Camden Property Trust (CPT) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to the 2:20 p.m. session at Citi's 2023 Global Property CEO Conference. I'm Eric Wolfe with Citi Research. And we are pleased to have with us today Ric Campo of Camden Property Trust. This session is for Citi clients only. If media or other individuals are on the line, please disconnect now. Disclosures are available on the webcast and at the AV desk. And as a reminder, the questions that I will ask today do not reflect the views of Citigroup or myself and are being asked for information purposes only. [Operator Instructions] Ric, I'll turn it over to you to introduce your team, give some opening remarks, and then we'll go into Q&A.

Okay. Great. Thank you. I'm here today with Kim Callahan, our Senior Vice President, Investor Relations; and also Connie Chau, who is our Director of Investor Relations. So thank you both for being here today. For those of you who are not familiar with Camden, we are a multifamily company with just over 60,000 apartment homes. We operate in 15 major markets across the U.S. We're an S&P 500 company with a total market cap of $16 billion, probably a little less than that today, given what's going on in the market after Chairman Powell bothered some people. We are having our 30th anniversary as a public company this year. So we just started a 13 city tour to celebrate employee excellence and to continue to nurture our culture and drive our business forward. Camden's been on the Fortune 100 Best Companies list to work for, for 15 years, 6 placements in the Top 10. And that just shows a focus on our culture because our employees are the ones who drive Camden's success every day. It's our secret sauce at Camden. And we make sure our employees understand why we exist as a company. And we exist as a company to improve the lives of our teammates, our customers and our stakeholders, one experience at a time. And let me unpack that a little bit for you. So we improved the lives of our teammates by providing great -- a great place to work, providing upward mobility, fair pay and a great, diverse environment. We improve our customers' lives by providing great homes for our customers where they make their most important memories in their life. They live at home. That's why we all make our most important memories. And we improve our stakeholders' lives by improving our communities and by taking shareholder money that everyone in this room gives us and investing it into multifamily properties, into technology and into employee development, so that we can be good stewards of that capital and drive returns that are better than competitors and better than the indexes. And ultimately, when shareholders want to sell their stock to pay for retirement or a second home or medical expenses, we've created value for them, and we improved their lives. We use this one experience at a time at the end of that statement as inertia, something that we want to make sure that everyone knows it's not -- we're not going to do this tomorrow, we're doing it right now. And right now is when we're going to improve the lives of all these constituent groups. And that's been our mantra for a long time, for 30 years, and it's why we've been doing so well for the last 30 years. Our strategy is to focus on high-growth markets. measured by projected employment, population and migration growth that ultimately drives household formation and multifamily demand as part of that formation. We operate a diverse portfolio of multifamily communities. We're geographically focused between A properties and B properties, also 1/3 urban, 2/3 suburban, trying to make -- create a lower volatility of our cash flow by operating that way. We recycle capital through acquisitions and dispositions. We create value through development, redevelopment, repositioning investments in technology and team member development. We maintain one of the strongest balance sheets in REIT land with low leverage, ample liquidity and broad access to capital. The last couple of years have been just amazing in the multifamily business. Since 2020, we've increased our FFO by 40% and our dividend by 25%. And these are run rate issue -- runway rate items where we don't expect to give any of that back any time soon. This has been driven by record property revenue growth, net operating income growth, which have been among the highest in the multifamily sector. These strong results are as a result of being in the Sunbelt and in -- particularly, in Florida. Some of the top best markets we have are the markets we're in today, in South Florida, Tampa and Orlando, and we expect those markets to be great performers in 2023 as well. And 2023 should be another strong year for Camden. Our 2023 guidance includes 5% -- 5.1% revenue growth, 5.5% expenses and 5% overall net operating income in the midpoint. Growth rates for our leases and renewals and our blended rates remain steady and actually, are ahead of normal times for this year ex the pandemic that drove demand the way it has for the last couple of years. And there are approximately 2% of new leases, 7% of renewals, 4% overall. The fundamentals of supply and demand, apartments are and -- continue to win -- continue to be a great business. This housing is a necessity. People always need a place to live, and you can't intermediate it with a computer. There will always be demand for high-quality apartment homes for those who choose to rent given the high cost of homeownership today and providing greater flexibility for people who rent. Projections for new supply remain steady and will peak in 2023 and 2024. Completion should start to decline in '25 and '26, with new starts likely to fall 50% to 60% in the next year or so given the current volatility of capital costs in an environment when -- in economic uncertainty. New supply in our markets, we always worry about it, but we aren't worried as much because only 40% of the new developments that are being delivered are in our submarkets and less than half of those are price competitive. There's about 200,000 units going into our markets, that -- whittling that down to about 40,000 units of competition. The wildcard for 2023 really is the macro economy and what happens with the Fed and recessions and all that. I mentioned our balance sheet is the lowest leverage in the sector. We have $1 billion of liquidity that we could deploy if we saw attractive opportunities. Today, the transaction market's pretty slow and a few deals are trading today given the wide bid-ask spread. We do have 2023 guidance that we put out for dispositions and acquisitions at 0 to $0.5 billion for each one of those. We are likely to sell communities in the first half of the year, pay down debt, get some dry -- more dry powder in our capital stack and then ultimately, use that -- those proceeds to fund development and/or acquisitions if opportunities developed at the end of the year. At this point, I'd like to turn it over to questions that you might have, so thanks.

