Bluerock Residential Growth REIT, Inc.
Q1 2020 Earnings Call Transcript

Published: 11 May 2020

[Operator:]

Good morning, ladies and gentlemen, and welcome to Bluerock Residential Growth REIT First Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note today's event is being recorded.At this time I would like to introduce your host for today's call, Christopher Vohs, Chief Financial Officer of Bluerock Residential. Sir, please go ahead.

[Christopher Vohs:]

Thank you and welcome to Bluerock Residential Growth REIT is first quarter 2020 earnings conference call. This morning, prior to market open we issued our earnings press release and supplement.The press release can be found on our website at bluerockresidential.com under the Investor tab. In addition, we anticipate filing our 10-Q later this month. Following the conclusions of our remarks, we will be pleased to answer any questions you may have.Before we begin, please note that this call may contain Forward-Looking Statements as they are defined under the Private Securities Litigation Reform Act of 1995. There are variety of risks and uncertainties associated with forward-looking statements and actual results may differ from those set forth in such statements. For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in the earnings press release we issued this morning as well as our SEC filings.With respect to non-GAAP measures we use in this call, please refer to our earnings supplement for a reconciliation to GAAP and the reason management uses these non-GAAP measures and the assumptions used with respect to our earnings guidance.And with that, I will turn the call over to Ramin Kamfar, Chairman and CEO of Bluerock Residential Growth REIT.

[Ramin Kamfar:]

