Mid-America Apartment Communities Inc (MAA) 2003 Q1 法說會逐字稿

Good day. All sites are now in the conference line in a listen-only mode. Welcome to the Mid-America Apartment Communities first quarter earnings release. I would be happy to turn the program over to the Chief Executive Officer of Mid-America Apartment Communities, Mr. Eric Bolton. Go ahead, please

Thank you. Good morning. This is Eric Bolton, CEO of Mid-America Apartment Communities. With me is Simon Wadsworth, our Chief Financial Officer, Al Campbell, Director of Financial Planning and Tom Grimes, Operations Director of our property management group. Before we start, I need to remind you that part of our discussion this morning we will make forward-looking statements. Please refer to the safe harbor language included in our press release and our 34 act filings with the SEC which describe risk factors that may impact future results. We will post a copy of the prepared comments as well as an audio copy from this call on our web site. In our prepared comments this morning, Tom will review property management operations for the quarter. Al will recap portfolio performance by market and provide insight from what we expect from our markets for the remainder of the year. Simon will discuss the balance sheet and forecast for the rest of 2003. We will then open the phone lines for any questions you may have. Our comments should last 20 minutes.

Let me start by providing an overview of the quarter's results. Mid-America had a good quarter. Our company's strategy, developed with a mission to deliver attractive risk adjusted investment returns characterized by steady, predictable performance, continues to produce solid results during a period of significant market weakness and volatility. While we were pleased with operating results for the first quarter as compared to our forecast and continue to believe the FFO performance will remain on track with the guidance for the year we have previously provided, market conditions do remain competitive. We believe our performance will continue to hold up well during this weaker market environment. Importantly, we believe that our balance sheet and our operation are increasingly well positioned to capture solid upside that an improving economy and market conditions will bring. We're encouraged to see same store rental concessions in the first quarter post a significant 27% decline over the same period last year. However, I feel it is too early to suggest that a definitive recovery in part of our markets is under way. We will need stronger job growth coupled with a slowdown in new construction before appreciable improvement and leasing conditions resume. This is particularly true in large metro markets of Dallas and Atlanta where we continue to be several quarters away from establishing pricing leverage. Overall, we expect revenue performance will continue to be sluggish for most of the year. Rental concessions and lower rent growth will persist in the larger markets through the summer leasing season. However, we do not see conditions worsening in any markets, and I'm comfortable we will see flat to slightly improving conditions in our various markets from this point forward. Our portfolio properties and a strategy diversified across large, middle, and small tier markets, coupled with our routine heavy focused on property operations will continue to deliver one of the more stable operating performances in the apartment [inaudible] sector.

As noted in the press release, property operations generated first quarter result that were better than we forecast and a slight improvement from last quarter. This favorable performance was due to lower property operating expenses and repair maintenance as we achieved both lower residence turnover during the quarter as well as positive early results associated with new maintenance productivity programs implemented last year. We have always had a very significant focus on operating expense management and productivity within our operation. I think it is important to note that our same store property controlled expense performance for the first quarter of 2003 was down 1.7%, marking the ninth straight quarter of just over four years where year-over-year property level operating expense performance, excluding taxes and insurance, has posted less than 3% growth. We believe in a highly competitive industry such as ours, operating productivity is a key differentiating factor and a competitive advantage over the long term. In addition to the solid operating results for the quarter, we were successful in acquiring two high quality properties since the first of the year through the joint venture initiative and for one -- we also made an acquisition for our own account. The balance sheet continues to be more flexible and coverage ratios are strengthening. It is worth noting at the end of the first quarter, Mid-America's fixed charge coverage ratio was at a five-year high. Our focus in laying the foundation for improved earnings performance during this weak part of the cycle through, one, completing lease-up of our development properties. Two, protecting value and cash flows of our existing properties. Thirdly, carefully deploying capital and balance sheet capacity and partnership private capital is on track in generating positive results. I'll now turn the call over to Tom to provide more detail on property operating results. Tom

Thank you, Eric. Property operating results are clearly reflective of the tough leasing environment. We believe a number of new initiatives developed over the course of last year are making an impact. We implemented a revised resident retention program that defines recurring resident contact points during the lease term, community awareness programs, and early lease renewal practices. The result of this focus are beginning to show. Resident turnover on a same store basis was down 2.8% as compared to the first quarter of last year and down 5% versus the prior quarter. This marks the fourth consecutive quarter we have seen year-over-year comparative turnover trends show a reduction. We feel our focus on resident retention is particularly important during a time of soft markets. We've also implemented an on-site maintenance efficiency program. This benchmarks per unit expenses on key repair and maintenance activities. In addition, we have modified a portion of our on-site incentive program to target performance in reaching these benchmarks.

