Elme Communities (ELME) 2004 Q4 法說會逐字稿

Good morning, and welcome to the Washington Real Estate Investment Trust's fourth quarter 2004 earnings conference call. As a reminder, today's call is being recorded. Before turning the call over to the Company's Chairman, EON President, Ed Cronin, Sara Grootwassink, the Company's CFO, will provide some introductory information.

Ms. Grootwassink, go ahead.

Thank you and good morning everyone. After the market closed yesterday, we issued our earnings press release. If there is any one on the call who would like a copy of the press release, please, contact me after the call, at 301-984-9400, or you may access the documents from our website at www.writ.com. Our fourth quarter supplemental financial information is also available on our website.

Please, bear in mind that certain statements during this call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although such statements and projections are based upon what we believe to be reasonable assumptions, actual results may differ from those projected. Key factors that could cause actual results to differ materially include changes in the economy, special and timely completion of acquisitions, changes in interest rates, leasing activities, and other risks associated with the commercial real estate business, and as detailed in our filing from time to time with the Securities and Exchange Commission.

Now, I would like to turn the call over to Ed Cronin.

Good morning. With Sara and me today are Skip McKenzie, Executive Vice President of Real Estate, and Laura Franklin, Sr. Vice President of Accounting, Administration and Corporate Secretary. After my brief comments, Sara will provide a review of our financial performance for the fourth quarter of the year end '04. Skip will discuss our portfolio performance, current development activities and general market conditions, then we will open the call for questions.

On our October conference call, I provided updated 2004 guidance anticipating FFO of $2.05 to $2.07 per share on a fully diluted basis. At that time we expected to be closer to the $2.07 FFO per share number, however, we underestimated additional costs related to internal and external audit fees, and the Dulles Park acquisition which we expected to close earlier in the quarter, but did not close until much later.

As everyone is well aware, the acquisition arena is very aggressive, especially so in this region. We are making offers on properties which fit with our strategic plan, but they must provide both near term positive returns and long-term growth opportunities. Over the last year, we have pursued our strategic plan of liquidating selected general purpose office buildings and reinvesting the proceeds and medical office and industrial placed property.

On an annualized basis, our current projected NOI contribution pie chart now reflects 39 percent from the general office use, 10 percent from medical office use, 19 percent from industrial flex, 17 percent from retail, and 15 percent from the apartment sector. We are now at a level of projected NOI contribution from the general office sector used to be a bit more aggressive regarding that type property.

Since our last earnings call, we sold 4 office buildings containing 469,000 square feet, of which three buildings containing 410,000 square feet closed on February 1st '05. In '04 we acquired two industrial flex properties containing a total of 405,000 square feet, and two medical office buildings containing a total of 116,000 feet. First year bottom line income from these transactions represent a total of $6,700,000 estimated net operating income versus an estimated NOI from the sold properties of 4 million 250, which would have required substantial lease up and capital expenditures. With the exception of one 48,000 square foot medical office building, there is very little lease up and CapEx dollars to be spent on the new properties.

Recently, we went firm, and had expected to close before this call, the acquisition of a 259,000 square foot shopping center in Frederick, Maryland where we own another retail property. The purchase price 45.1 million, and closing should take place within the next couple of weeks. We will provide more in-depth details on this transaction after it closes.

Now, let me turn it over to Sara.

Thanks, Ed. As a note, all per share amounts on a fully diluted basis. Net income for the fourth quarter totaled $12.4 million, or $0.30 per share, compared to 11.4 million or $0.28 per share, for the quarter of 2003. Net income for the year 2004 was 45.6 million, or $1.09 per share, compared to 44.9 million, or $1.13 per share in 2003. Funds from operations for the fourth quarter totaled $21.9 million, or $0.52 per share, as compared to FFO for the fourth quarter last year 21.7 million, or $0.54 per share, resulting in negative quarter over quarter growth. FFO for the year 2004 was 85.6 million, or $2.05 per share, compared to 80.6 million, or $2.04 per share in 2003.

Results for the year differed from our original guidance in three specific areas. First, operating expenses were higher than anticipated by $0.03, primarily due to higher utility expense and repair and maintenance. Second, G&A was higher than anticipated. We plan on spending roughly $0.01 per share on Sarbanes-Oxley 404 work, and ended up at $0.02 per share. Finally, our acquisitions totalled $84 million for the year, but were weighting more heavily at the end of the year, therefore, acquisitions NOI was down $0.05 from our original expectations.

