Park Hotels & Resorts Inc. (PK) CEO Tom Baltimore on Q1 2022 Results - Earnings Call Transcript

Park Hotels & Resorts Inc. (NYSE:PK) Q1 2022 Earnings Conference Call May 2, 2022 11:00 AM ET

Company Participants

Ian Weissman - Senior Vice President, Corporate Strategy

Tom Baltimore - Chairman and Chief Executive Officer

Sean Dell'Orto - Chief Financial Officer

Conference Call Participants

Smedes Rose - Citi

Floris Van Dijkum - Compass Point

Anthony Powell - Barclays Capital

Chris Woronka - Deutsche Bank

Dany Asad - Bank of America

Ari Klein - BMO Capital Markets

Jay Kornreich - SMBC

Bill Crow - Raymond James

Stephen Grambling - Goldman Sachs

Neil Malkin - Capital One

Robin Farley - UBS

Patrick Scholes - Truist

Christopher Darling - Green Street

David Katz - Jefferies

Operator

Greetings, and welcome to Park Hotels & Resorts' First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ian Weissman, Senior Vice President, Corporate Strategy. Thank you. You may begin.

Ian Weissman

Thank you, Operator, and welcome everyone to the Park Hotels & Resorts first quarter 2022 earnings call.

Before we begin, I would like to remind everyone that many of the comments made today are considered forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements. Actual performance, outcomes, and results may differ materially from those expressed in forward-looking statements. Please refer to the documents files by Park with SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.

In addition, on today's call, we will discuss certain non-GAAP financial information, such as FFO adjusted EBITDA. You can find this information together with reconciliations to the most directly comparable GAAP financial measure in this morning's earnings release, as well as in our 8-K filed with the SEC, and the supplemental information available on our Web site at pkhotelsandresorts.com.

This morning, Tom Baltimore, our Chairman and Chief Executive Officer, will provide a review of Park's first quarter performance and outlook over the balance of this year. Sean Dell'Orto, our Chief Financial Officer, will provide additional color on first quarter results, as well as more detail on our balance sheet and liquidity, as well as provide additional information on second quarter performance. Following our prepared remarks, we will open the call for questions.

With that, I would like to turn the call over to Tom.

Tom Baltimore

Thank you, Ian, and welcome everyone. I'm very pleased to report stronger than expected first quarter results as we enter a new phase of the recovery. More specifically, I am incredibly encouraged to see demand accelerate across all segments. While we expect a continuation of strong leisure demand across our portfolio, the recovery of both group and business transient is gaining momentum, with some of the most negatively impacted urban markets seeing demand up 300% since the start of the year. In addition, with COVID case counts down significantly in the U.S. and more companies returning to the office, our urban portfolio has witnessed a sharp rebound, specifically in San Francisco and New York, where second quarter occupancy is forecasted to nearly double over the first quarter to nearly 60% in both markets.

Further support of the broad-based recovery taking shape within our portfolio. And in Hawaii, we are very excited about the upside potential, especially in Honolulu, with the return of travelers from Japan expected toward the back-half of this year, which should help support a meaningful acceleration in our earnings, with Japan representing nearly 20% of demand in Hawaii in 2019. Looking at Park's 2022 priorities, we continue to see the benefits of our operational initiatives in realizing a more efficient model, and the opportunity to create value by executing on our capital allocation priorities, including stock repurchases and ROI initiatives.

We remain committed to upgrading the overall quality of our portfolio, and plan to take advantage of the strong big for real estate in the private market through targeted asset sales. Supported by our diversified portfolio, our rapidly improving backdrop, and healthy balance sheet, we believe Park is incredibly well-positioned in the quarters and years ahead.

Touching briefly on the macro backdrop, despite concerns over global geopolitical uncertainty and higher commodity prices, we have not seen a noticeable impact on our business as the U.S. economy continues to grow, driven by healthy consumer spending, strong corporate profits, and record low unemployment, coupled with the widespread shift in return-to-work polices among the largest companies in the U.S., and declining COVID cases, the macro environment should help fuel a full recovery in the lodging industry by the end of 2023, if not sooner.