One of the significant benefits realized so far has been an improvement in labor utilization and contract maintenance services. We have tracked our leasing traffic patterns over the years, and have in place specific guidelines for each property on lease expiration targets. This inventory management process attempts to match availability with demand and, therefore, minimize downtime between turns and advertising expenses.

Traffic volume was down in the first quarter as compared to last year, but showed the seasonality we anticipate and plan for. Leasing traffic during the quarter was down 9.2% as compared to last year, but up 26% versus the fourth quarter of 2002. April traffic as anticipated was up 14% from March, and we expect continued growth as we head into our busy season. As Eric mentioned earlier, a result of these programs was same store property operating expenses for the quarter were down 1.7%. Our expense line has also benefited from reduced turnover already mentioned and our continued focus on productivity at all levels of the organization.

Same store revenue performance was down by 1% as compared to last year. This was driven by occupancy performance but somewhat offset by lower concession levels. Same store occupancy was 91.9% at the end of the first quarter. That's compared to 94% at the same point last year, and flat versus the prior quarter end. Average rent per unit has remained relatively flat, down just .3% from the same quarter last year and down .2% from the prior quarter. As we head into our busy season, we will be monitoring rent performance closely. Overall, we anticipate that rent growth will be flat for the year. We were pleased to see same store concession levels decrease in the quarter on a year-over-year basis by 27.4% and down 7.5% from the preceding quarter. This is the second consecutive quarter we have seen improvement in concession loss over the prior year, and while we anticipate that it will remain high in Dallas, Atlanta, and several other markets, we expect to see a steady decline this year for the overall portfolio. In a highly competitive markets, we will aggressively compete to product quality, presentation, and with pricing or concessions, when necessary. However, we feel it is the wrong long-term tradeoff to lower customer credit quality to try to encapture short-term occupancy boosts. Net delinquency increased from 8/10 of 1% of net potential rent to 9/10 of 1% of net potential rent from the same quarter a year ago. However, on a sequential quarter basis, delinquency is down from 1.1% reported in the fourth quarter of 2002. We are particularly vigilant in our operation about not compromising leasing and credit standards. We will continue to keep a close eye on this and do not expect material movement up or down in net collection losses despite the weak economy. Al.

Thank you, Tom. Market conditions continue to be very competitive. However, our strategy of diversification across large, middle, and small tier markets has shown its strength this period as the middle and small two markets have acted as a stabilizing factor allowing our portfolio to perform relatively well overall in this tough market.

Our biggest challenge continues to be our large metropolitan markets, which have been hit hard by job losses over the last year, while at the same time continuing to receive new apartment units from the construction pipeline and meeting strong competition from the single family home sales. Our properties in Atlanta and Dallas have seen the brunt of this tough leasing environment as hyper competitive conditions have pushed vacancy levels above 13% with the continued need for concessions and selective rent reductions. New permits for multi family construction has begun to come down in both markets but the absolute level of approved new units still remains stubbornly high.

We've also seen Tampa soften over the last few months as vacancy for our four properties reached 12% at the end of the quarter. However, Tampa's economy is showing early signs of improvement as it added nearly 15,000 jobs during last year or 1.2% growth. We should begin to support recovery going into 2004. Houston was our one stand out in our large market group during the quarter. Growing revenues 3.2% over the prior year, while ending the quarter with vacancy with less than 5%. However, we do expect recent development in activity to push occupancy levels toward the 91% to 93% range over the remainder of the year.

On balance we believe the performance of our large market portfolio has essentially bottomed out, but will continue to bump along the bottom for the remainder of this year with recovery beginning in 2004, closely tied to stronger job growth and development discipline. On the other hand, our middle and small tier markets continue to improve their value with relatively stable performance on a same store basis, half of these markets produced positive revenue growth during the quarter. Our middle markets produced essentially flat revenue performance as a whole, while our small tier markets grew revenues about one half of a percent overall.