For the year, we distributed dividends of $1.55 per share, representing a 5.4 increase over 2003. Our FFO payout ratio for the quarter was 75 percent and 76 percent for the year. Our FAS payout ratio was 109 percent in the first quarter and 99 percent for the year. Funds available for distribution were affected less in 2004 by a decrease in leasing commissions, and an increase in recurring capital expenditures. Reconciliation of net income to both funds from operations and funds available for distribution can be found in our earnings press release for the fourth quarter supplemental financial report, both of which are available on our website.

Same store cash NOI for our overall portfolio decreased 1 percent, compared to cash NOI for the fourth quarter 2003. All (inaudible) store cash NOI for full year decreased 0.2 percent. Fourth quarter same store cash NOI for the office sector decreased 7 percent, driven by decreased acquisitions in Maryland and Tyson's Corner, plus increased operating expenses, primarily utilities and real estate expenses. Fourth quarter same store apartment cash NOI increased 3 percent, driven by rental rate and occupancy increases partially offset by increased operating (inaudible) primarily utilities. Fourth quarter same store cash NOI for the retail portfolio increased 4.3 percent, driven by rental rate increases, decreased bad debt expense and lower operating expense.

The industrial portfolio achieved it's fourth sequential profit quarter of same store NOI. The same store cash NOI increased 9 percent over fourth quarter last year. Occupancy increased 500 basis points, no roll down in rent. Sequentially, our results were flat, same store cash NOI for the overall portfolio increased .3 percent over third quarter 2003. Same store NOI for multifamily increased 3.(inaudible) with flat occupancies and lower utility expenses. Sequential same store NOI for the office decreased 3. 2 percent due to the lower occupancy at 7900 West Park and 1700 Research Boulevard.

Retail same store cash NOI increased 5.5 percent, increased occupancy and percentage rent, and industrial increased 3.5 percent higher revenues for operating expenses. We disposed of one property during the quarter and recorded a gain of 1 million, took back a note for 1.8 million. The buyers converting the building to office condos, most of which are already pro sold. We expect to recognize the remaining $1.8 million gain in 2005 as those units (inaudible). (Inaudible) to quarter end we sold three properties in Tyson's Corner for 67.5 million, resulting in a $33 million gain. Most of that gain will be tax deferred through a 1031 (inaudible).

At year end we had 610 million in total debt outstanding, 173 million of secured fixed rate mortgage, 320 million of unsecured fixed rate notes, and 117 million outstanding on our lines of credit. (inaudible) outstanding has since been reduced to 86 (inaudible). In total, our debt carries a weighted average interest rate of 5. 7 percent, and a weighed average maturity of 6.5 years. At December 31st our total market capitalization was 2 billion capital, resulting in a debt to total market capitalization ratio of 30(ph) percent. The company's debt to recovery ratio remains are and 3.3 to 1.

In November, we issued guidance for 2005. We expect to achieve FFO per share growth of 1 to 3 percent, ranging from $2.07 to $2.11 per share. This guidance is due to the following. Acquisitions for the year, including the Frederick shopping center, which Ed mentioned, which we expect to close March, and the remaining acquisitions weighted at the end of the year, netted against the $67.5 million disposition on February 1st to break even for the year. Any acceleration in the acquisition plan would produce positive (inaudible).

Through projected total property NOI will increase 3 percent, same store property NOI is expected to increase 1.7 percent. Average occupancy is expected to improve from 90.3 percent for 2004 to 93 percent in 2005. Tenant improvements are expected to decline slightly over all, as a recurring capital expenditures, resulting in an increase in FAD(ph) of 3 to 5 percent . In addition, we anticipate funding approximately 30 million in ground up development, and 18 million in major renovation. Finally, in regard to Sarbanes-Oxley 404, we are nearly complete with the year-end testing, expect to file our 10-K on time.

Now I'll turn the call over to Skip.

As of December 31st, our portfolio totaled 69 properties, consisting of 11 retail centers, 30 office buildings, of which 7 are medical office buildings, 19 industrial properties, and 9 multifamily properties. During the quarter we sold 8230 Boon Boulevard in Tyson's Corner for 10 million. We acquired 8301 Arlington Boulevard, a medical office building in Fairfax Virginia, for 8 million. Five buildings in Dulles Business Park in Chantilly(ph) Virginia for 48 million. Subsequent year end we sold 3 office building in Tyson's Corner for 67.5 million, resulting in a gain of approximately 33 million.