Great. Thanks. We've been starting out each session with the same question, which is, what are the top 3 reasons for investors to buy your stock today?

Top 3 reasons are -- first is our high-quality, geographically diverse portfolio of assets, primarily focused in Sunbelt markets. Second would be just we've got a long track record, 30 years of historic growth. We have a great team. And then bottom line would be our -- the last one would be our strong balance sheet and low leverage, which gives us opportunity to capitalize in the environment today.

Right. And I want to pick up on a couple of things that you had in your opening remarks as well as on the call, try to tie them together. You mentioned on the call that 4Q '22 absorption was, I think, the worst you've seen in your career, something like that. As this -- I think you called it the sugar high endemic stimulus waned. It looks like things have come -- sort of come back from that, [ jobs track ] a bit better. But my question is really -- how do we know that the same thing is not going to happen in 6 months, especially with supply increasing? If it can happen in the fourth quarter '22, why couldn't it happen in 2Q '23, 3Q, '23, especially as supply is going to increase from here and not decrease?

So I think what happened in 2022 was we pulled demand forward and then supply came in. And ultimately, we had just more supply than the demand could handle in that fourth quarter. And so that pull forward is finished, and now you have just more normal demand that's out there. And I just think that if you look historically at household formation and the demand that is created for multifamily, it's pretty rare to have -- unless you have a recession and you got some dislocation to have negative absorption the way we did in the fourth quarter of 2022. So unless something really -- something breaks in the economy and you have a big dislocation in the summer and that freaks consumers out, I don't think you'll have a repeat of that.

And I think in your remarks, you said that there's about 200,000 units just at a high level that are delivering in your market or have been started in your market. But when you really narrow it down, it's more like 40,000 units. Could you just put that sort of number in context? Trying to understand whether that's a high percent relative to history, a low percent. Just trying to think through how much impact that should actually have on your pricing power. And then just second question to that, I know it's a long question, but is -- if you think about that 40,000 units, sort of when will it peak in terms of impact? Is it going to peak later this year? Next year? Just some thoughts on sort of the cadence of that supply.

So 40,000 units relates to historic numbers. It's -- we're up -- so we started with the 200,000. It was around 160,000 in the last year or so. So we've been delivering 140,000 to 160,000 units to our markets, and it's now 200,000. So there's an additional 40,000-ish units that are out there. I don't think in a reasonable economy that it's like too high of a bar to deal with, and I don't think it's going to hurt our pricing power dramatically unless you have a big recession in the summer, especially when you look at the blended lease rates we have today at a 4% on average blended lease rate from -- for January and February. If you look -- if you took -- let's go ex COVID, that would be in the top 4 or 5, 6 years of starting the year that we've had in the last 25 years. So it's a really good start for the year, which tells me that demand is there and that we have pricing power in spite of bringing those units on. The units do peak. I would say they would peak towards the end of this year, in the middle of next year. The biggest challenge we're having today that all developers are having is getting products to market. And the supply chains, even though supply chains are better today, the permit process and the inspection process is still abysmal in most cities in America today. I'll give you an example of Camden Atlantic that we just opened was 9 to 12 months delayed primarily because of inspections. So we had a finished building that we couldn't lease. And then once we opened the building 4 or 5 months ago, it had a blowout leasing season and leased 50, 60 units a month. And we leased a 290-unit -- or 270-unit deal up in 5 months. So I think that the peak will come next year and the year after, and then there will be a big hole in the market in 2026 -- 2025 and 2026, because the starts that are going to -- that people think are going to happen in 2023 just won't happen.