Thank you, Chris and good morning, everyone. In addition to Chris, with me remotely today are several key members of our executive team including Jordan Ruddy, our President and Chief Operating Officer; Ryan MacDonald, our Chief Acquisitions Officer; Jim Babb, our Chief Investment Officer; and Mike Difranco, our Executive Vice President of Operations.I will focus my remarks on the COVID pandemic impact, financial highlights and key strategic accomplishments and some capital markets commentary and afterwards Ryan will provide you first quarter and April operational transactional and balance sheet detail.Before getting into our results for the outbreak of the COVID pandemic and its wide reaching impacts across the country in the world, I want to express our sincere wishes that everyone is staying well and doing healthy.We at Bluerock proactively took a defensive posture with regard to our team, our residents, and our portfolio early on, even prior to the release of federal social distancing guidelines and the issuance of shelter in place orders at the state and local level.At the beginning of March, we proactively set up COVID specific property guidelines and best practices across our on-site teams to prioritize and ensure the health and safety of our residents, our employees and our partners.As part of our COVID mandate, we shutdown all of our amenities executed only essential maintenance and moved to a fully virtual leasing environments, which was well supported by our pre-COVID technology build outs.We have taken a number of steps to provide a system to our residents, including health evictions for 60-days, and temporarily suspending late fees. In terms of our employees, we are pleased to have been able to maintain employment and compensation levels. And I want to thank all of our team members for their dedication, flexibility and tremendous hard work throughout this time.I would also point out that our asset management teams has been very excited and very active and effective in directing our on-site operating teams through the lockdown, we are now working with our operating partners to establish best practices for the reopening of the common areas of our properties and our on-site servicing and leasing as government guidelines permit and as health and safety measures are implemented.Moving on to our results, I’m report our strong numbers. We started off the year with a solid off of the quarter operationally, this was driven by solid organic rent growth and value creation from our renovation platform.We also executed our strategic capital recycling plans, realizing strong disposition values both before and after the outbreak of COVID in the United States. On the revenue front, we produce healthy 9% growth over the prior year period with the first quarter at 56.2 million, driven by our significant investment activities during the prior 12-months in addition to our strong same-store performance.On a GAAP basis, net loss to common stockholders was $0.70 a share compared to net loss of $0.53 a share for the prior year quarter. The figures obviously include non-cash expenses, which include depreciation and amortization of $0.88, and $0.74 per share for the current and prior year quarters, respectively.Moving on to property level results, we grew property NOI 15% to 31.4 million in the quarter. Same-store revenues and NOI growth reaccelerated in the quarter and came in at 3.1% and 2.6% respectively, compared to the prior year period.On the funds from operations side, core FFO, which is NAREIT FFO with add-back of certain non-cash non-operating items grew 10% to $0.22 per share versus $0.20 per share. For the prior year period, our common dividend coverage remains strong with a CFFO payout ratio for the quarter at 74%.We continue to grow our asset base. Gross assets are up 23% for the quarter from the prior year period to over 2.5 billion, which puts us at the larger end of small capital for family peers. We are also very active on the capital allocation front through April, completing transactions which were all in process prior to the on-site of the pandemic.We completed five dispositions totaling $272 million of which three close in April for a total of $160 million. Dispositions were executed at cap rates averaging 4.3% and DOG realized at 116% IRR and 1.8 times multiple our invested capital, while netting $96 million in proceeds.During the quarter we closed two acquisitions. In Phoenix and Atlanta totaling $138 million in gross asset value. We also invested $22 million in preferred equity and mezzanine loans, including two new operating preferred investments one new grab lease investment, and additional scheduled funding and buy outs for eight development investments.With respect to our value added renovation program, we continue to achieve above market results across the board, completing 120 units with an average ROI of 22% we have assumed a more conservative posture in view of COVID pandemics and suspended most of the interior renovations at this point. We will continue to obviously evaluate the program at both the market and property level as we have more visibility on the emergence of economic recovery.Shifting to capital markets we raised $57 million of our Series T Preferred during the quarter, including $29 million in the month of March, which was a record monthly amount. Our post Q1 range figures have been lower given the COVID impact on the public markets. But we have continued to raise our Series B at a run rate of just under $200 million annually, which will provide us great flexibility to review potential opportunities overtime.As we have noted before the Series T Preferred provides a distinctive advantage for BRG, because it allows us to raise capital decoupled from the volatility of the common equity capital markets and where the flexibility to convert its common equity at our option at a future date at the future common stock price. In fact, in the first quarter within $17 million for preferred at an average common equity price of $11.79 per share.While our first quarter performance didn't incur significant impact from the COVID pandemic, we continue to closely monitor COVID's impact on our business, properties, tenants and partners as obviously the full impact on our rental revenues and overall financial performance remains uncertain.As Ryan will detail we have been encouraged by post quarter rents and occupancy information to-date. We believe our Class A affordable rents strategy targeting and knowledge economy renter by choice positions us well with respect to the COVID pandemic in order to continue to deliver shareholder value.First, we believe that our market and asset selection have positioned us well, we have assembled a well located highly amenitized live, work, play portfolio and knowledge economy growth markets targeting the highly compensated highly educated worker, all of which are to help partially buffer us from the brunt of COVID drive job losses and the downturn, and should allow us to reaccelerate rent growth more quickly on the other side as economic recovery takes shape.Second, we are able to generate accretive capital through issuance of our Series T Preferred, which gives us balance sheet flexibility and the potential to take advantage of opportunities that may arise overtime.Third, we continue to proactively make prudent in a creative capital allocation decisions for the Company, including dispositions at various practice, cap rates, even post-COVID that are well inside our market implied in success as third-party NAV cap rate estimates.As we look ahead, we are confident in being well positioned to navigate through the challenges of COVID and believes the quality for portfolio and balance sheet flexibility sets us up to outperform.Further, we believe that overtime, there could be potential for structural operating expense savings from the large shift to virtual that we have all experienced, which should serve as additional long-term catalysts for the business.Finally, I would like to again note that management is significantly aligned with shareholders and a number of our senior management have purchased equity in the open market in recent months. As a result of all of which management now is approximately 29% of BRG fully diluted equity.With that I would like to turn the call over to Ryan.

[Ryan MacDonald:]