The Washington metro area office market continued to show strong performance in 2004. Significant federal procurement spending positively affected the regions job growth which translated into higher absorption, lower vacancies. Positive absorption totalled 4.7 million square feet for the fourth quarter, and 11.6 million square feet for the year. Overall vacancies in the region declined to 9.2 percent, but activity varied significantly by submarkets. While the Northern Virginia market accounted for more than half the area's positive absorption, the Maryland and DC markets held their own with 2.5 million square feet absorbed each during the fourth quarter.

Vacancies in general have not been reduced enough to provide meaningful rental rate increases. The WRIT office portfolio was 85 percent leased as of December 31st, and 88 percent excluding the dispositions. In Northern Virginia, vacancy rates decreased from 11.4 percent last quarter to 11.1 percent at year-end. Job growth across many sectors contributed to Northern Virginia's fourth quarter absorption of 2.6 million square feet, and 6.6 million square feet for the year. While government and related contractors have provided the engine for this activity, the broad-based nature of the market recovery is encouraging.

Leasing and free leasing activity has increased from both large and small units. While some unique situations may provide rental rate increases, in general, rental rates remain flat throughout the region due to significant amounts of remaining vacant space, particularly, the 6 million square feet in the (inaudible) Tyson Corridor.

At year end, office vacancies within the Northern Virginia submarket ranged from 7.7 percent in Alexandria to 8.1 percent in Roslyn, to 14.1 percent in Herndon, and 14.9 percent in Tyson's Corner. At year end, WRIT's Northern Virginia office portfolio consisted of 1.8 million square feet, and was 82 percent leased. Excluding the disposition, WRIT's Northern Virginia office portfolio contained 1.4 million square feet, and was 87 percent leased. Our largest vacancies remain at 7900 West Park in Tyson's Corner, where we have 127,000 square feet vacant due to the down sizing of XEROX, and the move out of a 40,000 square foot (inaudible) at the end of the year. We are providing increased leasing (inaudible) in this space, and expect to reduce vacancies significantly in 2005.

The downtown Washington D.C. office market continues to lead the region in overall occupancy and development activity. Strong market conditions allowed landlords to experience moderate rental rate growth, particularly for large users. Vacancy rates decreased to 6 percent from 6.4 percent in the prior quarter. In the fourth quarter, 1.1 million square feet was absorbed throughout the city. Vacancy in the two largest D.C. markets is 6 percent in the CBD, and 8 percent in the east end. Approximately 6.2 million square feet of space is under construction in the district, at an estimated 60 percent of free lease. 1.1 million square feet commenced construction in the fourth quarter, and 1 million square feet delivered.

For WRIT, D.C. office portfolio consists of 461,000 square feet, (inaudible) 96 percent leased at quarter end. The 147,000 square foot renewal and expansion of World Bank at 1776 G. Street was executed subsequent to quarter end. The Burbon Maryland overall leasing activity increased during the fourth quarter, with net absorption of 2.5 million square feet for the year. Overall office vacancy dropped to 10.1 percent from 11.1 percent in the previous quarter. At year end, individual submarket vacancies, including sublet space, ranged from 9 percent in Silver Spring, 13.4 percent in the (inaudible). Rental rates remain flat to down depending upon submarkets. While activities increased in Montgomery County, NIH and it's subcontractors continue to show little demand. Recent activity in the green belt area of Prince George(ph) county should provide positive results for the first quarter of 2005.

At year-end, WRIT's Maryland office portfolio consisted of 1.7 million square feet, and 86 percent leased. Our greatest leasing need is at Maryland trade center one and two, where we had 119,000 square foot vacant at year end. We have excellent activity on this space, and expect to make significant occupancy gains there in the first quarter of 2005. During the fourth quarter, WRIT leased 160,000 square feet of office space, with an average roll down of 10 percent on a cash basis, and 2 percent on a GAAP basis. Tenant improvement in leasing costs averaged $11 per square foot.

Our office retention rate for the fourth quarter was 35 percent, and 49 percent for the year, based on square footage. The retention rate was negatively affected by anticipated large tenant moveouts by Suntrust Bank, [Northrop Drummond], and Maine Control. The retail market is in excellent shape in the D.C. region, with continued job growth throughout the region, retail occupancies and sales remain strong. Investor demand for retail properties is intense.

