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Executives

David Hoster - President and CEO

Keith McKey - CFO

Analysts

Ki Bin Kim - MacQuarie

James Miller - Sandler O’Neill

Paul Morgan - Morgan Stanley

Jamie Feldman - Banc of America/Merrill Lynch

Mitch Germain - JMP Securities

Dan Donlan - Janney Capital

EastGroup Properties Inc. (EGP) Q1 2010 Earnings Call April 29, 2010 11:00 AM ET

Operator

Good day. And welcome to EastGroup’s First Quarter 2010 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. Please note this call may be recorded and I will be standing by should you need any assistance.

It is now my pleasure to hand the call over to David Hoster, President and CEO of EastGroup Properties. Please go ahead, sir.

David Hoster

Good morning. And thanks for calling in for our first quarter 2010 conference call. We appreciate your interest in EastGroup. Keith McKey, our CFO, will also be participating in the call. Since, we will be making forward-looking statements today, we ask that you listen to the following disclaimer covering these statements.

Unidentified Company Representative

The discussion today involves forward-looking statements. Please refer to the Safe Harbor language included in the Company’s news release announcing results for this quarter that describe certain risk factors and uncertainties that may impact the Company’s future results and may cause the actual results to differ materially from those projected. Also, the content of this conference call contains time sensitive information that is subject to the Safe Harbor statement included in the news release is accurate only as of the date of this call.

David Hoster

Thank you. Operating results for the first quarter exceeded the midpoint of our guidance range. This increase was due primarily to achieving higher than projected property occupancies. Funds from operations were $0.73 per share as compared to $0.83 per share for the first quarter of last year, a decrease of 12%. The $0.10 per share decline was in part the result of lower property occupancies and less capitalized interest during the first quarter of this year.

Same property net operating income for the first quarter declined 3.8% with straight-line rent adjustments and 5.1% without. These figures represent a somewhat lesser decline than what we experienced in the fourth quarter of last year.

In the first quarter on a GAAP basis, our best major markets after the elimination of termination fees were San Francisco, which was up 11.6% and San Antonio are up 3.8%. The trailing same property markets were Los Angeles down 21%, New Orleans down 20% and Tampa down 11%.

Although, average rents are declining, the difference between quarters is basically due to changes in property occupancies in the individual markets. EastGroup’s occupancy at March 31 was 86.2%. Although, this represented a significant decline from yearend, it was 120 basis points higher than we had originally projected in January. 320 basis point decline from December 31 was due to 110 basis points or one-third of the decline from our Chino vacancy, one of our largest properties; 80 basis points from lease terminations and another 60 basis points to new acquisitions and developments moving into the portfolio.

We believe that occupancy will be approximately the same in the second quarter and then increase in each of the remaining two quarters of this year. Please note that our occupancy statistics include our development properties that were moved to the portfolio at the earlier of 80% occupancy or one-year after shell completion.

Our Texas markets were the best at 94.2% leased and 93.4% occupied at the end of the quarter. Houston, our largest market with over 4.7 million square feet, was 96% occupied. Our worst major market continues to be Phoenix at 72% occupied.

In spite of the first quarter decline, the leasing fixtures changed for the better. Specifically, there is leasing activity in all our markets. But prospects expect cheap rent, significant concessions and feel a little sense of urgency since they have so many lease alternatives.

Since the first of this year, our markets have experienced leasing activity that has been better than or at least as good as that seen in the fourth quarter of last year. Looking at the first quarter leasing statistics, we renewed 51% of the 2.2 million square feet that expired in the quarter or two-thirds of the number of leases expiring.

We leased another 988,000 square feet that had either terminated or expired during the quarter or was vacant at the beginning of the quarter, a clear indication that users are out in the market and are actually signing leases.

In total, we signed 108 leases in the first quarter, which was the highest quarterly number ever. In addition, since March 31, we have signed an additional 565,000 square feet. Business is being done, though not necessarily at the price we would like or as fast as we would like, but it is happening. We currently have only 6.9% of the portfolio rolling over the balance of this year.

As you can see in our supplemental information, GAAP rents in the first quarter decreased 8.3% and cash rents declined 13.6%, a greater decline than in the fourth quarter of last year. We expect to experience negative rent growth until occupancies recover to the 93% to 94% level. This was the case coming out of the last recession.