Jacksonville continues to be a leading market for our portfolio. As market supply and demand has remained essentially in balance. Revenues there grew 2.7% on a same store basis over the prior year, while occupancy for the quarter had a solid 94.3%. We expect continued stable performance in Jacksonville throughout the remainder of the year. Memphis, our largest concentration of properties, was another stand out market for the quarter producing our overall best [inaudible]. Revenues for the same store group in Memphis grew 3.6% over the prior year, while [inaudible] control and expenses combined to produce a 6% in [inaudible] . We expect a limited supply of new apartments in Memphis in the next several quarters and should allow continued recovery as the economy and job growth improve. Our properties in Jackson, Mississippi and Little Rock also contributed to the stable performance producing solid revenue growth, Jackson at 6.3% and Little Rock at 9% and ending the quarter with occupancy between 94% and 95%.

On the acquisition front, we continue to make solid progress to our strategy of adding assets in the [inaudible] Texas and southeast. During the quarter we completed the purchase of two properties. The preserve in at Arbor Lakes in Jacksonville and Green Oaks in Dallas. Both are part of our joint venturing initiative with [inaudible]. Green oaks, which was initially purchased 100% by Mid-America was transferred to our joint venture on May 1 marking the completion of about 75 million or one-half of our initial investment objective with our partner. Outside the joint venture, we closed on the purchase of Jefferson Pines at 309 unit apartment community in Houston on May 6. Jefferson Pines is an upscale community constructed in 1999 located in the growth corridor of northwest Houston. Also, as mentioned in our call last quarter, we've executed a contract to sell the Crossings, which is an 80 unit older property in Memphis to redevelop the site. We will receive proceeds representing a subset in Cap rate upon closing, which is now expected to occur during the third quarter of this year. We continue to actively pursue additional acquisition opportunities in a number of our target markets. Some initial styles of the acquisition market is improving and encourages us. We are beginning to see increased deal activity and more deals are coming around after an initial refusal of higher prices. Simon

Thank you, Al. At 70 cents, FFO per share for the quarter was 2 cents above the same quarter a year ago and 3 cents above the midpoint of our prior forecast and 5 cents above first call's estimate. Compared to our forecast, about half of the improvement resulted from a reduction in repair and maintenance expense. Interest rates were also lower than we expected and we picked up additional savings from the efficient execution of our refinancings. We've only one remaining development property still in the process of stabilization, Reserve at Dexter Lake phase three in Memphis, which is now 86% occupied and lease-up should be complete by the end of the second quarter. We completed the refinancing of $149m of debt on March 3. We prelocked the rate on this through swaps which go into effect between March 3 and June 1. As a result, we reduced our effective debt cost to 5.0% down from 5.8% at the end of the prior quarter. Some comments on the quarter.

The same store revenues were down by 1% over the same quarter a year ago. Our total revenues increased as a result of owning 100% of Green Oaks in Dallas two months of the quarter before it contributed to the joint venture in May, and the performance of the development properties which we're completing lease-up. Our fee income and our FFO from joint ventures are going as a result of the new joint venture with Crow Holdings. Our total investment in the Crow Joint venture quarter end was $11m. We announced in our press release that the relatively stable performance of our portfolio and the low interest environment has helped us reap a five-year record high for our fixed charge cover ratio and the debt service coverage ratio improved again to 2.43 from 2.30 a year ago. Unlike many apartment REITs, we're not exposed to development risk, and our balance sheet is conservatively structured for our business strategy. At the end of the quarter, 84% of our debt was fixed, swapped, or forward swapped, and with less than 10% of our debt maturing in the next 18 months, we're well placed with standard rising interest rate environment. As we promised in our prerelease, we revisited our forecast for the balance of this year, and we've taken our forecast of FFO per share up slightly to a range of $2.75 to $2.80. We are forecasting, thanks to our NOI, to be down 2.5% as markets continue to be weak. The year-over-year trend to improve gradually as the year progresses, not because of any significant quarter-over-quarter improvement, but, more, because the second half of 2002 was quite weak. We're projecting second quarter FFO per share to be in the range of 70 to 72 cents. We think same store NOI will be trending 4.5% below the same quarter a year ago and be down slightly from the first quarter. The quarter's results will be helped by 2 cents per share from reduced interest rates due to our March 3 refinancing, the swaps on this phase in between March 3 and June 1, and for the higher fixed rates become effective gradually during the quarter taking our average interest rate to 5.6% by June 1.