Occupancy within WRIT's retail centers has he remained strong at 97 percent leased at year-end. During the fourth, we leased 39,000 square foot of retail space, achieving a 17 percent increase in rents on a GAAP basis, and 5 percent increase on a cash basis. Tenant improvement and leasing costs averaged $9.70 per square foot, and were affected by a $50 per square foot cost for tenant at Chevy Chase Metro. CI leasing costs for the year averaged $3.39 per square foot. Our retail portfolio retention rate for the fourth quarter was 91 percent, and 77 percent for the year. For 2005, we expect to see continued high occupancies and rising rents.

The apartment market in DC and Northern Virginia region continue to improve. The strongest growth in multifamily rental has occurred in Northern Virginia due to condo conversions and pace of the economy in that region. In contrast, suburban Maryland, primarily the North Bethesda through Rock Belt has a large supply pipe line, and has not enjoyed either the job growth in Virginia, nor the level of condo conversion as Virginia or D.C. The continued low interest -- residential interest rate, we expect that Maryland will ramp up condo conversion activity in 2005, which should assist in increasing multifamily occupancies. In the district absorption and condo conversion projects have kept vacancies risks increases at bay, and rental rates stable. 2005 we anticipate rental rates and occupancy rates to increase throughout the region. The WRIT multifamily portfolio was 92 percent leased at year-end.

The Washington region industrial flex market continue to benefit from the region's strengthened economy. More than half of the region's absorption occurred at the Baltimore Washington corridor, and sublease space was reduced significantly. Northern Virginia posted it's best results in four years, led by the absorption in the Dulles corridor. We are experiencing both reduced vacancies and increased rent in those submarkets and expect this trend to continue in 2005.

WRIT's industrial portfolio continues to expand. In December, WRIT acquired the 5 buildings, 265,000 square foot belt business park in (inaudible) Virginia. We anticipate further closing on another building in this market in late March upon completion by the current developer. The WRIT industrial portfolio was 95 percent leased at year end. Overall leasing activity and tenant prospects (inaudible) have increased. During the fourth quarter, WRIT leased 272,000 square feet of industrial space. Rental rates increased 3 percent in a cash basis and 15 percent on a GAAP basis. CI and leasing costs were $2.27 per square foot, and tenant retention rate was 82 percent for the quarter and end year.

On the development side, construction on Roslyn Towers project in Roslyn Virginia, where we are constructing 224 multifamily units, 5,900 square feet of retail is underway with completion expected in the fourth quarter of 2006. Plan for the approved 95 residential units and 4500 retail square foot additions to the 800 block South Washington Street in (inaudible) Virginia are progressing.

Last Saturday, the Alexandria City Counsel approved our plans to redevelop and renovate our Foxchase shopping center. Harris Cheeter(ph) will be our growth or anchor, and we expect the center to fully come on line in late '06. Income producing real estate in all sectors are improving. We are now seeing the smaller office space users returning to the market. Rental rates appear to be stabilizing with a modicum of upward pressure. We expect 2005 to continue to show reduction in vacancies and by year end upward pressure on rental rates.

Now, we will open the call for your questions.

[Operator Instructions] Yes, sir. Your first question comes from the line of David Finch with Legg Mason.

Hi, David. How are you.

Good. Ed, I was wonder if you could sort of of -- you guys provide a lot of details in your supplemental and your filing and your press release, as well as your prepared comments. I was just wondering if you could give a, sort of overview strategy as to where you see the Company's growth program heading both in terms of assets under control, but more importantly, how do you to get back to a more normalized earnings growth platform that will be more comparable to your peers? And, at least beating inflation going forward.

Long question. First off, part of it started with liquidating, particularly in this market place, a couple of the office building that we have to get our ratio of -- and net operating income contribution down so we could really take a hard look at some office buildings that we're very interested in but we have not pursued the past. And we're at that level now. So, in the meantime, what that enables us to do is acquire other assets, either office buildings, or as we recently de did the Dulles Park Newark properties, which don't really have any real current need for CapEx items that are reasonably well leased, so your tenant expenses -- lease up expenses are somewhat limited. That's one area.

The other is, we see on a current basis with the vacancy we have in our existing office portfolio some real lease up opportunities. Now, we don't see rental ramp up in some of these to any great degree, because there is still a roll down build in these buildings, because some of these leases are coming due. Our leases that we did several years ago are still at levels are higher than what we think the renewals will be. And to answer your question, of inflation, to some degree we're protected. It depends on where you think inflation is going, but based on current knowledge regarding inflation, average, we had built into our leases in the existing portfolio, close to -- or an average about 3 percent bumps in these leases year to year and so, I think that takes care of where we are to a certain degree on the -- from inflation, and the assets that we are acquiring also have built into those particular assets bumps, as well. So, that's one area.