And I think you said the number of starts, it's going to come down, something in the 50% to 60% range. I heard 50% from a few of your peers, so it seems like they're in agreement. I guess the question is why are we not seeing that in the starts number now? I mean every month, we kind of get the starts number. It seems to be high relative to history. I guess you can debate whether it's pretty high. But why is that not reflected in the current starts number? And when do you think we'll start seeing it? Is it just -- are the deals being started now just based on old economics, old construction loans that have already been in place and we'll start seeing it in like 3 to 6 months?

Yes, exactly. So what's happened now is you have legacy deals that were teed up that people just went ahead and continue to start. But if you look at -- I'll give you an example of a -- of the permits that are projected for L.A., for example, or 13,885. I know for a fact that there are 350 of them that aren't starting because they're mine, okay? So -- and just anecdotally from my good friends that are the CEOs of major developers in there, we're all betting the under on 50%. And they're talking their own book, which is -- we hear anecdotally every day, the deals are getting pulled. The math just doesn't work. When you double your cost of capital from a debt perspective and you increase your equity cost of capital by 30% or 40%, the math just doesn't work and people are pulling those deals.

I guess where would returns have to be, I think, for it to work in today's environment?

I guess if you look at our cost of capital and the challenge you have is in the last 30 days, our cost of capital has changed by 100 basis points one way or the other depending on when you calculated it, right? And so I think the problem that people have today is that -- what is the cost of capital? Tell me what it really is. I don't know. I mean if the tenure is going to stay at 4% for a long time, and you're going to have longer and higher, then cost of capital has to go up. So I think the biggest issue is not what spread I need, the issue is where do I start from the spread, and that's, I think, the challenge people are having. Is it just the uncertainty because of the volatility of how do you calculate -- how do you do a capital asset pricing model when you have -- and calculate your weighted average cost of capital when you have such a volatile environment? Do I do it on a Monday or a Friday? And on Friday, it works. On Monday, it doesn't.

Right. Sorry, were you going to say something?

No, I'm good.

Okay. So during your call, you said that you and Keith were debating the merits of waiting through sort of the slow acquisition environment, why did bid-ask spread. I mean what do you think eventually brings buyers and sellers close together, gets you back to a more normal transaction environment? And assuming cap rates do expand, and call it somewhere in sort of the 5.5% to, say, low 6% range, would you be a buyer in this environment? Do you think it makes sense? You have a good balance sheet, so just trying to understand how aggressive you'll be if you see that type of opportunity.

So the -- what should bring buyers and sellers together, either the sellers to the buyers or the buyers to the sellers is more certainty, right? What is the -- the uncertainty you have in the market today is freezing the marketplace. And so people are, as I said a minute ago, what is my weighted average cost of capital? And how do I think about that longer term? And today, it's really hard to do, to get very aggressive on something when you have these acquisitions if you have this uncertainty. So I think what has to happen to bring buyers and sellers together is you have to have more certainty. And then once we set the bar and say the new bar is x, then we can all reset and then figure out how we're going to move forward. What we're going to be doing, at least in this environment, is there's still a decent bid for smaller assets. So if you wanted to sell a or buy a $50 million asset, $75 million asset, cap rates are still 4.5%, 4.75% for decent assets out there. And if it's an older asset, it's probably 5.5%, plus or minus. But if you get over $100 million, then all bets are off. You're not going to like the price of $150 million bid out there. You'll probably have 15 bidders on a -- $50 million, and you'll have 3 or 4 on $150 million. And those 3 or 4 are going to want the 6% cap rate or 5.75% type cap rate that you just described. And I think that, that's a -- until we have more certainty in the marketplace, that's going to be the -- that's going to be where the market is. We are going to sell into the smaller asset market. And we have markets -- we have assets in the market right now. And we think we can sell them at a 4.5% to 5.5% cap rate basis. If we can do that, we can then pay down debt at 5.5% -- 5.6% on my line and make an accretive transaction on selling assets into this market. And that gives us more dry powder for the future, depending on how the world unfolds.