For the third quarter, we're projecting a range of FFO of 66 to 69 cents per share, down from the second quarter due to the higher fixed interest rates and also from prepayment penalties of 1 cent per share from a planned refinancing. Our current projections are for fourth quarter FFO per share to be in the range of 69 to 71 cents. Preliminary information on our July the 1st insurance renewal gives us hope that rates may increase in the region of 5%, compared to the 15% we previously projected. We're being conservative and have not adjusted our forecast at this point. If we are correct, the expense savings could be as much as 1 cent per quarter for the second half of the year. On the other hand, our real estate taxes, which are projected to increase by just over 3% for the full year on the same store basis, do not give us such cause for hope with rate and value increases being aggressively pushed by most jurisdictions. The forecast doesn't include the impact of additional acquisitions. We continue to seek to make joint venture investments with Crow Holdings and it could add 1 to 2 cents per share for our forecast for this year. We've included in our forecast 1.5 cents per share from additional refinancings, which we're wrapping up. On April 1 we refinanced a $35m medium term loan and we have also renegotiated the renewal of our bank credit facility, reducing it from $70m to $40m. We've reached an agreement on the terms and expect it to become effective in July. We feel confident about our ability to execute our business plans and sustain our dividend. Our concentrated focus is on improving our dividend coverage. As we've noted in the supplemental data in our press release, our dividend is covered by our free cash flow. Through our joint venture plans, we're actively working to protect the dividend further, and we have confidence in this year's FFO projection. Our free cash flow, which adds back non cash charges, was $2.37 per share for 2002, 3 cents ahead of our dividend. We're projecting our FAD for 2003 to increase over last year, and our free cash flow, again, to be ahead of our dividend. While we recognize FFO needs to grow to improve the dividend coverage, our dividend is secure within our range of forecast for the year. Eric.

Our operation, our properties, and our balance sheet continue to make steady progress on improving earnings performance and dividend coverage. Our strategy built around a solid market diversification, including large, middle, and small tier markets focused on the moderate to upper price rental market in the steady growth region in the U.S. will, we believe, continue to deliver predictable and steady earnings performance. Our strength in property management operations and a focus to ensure that we protect value addressing both the physical needs of the property as well as the credit quality of the customer base renting in our properties ensures that Mid-America's portfolio is poised to resume higher earnings growth as the economy and markets recover. We continue to place our current net asset value in the range of $26 to $28 per share, until the company is poised to feel the company is poised to see steady growth in this value over the next few years. That's all we have in the way of prepared comment. We'll be glad to answer any questions. Lee, I'll turn it back to you.

Very good. If you would like to ask a question at this time, press the star and one on your touchtone telephone. Once again, if you would like to ask a question, please press star and one on your touchtone phone. To withdraw yourself from the queue, you may press pound. One moment while we queue for questions. We'll take our first question from the site of Mr. Rob Stevenson at Morgan Stanley

Morning, guys

Hi, Rob

Eric, can you talk about what's going on in your portfolio in Atlanta and Dallas, specifically? That produces such low occupancy numbers relative to the market. Are you guys not having high enough concessions or is it something else?

Well, I think that, as you know, I spent a lot of time at our properties and I've spent a fair amount of time in Dallas and Atlanta over the last few months. A couple thoughts. One, we are being fairly aggressive with concessions and pricing and in competing to a point. I think that the danger you have in this kind of an environment is to try to get too aggressive and buy occupancy and you begin to compromise in area that I think can have negative consequences long term. We spent a lot of time in our operation thinking about kind of the priority of product, people, practices and price. Price is the last component there. I feel that we can be better in some areas regarding our product and some of the practices, and we're making some improvements there. Really, our Atlanta and Dallas portfolio occupancy, we have seven properties in Atlanta, and we've had some pretty tough performance issues, occupancy issues at two of them. The two happen to be the larger of the seven. That's pulled the whole group down a little bit. The same situation in Dallas. We have eight properties, three with a real tough occupancy battle. On balance, I would say we are being as aggressive as we probably ought to be. In concessions. Could we be more aggressive? Absolutely. I think we begin to compromise in areas we shouldn't. I think we are being as competitive as we should in pricing. I think we will continue to do some work to improve other areas. One other thing I'll mention is recognize this is a low point in the year for occupancy. This is always the first quarter is when we tend to be the lowest. We're heading into our busy season. Starting to pull a lot of triggers on pricing at this point in the year, I think, is inappropriate.

I assume that those numbers, the 86.2 and 86.9 were average occupancies for the quarter. Did they bottom significantly below that for the quarter?

No. That was the end of the quarter point, and, yes, we feel like that's bottoming. Usually, literally, the end of the first quarter is usually the low point on average in most cases. We are seeing traffic patterns pick up a little bit in April. We've got some new things going on in both of those markets that will help. I expect we'll see occupancy pick up steadily over the next few months.