The other is we want to continue expanding our medical office building complex. First off, on on overall cap basis, we're able to get better returns on invested capital from those facilities, and typically, the leases in place are demonstrating between a 3 and 4 percent escelation, and you really have very little rollover in those particular property types. I don't know if that answers it all David.

It does. You know who where I'm headed. I'm just trying to find a catalyst for your shares to begin outperforming a little bit, and you've had a few years where you've had to deal with down markets and some legacy assets, but we're seeing a lot of acquisitions activity, very aggressive by some of your peers, as a few companies that have been formed in your market that are directly competing with you, who are showing earning growth in the 7, 8, 9 percent range, and, ultimately that's going to drive your total return performance, and I'm just -- I try to figure out how to model forward years where we sort of get out of this 1 to 0 percent kind of FFO growth profile.

Well, part of it, David, I think is probably -- there are two pieces to it. One is, we really need to ramp up our acquisitions, and, and maybe over the last year or so, I've been too focused on really getting, what I think are appropriate returns on invested capital to real estate, and I really don't care to chase what I've seen in the way of some of these transactions that have been done, not only by REET, but by the other acquirers of real estate in our region. I guess, the answer is, not only ramping up our acquisition program, but the other side or it, I still want to keep it very high dead service coverage. I think that we're going to be in real estate for a long time, and maybe over the near term, we may not move as quick as some others, but I really feel that we ought to take our time and manage our business ourselves as we see fit.

In addition to that, we also have development coming on-line, particularly from a positive standpoint, really having an impact on our income in '06, with the things that Skip mentioned in regards to the retail and the apartment and that we have under construction. So, I think the combination of those things will enable us to, number one, outgrow inflation. Secondly, we have a very sound balance sheet, and I'm very focused on keeping a sound balance sheet, and if we have to give up a little near-term earnings to do that, I'm willing to do it.

Okay. Thank you. Good response. I just have one other detail follow up. You gave a negative same store NOI growth for the overall portfolio. Do you have that broken down by property type?

Are you talking about for 2004, or -- you're talking about 2004?

2004, that's right.

Yes. It's broken down by property type actually within the supplemental.

Okay. I'm sorry, I missed that. We'll find it there, that fine.

It's on page 11.

Your next question comes from (inaudible) with A.G. Edwards.

Hi, Scott.

Hi, guys. Sarah, could you just recap what your occupancy assumption was in your guidance?

Yes, I assumed that we would go from 90.7 on average for the year 2004 to 93 percent on average for 2005.

On average for 2005?

Yes.

Okay. And that's primarily due to, I'm assuming, some of the properties that were sold as lower occupancy, and --

Correct.

Okay. Can you guys maybe just comment in terms of how much NOI you're expecting to -- expecting to gain from the Westminster development?

Scott, let me just answer directly on the shopping center space. The current lease with Food Lion(ph) is at $9 per square foot, and I believe that was just under 40,000 square feet.

Okay.

So that's about $360,000 in income from that space. The prior supermarket, now, I don't have it in front of me, it was in, like, the $2 per square foot range.

Okay.

So, if you look at the past year where we've had the space down for almost the we'll year, you're looking at almost $300,000 income over the prior year, because there was no income, it was under construction. If you go back to the old co-op supermarket days, that lease was only at a couple of dollars per square foot, so the gap is a little bit tighter.

Thank you. In in term of the line of credit, could you refresh my memory what the size of your line is?

Scott, we have 50(ph) million with Suntrust bank, and 85 million with Bank One and Wells(ph).

Okay. Thank you guys very much.

Your next question comes from the line of Arthur Beckhoffer(ph) with Independent Investors Forum.

Hello, Arthur.

Yes. My question deals with your debt levels. You characterized the level of debt in comparison with your competitors?

Would you repeat your question? We couldn't hear you.

Oh, can you hear me now? Is that's all right.

That's better.

Can you characterize the amount of debt that you're carrying, in comparison to other REETs, either in the area or nationwide for the type of properties that you hold?

Well, in general, it's lower. We have one of the lower debt to total market capitalization ratios in the REET universe.

We are rated by S&P at 8 minus, EAA1 by Moody's. And, as Sara said, we have probably one of the better balance sheets in the industry open debt service coverage. And keep in mind, we talked about that, we have no outstanding preferred, so our fixed charges are not similar to others who have substantial outstandings on the preferred stock side. So -- and we -- and that gets back to probably the answer I gave earlier, is that we want to keep a very strong balance sheet, because, I look at this as a total return company with the fact that we want to be able to increase our dividends each year, and I don't want it to be at sometime in the future impacted by the fact that we have high debt service coverage. Did that answer your question?