Good. And you've talked about the conditions that you need to see if you were to ever sort of repurchase stock, and then I think you said something like you don't want to just do bite size. You want to do it in a little bit -- something that's more material for shareholders. Do you think those conditions are in place today? I mean assuming you're going to say that the stock is trading cheap relative to NAV. But just sort of what conditions do you think are in place now to repurchase stock? Which ones aren't? And when would you actually go forward and be a little bit more aggressive about that?

Well, the first condition that has to be in place is to have to be able to sell assets at a price that I'm willing to sell them at, that's number one, because I will not borrow money to buy stock, period, end of story, okay? So we're in the market for selling assets today, as I said. And so to me, it really does get down to -- it has to be a significant discount, and it has to be persistent, so we have the ability to make a -- do something that is meaningful in the stock. And what's traditionally happened is because of the blackout windows that we have, because of earnings and things like that, the windows are pretty short. And oftentimes, we haven't been able to do anything of size through those windows.

Got it. So the condition that's left really is being able to sell assets?

Yes, absolutely. That's number one is you have to sell assets first and then buy stock. You don't borrow money to buy stock and then hope you can sell your assets in the future.

Got you. And then second, I think you're saying maybe sort of selling assets and paying off debt, do you think that's a better use than repurchasing stock?

Well, it's clearly an -- it's very unusual that selling assets and paying off debt is accretive. And so you look at that and go, that's interesting. And I guess if you paint a scenario where we sell assets, pay off debt and then decide to buy stock, we can then increase our debt because we've already paid it down by virtue of selling assets. So it gives us much -- a lot of optionality in what we end up doing. If you end up with a more maybe draconian view of the world and stock prices continue to go down and interest rates continue to rise and we have a real recession, then it might create a better opportunity for us to buy stock. First, it's selling assets.

Makes sense. And then we're getting a number of questions about specific markets, which I'm going to get into in a second. So let's switch to operations. You already -- you put out an investor deck that had everything on an effective and the consigned basis, so we won't make you go into that. But maybe if you could just give us a sense for beyond the months that you disclosed in there, sort of where you're sending out renewals, what type of acceptance rate you've had on that. And then if we just think about some of the demand indicators that you're seeing today, traffic to your sites, applications, anything else that you look at, what is that signaling to you about the strength of the peak leasing season?

We're sending out new renewals at around 7%, plus or minus, and that's on average. So in Florida, it's higher. It's closer to 10%. In the other markets, it's lower, depending on supply and demand dynamics in those markets. So it's around 7%, and we're not getting any pushback from that at all. In terms of other metrics, the metrics we're seeing out there are -- in the field are pretty strong market reasonably. We're not seeing any real weakness anywhere or any kind of signs that tell us that something different is happening than we already expected and what we put into our guidance.

Got it. And then there's a couple of questions on markets. Specifically, they want to understand about the near-term outlook for Houston, D.C. and Southern California. And there was a specific question about Houston, which is, just trying to understand whether sort of the best days are behind it. I'll use the words that they have here, just, I think, in terms of the energy companies, even though they're making money sort of hand over fist aren't necessarily hiring like they're making money hand over fist. So do you see Houston, at some point, getting better? And what's the catalyst for that?

So Houston has been -- it was the slowest Texas city to recover from COVID, even though it did recover faster than a lot of other cities. The issue in Houston is energy companies are making a ton of money, but they're also getting more efficient. I mean if you go back to -- there were about 80,000 jobs lost during the COVID period for energy, and they've added about -- they've added back about 50,000. And so they are definitely being very conservative with their hiring practices and what have you. I wouldn't say the best days are behind Houston. I think we have a lot of really interesting things going on in energy transition. And if you look at energy companies, they have all been pushed forward by lot -- for lots of reasons on this energy transition space. And with the IRA bill and the infrastructure bill, there's massive amounts of capital they're getting ready to be infused in Houston. The Houston group just made the cut on the hydrogen hub. They cut it from 78 groups to 33. And Houston was -- there are 2 Houston groups who were in that carbon hub, and that's an $8 billion infusion of capital for hydrogen. So I think Houston has a decent future. I think that it is a growing city. It continues to add people and lots of migration and over 100,000 jobs created in Houston last year. The folks think it's going to be more like 50,000 or 60,000 this year. So I think it's going to be a decent market long term. We have said that we want to lower our exposure in Houston long term just because we want more geographic diversity, and we have plenty of underrepresented markets that we can grow into, and we'll be selling Houston assets as part of that plan. But long term, I think Houston's a fine growth market. D.C., we tend to build more there, just enough there to keep the market from going above 2% or 3% in revenue growth, and we want to lower our exposure there. I think D.C. is a great long-term market with -- for a lot of reasons why D.C. continues to do well. The challenge is that we haven't been able to sort of get to lift off above and beyond on the supply and demand side of the equation, like Florida has in some of these other markets. In terms of Southern California, Southern California is one of those really interesting markets. Just to give you some really interesting, fun numbers, in December, we had 97% occupancy in L.A. and our economic occupancy was 84%. So we had 13% of the people that didn't pay. And if you look at our bad debts and our receivables prior to the pandemic around $3.5 million, and they rose to about $17 million and 60% percent of that was in L.A. and California, even though 12% of our NOI was in -- is in California. So ultimately, people will start paying. We had a nice drop in occupancy and people go, "Oh, you're happy about occupancy drops in L.A.?" And I go, "Yes, because the people that are moving out aren't paying, so I have -- I'd rather have a vacant apartment and no one in it rather than somebody in it, not paying." And so we've had -- we started to see people moving out and getting our -- being able to get our real estate back. Hopefully, L.A. County will not continue to move forward their moratorium on evictions and we'll start getting our real estate back. I think long term, California is going to be fine. L.A. and -- if you look at -- assuming we get through this period of moral hazard, where people don't pay because they don't have to, Southern California should be a higher-growth market than probably some of our other markets. And it should be decent once we get through this bad debt/no pay world.

Yes, I actually saw some type of headline, I don't know if others in the room saw this just headline around -- I think it was like an apartment association suing either L.A. County or city for moratorium. I don't know if that would just -- foreshadows that it's actually going to get extended again. I don't know why you'd sue sort of if it's -- there's only, I don't know, however many days left.

The challenge you have with these kind of issues is that our government is trying to help people, but what they are doing is creating a moral hazard for people where they just don't -- there's no penalty for bad behavior. And there are people that need to be helped, no question, that have issues with paying rent and stuff, and we need to help them. And we need to be good landlords and really help people. When you think about our industry, we stopped evicting people before the government told us to stop. We froze -- we, as an industry in National Multi Housing Council, got big owners together, all the public companies, and we froze rental increases during the early part of the pandemic, stopped evictions way before the government started doing it. We have payment plans. We had all these -- I think Camden did a $10.5 million program for residents to help them in the early part of the pandemic. And so the challenge today, to me, is ultimately, we have to as a community and as a -- get behind just doing things that help the people that really need the help and stop creating moral hazard for people who are just gaming the system and getting free loans from all of the interest-free loans with no penalties from all the public companies and all the people that own apartments in California. That's very frustrating when that happens, as you know.

Every quarter, you give your letter grades for, I think, sort of the current prospects of the market and then talk about which one is sort of moderating or getting better. I guess a little bit of a crystal ball question, but that's what we're here for. Next year, when you're giving out those letter grades, which ones do you think will have moved the most to the sort of -- for the better or the worse?

For 2024?

Yes. We're sitting a year from now, as you look forward and think through how much supply is coming, you can somewhat project demand to a certain extent, depending on where you see economies being robust. Where do you think there's going to be the most improvement? Or on the other side of that, the most detriment?

Yes, I -- that's a hard one because we have visibility 90 days out. And then you tell me what the rates are, tell me what the economy is doing, and I can tell you which markets I think are going to do well. But when you look at markets like Florida, like the Carolinas -- I mean, Florida continues to be 96%, 97% occupied with near double-digit rental increases, and it just doesn't seem like it's going to slow down. And we've seen other markets -- like Phoenix was an interesting market. I would say Florida will continue to do really well and so will the Carolinas. I think that Phoenix, it was interesting. We had the best rental increases in Phoenix, 30%, plus or minus at the peak. And Phoenix got a lot of supply, a lot of single-family rental supply and the migration has slowed a bit as a result of just kind of the excess demand or excess migration that got pulled forward from -- as a result of COVID. And so Phoenix has slowed, for sure, on a relative basis. And Houston, D.C. continue to be laggards, but they're 2%, 3% growers. But -- so I would think that we would -- that those markets that are sort of laggard today on a relative basis are still going to be that way, probably next year. There might be some gas in the tank with Houston given energy and energy prices continue to firm. There are some folks that believe energy prices are going to go from the 70s into the low 100s as a result of just supply and demand dynamics. And that could happen in the next couple of years and probably by 2020 -- maybe end of 2024.