What is a hundred basis points holding occupancy mean in terms of FFO to you guys?

About 10 to 11 cents a share.

All right.

For a full-year basis.

For a full-year basis, yeah.

Okay. So going into the second and third quarters, are you expecting to pick up occupancy holding all else equal or do you think given the competitive nature and turnover, the concessions are going to trend up in order for you to pick up the seasonal occupancy gains?

I don't think so. I think a lot of the overall improvement in concessions, lower concessions, if you will, have been driven by our middle and small tier markets on a year-over-year basis. We are being competitive in my mind already in Atlanta and Dallas on pricing. I think that we will see improvement in occupancy more as a function of the season and increase leasing traffic as opposed to any sort of additional pricing concessions that we'll get into. I don't think we need to.

Rob, this is Simon. In our forecast that Al has been working on, we do see -- we're projecting our occupancy seasonally to increase, up in the mid-94 region and concessions to increase slightly. Again, it is a seasonal function.

Overall.

Overall. But no huge impact, of course, on the bottom line because we're protecting things that fell flat.

Okay. Can you guys talk about the acquisitions during the quarter and, also, the Houston acquisition. Where was occupancy on these properties when you got them? You know, do you think that's above, below where you guys are going to wind up operating them in terms of rental rate and occupancy?

Well, the preserve at Arbor Lakes in Jacksonville occupancy initially is around 94% to 95%. That's, as you know, been a fairly stable market. It's phase two. The newer phase of a two phase development. The first phase is going condo right now. This is a pretty upscale property in a very nice part of Jacksonville. We have two properties within a mile of this one particular property. We feel like through some CAPEX improvements and repositioning capital, it is a 1992 property that we'll be able to see steady rent growth at that particular property over the next few years. The Green Oaks property in Dallas was right around 93%, 94% when we bought it. It's a 1996 property. I think that, really, the upside there, we, obviously, expect that market to continue to be very difficult for the balance of this year. I think that we've seen, you know, some pretty -- there were some pretty aggressive pricing and concessions going on at that property that we believe we'll be able to pull back as market conditions improve there. The most recent acquisition, Jefferson Pines in Houston, you know, this is a very, very nice property. It is 1999 built. J. P.I. out of Dallas developed the property. We acquired it at roughly just below $70,000 a unit and we feel there's a great play on replacement value. We have a pretty -- the property was at 92%, 93% when we bought it. We have a pretty significant concession assumption built into our forecast. Probably one of the other big opportunities here is there is an incredibly high turnover at this property under the old management that we think we can cure. So all of them are a little bit different in terms of the upside. We feel good about all of them.

Okay. What were the purchase price of the Jefferson Pines and Jacksonville assets?

The Jefferson Pines property was under $70,000 a unit. Preserve at Arbor Lakes in Jacksonville was at $78,000 a unit.

Okay. Lastly, what are you thinking in terms of acquisitions in terms of the market these days? Are you more inclined to do wholly owned or more inclined to do JB at this point?

We We're more inclined to do JV. That's a prudent way for us to put our capital out. We have a great working relationship with the guys at Crow. We know each other very will, and, you know, we're sort of feeding off each other. They see a lot of opportunities. We see a lot of opportunities. We've got our teams working together nicely with some pretty conservative and similar underwriting practices. We feel it is a great partnership, and I feel that the vast majority of our capital will continue to be deployed via that platform.

Okay. Lastly, Simon, for the Memphis disposition in the third quarter, what sort of a rough number are we using for models purposes in terms of a selling price there?

It is about 5-6, or 5-7 in that region.

$5.6m or $5.7m?

Yes, Rob

Thanks, guys.

Thank you.

Our next question comes from Paul Puryear of Raymond James.

Thanks. Good morning, guys

Hi, Paul

A couple of questions. Simon, the 4.5% decline in the same store NOI in the second quarter, could you comment on why that accelerates actually, versus the decline of the first quarter this year?

I think it's more of a function, you know, if you like last -- of our second quarter last year and the relative performance. I think, Al, do you want to comment?

I think really, Paul, it is a function of last year market conditions. We're not quite as weak as we see them now for Dallas and Atlanta in particular. You know, we're also seeing, as we mentioned, a weakening in Tampa. So where as we see some Q2 to Q2 definitely improvement taking place in Memphis, we expect that the Atlanta/Dallas portfolios Q2 to Q2 will trail off a little bit. That's what's, primarily, on an overall basis creating -- we hope to do better. At this point, we feel like that's probably a reasonable expectation of what's going to happen.