Average lease length was 4.5 years, which is well above our average for last year. Tenant improvements were $1.93 per square foot for the life of the lease or $0.43 per square foot per year of the lease, which was our average in 2009.

As previously reported, we acquired in January two multi-tenant business distributions in Charlotte with 193,000 square feet for $5.3 million and a $3 billion business distribution complex for 274,000 square feet in San Diego for $17 million in separate transactions.

Although, these purchases closed in the first quarter, they were really 2009 transactions since that was when they were negotiated. Our guidance for 2010 assumes an additional $40 million of acquisitions this year, beginning in the third quarter.

During the last 30 days, we have seen an increase in industrial property offerings and hope to see more over the next several months. During the first quarter, we transferred three properties out of the development program, Beltway VII in Houston, Country Club III and IV in Tucson and Oak Creek IX in Tampa. They contain 318,000 square feet with a total investment of $22.6 million, and are currently 36% leased.

At March 31, our development program consisted of two properties and a pre-leased expansion, with a combined 128,000 square feet and a total projected investment of $11.3 million, of which only $2.4 million of this cost remains to be spent. These three properties are currently 63% leased. We do not plan to have any development starts in 2010, but are looking at several potential build-to-suit opportunities.

Keith will now review a number of financial topics.

Keith McKey

Good morning. FFO per share for the quarter was $0.73 compared to $0.83 for the first quarter last year. Lease termination fee income was $1.413 million for the quarter compared to $232,000 for the first quarter of 2009. Bad debt expense was $616,000 for the quarter compared to $778,000 in the same quarter last year.

For the year, we have projected termination fee income net of bad debt expense of $0.05 per share and I want to emphasize that the $0.05 is net of bad debts. Debt to total market capitalization was 41.5% at March 31, 2010, and that was with a stock price of $37.74 per share.

For the quarter, the interest and fixed charge coverage ratios were 3.2 times compared to 3.8 times last year. And the debt to EBITDA ratio was 6.3, the same as last year. Our debt maturities are in good shape. They are no maturities of mortgage loans in 2010, and $67.3 million matures in 2011.

Also note on our mortgage debt schedule in the supplemental information that we stagger our maturities to minimize large amounts of balloon repayments in any one year.

Our bank debt was $124.6 million at March 31st, and with bank lines of $225 million we had $98 million of capacity at quarter end. The bank credit facility is mature in January 2012, and at our option we can extend for one year on the same terms.

In March, we paid our 121st consecutive quarterly cash distribution to common stockholders. This quarterly dividend of $0.52 per share equates to an annualized rate of $2.08 per share. Our dividend to FFO payout ratio was 71% for the quarter.

Rental income from properties amounts to almost all of our revenues, so our dividend is 100% covered by property net operating income and we believe this revenue stream gives stability to the dividend.

FFO guidance for 2010 has been narrowed to a range of $2.77 to $2.93 per share, with the same midpoint of $2.85 per share and earnings per share is estimated to be in the range of $0.55 to $0.71.

Now, David will make some final comments.

David Hoster

We believe industrial property fundamentals have hit bottom and in many of our markets begun to show improvement. For EastGroup, our second quarter occupancy should be approximately the same as we reported March 31. Then we expect to achieve improvement in both the third and fourth quarters. From a leasing perspective, we are the most optimistic that we have been for a long time.

As Keith has just reviewed, our balance sheet continues to be strong and flexible, allowing us to seek attractive investment opportunities with yields that will be accretive to FFO in both the short and long-term.

In addition, we are seeing an increase in build-to-suit opportunities, which is the first step in our return to new development activity.

Keith and I will now take your questions.

Question and Answer Session

Operator

(Operator Instructions) Our first question will come from the site of Ki Bin Kim with MacQuarie. Your line is open.

Ki Bin Kim - MacQuarie

Thank you. David, can you talk a little bit about health of the small businesses and how it compares to large corporates? The reason, I ask is that we have heard from the past couple companies that reported that large corporates are doing a lot better than small businesses and I thought you guys might have a pretty good gauge on that?

David Hoster

We are seeing activity at both sizes. In the markets hardest hit by the recession, we are actually seeing the small businesses being more active. For example, in Phoenix, I was out there a couple of weeks ago and speaking with a leasing broker who said that he had a record number of small companies that had retreated to their basement or garage when the recession was hitting bottom and that they are now back out looking for the 5,000 to 10,000 square foot warehouses spaces to start to expand their businesses.