Starting with group, we have witnessed a material increase in demand within the past two months because declining COVID cases and loosening travel restrictions have translated to significant increases in both lead volume generation and actual group bookings. The pent-up group demand that we saw in the fourth quarter pre-Omicron resumed by mid-February, with first quarter group demand achieving a 35% sequential improvement to Q4 despite large spread cancellations in January. In group bookings for both 2022 and 2023, increased three-fold in March by approximately 200,000 room nights versus just one month prior, with over $44 million of group business added during the month.

Currently, our group pace for Q2 through Q4, of 2022, tips at 66% of what 2019 bookings were as of March, 2019. And group pays for the full-year 2023 sits 73% of 2019 pace, as of March 2018. The improvement in group trends is particularly evident at our urban hotels. In markets like San Francisco, New York, Boston, D.C., and Chicago, 2022 group bookings accelerated materially from February to March, with some markets seeing a 25% increase in pace, our group demand improved 400%, from January to March, for our urban hotel portfolio overall. We are seeing similar pricing power among our groups that we have seen with leisure travelers, including very strong ancillary spending that resulted in March group contribution exceeding 2019 levels in markets like San Francisco, New York, Orlando, and Key West.

We are encouraged by recent trends and feel confident that our group-oriented hotels will realize outsized growth over the near-term, and will return to pre-COVID group demand levels in 2023. Additionally, we expect business travel to accelerate during the second quarter, paving the way for healthy portfolio-wide growth in the second-half of 2022. Business transient demand saw promising improvements beginning in February, overcoming a 34% sequential decline in January, with a 25% sequential growth in February, and a 46% sequential growth in March, resulting March business transient revenues that were just 16% below March 2019 levels.

In addition, midweek occupancies for our hotels that cater more to business travelers improved to 56% in March, up from just 27% in January, highlighting increased mobility as the COVID wave receded. Looking ahead, second quarter transient pace is down just 11% to the same time in 2019, while the pace of improvement continues to accelerate. In the last four weeks, we have seen overall transient pickup increase by 7% over 2019 levels, and encouraging indicator of demand trends as a broader return to office unfolds, and leisure demand remains healthy. In [sum] [Ph], we expect business transient demand to continue to build throughout the year, and into 2023, accelerating Park's overall growth profile.

Looking briefly at portfolio results, Q1 came in ahead of our expectations and portfolio-wide ADR surpassed first quarter 2019 levels for the first time since the start of the pandemic. As mentioned earlier, results were driven, once again, by robust demand trends in Hawaii, Florida, Southern California, and Puerto Rico. Importantly, we are seeing an inflexion for our urban markets as we have also witnessed a strong uptick in business transient and group demand across several of our core urban hotels, including San Francisco, New York, Boston, D.C., and Chicago by the middle of the quarter, more specifically, hotel occupancy, or our core urban hotels across these five markets increased by more than 2,700 basis points on the January lows to nearly 47% in March, and are on pace to be near 68% during the second quarter, based on our current forecast.

Turning to some highlights from our core markets. Hawaii continues to exceed expectations, Waikoloa surpassed first quarter 2019 RevPAR by 32% and exceeded first quarter 2019 EBITDA by $1.2 million, or 9.5% on half as many hotel rooms compared to 2019. Our hotel EBITDA margins exceeded 2019 levels by nearly 700 basis points. Hotel hosted two near buyouts during the quarter, which helped push banquet revenues 19% ahead of first quarter 2019.

At Hilton Hawaiian Village, our hotel consistently outperformed budgeted expectations throughout the quarter with March RevPAR just 5% below 2019 levels, while EBITDA margin was up 140 basis points compared to March 2019, a testament to effective operating model changes. Based on our current forecast, we expect our Hawaii hotels to surpass 2019 RevPAR on a combined basis during the second quarter, despite a lack of International demand, which has historically been around 30%.

