in our mezzanine loan program. As is our strategy we financed the loans for each of the multifamily and retail center assets I just described separately. On non-recourse basis with no upstream guarantees to Preferred Apartment Communities or our operating partnership and no cost collateralization of any of the mortgages. Each of these loans is an individual startup. These multifamily loans have rates ranging from 3.18% to 3.68% with maturities ranging from five to seven years. The loan for our newly acquired shopping centers is at a rate of 4.21% but just with maturity of 10 years. Speaking of our mezzanine loan investment strategy as of December, 31st we had approximately 176 million in outstanding mezzanine and land loan commitments on which we had already funded about 153 million. As a group these developments are ahead of schedule and on budget and in many cases [lower]. And should be positioned for us to consider exercising our purchase options within the purchase option window disclosed in our fourth quarter 2014 supplemental financial data report. Timing of the exercise of our purchase option is always a bit of a balancing act between our anticipated return on the loan, projected return on the investment once acquired and current and projected interest rates. We’re pleased with the lease up activities at the multifamily community in our mezz loan program are going so well in an almost every case rates higher than originally budgeted. Our multifamily portfolio is amongst the youngest in the industry and assuming we exercise the purchase options on all or most of our mezzanine loan investment projects are already young portfolio will become materially younger. From a financing perspective we continue to use a combination of capital available to us from sales of our Series A redeemable preferred stock and warrants, common stock to our ATM program, borrowings under our loan facilities with KeyBanc and from first mortgage loans based on each of the acquired properties. By employing new sources of capital in the third quarter of 2014 we took out a nine month $45 million term loan that enabled us to close on over $300 million of acquisitions. We were then able to retire that loan completely within 95 days, this was a nine month loan facility and we repaid it in just over three months. As a result we’re confident that this process saved our common stockholders from significant dilution. As we go forward we expect that we will be able to continue to reduce the outstanding indebtedness under our KeyBanc loan facilities from earnings as well as from net proceeds received from sales of our equity security. In fact as of the close of business yesterday we only had $2.75 million outstanding under our $50 million revolving line of credit and $28 million outstanding under our acquisition term loan facility that we utilize to acquire the two Huston communities in February. I want to continue to reiterate that we are a multifamily REIT. We have an opportunity to diversify on a measured basis a portion of our assets into the grocery-anchored shopping center space where we were able to match up our management talent with the product sector that we believe is still relatively under appreciated. Our overwriting goal and we cannot emphasize this too much is to drive an FFO per share and most importantly total return for our shareholders. Let me now turn the call back to John.

[John Williams:]

Thanks Dan. As I mentioned earlier we’re excited about our financial results for the fourth quarter, our growth opportunities for this year and next year and the strength of our management team. I still believe the fundamental [indiscernible] for the foreseeable future will be strong and will continue on a positive note for us. Before I turn the call over to the operator there are several questions that we have already received that we'd like to go ahead and answer and then we will take your calls. The first question is will you please talk about your same-store results and I will call John Isakson to give us some of those results. John?

[John Isakson:]

Thanks John. I am excited to tell you that our same-store results were among the best in the sector and I think only FX was ahead from multifamily REITs. We had same-store NOI growth of 6.6% that was fueled by a 4.5% increase in revenue and a decline of 1.6% operating expenses which is a great resulting environment and we are excited about it.

[John Williams:]

Great, thank you. Next question [indiscernible] what the leasing trends look like from first quarter and the balance of the year, Bill Leseman and I call on you to answer that question.

[Bill Leseman:]

Yes John, we are very pleased with our leasing for the first quarter of 2015, particularly in the face of some devastating weather conditions. Our leasing were strong enough to keep us on budget and in fact through more second our availability which is effectively on leased vacant and at least on those noticed units is 1.2% better than where we were last year at the same time. We anticipate this trend to continue with strong budget [indiscernible] for the remainder of 2015.

[John Williams:]

Great Bill, keep up that great work. And here is another question I knew would come in, during the recent publicity about Houston, why is [indiscernible] property player, John Isakson you respond the last.

[John Isakson:]

Sure thanks John. Houston is an actually end market for us is a great diversified economy, it's been strong for several years, it's expected to be in the top 10 in employment growth this year we are telling back to your comments is one of the big drivers for the multi-family sector. We have acquired a very strong sub-market in Houston with great pricing on these acquisitions. These are brand new assets recently completed just now stabilizing and we're excited about what they are going to do for portfolio.