In the last recession, we saw that the smaller entities were the ones that started to recover first, willing to make new commitments. We are now seeing at the same time. For us, a large customer is in the 100,000 to 150,000 square foot range. We are seeing a number of those and in the last 30 days have signed some larger leases that we are very pleased with. So, it’s a little bit of both.

Ki Bin Kim - MacQuarie

And is there a indices specific or they are kind of broad-based?

David Hoster

We are seeing activity from the 3PL, freight forwarding, air cargo type user. Also from construction related entities for the first time in a while and that would be both residential and commercial. It’s not the mom-and-pop operators but the bigger companies who seem to have a new confidence in where the economy is going. And then finally, one that we’ve talked about in previous calls is foodservice, food related users.

Ki Bin Kim - MacQuarie

Okay. And one last question. Going back to your comments about build-to-suit opportunities possibly coming back, could you comment on how those yields compare to acquisition yields that you are looking at and if there’s any, if you’re getting any indication on actual volume?

David Hoster

Well, right now, we are just in the process of bidding on a number which we haven’t done for a while and so really can’t report anything that’s finalized where we can report numbers. But we are looking at yields that would be equal to or maybe even a little bit better than stabilized acquisition yields today and acquisition yields are certainly coming down.

Ki Bin Kim - MacQuarie

Where would you peg that at, acquisition yields?

David Hoster

The problem is how do you define stabilized and I think every buyer does that a little bit differently. But I would say the range of what we were able to buy last year to this year is yields have come down probably 75 to 100 basis points anyway. There is just a lot of money out looking for good industrial assets in the better markets are traditionally the stronger markets. Somebody is looking for acquisition that’s a little bit of a disappointment.

But I think the higher prices are going to have some sellers come back out of the woodwork and start to offer their properties for sale. So hopefully, even though, there’s more money chasing good investments, that there will be more investments over the next six months than we certainly saw last year and have seen the first part of this year.

Ki Bin Kim - MacQuarie

Got you, thank you.

Operator

And we’ll take our next question from the site of [James Miller] with Sandler O’Neill. Your line is now open.

James Miller - Sandler O’Neill

Good morning, guys. I guess, just following up on that last question. The capital flows coming in, are you seeing some of these investors looking for the smaller, let’s call them, less big-box quote/unquote institutional quality space, or are they still focused just on best assets, et cetera?

David Hoster

I think it’s, well, again, how do you define institutional quality? But good quality assets in good locations, whether they are 100,000 square feet or 300,000 or 400,000 square feet or a complex of that size, have a good bit of money chasing them. We have seen that in South Florida. We are starting to see it in Texas and it’s the private funds that are seeking out industrial real estate. Pension fund advisors are back in the marketplace and I think some REITs are quietly starting to offer on properties besides us for a change.

James Miller - Sandler O’Neill

So, I guess, another way to ask that, the cap rate compression is not just, I guess is it expanding away from the class A and into the more, into the B assets as well?

David Hoster

Well, again, if you define class A as brand new large box, yeah, but we define A as a reasonably new, well located highly functional building no matter what its size is. I think, where the disconnect is older buildings and poor locations, obsolescence and in cities that are not viewed as growth markets.

James Miller - Sandler O’Neill

Okay. Thanks. And then, my second question is some of our market visits are showing that some of the big-box stuff is still struggling to fill up and landlords are buying occupancy either through cutting rates or high concessions.

Is that still happening and then to what extent do those big 0.5 million to 1 million square foot boxes have an impact on your guys’ ability to eventually get some pricing power and obviously that requires the occupancy increases that you guys have spoken about?

David Hoster

I don’t think it makes any difference what size the space is today. There is a battle on rents and all it takes is one landlord who feels he needs to lease his space at any cost and that keeps rents down. Most of those big boxes cannot be subdivided for anything less than 100,000 or 150,000 square feet and we have very few spaces available in that size.

So, as the smaller spaces fill up and our occupancy goes up, we are not really that much affected by what’s happening in a big box on the fringe of the market, because it’s a very different type user.

James Miller - Sandler O’Neill

Got it. Great. Thanks, guys.

Operator

And we’ll move next to the site of Paul Morgan with Morgan Stanley. Your line is now open.