Overall, with the return of the International traveler expected to occur during the second half of the year, and further accelerating our growth profile. South Florida remains incredibly strong with our Key West hotels exceeding 83% occupancy during the first quarter. Our ADRs continue to climb, reaching $752 during the first quarter, and more than 60% higher than levels achieved during the same period in 2019.

Miami occupancy topped 82%, while rates at our Royal Palm Hotel were nearly 30% higher than Q1 2019. We do expect a modest deceleration of growth during the summer, as our hotels start to lap RevPAR growth rates of 150% to 200% on average achieved last year. However, fundamentals remain strong in South Florida for continued leisure strength.

Looking at some of our urban hotels, in New York, Omicron hit particularly hard in January, but the market quickly rebounded in February with occupancy improving nearly 21 percentage points sequentially to 34% and 54% in March as a removal of the vaccine and mask mandates in early March led to a sharp increase in reservations.

Based on preliminary results, April occupancy is on pace to be approximately 70%. Domestic leisure has made up the bulk of the demand thus far. But there are encouraging signs of material improvements for both business transient and international travelers. And the group outlook looks strong. The group pays up over 96% for the balance of 2022.

Overall, we expect the hotel to end the year at over 80% occupancy with average daily rate above 2019 levels. In San Francisco, the outlook is very promising. Based on preliminary results, our open hotels are expected to report occupancy of over 64% in April and more than 22% improvement from March with the pace of improvement expected to continue throughout the second quarter as group returns to the market.

Tech companies resumed Travel and Leisure production accelerates. Performance has been particularly strong at our 1900 room Hilton San Francisco and Union Square, with occupancy improving to 60% in April, based on preliminary results, up from just 30% in March given better than expected group production, we made the decision to accelerate the reopening of Park 55 which is now scheduled to open on or around May 19.

Hotels expected to quickly ramp up with forecasted occupancy over the back half of the year, expected to be just 10 percentage points below 2019. Performance should accelerate as we move through the second quarter with hotel occupancy for our San Francisco assets, excluding the still closed Park 55 forecasted to exceed 70%.

As demand trends improved, our efforts to reimagine our operating models since the onset of the pandemic and translated into improved flow through and strong margin gains with our cost saving initiatives expected to yield 300 basis points of margin expansion peak-to-peak. As a reminder, we have eliminated $85 million of operational expenses across our portfolio, majority of which are managerial salaries and benefits that we expect to continue to maintain, even as demand levels return to pre-pandemic levels. By way of example, at our two Hawaii hotels, we have successfully maintained a nearly 30% reduction in mid level management staff despite nearing 80% occupancy during the first quarter.

In addition, our properties continue to evaluate their food and beverage offerings, flexing outlet openings based on demand and rethinking concepts and products to ensure profitability and alignment with changing guest's preferences. As demand returns, our properties would continue to employ thoughtful staffing strategies to help minimize unnecessary cost creep going forward.

Turning to capital allocation priorities, we remain laser focused on pursuing strategies to create long-term shareholder value. Accordingly, we remain committed to taking advantage of the strong private market bid for real estate and anticipate executing on our stated goal of $200 million to $300 million of non-core dispositions this year, with over $100 million already under contract.

Proceeds will be reallocated to repay debt, repurchase stock to the extent that deep discount to our internal NAV estimates persist and invest in our pipeline of in process ROI projects, including the Bonnet Creek Meeting platform, the rebranding and renovation of the Waldorf, Casa Marina and Key West to Curio and the conversion of the Doubletree in San Jose to Hilton, all of which should generate returns in excess of 15% to 20% while enhancing the overall quality of our iconic portfolio.

To briefly recap, we're very excited about Park setup for the balance of 2022 and into 2023. Hawaii is expected to continue to outperform expectations, particularly from the robust pent-up demand from our Japanese travel partners, and it's expected to materialize by the summer, accelerating group and business transient demand should help push growth among our urban assets with these assets expected to fully recover next year.

While labor remains a near-term headwind in certain markets, we remain confident that our cost savings initiatives will translate into more efficient operations as demand recovers. With over $1.5 billion of liquidity and just 1% of debt maturing in 2022, we have ample liquidity to execute on our capital allocation priorities to help drive growth.

Overall, we remain laser focused on creating shareholder value, and narrowing the valuation gap with our peers. With our 2022 priorities squarely focused on operational excellence, and realizing the embedded 300 basis points upside potential in operating margins, recycling capital and taking advantage of the strong private market bid for real estate, unlocking the significant embedded value in our portfolio by reinvesting in our hotels through our robust ROI pipeline and continuing to improve the quality of our balance sheet to provide for enhanced financial flexibility, and optionality to execute on our long-term growth plans.

Now, I'd like to turn the call over to Sean, who will provide some additional color on operations along with an update on our capital allocation priorities, balance sheet and guidance for Q2.

Sean Dell'Orto

Thanks, Tom. Overall, we are very pleased with our first quarter performance as recovery has expanded beyond leisure travel. Pro forma RevPAR improved sequentially to $116, despite a 60 basis point decline in occupancy to 51.9%. While rate average an impressive $224 during the quarter, a 7% sequential improvement over Q4 2021 and in line to the same period in 2019.

First quarter results were negatively impacted by the spike in case counts in January. However, as concerns over Omicron waned toward the tail end of the month, we witnessed a sharp rebound in demand over the balance of the first quarter, with RevPAR improving by 45% in February from January and by 26% in March $249.

Total operating revenue for the portfolio was $463 million during the first quarter. While hotel adjusted EBITDA was $89 million resulting in hotel adjusted EBITDA margin of 19.3%, margins quickly ramped up as we moved through the quarter, increasing from a low of just 2.8% in January to 29.3% in March.

Note that our first quarter EBITDA margin was down slightly to Q4 2021 due to a $7 million sequential increase in property taxes. Overall, Q1 adjusted EBITDA was $82 million and adjusted FFO per share was $0.08 for the quarter, with March FFO, coming in at nearly $35 million.

Turning to the balance sheet, our liquidity currently stands at over $1.5 billion, including over $900 million available on a revolver and approximately $640 million of cash on hand. Our net debt sits at $4.2 billion. With respect to potential refinancing opportunities, we continue to monitor the credit markets as both treasuries and spreads have widened, resulting in a meaningful increase in borrowing costs over the past couple of months. In spite of this parts, balance sheet remains very good shape with 99% of its debt fixed and just $84 million of debt maturing within the next 12 months. We will continue to closely monitor the debt capital markets and update you on our refinancing efforts over the course of this year.

On the capital return front, as previously announced, we reinitiated our quarterly dividends in the first quarter at $0.01 per share, and expect to continue paying a $0.01 per share dividend over the next couple of quarters, ending the year with a potential fourth quarter top off dividend. Also, as previously reported, we bought back a total of $61 million of stock during the first quarter at an average price of just under $18.

With nearly $190 million of capacity still available, subject to the limitations outlined in our credit facilities. Overall buybacks were executed at a nearly 40% discount to our internal entity estimate or just 10.3 times, 2019 pro forma adjusted EBITDA.

In fact, when comparing to recent transactions we've evaluated in recent months. There's simply no better use of our capital, with buybacks more than twice to create the earnings and buying hotels at north of 14 times 2019 EBITDA. We believe the stock remains undervalued. We will update you on future buybacks during our second quarter earnings call.

Finally, as Tom noted in his earlier comments, the pace of improvement has been remarkable. And while COVID led to an unprecedented uncertainty over the last 2 years, I'm thrilled to announce that we've decided to reinstate earnings guidance for the second quarter based upon the broad-based recovery taking shape within our markets, especially across our urban portfolio of hotels.

Accordingly, we are establishing Q2 RevPAR guidance of $160 $164 or 15% below 2019 levels at the midpoint. With adjusted EBITDA guidance for the second quarter between $160 million and $180 million or 18% below 2019 pro forma adjusted EBITDA at the midpoint. Hotel adjusted EBITDA margins will range from 27% and 29%, while FFO per share will range between $0.40 and $0.49 for the second quarter.

This concludes our prepared remarks. We will now open the line for Q&A. To address each of your questions, we ask that you limit yourself to one question and one follow-up.

Operator, may we have the first question please.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question comes from the line of Smedes Rose with Citi. Please proceed with your question.

Smedes Rose

Hi, good morning, it's Smedes. I wanted to ask you just two quick questions. Just relative to our forecast, the kind of other revenue line which is quite a bit higher than what we had been anticipating. And I was wondering if you could maybe talk about just customer spend -- or sort of out-of-pocket spend during the quarter, what you're seeing there? And were there maybe some cancellation fees booked into that number as well?

Sean Dell'Orto

Yes, Smedes, this is Sean. You're talking through Q1 reporting here. And if you recall, with -- obviously with a lot of Omicron-related cancellations in the group side, cancellation fees were -- certainly have been elevated if you're kind of tracking relative to prior [pandemic] [Ph] levels and trying to model that way, I'd say that's the biggest gap you're probably seeing at this point is I would say we're probably normalized around $2 million or so of cancellations any given quarter. And we were around $10 million for the quarter. I think it's probably the biggest gap. I think as you look at occupancy levels and whatnot certainly being down meaningfully to pre-pandemic levels.

But from a resort fee standpoint, and which is in that line, we're probably at 5% down. So, I think those -- probably the two combined are probably where you might be a little bit off.

Smedes Rose

Okay, thanks. And then I just wanted to ask, you touched on the private bid for asset sales, and I just was wondering, given the sort of rising costs of debt and some things we're seeing going on in the CMBS market, what have seen just kind of more recently from potential buyers? And would you guys consider doing seller financing as a way of maybe getting a deal done?

Tom Baltimore

Yes, I would say, Smedes, well, it's great to speak with you that; obviously, there's tremendous capital whether it's private equity, whether it's high-net-worth, whether it's sovereign funds. And clearly, as we look out, and certainly limited supply growth, we -- and as we demonstrated last year, as you know, we sold five assets for $477 million, at pretty attractive cap rates and multiples. We see really no slowing down of that. The debt markets are a little choppy, and have widened out a little bit. But it's still no real hindrance in getting a deal done. Seller financing is really not something that we're considering at time, and we don't really think it's needed for the types of deals that we're looking at transacting on.

Smedes Rose

Great. Well, thank you very much.

Tom Baltimore

Thank you. Have a great day.

Operator

Our next question comes from the line of Floris Van Dijkum with Compass Point. Please proceed with your question.

Floris Van Dijkum

Hey, thanks, guys.

Tom Baltimore

Hey, Floris.

Sean Dell'Orto

Good morning.

Floris Van Dijkum

Good morning. Tom, capital allocation, you talk about; obviously, you have some -- a little bit of flexibility. You did buy back some stock, I think that's -- I think a lot of investors appreciate that, that you're willing to put your money where your mouth is. But maybe talk about how do you weigh potential new investments, for example, building another tower in Hawaii, at Hawaii Village, were essentially, potentially, you double your capital when that -- when the doors open because the values there are so much higher than replacement costs. How do you weigh those competing demands on your capital?

Tom Baltimore

Yes, Floris, it's a great question. I think the first thing, and I think we've been really crystal clear about that. And that is that when you're trading at the kind of discount that we are, at 30% to 40%, as Sean noted in his prepared remarks, the highest and best use of available cash for us is really investing back into our portfolio, either in buying back stock or in the case of reinvesting in the ROI projects, and Bonnet Creek is a great example of that; finding that right balance is important. You will expect, we've set a target here of selling, obviously, non-core assets of $200 million to $300 million, I would expect that we will at least meet that, if not exceed that.

And then we'll use those proceeds and we'll allocate, carefully, between where the stock is trading, in that discount, in terms of buybacks and what we're permitted to do. And we certainly expect to be out of the covenant restrictions here in the near-term, if not second quarter or shortly thereafter, which will also give us increased flexibility, but reinvesting back in the portfolio. As you look at something like Hawaii, which is just an extraordinary asset, 2,900 rooms, we're working through the entitlement process now. We're still a few years out where we really have to make that decision in terms of investing. We're doing all of the entitlement, we'll obviously design and work through that. But fortunately, we don't need to make that allocation decision on that in the near-term here.

Floris Van Dijkum

Right. My follow-up, if possible, so you sort of touched upon the fact that you're going to be -- you expect, potentially, to emerge from the covenant waivers in the second quarter. Where do you see your split between resort and urban at the end of this year? And do you have like an optimal -- an optimal percentage of your portfolio? And has that changed over the past 18 months, in your view?

Tom Baltimore

Yes, listen, it's in two things, as Sean is going to just give you a little more clarity on the covenant piece, so let me -- he'll come back to that in a second. I said possibly by second quarter, he'll clarify that just where we are. But the other point is, look, we don't look at -- obviously, Hawaii as 25%. We have two phenomenal assets there. We're certainly not looking to necessarily add more product in Hawaii. We're not looking to obviously sell either of those assets at this point as well. In the urban front, we'll continue to evaluate markets.

As we've said, we certainly, like others, are looking at what's happening, obviously, in the South East, and certainly markets that we too find attractive, whether that's a Nashville, or an Austin or Phoenix. Obviously, there's a lot of supply coming, so we certainly want to be thoughtful in that respect as to how we're allocating capital. But as we look at the urban markets, we -- as we're seeing, we fully expect here that you're going to continue to see that recovery accelerate, and that that's going to be very attractive to us as we move forward.

Sean Dell'Orto

Yes, and then Floris, just to clarify, and we're certainly expecting -- we have the covenant waivers due Q3. And we certainly expect to be in position where our covenants, when you analyze Q2, will be very strong. But just ultimately, since it's not really truly tested and you don't get out and test it that way on Q2, we originally expected kind of more towards Q3. Obviously, we did a lot of work to give us a lot of flexibility in that -- during that covenant waiver period, so not too worried about us functioning as we need to through Q3. But I think, typically, we won't be out of it until Q3.

Floris Van Dijkum

Thanks, guys.

[Technical difficulty]

Are you guys still on?

Tom Baltimore

Yes, the Park team is here.

Floris Van Dijkum

Sorry. That was it for me. I will open the floor up to others, if I'm still live.

Tom Baltimore

Okay. Yes, I think we have --

Sean Dell'Orto

Operator, we can ultimately get to the next question in the queue, please?

Operator

Our next question comes from the line of Anthony Powell of Barclays. Please proceed with your question.

Anthony Powell

Hi, good morning, everyone. A question on leisure pricing, and I think that you said that you expect to see tougher comps in the summer in your leisure properties, which we all expect. But I'm curious, do you expect to be able to push pricing over 2021 levels in some of these markets or do you worry about inflation maybe taking away some purchasing power for some of these properties this summer?

Tom Baltimore

Anthony, one, great to hear from you, and sorry, we had a little bit of a delay there, but hopefully we've gotten that corrected. Look, we were saying a little bit of moderation really in the context of what we're seeing in Key West. As Sean noted, we're looking at numbers that are 150% to 200% above, obviously, previous thresholds which obviously are healthy. Having said that, as we sort of look here at Q1, both costs and the reach were 46% to 50% over, and RevPAR certainly versus 2019, we're expecting we're probably going to be in that 40% to 50% range here, as we look out, there's a little bit of moderation, but they're still going to continue to be strong.

As we sort of look out over Hawaii, and Hawaii really hasn't had the great run, so we are just incredibly encouraged. And as we said, as we look at in second quarter, they are, we're looking at probably both properties combined, probably being a RevPAR over 7% of what we had in 2019. But clearly, Waikoloa has just been an incredible performer and clearly in that 45% range and fully expect that that's going to continue to, it's going to continue there. So, we see no real retreat other than probably pockets of just trees don't grow to the sky, and given the fact that QS has just been so extraordinarily successful, that a slight moderation there is not unreasonable.

Anthony Powell

Got it, okay. And maybe on Hawaii, I mean you mentioned you're very positive on the second half of the year, given the return of the Japanese travelers, the Yen was like 21 year low. So, I'm curious how currency plays into your view of Hawaii in the back half of the year as those travels were based on interest rates and currency headwinds, I guess.

Tom Baltimore

Yes, I mean, it's a fair point, Anthony. But I think if you look at Japanese travelers into Hawaii over the long run, I mean, they've consistently been about a million and a half visitors, as you think about Hilton Hawaiian Village for us, it's about 30% International of that about 60% of that. So, 20% in total, obviously coming from Japan, that's down over the last two years, there's been significant pent-up demand, and they've been absent and that their visitation is down about 97% plus or minus. So, they spend more and they stay longer. And we just hear and we believe just based on the trends and the discussions that we're having, that that recovery and that return is coming and really going to be robust and pretty significant. So, we are really encouraged by that. And fully expect that in the second half of '22 and '23 and beyond and again over the last 30 years, it's really been that group, that important partner base has been just consistent. And we fully expect it's going to return.

Anthony Powell

Okay, thank you.

Tom Baltimore

Okay, thank you.

Operator

Our next question comes from the line of Chris Woronka with Deutsche Bank. Please proceed with your question.

Chris Woronka

Yes, hey, good morning guys.

Tom Baltimore

Good morning.

Chris Woronka

Good morning, I appreciate the decision to give guidance. Again, I think that gives us all a little bit of confidence. And since it's your first time going back into it, I want to go easy on you. But basically, what you said about March, numbers you gave out and then the acceleration into April, it seems like those could be pretty conservative. And so, I guess the question is, is April the strongest month of the quarter from where you sit now?

Tom Baltimore

Yes, a couple of things, Chris. Look, it's a conservative team here. And just based on the trends, we are confident in the guidance. And look and we hope that we're having this discussion less than 90 days from now, and certainly, meeting and exceeding that. But the reality is, I think what listeners should gain confidence that the management team is confident. We're seeing very encouraging signs. And I think remember, there have been a lot of people that have been certainly understandably concerned about certainly on the group and the business transient on the urban. I think it's clear that that, that those segments are accelerating, and we are confident that that's certainly going to continue.

Chris Woronka

Okay, that's -- yes, that's fair, Tom. And then on the dividend, I think you mentioned the penny for the next couple of quarters. But beyond that, and understandably, you're still getting the balance sheet back to where you want, you have to come out of the Covenant relief. But beyond that with the 10 year 3%, where do you think you might land or would you like to land relative to say '19 given that the competitive yield is now a lot higher?

Tom Baltimore

Yes, it's a great question. Look, we've decided as a team in the past, we had a set dividend, and then of course we would do a modest sort of top off and we've decided in this environment particularly as we will be continuing to recycle capital that will use more of a fourth quarter sort of top off strategy here in the near-term, we will be thoughtful, we'll continue to put out additional information. We thought it was important to lead with the $0.01 and then we'll continue to adjust that as asset sales and as the business operations improve, and you can expect to get more clarity on that in the weeks and months to come.

Chris Woronka

Okay, very good. Thanks, Tom.

Tom Baltimore

Thank you.

Operator

Our next question comes from the line of Dany Asad with Bank of America. Please proceed with your question.

Dany Asad

Hi, good morning, everybody.

Tom Baltimore

Good morning, Asad.

Dany Asad

Tom or Sean, I'm just going to ask question a little bit differently, but the Q2 RevPAR outlook of down 15 is just lower than your April run rate. So, just when we're thinking about May and June, can you kind of just help us unpack that whether it's -- are there -- is there like an implied de-sell in specific markets and specific segments or is it just, you're like, well, we haven't -- we don't -- we're not really, we don't have as much visibility into some parts of the recovery, so we're going to be conservative and kind of lay it out that way.

Sean Dell'Orto

Dany, I'll give it a shot. Somebody went there and say that again, it's kind of under underline -- the underlying that the conservativeness in here as Chris went easy on us, we certainly were coming out for the first time, guys couple years one that kind of certainly take a conservative tone, but realistic tone, but I would say that bottom lines May were coming off the leisure, strong leisure elements of April, so May is a little bit, little weaker than April, but June I would say is in line just at least slightly better than April. So, it's just as May is a little bit soft, but overall, again, I think we feel pretty good about what the guidance we've given you.

Dany Asad

Understood, thank you. And then for my follow-up, look it's just a little bit. It's been a bit tricky to map out that margin recovery pattern only because, you have so many moving pieces, right? There's permanent cost reductions. You have some labor issues in some markets that are offsetting that we don't know, we haven't seen the full picture of the labor kind of in some of those markets, you've some returns from ROI projects. And so, all these things are beyond kind of how we would think about the core portfolios, normal margin recoveries. So, how do we think about that, for the balance of the year and is there any, are there any significant milestones that we can look for to see kind of, oh, there will be an inflection, for example, New York or San Francisco hit certain thresholds or something like that?

Sean Dell'Orto

Yes, I think. I mean, I think -- when I think about it for one I think the getting back the group in a more stabilized, we're down 600 points or six basis points on mix on group and we're down significantly relative to Q'19 on banquet and getting revenue. So, you're talking about a line item that you're getting 45ish percent margin on versus more reliance on outlets, which has been great, and we're actually more profitable in that than the outlets, but we're only, it's only about 12% margin or so 12% 15% margin. So, getting that mixed back, I think it's going to help, I think demonstrate some of the margin strength here.

So, we just need to get more stabilized mix in our business when you start comparing to prior your pre-pandemic times. But when we look back at the portfolio, we've obviously had these group of assets even in partnership, we have the data and you look at kind of the great recession, 2008 to kind of 2010, 2011 you got RevPAR drops of 10% to 15% margins are down 500, 600 basis points relative to where we talked about 50% down at the midpoint on our for the quarter and only down 300 basis points or so in the margin. So, I think -- I think you're seeing in different ways, but it's going to take a little of time to kind of get through, the kind of the variability of some of these different elements of the business coming back at different times.

Tom Baltimore

The only thing I would say on here is we are laser-focused, as we've said and working with our operating partners to reimagine the operating model and we stand by the $85 million in cost. It's about the 1,200 jobs. The vast majority of those are really in management positions. And obviously the pandemic forced all of us to think about the business differently and to respond to customer preferences and the changing customer preferences is one of the evidence as you think about first quarter and our labor expenses were down in $73 million just in the quarter, and a lot of that coming in food and beverage labor, a lot of that coming in sales and marketing. So, look, we understand it's a bit of a show me story. Investors aren't giving us any credit and it's certainly analysts aren't giving us credit for it, but we are very confident that we're going to continue to demonstrate that and as occupancies in the business comes back and continues to accelerate, you're going to see that it is a very different operating model and that they are much better profile as we look out.

Dany Asad

Okay, very helpful. Thank you very much.

Tom Baltimore

Okay.

Operator

Our next question comes from the line of Ari Klein with BMO Capital Markets. Pleased proceed with your question.

Ari Klein

Maybe on the group booking, they've obviously been improving quite a bit of weight, wanted to dig in on the rate side, which is flat for '22 and about 2.5% for '23 versus 2019. The rate back up has evolved quite a bit since some of these bookings were originally made, so we're hoping to get some color and have more recent bookings compare versus 2019, and if you expect more of an uplift from the near bookings?

Sean Dell'Orto

Yes, I couldn't really give you a big heart. A lot of hard data, I'm sorry, but ultimately talking with our folks. At the brands, operators are ultimately saying yes, they're seeing more and more -- little more pricing power on the group side. They're also implementing and working through ways to bring in some adjustment factors in as you think about bookings that are done and some of the outer years and he has to think through inflationary elements to kind of have the ability to adjust, which really has not been there over the last several years even in the last cycle. So, those kinds of elements are being now brought into the contract discussion. So, you're starting to see that more and more push on the right side of the group.

Ari Klein

Got it. And then just on group pay 2023, 73% that's kind of flat where it was at the end of December. