SHO - NYSE

Good morning, ladies and gentlemen, thanks for standing by. Welcome to the Sunstone Hotel Investors Fourth Quarter 2023, Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. I would like to remind everyone that this conference is being recorded today, February 23, 2024, at 1 pm. Eastern time. I will now turn the presentation over to Mr. Aaron Reyes, Chief Financial Officer. Please go ahead, sir.

Thank you, operator. Before we begin, I would like to remind everyone that this call contains forward-looking statements that are subject to risks and uncertainties, including those described in our filings with the SEC, which could cause actual results to differ materially from those projected. We caution you to consider these factors in evaluating our forward-looking statements. We also note, that the commentary on this call may contain non-GAAP financial information, including adjusted EBITDAre, adjusted FFO, and property level adjusted EBITDAre. We are providing this information as a supplement to information prepared in accordance with generally accepted accounting principles. Additional details on our quarterly results have been provided in our earnings release and supplemental, which are available in the Investor Relations section of our website. With us on the call today are Bryan Giglia, Chief Executive Officer; Robert Springer, President and Chief Investment Officer and Chris Ostapovicz, Chief Operating Officer. Bryan will start us off with some highlights from last year, followed by commentary on our fourth quarter operations and recent trends. Afterward, Robert will discuss our capital investment activity. And finally, I will provide a summary of our fourth quarter earnings results, review our current liquidity position and provide the details of our outlook for 2024. After our remarks, the team will be available to answer your question. With that, I would like to turn the call over to Brian, please go ahead.

Thank you, Aaron. And good morning, everyone. We were encouraged by our execution in the fourth quarter, as better than expected top line performance and strong cost controls allowed us to deliver earnings above the high end of our guidance range. The fourth quarter caps off a productive year at Sunstone, in which we made further progress on our three strategic objectives, which include capital recycling, investing in our portfolio and returning capital to our shareholders. On the recycling front, we completed the sale of Boston Park Plaza in the fourth quarter in a solid execution. While the hotel performed very well for us, it had reached its maximum return potential and needed significant additional investment, much of which would be defensive and would result in meaningful earnings disruption. So consistent with our investment lifecycle approach, we sold the hotel at an attractive valuation in an all cash deal and are actively pursuing opportunities to redeploy the proceeds into assets that have a more compelling future return profile. As we have previously discussed, given the composition of our portfolio, we are targeting a group centric hotel that has an attractive going in yield with limited near term capital needs, but with longer term value add opportunities. While this sounds like an ambitious wish list, we are confident that we can execute in the near term. We look forward to further updating you on our progress soon. During 2023. We also executed on our second strategic objective, which is investing in our portfolio and we are already seeing the benefits of some of those projects. In October, we launched the Westin Washington DC. The fully renovated flagship property has been very well received with 2024 group pays up almost 20% as compared to 2023. While the hotel has always been a productive group house, the conversion to the Western brand is already driving incremental transient demand at higher rates. Looking forward work is now also underway on another value added conversion of our soon to be Marriott Long Beach downtown, what should contribute to earnings growth starting in the second quarter of the year. In late 2023, we completed the demolition of the backyard of the Confidante Miami Beach, and the room renovation is now underway. Shortly, Robert will share some additional details on these exciting projects that will drive growth in 2024 and beyond. The last element of our strategy is the return of capital to our shareholders. In 2023, we return nearly 120 million to shareholders through an increased quarterly base dividend and through share repurchases at a meaningful discount to NAV. While our share repurchase activity will remain opportunistic, our common dividend will continue to provide a more consistent return of capital. That said, in 2023, we repurchase 56 million of our common stock at $9.43 per share. Additionally, over the last two years, we have repurchased 165 million of common stock at $10.15 per share. Our strong balance sheet and liquidity position gives us the ability to further enhance our capital return into 2024. Now shifting to our quarterly results, as I noted at the top of the call, we were pleased with how the portfolio performed in the fourth quarter relative to our expectations. Similar to what we saw earlier in the year, group business performed well. Corporate travel continued to move higher and leisure demand further moderated, although still generating comparable profitability well ahead of pre pandemic levels. Our convention hotels led the portfolio with nearly 8% RevPAR growth in the quarter driven by our newly converted Western Washington DC, which grew RevPAR more than 50% in the quarter and should continue to generate outsized growth into 2024 as it benefits from our recent investment. Elsewhere across the portfolio, we also saw strength in our urban markets, including San Francisco and Portland, which had been our slowest to recover, but showed meaningful improvement as the year progressed. The Marriott Boston Long Wharf also continues to provide solid growth with RevPAR up 8.4% during the quarter. As has been widely discussed, leisure travel continues to moderate and has been impacted by the imbalance of the increased number of Americans going abroad. While inbound international visitation remains below historical averages. This trend is evident in Wine Country, as market wide softness has continued to hamper results. We are focused on driving group business and generating ancillary revenues at these resorts, which partially mitigated the depressed leisure volumes in 2023. While we cannot control when leisure demand will accelerate, we can continue to work with the resorts to build a base of group business and control costs, all while maintaining a world class guests experience. On the cost side, we remain focused on working with our managers to find ways to offset inflationary pressures. While labor availability has improved wage growth continues to hover near the high end of historical averages in most markets. We were able to mitigate labor costs increases through enhanced productivity, better staff management and driving efficiencies where possible. Food and Beverage profitability improved in the quarter driven by further menu optimization and a better mix of business. Our margin performance during the quarter was impacted by the renovation activity at the Confidante Miami Beach and Renaissance Long Beach. Excluding these two hotels, our margin was down only 100 basis points, even with minimal top line growth and the impact of higher property insurance costs, which speaks to the efforts of our operators to be disciplined in their cost management. As we look ahead into 2024, we are encouraged about the outlook for the year which benefits from our recent investments and begins to pave the way for the next layer of growth in the portfolio. Group pays for the comparable portfolio is up approximately 6% with DC sustaining the portfolio in the near term, while the second half of the year benefits from broad based strength including outsides growth in Long Beach, San Diego and Boston in a testament to the markets desirability, Wailea has bounced back very well from the tragic fires last summer, as our well located resort has attracted additional group and leisure business and looks to generate year-over-year growth in ADR and earnings. We appreciate the hard work and dedication of the resort's associates that continue to do an outstanding job welcoming guests providing unparalleled service and making the Wailea Beach Resort the premier destination that it is. We continue to evaluate opportunities for the proceeds from the sale of Boston Park Plaza. While a portion of the proceeds were utilized for additional share repurchase activity last quarter, we maintain significant investment capacity that we are looking to accretively redeploy into a superior growth opportunity than what would have been achieved through the continued ownership of Boston Park Plaza. As I noted earlier, our investment parameters include a compelling going in yield, limited near term capital needs and opportunities where we can add value either through asset management initiatives, or through capital investment later in the course of our ownership. Considering the significant embedded growth, we already have in our portfolio from us in process transformation of Andaz Miami Beach, and the ramping resorts in Wine Country. A well-priced cash flowing investment now will bring more balance to our earnings, sustain our strong credit metrics, and still provide us with the opportunity to create value. We expect to balance this with incremental share repurchases, when our stock price warrants it. We look forward to sharing additional updates on our progress redeploying these funds in the near term. To sum things up, we executed on all three of our strategic objectives in 2023. But we know that we have more work to do in the current year, we are focused on delivering profitability growth from our operations and realizing the benefits of our investment projects. We will further advance our capital recycling strategy through the redeployment of our excess cash and further utilizing balance sheet capacity to thoughtfully grow the portfolio. These actions should further support our capital return objectives in the coming year. The entire Sunstone team remains committed to delivering strong returns and creating value for our shareholders. And with that, I'll turn the call over to Robert to give some additional thoughts on our renovation progress and upcoming capital investments.

Thanks, Bryan. During 2023, we invested over $110 million into our portfolio as we completed in relaunched the Western Washington DC Downtown, began the renovation and conversion of the Renaissance Long Beach to a Marriott and commenced the transformation of the Confidante the Andaz Miami Beach. In 2024, we expect to invest between $135 million and $155 million into our portfolio. The majority of the investment will be in Miami as work is now underway on both the exterior and interior areas of the hotel. In order to most efficiently complete the renovation. We will be suspending operations at the hotel starting in late March, through the fall. We expect to debut the fully renovated hotel in the fourth quarter and remain confident in our business plan and our underwriting approach. We look forward to updating our progress on our next call, as we get that much closer to the completion of this transformational project. In Long Beach, we expect to finish and launch our converted Marriott Long Beach downtown in the spring, which should contribute to earnings growth for the balance of the year. Elsewhere across the portfolio, work is underway to renovate the meeting space at our JW Marriott in New Orleans and to convert an underutilized area of the hotel into new meeting space, which should allow us to better compete in the market. In addition, we are also adding a market concept in the lobby of the Renaissance Orlando, which is combined benefit of delivering a better guest experience while also contributing to higher food and beverage profitability. In DC, we're delivering the last piece of our comprehensive renovation of the property with the addition of 4000 square feet of new meeting space that has abundant natural light and an exterior patio and makes better use of an underutilized former restaurant space. Later in the year, we will be completing a soft goods renovation and Wailea to keep the room product fresh and able to compete with its nearby luxury peers. While we will have several projects underway during the year on balance, we expect fact that the renovation activity we have planned for 2024 will be marginally less disruptive to earnings than what we experienced in the prior year. [As we've shared with you before, capital recycling is a primary component of our strategy. And we are encouraged by the incremental activity we're seeing in the transaction market. We have considerable investment capacity and are actively looking for ways to redeploy these proceeds into new growth opportunities. We look forward to sharing additional information on our progress in the near term. With that, I'll turn it over to Aaron, please go ahead.

Thanks, Robert. We are pleased with our financial results for the fourth quarter, as RevPAR growth, EBITDA and FFO Were all above the high end of our guidance ranges. Adjusted EBITDAre for the fourth quarter was $55 million, or 8% above the midpoint of our outlook, driven by better top line performance, stronger expense management across the portfolio, and lower corporate level costs. Adjusted VFO for the fourth quarter was $0.19 per diluted share, nearly 20% above the midpoint of our outlook and $0.02 above the high end of the range. As lower than expected financing costs combined with the benefit of stronger operating performance. While forward visibility remains challenging, we are seeing more stability in booking behaviors and travel patterns. As a result, we are providing a full year outlook for 2024. Based on what we see today, we expect that our total portfolio RevPAR growth will range from 2.5% to 5.5% as compared to 2023. This range includes all hotels in the portfolio. If we exclude the Confidante Miami Beach, which will be under construction for most of the year, our full year RevPAR growth is projected to range from 5% to 8%. We estimate that full year adjusted EBITDAre will range from $230 million to $255 million. And our adjusted FFO per diluted share will range from $0.78 to $0.90. Given how travel patterns evolved over the course of 2023, and the expected timing as city wide events and other major demand drivers in 2024, we expect that overall industry growth for this year will be more heavily concentrated in the second half of the year. The same will be true of our portfolio, which will also have the added impact of the renovation activity in Miami and Long Beach, and which will likely lead to modest RevPAR growth, excluding the impact of our renovation activity and lower year-over-year portfolio earnings in the first quarter before resuming a positive trajectory for the balance of the year. In the 2024 outlook section of our press release, we have included the key assumptions that support our full year guidance numbers. I'll share a couple of the key points here as well. Our outlook for 2024 does not assume the reinvestment of the proceeds received from the sale of Boston Park Plaza. As we have noted, we are actively evaluating opportunity to replay those proceeds and would expect to update our guidance ranges as appropriate, as those funds are put back to work this year. As Robert noted earlier, we will be suspending operations at the competent Miami Beach in late March to allow for the renovation work to be performed more quickly. A portion of the costs incurred at the hotel during this time will be capitalized in accordance with generally accepted accounting principles or adjusted for in our reconciliations of adjusted EBITDAre and adjusted FFO, consistent with industry practice. We expect the resort to open in Q4 as Andaz Miami Beach. And for the full year, we estimate that the resort will generate an EBITDA loss of $3 million to $5 million, with the majority of the loss spread across the second quarter through the early part of the fourth quarter while the hotel is offline. As we noted in our press release this morning, our capital investment activity in 2023 was $110 million. And with $30 million lower than the midpoint of our estimate at the start of the prior year, as a portion of that span will now be incurred in the current year. Inclusive of this carryover balance, we estimate that we will invest between $135 million to $155 million into our portfolio this year. Based on the renovation timeline, we expect to incur a total of $11 million to $13 million of earnings disruption in 2024, which is approximately $1 million less relative to the prior year. Our balance sheet remains strong. And as at the end of the year, we had nearly $500 million of total cash and cash equivalents including our restricted cash. We retain full capacity on our credit facility, which together with cash unhand equates to nearly $1 billion of total liquidity. As at the end of the year, our net debt and preferred equity to EBITDA stood at 2.9 times. And our net debt to EBITDA was only 1.7 times. Adjusting for the redeployment of a portion of the Boston Park Plaza sale proceeds, we would expect our pro forma leverage metrics to increase by approximately one term. But to remain in the low end of our longer term target range. We have one piece of debt coming due at the end of the year. And we expect that the modest principal balance of the maturing loan combined with our low overall leverage, strong liquidity position, and an improving financing market will give us sufficient optionality to address the refinancing before year end. Now shifting to our return of capital, our Board of Directors has declared a $0.07 per share quarterly common dividend and it's also declared the routine distributions for a series H and I preferred securities. While retain ample capacity for additional capital return, the full year outlook that was discussed earlier does not assume the impact of any additional share repurchase activity. And with that, we can now open the call to questions. So that we were able to speak with as many participants as possible, we ask that you please limit yourself to one question. Operator, please go ahead.

[Operator Instructions] Our first question comes from a line of Chris Darling with Green Street. Please go ahead.

Thanks. Good morning. Chris. Brian, you mentioned in your prepared remarks a handful of properties that you'd expect to grow in excess of the 5% to 8% RevPAR growth range that you provided, at least when you exclude the Confidante. Can you talk through which properties might fall below that range? And then similarly, what is the midpoint of your guidance range implied for leisure transient RevPAR growth this year? Thank you.

Okay, let me -- good morning, Chris, I'll start with the first part. So when we look at ’24, the above market or above portfolio growth, obviously Western DC, Long Wharf, Long Beach coming out of the renovation. San Diego and Portland are our larger growth assets. When you look at the ones that are will be below that are below the midpoint, the New Orleans market while decent pace this year, it's back end loaded. So the city wide and the demand is coming in the second and third quarter, -- I'm sorry, the third in the fourth quarter, which doesn't have the transient compression that the first and second do. So, New Orleans will be slightly below. San Francisco is a market where we had great growth in ‘23. Looking into ‘24 there are components of growth that are really good. The business transient demand continues to be strong. The hotels, group business or the -- group business that it really focuses on is the smaller, call it, 50 to 100 room night business. That's about 40% of the business. That's been pretty robust with -- the hotel is continuing to book and booking short term that's kind of 90 days out. That -- so that remains strong. The one concern in San Francisco are the citywide are weak this year. And so that could result in some ADR pressure coming from the other sub markets that maybe are not as strong as the financial Embarcadero where we are with business demand. You know some of the wildcards in that market to or what happens with AI. We have seen some increase office getting filled up around us with some of that business and we expect that to grow. And then the international inbound is supposed to grow this year. So if that does it will obviously help that market. I think looking else Orlando had a big first quarter of last year. It has, from leisure standpoint, the Park, -- new Universal Park is opening next year. And so we expect some transient softness in that market also for the second half of the year.

Our next question comes from a line of Duane Pfennigwerth with Evercore ISI. Please go ahead.

Hey, thanks. Just wanted to ask a follow up there on the 5 to 8x Miami. Can you talk about you know what that growth rate was x Miami in the fourth quarter? And maybe you know how you would -- how we should be thinking about that in the first half of the year, 1Q, 2Q?

As far as -- I'm sorry, Duane, as far as the cadence?

So, yes, the 5 to 8 outlook that you're providing x Miami, what did x Miami RevPAR look like in the fourth quarter, and maybe you already indicated it's probably going to be more second half we did. But I wonder if you could put a finer point on the first half of the year?

So, Duane, just to hit your first question on what it RevPAR growth look like x Miami, those are the statistics that we have on page two of the earnings release, we show both the full portfolio and then without Miami. So for the quarter, as you saw in our guidance range, we were down 2.2 for the full portfolio. And then if you exclude Miami, it was it was down 40 basis points. And both of those metrics were on the better side of our guidance range.

And then to add on to that when you look at the cadence for the year, Q1 is will obviously be the as Aaron said, the weakest quarter, when you look back to ‘23, you had -- most of our group hotels had really some the best quarters that they've ever had Wailea, San Diego. So there was very strong – part of that was the impact of ERV or with Omicron. And so Q1 was very strong this year will be Q1 will be our toughest comp. When you look at the back half of the year probably 60 or so percent of the of our gain is coming in the back half Q2 ramps up a little bit more, our larger group hotels, the majority of their demand and the pace is coming in that back half of the year, Q3, Q4, that's stronger for the New Orleans market, the San Diego market, that's where we'll see the most growth. The only one that’s more uniform across the year will be DC. And in our RevPAR guidance DC is a big piece of it. It's you know, it's 200 basis points of our RevPAR growth is coming from that hotel ramping up, Long Beach will start to see some of that happen in the starting Q2, buy mainly in the second half of the year.

Okay, thank you.

Our next question comes from the line of Smedes Rose with Citi. Please go ahead.

Hi, thanks. Bryan, I wanted to -- as you had announced definitely held up better in the fourth quarter. And I just wanted to understand is that just the normal business mix there? Or did it benefit from any fire related fallout in terms of housing? And how are you thinking about that property in 2024. And this, just along with that, if you could just talk a little bit about what you're seeing at the two Napa hotels, which seem to still sort of be struggling to find their sort of reasonable run rate, or at least a predictable one?

Okay. Good morning, Smedes. So, in Maui, the majority of the business in the fourth quarter reverted back to the typical business that we would see in that market. There was some early in the fourth quarter, you know, October, a hand a little bit of some of the relief business still in there. But the hotels had a really good job of pivoting early and getting that relief business and in the third quarter and then reverting back to its more typical business mix as we got later into the year, in the fourth quarter. There is still and others have mentioned on calls. There's still some lingering impact. And we expect Maui to be a recovery market into 2024 and beyond. We have good group base in there, the leisure demand has been strong. The Wailea market is recovered much more than the kind of [indiscernible] market, which still has the majority of the release, room nights in their market right now. But we have seen, you know, just as a reference point, the festive period in December was stronger than what we saw in 2022. And so that higher end leisure customer definitely came back to the market. Q1 is a little bit weaker on a year-over-year basis, on the group side, that's mainly because there's a large group piece of business that rotates out of Maui, every third year, and then comes back, so there'll be back next year. So from that standpoint, we're very happy with how the hotel has responded how our market has responded. And our expectation is we'll get growth out of it this year, and probably get back to a more normalized level into ‘25. When we look at the, at the Wine Country assets, look, the leisure demand continues to be disappointing, market wide. But right now we're focusing on what we can focus on to control in those hotels, to resorts. And that means focusing both on group if you look at the -- in the supplemental, you'll see that Montage had a better quarter then Four Seasons, Four Seasons had to buy out, so it didn't repeat this year. So there's always going to be that lumpiness in their numbers. Montage is a bigger hotel, and does more group business. So it had a, -- it was able to offset the transient weakness better with group in the Four Seasons was able to, and Montage as we've talked about before is farther along in our in some of the costs restructurings that we've done. And so they're a little bit farther along, Four Seasons that's being implemented now. And montage also going into ‘24, the residential units are now available and starting to be sold. So, we expect both to continue to gradually increase on the top line, but we're not going to see that next way, really, until we start to see some transient demand accelerate. Now we've seen -- in ‘’22 we saw, right when they open, we saw some of that. We're starting to see some pickup and transient demand. Now, but it will be -- it will come quickly, when it does come and when what we've done in the meantime, is set the cost model and the segmentations of the hotels up right, to be able to really push that cash flow. The good news is throughout the rest of the portfolio, and what we've taken a lot of time to do is make sure that we have the right portfolio mix and built a foundation of growth going forward to be able to handle markets that might not be performing the way we want them to. We have DC growing this year, we've layered that with Long Beach. Why we're talking about displacement at Andaz right now, as we get later into the year, we'll start talking about next year and the ramp up there and remember in the condition that that hotel was in as the Confidante it was doing $12 million of EBITDA. So we built and layered growth and invested in our portfolio. We'll start to see -- that gives us then, Portland is continuing to rebound. We're getting great growth at Long Wharf, which is building more of a group base. The hotel has done phenomenally but there's still a lot room or a lot more room to go there. And we have even talked about then what we can do with the proceeds from Boston Park Plaza and providing better growth and more growth from that, whether it be through share repurchase, or additional acquisitions. And so while we took some lumps to build this foundation, were set up pretty well for ‘24 and going into ‘25 and beyond.

Thank you. Appreciate it.

Our next question comes from the line of Chris Woronka with Deutsche Bank, please go ahead.

Hey, good morning, guys. Thanks for taking all the questions so far. I know you just spent a lot of time Bryan talking about the Wine Country assets. But I want to ask a slightly different question, which is, is there going to be at some point is there more like a step function on profitability? Let's call it hotel EBITDA when you get to a certain level of ark, or give RevPAR or something like that, you're obviously holding the rates just fine. You don't have enough ark? Is there more of a step function? I'm really trying to think about margin cadence as you eventually get more Bill doc [ph].

Good afternoon, Chris. It's the right question and it's the right question for Wine Country and San Francisco, it's going to be a step function. It's -- we saw -- in San Francisco, we saw good growth last year. And there may be a time period where things go sideways a little bit, and then we get some more acceleration. These resorts are exactly the same is that we've built the foundation right for them, we've have the right -- we're working on the cost models, the right way, rate, we're holding rate, but at the same time, we're also making sure that we're being rational with rate and thinking of total RevPAR in that contribution, because, the rate will come down at both of these resorts to be able to bring in the right amount of group. And when the group is, $700 have made or so at Montage $800, Montage of ancillary spend and over 1004 seasons, it's important that we make sure that the resorts look at that holistically. And so all of that has been done. And yes, you're absolutely right, that there will be acceleration, once additional transient occupancy and transient demand comes back into that market. And it will be, you're not going to see margins that you could see in a full service or convention, upper upscale hotel, but you will see, you will see margin expand significantly from where they are. And at that point is we've talked about before, is the point in time where we would look to potentially monetize one or both of these assets and recycle it into something -- some other growth opportunity. But we still think that there's quite a bit of room to go. It's not going to be linear, though.

Okay, thanks, Bryan.

Our next question come from a line of Floris Van Dijkum with Compass Point. Please go ahead.

Thanks. Morning, guys. Thanks for taking my question. Hey, Bryan, question, as you keep shrinking your portfolio, if I do my math correct, your top three assets account for 58% of your EBITDA. Obviously, you know, very pleasantly surprised that Wailea Beach is bounced back as quickly as it has. It's great, kudos to you guys. And San Diego Bayfront continues to move along as well. My question was on the third of your top three or you know the Orlando's SeaWorld Renaissance, you guys have rebranded some of your other Renaissance hotels, can you tell us a little maybe a little bit more on your longer term view on the flag at this particular asset and what you could potentially do to create some value going forward?

Sure. Afternoon Floris. Well in -- while Orlando is number three right now, I think that DC might be passing it very soon. And -- but to your point of one concentration is something that we focus on quite a bit and so as we look to acquire an additional asset or for more that concentration and making sure that we're spreading that out and you know, replacing what we had in Boston that's something we look at it and we think a lot about. So, while we would like that, that, majority of EBITDA, coming from a few more hotels, we also like the ones that we have that are producing it, and they are a world class asset. Orlando, I think we've talked about this before on another calls, is that, we have rebranded a few of the -- of our Renaissance hotels and Renaissance hotels do very well on the group side. And we've been happy with the performance in Orlando, it has done very well and done very well as Renaissance. And we've been very happy with that. And so our view is, is that while we always look for opportunities to up brand or add value through that. The Orlando is a pretty mature lodging market with a lot of brands everywhere. And so what we're going to do in our focus is really to maximize this asset, we think we can maximize it as a renaissance. And we have, we have a lot of surface parking lots. We have a leisure component, that's good, but could maybe be better. And so we will look to maximize our real estate, which could include future development, redevelopment, and we've added a meeting space there a few years ago, which has been able to drive additional room nights. But the good news is, is we have a lot of -- we have a lot to work with there. And that the brand has always been additive, especially at this location.

And maybe just to clarify on the on the surface parking lot, and I think, if I'm not mistaken, I mean, you can almost double the floor plate potentially. If you have structured parking, if I'm not mistaken. Would you consider adding additional hotel rooms? Or what kind of improvements do you reckon you would look to bring to the property,

I mean, we -- structured parking is, comes with a, an expense, which would have to be evaluated. But with some of the space we have there, we could add rooms, we could add additional meeting space, I don't know if we need that, because the hotel has really ample meeting space for its size. We could add more leisure, components pool, waterpark, that sort of thing. So, we have a lot of optionality there, then we're currently evaluating what will be most additive to those.

Thanks.

This concludes today's question and answer session. I would now like to turn the call over to Bryan Giglia for closing remarks.

Thank you, everyone for your interest and time today. We look forward to meeting with many of you at upcoming conferences and we look forward to for those that we have toured of the Andaz and those that are touring it coming up. We think it will be a great opportunity for you to witness our next round of growth that we have embedded in this portfolio. Thank you.