Good afternoon and welcome to the Red Rock Resorts Fourth Quarter and Year Ending 2019 Conference Call. All participants will be in listen-only mode. Please note this conference is being recorded. I would now like to turn the conference over to Stephen Cootey, Executive Vice President and Chief Financial Officer and Treasurer of Red Rock Resorts.

Please go ahead..

Thank you, operator. Good afternoon everyone and welcome to the Red Rock Resorts fourth quarter and year-end 2019 earnings conference call.

Joining me on the call today from Red Rock Resorts are Frank Fertitta, Chairman and Chief Executive Officer; Rich Haskins, President; Bob Finch, Executive Vice President and Chief Operating Officer; and Robert Tamian, Executive Vice President of Development and Strategy.

Please note that our call today will include forward-looking statements under the Safe Harbor provisions of the United States Federal Securities Laws. Developments and results may differ from those projected. The risks and uncertainties related to these statements are detailed in our filings with the SEC.

During this call, we will also discuss non-GAAP financial measures. For the definitions and complete reconciliation of these figures to GAAP, please refer to the financial tables in our earnings press release and Form 8-K, which were filed this afternoon prior to the call. Also, please note that this call is now being recorded.

Let’s take a look now at our fourth quarter results as we close out the year with a very solid quarter. On a consolidated basis, fourth quarter net revenues increased 6.8% to 460.8 million. Adjusted EBITDA increased 1.8% to 137.6 million and margins decreased 145 basis points to 29.9%.

With respect to our fourth quarter Las Vegas operations, net revenues for the quarter increased 6.9% to 437.9 million; adjusted EBITDA increased 3.7% to 125.5 million and margins decreased 89 basis points to 28.6%.

When viewing our fourth quarter Las Vegas performance, excluding the Palms, the results were very impressive and reflect the ongoing strength and stability of both Las Vegas locals market and our core business.

Measured on that basis, net revenues increased 3.9%; adjusted EBITDA increased 9.4%; margins increased 171 basis points to 34.2% and flow-through was at the high end of our historical range. This represents our highest same-store fourth quarter net revenue, adjusted EBITDA and margins since 2007.

Looking at the Palms fourth quarter results, net revenues was 58.9 million and adjusted EBITDA was negative 4.1 million for the quarter.

Notably when excluding costs and expenses related to the KAOS dayclub/nightclub and adjusted for normalized hold, adjusted EBITDA for the property was positive 3.2 million and what has historically been the Palms slowest quarter of the year. We’re also pleased with the progress we saw at the Palms this quarter.

In particular, we experienced growth in a number of key volume metrics at the property and are confident that there is still significant upside on both the revenue and expense side of the ledger. Importantly, we believe that the Palms have now reached an inflection point that we expect to generate positive EBITDA in the first quarter of this year.

Additionally, we are taking one-time charges of 15.5 million in the fourth quarter related to the termination of certain artist performance agreements and employment arrangements at the Palms as well as other one-time items.

These charges were below the 16 million to 22 million range we discussed in our last call, and we do not anticipate any substantial charges related have KAOS dayclub/nightclub going forward into 2020.

Overall, these robust fourth quarter numbers reflect our sharpened focus on the core business and were driven in large part by solid growth across all gaming segments including slots, tables, sports and ancillary games.

In addition, we saw a very meaningful ramp up to Palace Station in the quarter as our revenue and cost initiatives of the property gained traction. Let's look now at our full year performance. Consolidated net revenues for the year increased 10.4% to 1.86 billion, primarily driven by 122 million increase in revenues at the Palms.

Consolidated adjusted EBITDA for the full year remained flat at 509 million as solid EBITDA growth in the remainder of our Las Vegas operations was offset by a negative EBITDA of 27.7 million at the Palms. With respect to our full year Las Vegas operations, net revenue increased 10.8% to 1.76 billion.

Over that same period, adjusted EBITDA was essentially flat at 455 million and margins decreased 290 basis points to 25.9% as both EBITDA and margins were adversely impacted by the Palms negative EBITDA performance for the full year.

Much like the fourth quarter when viewing our full year Las Vegas performance, excluding the Palms, the underlying power of the Las Vegas locals market and our core business once again becomes clear. When measured on that basis, net revenues increased 3.4%, adjusted EBITDA increased 5.3% and margins increased 57 basis points to 32.6%.