(Inaudible)

Frank?

Yes. Am I on?

Yes, you are.

Okay. I'm sorry about that. I guess moving on to your acquisition assumption. Did you indicate that you had -- that you're expecting flat -- or no net acquisitions in '05?

No, we are, Frank. We've modeled in the 45 million from Frederick, expected to close around, essentially March 1st. And then, I've weighted the other 50 million toward the end of the year. And so, when you weight out that acquisition NOI, and net it against the disposition NOI of 67 million -- the dispossession of 67.5 million starting February 1st, when you weight that all out, it ends up being flat. Now, if we're able to increase our acquisition activity and bring it more towards the beginning year, then, we'll have positive.

Okay. Sorry that I missed that.

That's okay.

For G&A, it was -- it was a little bit higher than I expected. Was that Sarbanes-Oxley cost in the quarter?

Yes, we -- we ended up spending for the year, and most of which hit fourth quarter, $0.02 a share in Sarbanes-Oxley 404 costs between internal audit cost and that portion of the external audit cost. Going forward, I would expect that that would be closer to a penny.

So a good run, maybe, on a quarterly basis is what, 1.2, 1.3, 1.4 million?

You are talking about total G&A?

Yes.

I would say closer -- a little bit higher than that, because their overall expenses, have this prior increasing, so I would say probably (inaudible)

Okay. And I'm sorry if you touched on this, as well, but can you go over maybe what you're seeing as far as your lease expirations, and in '05, and just how you view those?

Well, the -- the major rollover is in office, and as Skip mentioned, we just renewed 6.2 million of the office revenues as expiring in 2005.

That's right.

And frank, could I just clarify that? Back to the supplemental, I think we had $15 million in annualized rent rolling. Approximately 6 million of that is the World Bank/IMS space. So, that basically takes that down to $9 million and change rolling in the office sector.

What was the roll on that new lease? Was it up or down, or flat?

It was -- on a first year basis, it was approximately flat. So, basically, the rental rates stayed flat for that year, and then there's a 2 percent per annum after that.

For GAAP a little higher?

Yes.

Your next question comes from the line of Chris Lucas with Robert Baird.

Chris.

Hi, how're you guys doing?

Good.

Good.

A couple of just detail questions.

Just a moment, Chris, for some reason we're not getting good reception.

Can, you hear me?

Yes. Now.

Skip, I guess in the supplement, the amount is about 13.8 million of rent for the lease expirations in office excluding properties for sale, so that's 6.2 off the 13.8.

Okay.

Okay. Is that right?

Yes.

All right. What sort of traffic -- and if you've already touched on this, I apologize, but what sort of traffic are you seeing at 7900 West Park?

Very good. One of the reasons that you ended up with such a high vacancy is those -- the Maine control, in particular, lease rolled at the end of the year, and the XEROX space was given back to us near the end of the year, because the renewal required us to do tenant improvement work in their space, so we weren't able to recapture the vacancy until late in the year. But we're seeing very good activity to there.

In terms of the line, you ended the year with 117 million outstanding, and you generated 67.5 million of proceeds during the quarter for the asset sales?

Right.

I'm assuming that all goes back towards the line until you --

so, it would, expect there's a portion of it went to a 1031 exchange.

Do you have a sense as to what your quarter end line number would be? For the first quarter?

My quarter end line, I expect to be -- I expect it would be -- it will be about flat, 86 million, actually, because we're going to use most of the net proceeds that we'll need for Frederick will be used from the 1031.

Okay. So, 86 million, you think, roughly?

Yes.

Okay and then just a last detailed question. Do you are have a breakout for revenue and expenses for the assets that were included in the discontinued operations piece?

You know, I have that. I don't -- it's -- hold on one second. It's netted in the --

Right.

I can get that to you.

Okay. I'll follow up later. That's it. Thank you.

Okay. Thanks, Chris.

Again, ladies and gentlemen, I would like to remind you, if you would like to ask a question at this time, please press star then the number 1 on your telephone keypad. Star 1 if you would like to ask a question at this time. And we will pause just a moment to compile the Q&A roster.

Not hearing anymore questions, let me thank everyone for joining us today, and as always, we greatly appreciate your participation and support. All of us are available to answer any other questions you may have, and we do look forward to hearing from you. Thank you.