[John Williams:]

Yes I am sure what you're saying is we look at the Houston market as almost like a runner, we look at our business as a marathon and not a sprint. So we think these are outstanding assets, they actually [indiscernible] and converted into partners in reality. So thank you John. And then another question please tell us a little more about how things are going with the grocery store anchored retail shop incentives. I'll call on Joe Murphy to respond to that. Joe?

[Joe Murphy:]

Thanks John. We are very pleased with the operational results for the retail portfolio for our first full quarter of operations. The portfolio is 95.5% leased and the results for the quarter actually exceeded our internal underwritings that we had in place when we approved these acquisitions. Similar to the multi-family portfolio our retail portfolio benefits from positive momentum and job and wage growth in our markets. Also similar to the multi-family portfolio we have a relatively young portfolio. Our leasing resources are now fully engaged. We are seeing positive trends both into absorption and rent achievement on vacant space and also starting to see positive trends on renewals of currently leased space. And a critical component of success and [indiscernible] retail property sales at the property level and we are happy to report that we are seeing and experiencing solid comp store increases from our grocery store anchors over the prior year. And now turning to 2015 as we are seeing -- I know we have this full quarter of operations under our belts and assembly the management team in new market we are now again fully focused on pipeline, we are seeing a [pool] of possible acquisitions that fit our acquisition criteria in our Sunbelt markets, and we plan to aggressively yet prudently pursue them always keeping management and shareholders interest in only undertaking accretive transactions at the forefront of that analysis.

[John Williams:]

Thank you Joe. I'll now [give] you with another question in a few minutes. And the new question is the comparative sales of the region and so who and the truth is we compare ourselves to every -- most family regions out there and fortunately we performed very well against the entire group. I think our [indiscernible] as John Isakson is the same-store number was a second [indiscernible] for the marketplace out in the west coast. Our NFFO it was among the best in the entire industry, we think that our portfolio is youngest age in the multi-family business and we will be going on based on the outlook for our mezzanine loans in the future purposes. But yes, we compare ourselves all the time. And we did very well against the other REITs. One area of other REITs and [indiscernible] most on them had multiples that are twice ours and I guess we won’t able to catch up. And with that I would like to thank you for joining us. And I will turn the call now back over to the operator for other calls.

[Operator:]

We will now begin the audio portion of the question and the answer session. [Operator Instructions]. The first question comes from Ryan Meliker of MLV & Company. Please go ahead.

[Ryan Meliker:]

Hey guys great quarter, I love that 6.6% same store NOI growth. I did have a few questions for you. First of all with regards to your guidance can you let us know what's assumed in there, are there any acquisitions assumed in there? Any level of preferred equity issuance or common equity issuance be that be an ATM or anything else, just want to make sure that I understand what you're assuming so that we can go down to the same numbers.

[John Williams:]

Sure, Ryan this is John, let me take a little bit of a crack at it and then I'll tell Dan to finish that. Obviously we have a substantial number of acquisitions in our budget and business plans this year, I think the number is 10 to 12 and we as you know already closed two, we have another one to contract so that's a very tough thing to be able to make happen because we are [agreed more] for accretion in success within these transaction than just going out and buying. We continue to sell our preferred stock program, in this year we've budgeted around $250 million in our preferred sales and perhaps we can do a little bit better than that and we expect to sell as an additional mezzanine loans the portfolio and although I'm sure Dan will indicate in a few minutes one of the things that we will be doing is we'll also be paying some of the mezzanine loans off. So, there is also a component of common stock in our model and a lot of the common stock is in the second half of the year although we had in January and we did sell some common stock and you'll see that if you look at the first quarter numbers. We think it's prudent to have some common stock to be sold and match up with our preferred but Dan, I'm sure you will want to make some comments on that.

[Dan DuPree:]

Yes, John and Ryan we gave a pretty wide range in our guidance and that kind of reflects the uncertainty on the acquisition side and really on the mezz side both from standpoint of exercise of purchase options and initiation. I was looking back at what our guidance was that we gave last year on NFFO, we gave it quarterly and in the aggregate we gave a range of $0.88 a share to about $1.4, we ended up a little over $1.4, this year we've given a range of $1.11 to $1.19. We are not going to acquire an asset because we have said a number that we're going to acquire, we're going to acquire the assets that we think can get appropriate pricing on so that the deals will be accreted their earnings and strategic to the overall plan, again we've got pretty good momentum right now on the acquisition side and that's just dealing on the multifamily side, on the retail side we have a number of deals we're working on as well. On a mezz loan side, there are a bunch of variables that come into play on the exercise of the mezz loans. One, we have very attractive interest rates right now that we can lock in so we want to take advantage of those interest rates as quickly as we can, we got to weigh that against the interest we're getting on the mezz loan. So we have a little bit of variance built into our model as it relates to the mezz loan. Clearly, there is considerable value that is out there in our mezz loans it reflects itself more a long term in NAV and ultimately in capital gains perhaps even then it doesn't end in NFFO. So we're still sizing the nuance of that but we're very keenly focused on the range that we've given and I will direct you to look at our performance in the past relative to our guidance.

[Ryan Meliker:]

No, that's helpful. So, it sounds like you guys are modeling out your 10 to 12 acquisitions, $250 million of preferred issuance and some common equity throughout the course of the year to I guess fund those acquisitions?

[Dan DuPree:]

Correct.

[Ryan Meliker:]

Okay, that's helpful and then the second question I had was at the end of December you're at about 54% debt undepreciated book value and you mentioned that your goal is to be at 50% or below, you just acquired two assets with a third one coming at 65% loan to cost, so it seems like that number is going to go higher in the short term as opposed to lower, what's the plan to get you to your goal level?

[John Williams:]

Well, I think it's primarily our concern about having debt that is an outlier, 50% number is a real number and if you go back to where it was in '13 it was actually 49%. So we want to manage to a 50% debt to undepreciated book, if we don't make it, it is because of timing but as you know with our preferred equity lease that money comes in twice a month and we’re able to utilize that money along with common and ATM sales to manage the balance sheet so that we keep our debt levels under control and you are right, there will be temporary relapse when we go out and buy something and we use debt from our credit loan but we always will manage the debt back down instead of pay it all much sooner than expected and you can look at last year as a good example of our commitment to getting each short term debts paid off quickly.

[Ryan Meliker:]

Okay, that’s helpful. So it sounds like essentially the first three acquisitions or so are going to largely funded by debt but over the course the years these new acquisitions come in, you’re going to fund them more by common equity and preferred equity issuance. That’s what’s going to bring you down to a 50% or below.

[John Williams:]

Absolutely.

[Ryan Meliker:]

Okay. And then just the last quick one I had for you, I’m just hoping you can give us some color or a data point on what your 4Q rents were for your multifamily portfolio? Give us the occupancy that we don’t have the actual rent.

[John Williams:]

Bill, do you have that number handy that we need to call?

[Unidentified Company Representative:]

[indiscernible] basis.

[John Williams:]

Can we follow back up and give you that number?

[Ryan Meliker:]

That sounds good, all right. Thanks guys. That’s all from me.

[Operator:]

Our next question comes from Craig Kucera of Wunderlich. Please go ahead.

[Craig Kucera:]

Hi, good morning. I want to reference your prepared comments about where you are capitalized now. I think you said you were making 185 million to 190 million of preferred, I think you’ve got about 200 million common market cap, you’re bringing in 20 million a month on the preferred side, what capital structure are you guys really comfortable with, are you looking at sort of being fifty-fifty preferred common or have you ramped up the preferred issuance is enough on a go-forward basis that you might become even more weighted towards preferred relative to common.

[John Williams:]

I think today we have about $230 million worth of common capital and about $109 million worth of preferreds and our goal is to always look at that with the proper ratio and comfort level. There are many folks that said why don't you [indiscernible], why don’t you just sell the preferred and go back to your business, well, guess what it would call us a pretty substantial one-off in earnings but we would still like the balance sheet would not be the fortress balance sheet that we like to have internally. So our goal is to always take and have a portion of the capital we raise come from common, it could come from a secondary lately it's been coming from ATM and if understand the importance of keeping that ratio appropriate and that’s our plan for this year, we’re paying also a substantial amount of ATM in common stock this year and frankly a lot of preferred.

[Craig Kucera:]

Okay. And during the fourth quarter you had I think a G&A line item that was deferred, can you give us some color on that, and will that be recovered are you anticipating recovering that back next year out of earnest?

[John Williams:]

Let me [indiscernible]. As you know our advisor collects fees for certain tests and those things we things we think are modest and reasonable, but from time-to-time we get a chance to look in the assets and so extraordinary and fit so well within our portfolio and we know we’ll make our shareholders a lot of money that the advisors takes and defers that fee so that we can go ahead buy those assets and making the quick return, I’ll let Lenny to tell you exactly how we treat the deferral but basically our philosophy is that if we have to as an advisor back off and not take fees but they would allow us to bring in an outstanding asset interest into the portfolio we will make that decision to do that every time. Lenny?

[Lenny Silverstein:]

Yes, it’s a really good philosophy and the objective of that philosophy is be protective of all of our stockholders. We don’t want to do simply do acquisitions for acquisitions stake what we really want to do is we want to acquire accretive opportunities and at the end of the day when we have our deferred fees, those deferred fees will stay outstanding and then at one-time we were ready to sell the assets, we’ll look and see what the return is at that point in time to see how we produce the return and then have repayment of those deferred fees.