Paul Morgan - Morgan Stanley

Hi, good morning. Going back to the build-to-suit opportunities, could you just give a little bit of color? Obviously, there’s quite high availability in a lot of markets and why the existing inventory is poorly suited to these potential tenants and what that might say about the obsolescence or what is in the vacant stock?

David Hoster

The build-to-suits that we are looking at right now, there’s really not a solid alternative for them. And companies that start to look at build-to-suits, especially when we are just coming out of a recession, view that what, generally view what they are going to do inside the building is a much bigger factor than really what the rent of the building is going to be. So that building has to be configured, whether it’s the clear height, shape of the building, size of the truck cord, all those different things, it’s more important to have those fit their needs.

An example is in Phoenix where there’s millions of square feet of big-box space and Amazon has announced that they are doing a build-to-suit because they need it to be done exactly the way they need the inside to work out, with their racking and conveyor systems and all that sophisticated stuff that you usually don’t see in our buildings because of the smaller users.

So, for a lot of those big, big users, the cost of the building itself is less important than what goes on in it. So, it’s worth getting it done their way. But I think it’s a positive sign for future development because it indicates that companies are having a new confidence about the future of their business and are willing to make those kind of commitments.

Paul Morgan - Morgan Stanley

I mean do you think it’s a problem, though, for people who own vacant big-box space that, in fact, the users of it may not find that suitable to their needs and even despite the vacancy require a new building?

David Hoster

I think it’s very much, you have to look at the specific build-to-suit proposals. A cup a couple of ours that we are working on, there’s just not another building that size in the location they want to be.

So, you have to look at it market-by-market and really what they want to do in the building is more important than what the rent is and some people just need a big-box to distribute out of.

Others are going to put a lot of sophisticated equipment in it and as a result, size and shape of the building is more important. I think this is just a natural thing that happens coming out of a recession.

Paul Morgan - Morgan Stanley

Okay. Can you talk about, I mean about one-third of your vacancy is in Tampa and Southern California. Could you just give a little bit of detail on what you are seeing in those markets, whether, you mentioned activities sort of across the Board, but the stuff in those two markets you think you can absorb sooner rather than later?

David Hoster

We have seen a nice pickup in activity in southern, the greater Los Angeles metropolitan area. I think the increase in container cargo importing is helping pick some of that up, but good activity in City of Industry and Chino in the last 30 days. San Diego, we have two spaces and the activity is not very good there, but the new property that we bought in January is actually outperforming our projections in terms of occupancy. I think that’s based on its location and smaller tenant sizes. Southern California is encouraging.

Tampa is still very slow on that far southeastern submarket. We are doing very well in our airport submarket, but down in our Oak Creek development, which is a little bit of the fringe of the Tampa development is more of a struggle. And we are optimistic, we will pick up occupancy between now and the end of the year, but there’s less activity than in some of our other Florida markets.

Paul Morgan - Morgan Stanley

In those outer markets, was a lot of the demand housing driven?

David Hoster

I think Tampa was a lot more housing driven in hindsight than anybody thought it was initially. There’s not any real pickup in that yet. I think just the overall economy is people are optimistic about that improving, but we are not seeing a pickup in anything related to housing either, from a warehousing standpoint either from Tampa or Fort Myers.

Paul Morgan - Morgan Stanley

Alright, thanks.

Operator

And we’ll move to the next to the site of Jamie Feldman with Banc of America/Merrill Lynch. Your line is now open.

Jamie Feldman - Banc of America/Merrill Lynch

Thank you and good morning. So, in terms of your expectation for an occupancy pickup in the back half of the year, can you talk a little bit more about, I mean are these leases that are signed already, or is this just a pickup in activity you think will come through?

David Hoster

It’s a combination of both. We are starting, really I guess, during the end of last year, really January of this year, we started to see prospects who unlike in the past with industrial are looking farther out to nail down a deal. So, we have been signing some leases that will be effective in the third and fourth quarters, a good bit of which we’ve already projected. So, we don’t see the increasing FFO from our current guidance level.

But what it does is, we believe reduce the risk of not meeting our guidance, so that has been very encouraging. We just signed an 80,000 square foot lease in Charlotte and we leased, subject to government approval, 100,000 square foot in our Chino 300,000 square foot vacancy. So, we have leased about 130,000 square feet in Tucson. And those are all future occupancies that, as I say, we think reduces the risk of not hitting our numbers.

Jamie Feldman - Banc of America/Merrill Lynch

Okay. Thanks. And then, as you think about your role for 2011, I think it’s about 20% of the portfolio. Are you starting to have conversations now on some of that space? What are your thoughts at this point?

David Hoster

The bigger users after the first of the year, we are starting to talk to. But industrial you don’t, unless it’s a big user, you generally, you don’t need as much lead time, as you do on an office building because you don’t need to put in nearly the amount of improvements.

But smaller users, when you come to them 9 to 12 months in advance, they usually tell you to come back and see them in six months. So, it usually is in the final six months of a lease, we do our serious negotiation with the users at 25,000 square feet and below.

Jamie Feldman - Banc of America/Merrill Lynch

Okay. So, you’re not really seeing a sense of urgency given lower market rents like you’re seeing in some of the other sectors?

David Hoster

You mean on the tenants’ part, on the customers’ part?

Jamie Feldman - Banc of America/Merrill Lynch

Yeah.

David Hoster

We are for the bigger users but not the smaller ones. They still want to have a little more confidence about where their business is going, whether they need to shrink, stay the same or enlarge their space. So, they want to get closer to their lease termination to make that decision. They are looking for more flexibility because they are the ones that tend to have the bigger changes.

Jamie Feldman - Banc of America/Merrill Lynch

Okay. And then finally, just if you can give us an update on the acquisition market, kind of how do things feel today versus three months ago?

David Hoster

As I mentioned in my remarks, there are an increased number of offerings and there’s more coming on the horizon. We’d still like to see a good bit more. Our experience in bidding so far and just anecdotal evidence of some of the deals that have been tied up is that cap rates are coming down. People that thought they were going to steal something, especially in industrial, are finding out that that opportunity is not there. So, they are starting to get more aggressive. It’s always the case if you have a fund and you don’t put out your money, you don’t earn your fees. So, there’s more pressure for those type people to put out their money than it is for us.

But we have lost out on some bidding because our prices weren’t high enough, but we are continuing to bid on what we think fits our criteria. A couple of interesting sidelights, because as a REIT we now have to expense our acquisition costs rather than capitalize them, I’d point out that the two properties that we closed on in January, we had to expense $49,000 of acquisition costs this first quarter. And that includes some that we had to expense related to those in the fourth quarter of last year.

Another thing in our own thinking that we have underestimated about, I guess, you don’t call them FASBs anymore, but 141 which forces a REIT to only record what the market rent is for a space versus the cash rent. If we could record the market rent, we’d have almost another $0.02 a share this year and that’s cash we are receiving but it doesn’t show up as FFO because of the accounting rules.

I’m not sure everybody understands the effect of that. It has always been there for a number of years, but the difference between base rent and market rent are bigger now than in the past, so it has a much larger impact than it has in previous years.

So, I’d just mention that. We are making more money from these acquisitions than we are reporting.

Jamie Feldman - Banc of America/Merrill Lynch

Yeah. We have seen that, historically, we always saw that to the upside.

David Hoster

Yeah.

Jamie Feldman - Banc of America/Merrill Lynch

Haven’t really seen it too much with the downside, but that’s where we are in the cycle.

David Hoster

Yeah.

Jamie Feldman - Banc of America/Merrill Lynch

Okay. Well, thank you very much.

Operator

And we’ll take our next question from the site of Mitch Germain with JMP Securities. Your line is now open.

Mitch Germain - JMP Securities

Good morning, David. The 565,000 of square feet of leasing completed after the quarter that you referenced, is that what you just talked about in Charlotte, San Diego, Phoenix? Is that what that relates to?

David Hoster

Well, 80,000 of it is Charlotte, we signed this week. It was nice to be able to talk about it on the call and it’s just a wide range of different markets.

Mitch Germain - JMP Securities

And how much of that is new versus renewal?

David Hoster

Good question. Let me quickly pull that out. Okay, yeah, renewals are 203,000 and the new leases are 362,000.

Mitch Germain - JMP Securities

And just hate to talk about acquisitions again. I know there has been a lot of focus on it on the call. It seems a bit that your enthusiasm regarding putting capital to work is a bit more tempered today versus last quarter. Is that a good assessment?

David Hoster

I’m not sure I would say that. The good news is that there are going to be more assets for sale. There are now, but I think will be even more. The bad news or the difficult part of it is that yields are going to be down a bit, but there are a lot more competitors out there bidding on the properties.