Thank you Ramin and good morning everyone. The operating portfolio started off the year with strong performance across the majority of our metros with nine to 14 MSA posting rental rate growth of 2.5% or better in the quarter.This was highlighted by continued outperformance in Atlanta and Austin and reacceleration in our Colorado properties as supply moderates there. Portfolio wide occupancy was 94.2%, which was 30 basis points higher, compared to the prior year quarter.Occupancy held strong throughout April finishing the month at 94.3% and availability, which is a leading indicator for occupancy is strong at 8.2%, which is approximately 50 basis points ahead of where we were last year at the same time.Overall, same-store revenue increased 3.1% over the prior year period, driven by a 2.9% increase in average rental rates and flat year-over-year occupancy. Rate growth was broad based with 25 of the 27 properties in the same-store pool recognizing year-over-year increases and average rental rates in the quarter. On a sequential basis, same-store rental rates increased 50 basis points and revenue was up 1.1% over the prior quarter.Moving on to rate growth during the quarter, lease rate growth averaged 2.4% with renewals remaining strong at 3.8% and new lease rate growth slowing to 90 basis points. New lease rates were partially impacted by a seasonally weaker part of the calendar and the initial stages of the COVID pandemic in mid to late-March.Consistent with improving seasonality trends, we saw lease rate growth climb on a sequential month-over-month basis throughout the quarter. And despite the COVID impacts, March finished 80 basis points higher than January.In conjunction with the shelter in place requirements and our markets and our decision to move to a more defensive occupancy posture. April lease rate growth trended lower averaging positive 10 basis points with renewals yielding positive 1.2% and new leases average negative 1.9%. Through the first week of May, new lease rate growth has trended back to positive territory, which has led to a blended lease rate for the week 60 basis points higher than April.I would also like to note that while we were aggressive in pulling back renewal increases across the board in late March and throughout April, in response to the pandemic. We expect to be able to start to implement increases in July and August in certain assets that are outperforming today. Some of the markets include Atlanta, Austin, Colorado, and Phoenix amongst others.For the month of April, we collected 97% of multifamily rent including payment plans of 1%, which was in line with March pre-COVID collection metrics. These figures are generally in-line with a normal environment, where we typically close out the month with receivables around 2% and work the AR balance down to the next couple of months to approximately 50 basis points.Moving on to May, we started off the month with a very strong collection profile, having collected 92% of our rents through yesterday, including 2% on payment plans, which is approximately 1% ahead of April by the same date.During the month of April, we captured 88% of the prior year period new lease volume, which was done solely with virtual leasing, and no tours. As reopening guidelines are implemented in our markets, we look forward to further supplementing virtual leasing or self guided tours. Additionally for April, retention was up a very strong 500 basis points on a year-over-year basis. And we look forward to this elevated renewal trends it continues throughout the coming months.On the expense front year-over-year same-store expenses increased 3.7% during the quarter, with taxes and insurance accounting for 3.4% of the increase. As we have communicated in the past, utilizing technology to drive both top-line revenue growth and controllable expense savings is a strategic area of focus for us. To that point, we are encouraged that some of the measures we are implementing should result in controllable expense savings with the majority of the future reduction coming in payroll.We continue to be pleased with our value added renovation program, which delivered healthy results in the quarter. During the quarter we completed 120 units renovations with an average ROI of 22%. And to-date we have completed approximately 2,800 unit renovations at an average cost of roughly 5,800 per unit, yielding a 24% ROI.As Ramin referenced earlier, we have halted the majority of our interior capital renovation work with the exception of one asset in Phoenix, Arizona. Once we have resumed renovation work, we estimate there are north of 4,600 units remaining to be renovated in the current portfolio with comparable economics, which would significantly be accretive to both CFFO and NAV.In terms of capital allocation during the quarter and post quarter end, we sold a combined five assets totaling $272 million in gross asset value. And the sales yielded BRG $96 million in net proceeds excluding partner buyouts, of which $35 million was realized before quarter end.The five dispositions were executed at an economics cap rate of 4.3% based on $400 per unit replacement reserves, and the buyers your one tax estimate. The three dispositions post quarter end, Enders Place in Orlando, Florida, Ashton Reserve in Charlotte, North Carolina and Marquis TPC in San Antonio, Texas were executed post-COVID at an average cap rate of 4.7%, which was in-line with our portfolio sale last year and substantially below our consensus NAV cap rate estimates.Moving on to investments, during the quarter we completed two acquisitions totaling approximately $103 million in BRG investments and also made one preferred equity investment into two operating assets totaling approximately $8 million in BRG equities with an annual yield of 10 and 1.5%.The operating investment consisted of an acquisition of a 2013 built, 254 unit apartment community and Phoenix Arizona called Avenue 25 at a purchase price of 56 million and a 2019 built 356 unit apartment community in Atlanta, Georgia, called Falls at Forsyth at a purchase price of 83 million.The assets were purchased at a combined stabilized cap rate of approximately 6%, which compares favorably to market cap rates in the four and a quarter to four and three quarter percent range. I'm pleased to report both assets are performing ahead of pro forma on an NOI basis. And collections are within the top quartile of our portfolio.Also during the quarter, we made our first ground lease investment into a new development projects in Austin, Texas with an annual unlevered yield for 6%. BRG invested three million during the quarter and is projected to fund up to 15 million to the projects throughout the year.Using the ground lease structure, we believe, we will be able to generate attractive double-digit risk adjusted ROI at a position in the capital structure ahead of the senior lender, with each investment, also providing potential future pipeline acquisition opportunities.Turning to the balance sheet, during the quarter BRG acquired 138 million of operating assets representing 103 million in BRG equity and made investments totaling 22 million into new and existing preferred equity, mezzanine and ground lease investments.Following the investments and dispositions made in the quarter, BRG's investments in preferred equity, mezzanine loans and ground leases stands at 272 million, which represents approximately 11% of our total assets. And it is important to note of the 272 million north of 80% or 226 million is invested in operating assets, which obviously have a lower risk profile than development assets under construction.During the quarter, we refinance our senior line of credit and increase availability from 75 million to 100 million and significantly reduced pricing. With the refinancing, we were able to add ground leases to our borrowing base and reduce our spread on the facility at the top end of our range by over 80 basis points.From a liquidity perspective, due to the uncertainties presented by the COVID pandemic, we took a number of measures to increase our liquidity. As of the end of the quarter BRG had approximately 120 million available for investments through a combination of cash and availability on a revolving credit facility.At the end of April, BRG had 124 million in cash plus 51 million in line of credit availability as needed. And we expect to continue to grow our capital base through our Series T preferred offering.Although we intend to be prudent in our view of further COVID developments. We believe we have sufficient liquidity to meet our primary cash requirements through this uncertain period, as well as to invest in ongoing growth as conditions permit.Shifting to our previously announced 2020 earnings guidance, while we are encouraged by the initial trends of our portfolio following the outbreak of COVID-19, given the change in the current environment versus the beginning of the year, and the inherent uncertainty around the full scale of the economic and social disruption caused by COVID-19, and its duration, we believe it is prudent to withdraw our full-year 2020 guidance, which was included in our February 13, 2020 earnings release.So to conclude, I want to reiterate that we are pleased with our first quarter and April operational performance and continue to actively manage our portfolio and capital in view of the COVID pandemic. We believe the quality of our multifamily portfolio and investment strategy will continue to provide outperformance in all parts of the cycle.And with that, we will open it up to Q&A. Operator.

[Operator:]

Ladies and gentlemen, t this point we will begin the question and answer session. [Operator Instructions] And our first question today comes from Gaurav Mehta from National Securities. Please go ahead with your question.

[Gaurav Mehta:]

Thanks good morning. First question on your preferred issuances. I was hoping if you could provide some more color on what kind of demand you are seeing for the paper and have you seen any increase in redemption interest?

[Ramin Kamfar:]

Hi Gaurav it is Ramin. Well, we switch from the Series B at the end of the year to the Series T. Normally we see a significant drop off as you know the transition, and with that transition, you have to go back and sign all the selling agreements again. And so we saw very, actually very quick pick up in terms of in terms of the Series T demand in the first quarter.As we noted, March was a record month for us notwithstanding, not having signed all the signing papers yet - $29 million. Obviously, when the pandemic hit with the markets down 40% or whatever they were the public markets that puts us in a significantly different investment climate.But we are continuing so we are lower than that - we have seen a drop off from the record numbers in March, but we are still seeing very strong demand in terms of the Series T and as we said, we are running at about a $200 million run rate and we think that this is kind of the base from which we are going to continue to build with this.With this we have got additional selling agreements that are coming online and I think we - April witnessed kind of the initial shock of the pandemic and the lock downs and everything else. And obviously as you look at the public markets, they have started to they have regained a significant part of the down leg.Now we are going into this Phase 2 and Phase 3 of the lockdown and then the unlock and then dealing with chronic issues, et cetera, et cetera. But I think as things get closer it will get past the shock and things when market has normalized will go from there. But today, our run rate is about just under 200 million.We have seen a modest pickup and redemptions not significantly. Redemptions generally are not a very significant number for us. Chris, do you have that number handy?

[Christopher Vohs:]

Yes I will pull it.

[Ramin Kamfar:]

Good. Send it to me. why don't we go on to next question and we will pull the numbers and we will give you an answer on this call Gaurav.

[Gaurav Mehta:]

Okay, that fair. And I guess as you think about your $200 million run rate. How do you expect to deploy that capital in the current economic environment?

[Ramin Kamfar:]

Well, that is a good question. I think we have got plenty of opportunities. In our past as I said, we are past this initial shock of the pandemic and the lockdown, so we are going to open the markets.Again, we don't know - no one really knows. I think how that is going to play out. I think multifamily in terms of real estate is a well positioned asset classes, just because of an essential need as opposed to going to hotel or go into shopping mall.So we are fortunate that way and I think we are in a different position in 2008 in terms of the lack of the significant over building on the condo side and high and our extremely high leverage associated with those in the foreclosures that came with that.But I think next week, as time goes on, you are going to see stress in the system. And I think we are going to be, we are in no hurry to deploy the capital today, we are well positioned in terms of our cash and we are building on that. And we are seeing plenty of opportunities today.And I think we are going to see continual - and that number is only going to go up for a period of time as we work through, as we get from here to an economic recovery. So I think there will be plenty of attractive opportunities for us given that we have access to capital.

[Gaurav Mehta:]

Okay. Thank you. That is all I had.

[Operator:]

Our next question comes from Rob Stevenson from Janney. Please go ahead with your question.

[Robert Stevenson:]

Good morning guys. Ramin, just a follow-up on that? What are the plans at this point for the Series A preferred? Are you guys anticipating redeeming that with Series T or asset sales or leaving it in place?

[Ramin Kamfar:]

I think it is very expensive at eight in a quarter for staff. We have looked at - we were planning to redeem it, we would like to redeem it at some point in time, and it is going to depend on - at that some point in time, it becomes available for redemption later this year. I think we have got a couple of years to redeem it before the interest rate, I think starts taking off.So we have got plenty of time on that. And that is one of the things that will be on the table. We are going to evaluate that versus other opportunities that we see in terms of the investment landscape, it is all on the table.

[Robert Stevenson:]

Alright. And then I guess the other question on revolving deployment of capital. Are you seeing much product, if any, in your markets of that you would want to buy on the market today? Or is did the market just come to a complete standstill with COVID and you are going to have to wait for things to reopen?

[Ramin Kamfar:]

I think the markets are pretty much at a complete standstill today. Ryan can give you his point of view, because he is closer to that than I am on a day-to-day basis. But our sense is the markets at a complete standstill, because it has gone through this trough where everything is locked down, and people are going to try to figure out how did I even do unit tours, forget my third-parties in there, et cetera, et cetera et cetera.So, and I think there is going to be an adjustment period between salaries that they have, pricing that they are looking backwards on pricing in terms of what they had in mind, what they have in mind and buyers are looking at forward pricing and a significant discount.I know that we have three deals that we have signed up to sell that we closed in April and we aren't going to - we wanted the pricing that we were that we have, and we are fortunate enough to have very attractive assets and very attractive markets and we got our prices.So, but I think that is going to - not everyone is going to have the financial flexibility that we have. And the conservative positioning going into this, particularly. So I think that is my point of view. Ryan, feel free to add or subtract there.

[Ryan MacDonald:]

No. I think that is spot on Ramin. I think waiting for sellers to get a full understanding of kind of what to go forward landscape is going to look like is something that will take time. And if you go back to the GFC in fact, using that as a proxy for a downturn, it took a good six to 12 months to really shake loose opportunities. So, we think there will be opportunity, especially coming into the end of the year and until next year, but it will take time for some visibility to shake out.

[Robert Stevenson:]

Okay. And are you guys, I mean what percentage of your assets are Fannie or Freddie financing on it? Are you seeing much in the way of the trade-off for the mortgage forbearance versus the eviction ban on assets in your market? And are you guys doing any of that?

[Ryan MacDonald:]

The answer is north of 80% of our operating assets have agency financing on it, we are not seeing whether it is ourselves or any of the other large owners. Many take advantage of the forbearance opportunities, people are collecting rent. I mean, we collected secondly in-line with where we were in the past months pre-COVID.I think the NMHC and the other large owner are north of 90%. So people can pay they can pay the rents and are paying the rent. So we have not seen a usage of that system nearly as much as probably we would have predicted in mid-March, when they came out with the plan.With respect to our markets, I think we are not seeing really any difference and evictions then we would pre-COVID. We are not seeing people again not pay rent. So we don't have necessarily situations where we have got mass evictions that we can't undertake because of the Fannie and Freddie guidelines.

[Rob Stevenson:]

Okay. And then last one from me.

[Ramin Kamfar:]

Rob I think on the Fannie and Freddie forbearance I think it was a great thing for them to do. And we put a task force together when it came out to, drill down into each property and there isn't one we need forbearance, but as we looked at the numbers and drill down into each property, we, it was clear that we don't need it and we are not going to take it.I'm sure there is someone out there that - there are people out there who are going to use it, given their leverage and their assets and their markets, but for our markets for our tenants. for quality product. We are not even close.

[Rob Stevenson:]

Okay. And then last one for me. We have heard from some of the peers, different reasons for suspending redevelopment. I mean, from your standpoint. What was the key item that sort of cause you guys suspend it, was it not likely to see the near-term returns was a difficulty, actually doing them in the current environment with lining up the contractors, et cetera. Was it the tenants not wanting the contractors in the buildings? When you guys boil it down, what was the sort of key reason why you guys decided to suspend the redevelopment program?

[Ramin Kamfar:]

From our point-of-view, it was lack of visibility. I mean, just because we have suspended it, and like I said, this things going to play out in phases. You have got the lockdown with the massive unemployment.Now, the difference between this and GFC has hit a large part of that should hopefully be temporary et cetera, et cetera. But I don't think we have any reason we said and in the middle of March, as we were looking at for bears and everything else. From a prudence point of view, let's just find it.And we will take a look at it and 60-days, 90-days as we get more visibility. So it is systemic today, but that doesn't mean that a quarter from now when we are talking, we are not busy doing it. But my guess is we won’t be doing it and all the properties we were we will be doing it in some.

[Ryan MacDonald:]

It is no different than our renewal strategy, which we effectively went flat in March, April. And now we are revisiting it for July and August, where there is obviously isolated opportunities where we are seeing strengths and we are going to take advantage of that.

[Rob Stevenson:]

Okay. Thanks, guys. Be well.

[Ramin Kamfar:]

Thank you, Rob. So, back to Gaurav on the question. We pulled the crystal the numbers and order to you to-date we have had 1.2 million in holder redemptions. We probably get about that number for the full quarter. So they're running as, let's say, twice the normal pace.But as you can see, it is not material amount, given the amount of prefer that we had out there. In general the reps and investors look at it as a pretty stable and a source of income that has stability in credit protection with a common underlying it and without the volatility that you see in the market. So we don't expect it to pick up materially from here. Next operator?

[Operator:]

Our next question comes from Alex Kubicek from Baird. Please go ahead with your question.

[Alex Kubicek:]

Good morning. Have there been any requests for forbearance or deferral in your guys mezzanine loan portfolio. Just looking for an update on how those assets are performed? Especially those in lease up under development? Just kind of curious what you guys have heard from your borrowers on that side?

[Ryan MacDonald:]

A couple of thins Al, I'm happy to take it. A couple of things. So the answer is no, we have not had any requests for forbearance on our capital, everything is paying current. I think, if you look at it, it is a function of a couple of different things.One is, the quality of the assets that we invested in is one. And then two, if you look at the leverage points, we are typically somewhere in the 85% I will call it high 80% of cost. And so if you look at where our portfolio is today, we are talking 80% of this through construction at this point and so there has been significant value created at each asset, and so from an LTV standpoint, we are significantly below that.So we feel really comfortable. I mean, at the data point, we have a lot of development deal where we have a mezzanine loan investment, and the deal did 12 leases last week. So, we have another deal in Charlotte, North Carolina where we are doing seven leases a week we are 40% pre-leased respectively it is just open. So we had actually very, very strong performance on that part of the book.

[Alex Kubicek:]

That is helpful color. And then just one more for me probably Ramin best to hear from you but know what the stock today well, just wondering how repurchasing stacks up against other investment opportunities out there? Just any color on your methodology on buybacks today with would be appreciated?

[Ramin Kamfar:]

Well we haven't really purchased anything in the second quarter if that is your question. It is on the table along with other opportunities. I think it is prudent to given that this a different downturn than everything we have anyone on this call I think has ever experienced because it is not just an economic recession, there is a health crisis overlay on top of it.So, while we think we have a point of view in terms of how play out, no one really knows. So, and I think in that scenario, given that, given those that later on land, I think it is our job to be prudent and exercising or duties to shareholders, so it is the buyback.Do we think the stock is very attractive as the price that it is today and very undervalued? Absolutely. Have we gone out as individuals to buy stock? Absolutely. If we even if you look at, look at some of their compensation elements, a significant part of our management team has agreed to take this compensation and equity and so on and so forth.So, it is on the table, but I think from a institutional point of view, from the reach point of view, it is prudent to take a pause before we - and we have better visibility before we jump in. And that is why I used it, so it is no different than our investment process.\Where we are just taking a pause in looking at the landscape of opportunities, same in terms of use of capital for upgrades or redemption of the Series A preferred stock buybacks there? Will we be in the market buying back stock? Absolutely. At the right time. So that is something that we are going to be talking internally into the Board about. Does that help out you?

[Alex Kubicek:]

Yes, definitely. Thanks for the time.

[Ramin Kamfar:]

Thank you Alex.

[Operator:]

[Operator Instructions] And ladies and gentlemen, we do have a question from Barry Oxford from D.A. Davidson. Please go ahead with your question.

[Barry Oxford:]

Great, thanks guys. Ramin, are you seen opportunities, you said that the kind of a pause on the apartment? As far as acquisitions, is there more opportunity in the mezz? Or has that market kind of come to, kind of a grinding halt at this particular point?

[Ramin Kamfar:]

I think there might be some very interesting options on the mezz preferred side. Ryan is dealing with it on a day-to-day basis. So I will let Ryan. Ryan answer that.

[Ryan MacDonald:]

No, no. That is exactly right Ramin. I mean, I think there is opportunities, certainly in the mezz space today that we are looking at and then obviously, on the common side as well. But again, I think we are waiting probably the next couple of months to get better visibility on what the recovery is going to look like, but absolutely.

[Barry Oxford:]

Ryan, have you seen the rates of return move on the mezz product?

[Ryan MacDonald:]

The answer is yes, slightly, Barry. Obviously, the really strong projects are going to command more premium pricing and we typically invest in projects that we want to own long-term. So it is not just a mezzanine investment in the event that ultimately we do need to own it or we want to buy it out. But I think there has probably been a widening of a couple hundred basis points and total return across the mezz and preferred space since the beginning of the year.

[Barry Oxford:]

And then last question 92% collections rate so forth the month of May very good, great job. Is there dispersion between markets? Or does that 92% give or take a couple percentage points hold across all of your markets?

[Ryan MacDonald:]

Well, the Orlando and Vegas are generally trailing, although Orlando has actually trended pretty well of late. If you take April 30th, as a good proxy, I think Orlando was about 93% collected and Vegas where we only have two very, very small assets was 87% collected.That being said, post quarter and in Vegas in particular, we have collected an additional 500 basis points of AR. So while we saw probably delays and some of that structural in nature in Nevada, there is actually people tend to pay late because of the laws there aren't as impactful to late payers.So we have seen we have seen Vegas in particular cashed out significantly in May and late-April relative to where it was at the month end. Other than that, it is generally pretty well dispersed across the Board.

[Barry Oxford:]

Okay, great. Thanks so much guys.

[Ramin Kamfar:]

Thank you Barry.

[Operator:]

And ladies and gentlemen, at this time, I would like to turn the conference call back over to management for any closing remarks.

[Christopher Vohs:]

Thank you, operator. Thank you, everyone for joining us today. Look forward to continuing to report to you on our progress and be healthy and be safe. Good bye.

[Operator:]

Ladies and gentlemen that does conclude today's presentation. We do thank you for joining. You may now disconnect your lines.