[John Williams:]

And that’s why the return to the shareholders trumps our deferred fees so we might not be able to get that money back but that’s the trade-off we’re going to take.

[Operator:]

[Operator Instructions] The next question comes from John Benda of National Securities Corp. Please go ahead.

[John Benda:]

So question, so now that you have 10 multi-family assets or 13 multi-family assets, 10 retail properties and a pretty robust loan book. How do you guys sit down and think about the capital allocation decision on the growth spectrum?

[John Williams:]

I am going to let Dan to please tell us, so [indiscernible] mention we go through and this is something that we talked about quite often and quite intently. Dan?

[Dan DuPree:]

Thank you John and hey John. I mean basically we are looking to maximize the return on the invested dollar. And then the truth is we have several buckets that we can invest money into. We can invest money into acquisitions be it retail or multi-family. We can invest capital into mezzanine loans and purchase option opportunities. And the reality is on the mezzanine loan side it is more finite. There are only so many deals that we should be comfortable doing given point in the cycle on the mezzanine loans and with a very finite number of developers within we have long standing relationship. So I would tell you that we have commitments right now of 176 million on the mezzanine loans, my guess is that from time-to-time depending on where we are in the cycle our commitments will be fairly consistent between $150 million and $200 million again at any point in time. So we cannot set that aside, and clearly we get a great return we get a great return, and while the exercise of the purchase option has a less dramatic impact but still a significant impact on our NFFO, it has a significant value and a comparable gains that we are creating at the end of hold. And in our NAV which has positive impact on process, that’s also on one side. Then you get the acquisitions and again one of the reasons we have the wide range in our guidance is because we are not going to acquire assets just for the sake of acquiring assets. Right now we have assumptions on the split between retail and multi-family. A limitation on the retail, mandated at 20% of total assets. But acquisitions we will fill the rest of the bucket. And that will dictate somewhat what our debt level is because if we are raising the pay and we are going to acquire fewer assets we'll have more of the preferred and a common in any assets. So I think that’s probably how I would answer that.

[John Benda:]

Okay and then second.

[Dan DuPree:]

Does that answer that question? Do you have a second question?

[John Benda:]

Yes, absolutely. So then again on the mezzanine loan portfolio on the bridge loans that happen to be maturing in the first quarter of ’15. Are you also going to be converting those to mezz loans?

[Dan DuPree:]

Yes, we are.

[John Williams:]

We only go into those bridge loans as a soft gap while the model developer gets a loan and loan money on properties that have already been zoned, that have already been pre-prepared for us. It is just an interim stop to get us to the mezzanine loan. So we would not expect any bridge loan not convert to a mezzanine loan and convert very quickly. I would think that in the next few months we won't have any bridge loans will be mostly converted out.

[Dan DuPree:]

If we look at those like land loans and by large I can’t think of an exception they all appraised, the land all appraises at a reasonable loan to value on the loan that we put on it.

[John Benda:]

And then on the retail portfolio, do you happen to have a breakdown of rent per square maybe by markets where Tennessee , Florida, Georgia depending on what you guys are getting on a per square basis?

[John Williams:]

Not per square John, but we could pull that together but I think we got we have 10 centers in five states and that’s weighted towards Georgia and weighted towards Florida we only have one asset weighted to Nashville. So I hate to stick a number at it because of a very different markets. So per square math really given you think but I think where you are headed to is exposure in that market it would be the primary ones would be Georgia, Tennessee and Florida.

[John Benda:]

And then just lastly on the retail portfolio what’s the rent per square that you are getting on the whole portfolio?

[John Williams:]

Again on that one I really don’t look at it per square because that’s such different assets with different costs. But I guess what we talked about how we've acquired these assets we've talked about the increased returns and rationally we're seeing positive rents for as part of the strategy John, that we talked about is that we're acquiring these things significantly both replacement cost which gives kind of a low rent per square foot overall in the portfolio which candidly is what we like about it because it's lot easier to increase rents off a small base than is a big base.

[Operator:]

[Operator Instructions] As there are no further questions at this time, this concludes our question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

[John Williams:]

Thank you operator and I think we had a record number of people on the call and substantial number of pack associates. 2014 was an outstanding year for our company and we're expecting 2015 to even be a better year and I want to thank all of those associates who're listening on the call thank you for all you do and thanks to all our shareholders and the analyst and the other folks who're involved with us. We will look forward to see you next quarter. Thank you again.

[Operator:]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.