The full year top line and bottom line growth was seen across virtually our entire Las Vegas portfolio with all of our large properties reporting their highest to net revenue and EBITDA levels in the last 10 years. Turning to the Palms full year results, net revenues were 278.8 million and adjusted EBITDA was negative 27.7 million.

Importantly, when excluding costs and expenses related to the KAOS dayclub/nightclub, one-time items related to the Palms opening and adjusted for normalized hold, net revenue at the property was 232.3 million and adjusted EBITDA was 50 million. Let’s take a look now at some of the leading economic indicators in Las Vegas.

As we begin 2020 as a parent, the local economy remains extremely sound and supportive of future growth. Population is at an all-time high and rising as Las Vegas remains the third fastest-growing MSA in the nation. Employment also remains at record levels and we've now seen 102 consecutive months of broad-based employment growth.

Wage growth as measured by weekly earnings is also robust with Las Vegas reporting an increase of 2.3% for the year. In addition, total earnings, which takes into account both employment and wages, increased 4.8% over that same period and we have now experienced 102 consecutive months of growth in total earnings.

At the same time, unemployment was down 3.5% as of year-end, its lowest level in nearly 20 years. Housing was also solid as medium home sale prices were up 5.7% in December.

Lastly, there are over 20 billion in new capital investment projects planned, underway or recently competed in Las Vegas led by the new Raiders stadium, Project NEON, the Convention Center Expansion and multiple Strip developments, all of which are expanding the local economy.

The strong economic fundamentals along with an extremely favorable supply/demand dynamic, stable regulatory environment and attractive gaming tax rate only serve to confirm that the Las Vegas locals market is the best gaming market in the United States.

As a proven leader with best-in-class assets and locations, unparalleled distribution and scale and a deep development pipeline, we remain uniquely positioned to outperform in this market moving forward.

Turning to our Native American segment, we reported management fees for the quarter of 19.9 million, an increase of 3.9% over the prior year driven by another excellent quarter at Graton Casino Resort.

With respect to the North Fork project and as previously noted, the California Supreme Court has granted the tribe’s petition for a review regarding a key lower court decision involving the project that has deferred taking any further action in that matter until its ruled on a very similar case involving the enterprise tribe, which received a favorable ruling at the appellate court level.

The enterprise tribe's case remains the oldest civil case on the California Supreme Court docket and we continue to anticipate that the court will schedule a hearing on that case in the near future. I will now cover a few balance sheet and capital items.

The company’s cash and cash equivalents at the end of the fourth quarter was 128.8 million and total principal amount of debt outstanding at quarter end was 3.076 billion. At the end of the fourth quarter, our net debt to EBITDA and the interest coverage ratios were 4.96x and 4.27x, respectively.

Since the close of the fourth quarter, the company's consolidated subsidiary Station Casinos has launched two refinancing transactions which are expected to close this Friday, February 7 and which will further strengthen our balance sheet and increase our financial flexibility.

The first transaction involves a 750 million note offering by Station Casinos that’s due 2028 at an interest rate of 4.5% per year. The proceeds of this offering will be used to pay down a portion of its senior credit facilities and for general corporate purposes.

The second transaction involved an amendment of the Station Casinos senior secured credit facilities pursuant to which various lenders will provide an undrawn revolving credit facility of roughly 1.03 billion, a term loan A loan facility of 189 million, each maturing in 2025, each bearing an interest rate at 1.75% over LIBOR.

And a term loan B facility of 1.53 billion maturing in 2027 and bearing an interest rate at 2.25% over LIBOR. The aggregate proceeds of this amendment will be used to refinance the revolving loans and term loans outstanding under its existing credit facility. The closing of each transaction is subject to customary closing conditions.

Capital spend for the fourth quarter and full year 2019 was 28.8 million and 353.3 million, respectively, inclusive of the Palms redevelopment project.

In 2020, we still anticipate spending approximate 90 million to 110 million in maintenance and other capital which includes cost related to the completion of the ongoing Red Rock room model, which is expected to be complete in March of this year.

As noted on our last call, the completion of the Palms redevelopment in September 2019 we have reached a key inflection point as a company and we now expect to generate significant and accelerating free cash flow.

As we enter this harvesting phase, we intently focus on maximizing financial performance of existing properties, reducing our net leverage ratio to a target level of 4x or less through a combination of paying down debt and increasing EBITDA.