So you're not ready to call a bottom in Dallas and Atlanta?

I think in terms of the sequential performance, I don't think quarter one to quarter two we won't see a worsening. In terms of Q2 to Q2 year-over-year, I think, clearly it is worse. In terms of a bottoming, yeah -- I don't think we're going to see either in Dallas or Atlanta things deteriorating from this point forward in any material way or, you know, any real way. I think, yeah, we are continuing to bump along the bottom. I think we have been for the last three quarters or so. These next two quarters will be very, very important to get a sense of what's really happening there. We should see a seasonal improvement.

Hey, Simon. It's Bill. Didn't you say you thought sequential NOI would deteriorate first quarter to second quarter or did I hear you wrong?

No. That's right. We are projecting a slight decline sequentially in the second quarter NOI.

I guess that's what we are trying to get at, is given the seasonality and the positive factors and the fact you feel leasing activity is picking up.

What it really is, Bill, we're being a little conservative on the expense side. You know, we had -- we will see an increased number of terms as we go into the second quarter. We have a lot of lease renewals that we're addressing and faced with, and so, you know, where we're seeing a slight pickup in revenues, which is a seasonal thing on a sequential basis, we're seeing it's an expense on the turn cost that we're going to be dealing with

Did you have any weather damage or disruption in any of your markets?

In Jackson, Tennessee, which suffered some pretty severe storms, we have five properties. We were very, very fortunate. All tolled we think we may have $40,000 worth of window replacement and roof work. Not enough to file under the deductible. No, no damage. We're very fortunate

One final thing as it sort of relates to the next few months. Interest rates have come down back a little bit, mortgage rates I'm speaking of now. There's talk the fed may lower in June. You know, the single family buyer gets a little more incentive. As you roll into the season, that can't be viewed as good news?

No. I think, clearly, the mortgage rate environment has put some pressure on things. You know, I will tell you, from my perspective, the -- it's been more of a supply issue and more of a, you know, lack of job growth issue as opposed to home buying issue. As you know in the southeast, that's always been our number one competitor and continues to be. I think any further reduction in mortgage rates on an incremental basis will not be that significant, in my mind. I think it will hurt a little bit. It is hard to know for sure and hard to measure it exactly, but I think, really, it's the other factors that have been primarily creating the weakness we're seeing.

I think our forecast is, really, not predicated on any significant market improvement, Paul. The things will be pretty flat for the rest of the year. Although we are seeing, particularly in the fourth quarter, an improvement, same store performance, that's really not a sequential quarter-over-quarter improvement just because the fourth quarter of last year was really a tough year, a tough quarter.

Yeah. We're not complaining. Relative to some of the others we've seen, you turned in a very good quarter. Thank you very much

Thanks, Paul.

We'll take our next question from Asaz, Qasam of Reese Securities(ph).

A couple of quick questions. First, how much of the turn costs are capitalized versus expense?

Approximately about two-thirds are expensed and one-third capitalized. We think our turn costs run about 1,200 bucks and 800 of that, which would include the down time would go through the P&L.

Perfect. And, Simon, you talked about real estate taxes being a little higher this year. Is that higher than what you folks budgeted, or is it just -- did you budget enough and it's hitting the budgets and you're not seeing any upside there?

Let me hedge my comments. It is still very early in the year. As you know, we don't know the rates in most of our jurisdictions until, really, the third quarter and sometimes even the fourth quarter. Of course, we're also battling assessments up through the year. We have built into our forecast about 3.2% same store real estate tax increase. As far as we know at this point, that is adequate. That was in our -- we've not changed that, to any material extent from when we went into the year. We've had different pieces move around within the 3.2% forecast. I was hoping that we might, early on, see a little bit of a favorable trend, that we might be able to lower our forecast from the 3.2% same store increase. But at this point I would say that's probably the right number to have in there.

Got you. I guess in the Crow and Black Stone joint ventures, what is the current yield? If you can give us a sense of that?

I don't have that hand. I'm going to guess it it's going to be in the 10.5% to 11% range, but I would -- I'll find it out and get back to you.

Thanks a lot, Simon. Thanks, guys.

There are no further questions at this time. Mr. Bolton, I will turn it over to you

Thank you. We appreciate you being on the call this morning. We'll be back in touch next quarter. Thank you.

This concludes our conference call for this morning. You may now disconnect your lines. Thank you for participating.--- 0