And from -- I think you mentioned this, but -- on the call that you disposed of about $3 billion from 2014 to 2020. You moved the portfolio around quite a bit. Are there any of those that you wish you had back? Any time you look back and say, "Oh, wow, Vegas is a great market?" Or -- I'm just using it as an example. Are there any of those that you said, "Well, I wish I had -- actually had a presence there today?"

No. We sold out of Vegas and we sold out of Corpus Christi, and we sold -- it was roughly -- almost $3.5 billion over the last 10 years. And we sold them because they had high CapEx, a high -- a low return on invested capital. And I'm glad to have missed COVID in Vegas, even though it's very robust there now. It's just a hard market to operate in. And so we're very -- I wouldn't want any of the properties that we sold back. Now I will tell you that the people that bought them made plenty of money and they did well and God bless them. And we made plenty of money taking that capital and redistributed -- distributing it into our development program and our newer assets. So we look at every property in every market on an ongoing basis, and we force rank our portfolio and we look at -- just like people doing the -- with their stocks, right, which ones are dragging my portfolio? Which ones are going to grow faster? And if my return on invested capital -- I guess I have to put a roof on an old property and I don't get to raise the rent, then I'm going to sell that property and let somebody else reroof it and run it differently than us. And so no, I don't have any regrets about what we sold in the past.

Got you. And your leverage has never been lower. The question is just over the long term, do you think it's sort of efficient to run a multifamily company at 4x leverage? And I've heard from peers for over a long period of time that they're building capacity for when distress and stress comes. You have that capacity today. If stress comes, are you willing to lever up?

Absolutely. We have a fortress balance sheet for a reason. And I remember being at this conference in 2020, and I still took questions -- I was questioned about our balance sheet. And I remember sitting there out on the patio, we have this -- Camden's along with other multifamily companies, sitting on the patio outside. And I remember -- and this one investor continued to sort of push on our low leverage. And I made a comment, I said, "What happens if COVID shuts down and the world's changed? Again, I want to have a strong balance sheet." And of course, next week that happened. But bottom line is that if you go back to the financial crisis, we were 8.5x debt-to-EBITDA. And what drove me the craziest about that time was we had plenty of capital at the time, but we were just -- we had too much leverage and we couldn't take advantage of opportunities, and there were huge opportunities. Our 10-year bonds that I sold in 2007 were offered to me for $0.60 on the dollar. And because we had too much leverage, I felt uncomfortable buying my bonds back, yielding 13% at $0.60 on the dollar, and that still bothers me today. And so the bottom line is that we drove our debt down to where it is today, so we could take advantage of opportunities like that. During COVID, I started getting calls from merchant builder developers going, "Hey, I want to be the first one in your office to recap." And I'm like, "Okay, come on, bring it in." And of course, the Fed monetized the world and they never had to come in. So if we need to flex our balance sheet, we'll take our debt-to-EBITDA up to 5, 5.5, and that's another $1 billion excess capacity if the opportunity is there and the rating agencies and our bondholders know that we would flex and then ultimately, bring that debt back down. So you -- during good times, you keep the debt really low. And then during bad times, you flex if there's opportunity.

Great. Rapid fire questions, although this isn't supposed to be one, I'm going to say it anyway. What's your top ESG priority? We can dig deeper if it's not a...

Well, as Kermit the Frog says, it's tough to be green. But we're committed to setting science-based targets with plans to get to net carbon zero. I'm not going to give you a date though.

What will same-store NOI growth be for your portfolio and -- not for your portfolio, for peers overall in 2024? So not for your portfolio.

Well, thank you. I appreciate that.

However you want, you know what I mean? We want to give 2020...

But I think the broad view is 5%.

5%. What's the best real estate decision today, buy, sell, redevelop, build or hold?

It's always redevelopment.

Interesting. Will there be the same fewer or more apartment companies this time next year, better publicly traded?

Fewer.

Do you want to -- any -- do you have any explanation for that one? Or...

I will -- I'm including the whole menu of not just the large cap business.

All right. Thank you very much. Appreciate the time.

Thank you.