As part of this deleveraging effort, we are also actively seeking to monetize a number of our non-core landholdings and expect to deploy any proceeds generated therefrom to further reduce our debt. Finally, the company announced that its Board of Directors has declared a cash dividend of $0.10 per share payable for the first quarter of 2020.

The dividend will be payable on March 27, 2020 to shareholders of record on March 13, 2020. In sum, we are very pleased that we ended the year and was respectable to our core business and the Palms and look forward to continuing that momentum into 2020 and beyond.

Operator, this concludes the prepared remarks today and we’re now ready to take questions from the participants on the call..

We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from Carlo Santarelli with Deutsche Bank. Please go ahead..

Hi, guys. Thank you. Steve, thanks for all the color. As you guys looked at the Palms over the course of the fourth quarter and now obviously into the 1Q, since the closure of KAOS, what are some of the things – obviously, the inflection to positive EBITDA on an adjusted basis is very interesting.

But what are some of the things you’re seeing and how that closure has maybe impacted other elements of the business positive and/or negative?.

Sure. I’ll start. Then anyone else jump in on the call. So overall I think we’ve been very pleased with the performance of the Palms. Again, expectations haven’t really changed since our last quarter. What we’ve seen is a couple of things.

From a gaming perspective, since the club closure, we’ve actually seen a slight uptick in both slot handle and table volume as just people appreciate the assets and not so much the chaos of KAOS, so to speak. From a hotel perspective, we’ve also seen an uplift and uptick in the use of the assets, again, a net positive since the closing of KAOS.

Where it’s a mix bag is probably the restaurants. When you look at the core restaurants, the café and the buffet, we’ve generally experienced positive growth since the uptick since the closure of KAOS.

When it comes to the fine dining restaurants, it really comes down to how we activate Apex and Pearl and some of the other assets that we have in the Palms..

Got it. Thank you. And then just in terms of the land and obviously you guys do have some excess land.

How should we be thinking about your progress with whether it’s Wild West, some of the excess land at Durango, the Inspirado parcel? And within the context of that 4x leverage goal, how much are land sales kind of driving that target?.

I don’t think they’re driving the target, but I think everything is on the table to get to where we want to. And while we have an unbelievable pipeline of I think it’s eight locations with nearly 500 acres, we’re going to keep the core holdings and look at monetizing properties that we probably wouldn’t get to for a long, long time..

Thank you..

We’re not saying that we’re going to liquidate our entire land portfolio here. I think the point is that the effort is underway to monetize some of these assets and we’re evaluating each parcel to determine the highest and best use of each of those parcels and how we extract value out of these non-income producing assets.

So which assets do we want to continue to hold, which do we want to sell to help pay down debt. So when we look at those excess parcels, we’re looking at excess parcels at our existing casino properties as well as excess that maybe attached to these greenfield opportunities as well that can be sold off.

I think the good news is that when we looked at the land value here in Las Vegas, land values and rents continue to appreciate in Vegas to where we can now market these excess pieces to a variety of non-gaming uses, and that’s spread between what we may have paid for these assets as casino land and that spread is now narrowed between casino entitled land and the non-gaming uses today..

That’s very helpful. Thank you very much..

Our next question comes from Joseph Greff with JPMorgan. Please go ahead..

Good afternoon, everybody. Just, Steve, going back to the Palms, you mentioned if we exclude KAOS and low table hold and the write down, I think I heard you correctly that last year the Palms generated $15 million in EBITDA. I would imagine that you guys would at least do that in '20 and consensus is somewhere around 20 million for this year.

Do you think we’re right on sort of the near-term expectations for Palms? And then maybe, Frank, could you just talk about what you think longer term this property could do following these changes at KAOS?.

Look, I think we still believe in the initial underwriting case. I think it’s going to take longer to get there than we originally anticipated. I think closing the club in hindsight was definitely the right thing to do. And we’re seeing positive traction at the property, but it is going to take us longer than we originally anticipated..

I agree with what Frank is saying. I think we’re seeing positive growth across all the major lines of business at the Palms. And so as we talked about last call and we talked about during the remarks here, we’ve reached that inflection point. The one-time charges are behind us, so we expect to be positive EBITDA in Q1 and beyond..

But we’re focused on programming deferral [ph] the right way. We see good crossover and pickup when that is programmed properly across the property. We’re focused on more trials, growing revenue and hotel slots, tables and we’re also focused on rightsizing the expenses at the property.

And again, we’re seeing positive traction but it’s going to take longer than we originally thought..

Okay, great. Thank you. And then two follow ups. Steve, corporate expenses were a bit lower in the 4Q.

How are you thinking about run rate in 2020 for corporate overhead? And then going back to the topic of monetizing lands and non-EBITDA producing assets to help get your leverage ratio down, can you talk about the timing of that? I guess my question is how theoretical is that and how many active engagements are you presently involved in with divesting some of these land parcels? And that’s all from me.

Thank you..

I’ll take the real estate one first. I think as far as timing, a lot of these do take some time to go market and then if there’s any sort of entitlement period attached to that for the end user, that can take several months also. So I think we’ll start to see more of that impact late 2020 and into 2021.

Just far as active listings, there are two active listings that we have through national brokerage firms. There’s the 56-acre assemblage at Cactus and I-15, which is just south to the South Point casino. That is on market currently as well as the 88-acre parcel in Reno which is in South Reno and Mount Rose Highway on the 395.

So those two are actively listed and we are evaluating some other opportunities to get those to market also..

Joe, can you just repeat the first part of the question? I just want to make sure I get it right..

Corporate expenses came in lower than what we were modeling for the 4Q.

So my question to you is, how are you thinking about corporate overhead in 2020? I would expect some lift there just because you don’t have the palms maybe serving as a direct or indirect drag on the corporate expense line?.

All right. I probably got to answer this in kind of two parts. So you’re completely spot on. So run rate for corporate is probably $30 million. But what we’ve done is gone through the exercise of taking a look at some of our, let’s call it, enterprise-wide projects that we’re overburdening the properties with.

And we are going to start seeing some – basically moving from the – expenses moving from the property to unallocated expense to really truly reflect what the properties are doing from an EBITDA perspective. So you probably see an increase in corporate for that exercise to probably about 20 million – add $20 million onto the 30.

That said, on a consolidated basis, there’s no change with that 20. I’m just moving it from taking out of a property so that you can accurately see what the properties are doing and moving it to unallocated corporate to where it belongs given the enterprise nature of the projects..

Got it. Okay.

So we should really think of the 30 million not adjusting for the shifting from property to unallocated?.

Yes, that’s correct..

Great. Thanks, guys..

Our next question comes from Barry Jonas with SunTrust Robinson Humphrey. Please go ahead..

Thank you. Maybe just expanding on the costs, if you think more at a higher level, do you see more opportunities to pull costs out either at the corporate or the property level? And with that, how should we be thinking about the labor market dynamic right now? Thanks..

I’ll start at the labor market. I kind of talked to you about the unemployment growth rate is 3.5%, its lowest it’s been in quite some time. So structurally, we’re at fully employed. So it’s a very tight labor market. That said – and we are experiencing growth in wage inflation probably about 2% to 3%.

The good thing about wage inflation and the values that there are more of them than there are of us. So again, we like when employees experience wage growth because they tend to spend more at our casinos. But then to your second point, we’re actively managing the labor.

It’s about yielding the floors correctly both in the slots, the tables as well as food and beverage. We think there’s lot of opportunity there to fine tune labor. And then obviously we’re looking to continually optimize our marketing programs which you’ll see the result of that as we go through 2020..

Great. And then next just relative to the Palace, the renovations there.

What sort of ramp should we expect from here to get to sort of targeted ROI?.

We’re continuing to make progress at the Palace, revenues and EBITDA outpacing the core properties overall and margins are continuing to improve. But that said, I think we’re still going to need some time.

The progress is going slower than we expected and there’s still a lot of room to make on the revenue side, particularly the group business, the hotel business. And then on the cost side, really going to fine tuning our F&B mix which is sequentially improving but can get a lot better..

Great. And then last one for me. Steve, you certainly outlined the strength in the locals market and a lot of the tailwinds there. But the Strip really has a lot of tailwinds on the convention side and the event calendar.

I’m just wondering how we should think about what might flow from the Strip to the locals market in Red Rock in terms of the Strip this year?.

With the help of the Strip, we’re definitely a second derivative. Again, their employees are out customers. So having a healthy Strip is incredibly positive for Red Rock.

And then from a group business, particularly somewhere at the Palms, you are seeing an uptick in group business as you’re seeing – one, you’re seeing the first time we have to go through a 12 to 18-month sale cycle. We’re now through it where meeting planners can actually touch the assets of the Palms. So it’s been very well received.

We’re seeing an uptick in the group business which again has a lot to do about the Palms and the nature of the assets, but also to you point the tailwinds with pretty decent convention market in 2020..

Great. Thanks so much..

Our next question comes from Stephen Grambling with Goldman Sachs. Please go ahead..

Hi. Thanks for taking the questions. You mentioned the strength of Palace Station. Is there any way to quantify some of the benefits that you’re seeing there, reminding us of what you might be lapping? And then as a follow up, are there opportunities for renovations at other properties that are currently under consideration or underway? Thanks..

I think the renovation here is a focus move – I’ll answer the second part first. So from a renovation standpoint, we’re really focused on the delevering point.

So we’ve just completed what I would call a massive CapEx cycle, putting in $191 million in the Palace, $690 million in the Palms and we’re currently going through a Red Rock room remodel which should be complete by March. So upon the completion of the Red Rock room remodel, we don’t foresee any substantial CapEx.

That’s the one great thing about the assets is they’re in great shape. There’s really no deferred maintenance and that’s really the type of advantage we’re using and we were growing above market.

Can you say your first question again?.

Just help me think about – quantifying the benefits that you’re seeing at Palace Station, you kind of called that out as having particularly strong ramp up..

We’ve seen it across all areas of the business, right, particularly on the gaming side. And then going back to the prior question where I think we can improve it is your out-of-town hotel business we think we can get better at. And so that’s one of the areas of focus. From an F&B perspective, we still need to generate more traffic in F&B.

We’re getting traction and then really fine tuning the cost side. As you know, F&B is a very tricky business and so it’s all about getting volume in the restaurants. So we’re doing our best to manage F&B, but there’s still a lot of wood to chop there..

Makes sense, helpful. And then one other quick follow up. Is there any way to think about the tax base of land that’s in the market now or in general? Thanks..

I think you guys have the advantage because the stakeholders currently probably weren’t around when we purchased the asset, so consider the tax base as fairly low..

Great. Thanks so much. Best of luck this year..

Our next question comes from Shaun Kelley with Bank of America. Please go ahead..

Hi. Good afternoon. Thank you for taking my question.

Maybe just to continue on the Palms for a moment, just any thoughts about potentially reprogramming or activating that nightclub space, is there anything on the docket there? I know it’s probably – is there anything that can be done to just sort of utilize that space better that’s being contemplated?.

It’s getting quite a bit of use right now through group business, sales, catering..

Yes, I think Raul [ph] and the team over the Palms has done an excellent job, literally kind of reimaging and repurposing the nightclub into a very profitable catering and group space business..

Great. And then, Steve, I think you mentioned this in response to one of the prior questions, but maybe you could talk about it a little bit more specifically.

Just maybe starting to look at the promotional or marketing side of the house just as you guys are beginning to kind of fine tune and refocus on operations across the portfolio, could you talk a little bit more about that opportunity? And I think the trend we have seen is possibly a slight change in the net revenue trajectory but certainly more than offset by margins.

Is that something we should – at least some sort of interchange we should think about as we move through 2020?.

I think the idea here – for competitive reasons I’m not going to go into program by program, but we are incredibly focused on marketing. It’s our second largest cost in the system.

We’re really trying to move toward more profitable profit-driven customers and profitable-driven growth, which is going to require us to optimize our marketing programs accordingly..

Okay, great. And last question for me but a bit of a total sidebar would be, obviously I think one of the biggest focuses in this space over the last few weeks here has been what’s going on, on the sports betting front.

If I recall back in the memory banks here, at one point many of the people involved there was Station and Red Rock had significant experience in this and actually had sort of built a kind of interactive product at one point, which was fairly meaningful in scale.

So kind of any thoughts about the landscape as it’s evolving or your strategic angle toward it would be great?.

It’s a growing business, so I think we’re the largest fish in the Las Vegas valley here and we like our position in the current market..

Great. Thank you very much..

Our next question comes from Harry Curtis of Instinet. Please go ahead..

Good afternoon, everybody. Most of my questions have been answered. I just had one follow-up question on the Palace. The ramp is great. It’s having a positive impact on the overall Las Vegas resorts, ex Palms.

But if you were to separate Palace out, what would the 9.4% increase in EBITDA have looked like do you think?.

By separating the Palms out – excuse me, the Palace out, it would be right around the same level. Just let me get back to you on that, Harry. Generally I just – I’m not relatively breaking out the Palace..

Yes, it’s a special request. All right.

And if you hazard a guess, again, ex Palms, do you think what the EBITDA growth rate on everything that you’re seeing in 2020 should be in a similar high-single digit range for Las Vegas this year?.

We feel very comfortable with the projection we always stuck with, right. We think the market is a solid market. The wind is always behind our back, but we’ve always been very consistent and comfortable with the 2% to 3% market growth..

All right, very good. Thanks very much, everyone..

Our next question comes from Jared Shojaian with Wolfe Research. Please go ahead..

Hi. Good afternoon, everybody. Thanks for taking my question.

So just going back to the Palms and the improvement that you saw after closing KAOS, is that improvement coming from new customers or existing customers staying and playing longer? And if it’s the former, which I think is the case, where do you think that new customer is coming from? I’m assuming it’s market share gains.

How do those demographics compare to what you were seeing earlier in the year? Thank you..

I think it really depends on where the customer is playing. So from a table’s games perspective, you’re looking at primarily – you’re seeing growth in both out of town and local but mainly out of town. From a suite perspective, you’re seeing out-of-town growth.

From a slot perspective, let’s do midweek, you’re actually seeing more of a local activation as we’re bringing the Palms into the Station marketing program. In terms of where the market share is coming from, as you know Palms is not in the local market. It’s in the Strip market.

And so the out-of-town folks are – particularly on the PD side, we know they’re coming from – their larger players, they’re coming from the main competitors you would think of when you consider that consideration set in the Strip..

Great, that’s helpful. Thank you. And then ex the Palms, flow through was a little bit better in Vegas. I don’t recall you talking about why? Anything you can share on that..

We’ve made one change in our HR policy, one outstanding item, but for the most part this is really the result of us --.

It’s refocusing on the core business..

Right. Yes, we’ve refocused on the core business. We’ve seen uptick in margin in slots, in catering, in hotel and all the higher margin business we’re just making them better. We did have one credit we took and that was a $2.1 million credit related around what we view as an employee enhanced benefit. We’re giving them flexible time off.

And so that allowed us to take a $2.1 million credit on benefits..

Got it, that’s helpful. And just one quick housekeeping. I assume the percentage of Chinese visitation is quite small given the local focus, but I imagine there may be some visitation at the Palms and like.

Any sense on what percentage of your revenue is coming from Chinese guests?.

I really haven’t broken that out, but I think we are going to is that we really haven’t seen any impact from the coronavirus..

Got it. All right. Thank you very much..

Our next question comes from John DeCree with Union Gaming. Please go ahead..

Thanks, guys. I think all of my questions have been answered. Steve, maybe one housekeeping item. In your prepared remarks I think you mentioned 90 million to 100 million of maintenance CapEx this year including the room remodel at Red Rock.

Just wanted to confirm that? And then after that remodel is done, what’s baseline? Is 90 to 100 still kind of baseline CapEx given there’s – it doesn’t sound like there’s any other kind of key projects lingering out there?.

It’s 80 to 100. So when you think – it was a little bit of an awkward number because the Red Rock room, the remnant of that spend was probably $7 million to $8 million kind of extending from 2019 to 2020. So going forward we’re looking at $80 million to $100 million maintenance..

Got it. Thanks, guys. Thanks for all the color..

[Operator Instructions]. Our next question comes from David Hargreaves with Stifel. Please go ahead..

I’m wondering if Palace has any customer overlap with the Strand [ph], if you’re seeing anything from the remodels they’ve done there.

And alternatively are you sensitive to tavern activity in the area?.

When we think about Palace and all of Las Vegas, there’s a competitor on every corner. So we’re sensitive to what our competitors are doing. We do think the local’s customer move from place to place.

Fortunately I think we are situated where we have the best assets in the best locations and 90% of the population is located within 5 miles of one of our places and location is everything..

Great assets. I’m just wondering do you think you overlap with Strand at all..

Sure, we overlap with a lot of properties. I would think of it as very insignificant..

Fair enough.

And could you tell us where your restricted payment capacity is currently?.

Restricted payment capacity is about $275 million baseline. That does not include – there’s a carve-out for $50 million annual dividend. That’s the new credit facility..

Excellent. Thank you so much..

This concludes our question-and-answer session. I would like to turn the conference back over to Stephen Cootey for any closing remarks..

Thanks everyone for joining the call and we look forward to talking to you in about 90 days. Thank you..

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