A real positive for us is that we can buy at lower yields than we did the last four acquisitions and still have it accretive. Given today’s cost to capital, the yields today are more accretive than they were three or four years ago, looking at the comparison on a same basis.

So that we are still optimistic that we will be able to buy assets this year and optimistic that they will be accretive, even with vacancy and certainly even more accretive as we lease up that vacancy over the next year or two, since most assets being offered for sale have a little bit of vacant space. So, we’re just going to have to work harder to get the properties and pay a little bit more, but the numbers still are very attractive for us.

Mitch Germain - JMP Securities

And last question David, just remind me the deals that closed in the first quarter, were they widely marketed or were they off-market transactions?

David Hoster

No, they were both widely marketed. The Charlotte purchase was a couple of buildings out of a much larger package. San Diego purchase had been out on the market for eight months at that time and I think the seller had gone through maybe two different buyers and I think finally came to us. We had bit initially and they didn’t like our offer and we were able to cut an attractive transaction for us.

One of the positives with EastGroup in the marketplace is we have a reputation for closing, doing what we say we’re going to do. And so many times that allows us to buy a property at a price that’s less than some other bidders. When the seller needs to go to closing by a specific date, we are a better bet.

Mitch Germain - JMP Securities

Thanks.

Operator

And we’ll move next to the site of Dan Donlan with Janney Capital. Your line is now open.

Dan Donlan - Janney Capital

Good morning. Just curious on your leasing folks and how they are tackling leasing. Are they looking to have shorter term or how are they looking at length of leases going forward?

David Hoster

I think you have to look at each prospect differently. If somebody wants a long-term with tremendous concessions, that doesn’t work. If somebody needs a teaser rate and a break upfront where the rent increases overtime, we will sign a longer lease. It’s just what they are looking for.

Lots of times, though, it’s always within a range and you sometimes end up doing what the prospect wants to do or you don’t sign the lease. We have 15% to 20% of our portfolio turning every year.

So, if we sign a few leases at lower rent than in hindsight we’d like, we seldom are looking back. We have plenty of leases to make up for going forward as rents start to recover and to sound like an office company, then we can say we have embedded rent growth.

Dan Donlan - Janney Capital

And then, next question would be I think you’ve said in the past that your occupancy in the last recession, I think, bottomed out in first quarter of ‘02, but it look about four years to report rent growth.

Do you think that, I think you’ve mentioned before that supply increases this time around have been a lot less than last time around? Do you think you could get rent growth quicker than you did the last turn?

David Hoster

It all depends on the demand in markets. Our experience is that to really have pricing power, I mean, market rents are going to go, we think have hit bottom and are certainly going to start to inch back up over the next year or so. But, of course, the way we report rent is what the previous customer is paying versus what the new lease is.

And you really don’t have pricing power until occupancy gets in the 93% to 94% range. It all gets down to how many alternatives does prospect have. If they have 10 alternatives that are pretty good, we have zero pricing power. If they have one or two alternatives, that’s when you can start to increase rents.

And looking back at our historical graphs, we really did have a rent spike coming out of the last recession where rents went from being negative to flat for a period of time. And then almost overnight we had a jump of 10% to 12% rent growth and when you compare that to our occupancies and it’s in that 93% to 94% range when we are starting to go from really no rent growth to double digit. Now whether, when that is going to happen is all going to depend on how robust the recovery is.

Dan Donlan - Janney Capital

And if you could maybe comment, do you think a lot of the turn last time around in your space, was it more homebuilding driven, was it construction driven, or do we have to see that turn before you can get to 93% or 94%?

David Hoster

I think you have to look at individual markets where Florida and Arizona were much more homebuilding driven than in the other markets. But we are really seeing a pickup in prospect activity in Florida today, not really, well, actually even a little bit in Fort Myers, but improvement in activity and expect to be have higher occupancy in the future there. And really none of that is homebuilder driven yet.

Dan Donlan - Janney Capital

Okay. Thank you.

Operator

And it appears that we have no further questions at this time.

David Hoster

Thank you very much for calling in. And as always, Keith and I will be available. If something didn’t get covered or you didn’t understand something that we put out, please give us a call. Thanks.

Operator

And this does conclude today’s teleconference. Thank you for your participation. You may disconnect at any time and have a wonderful day.

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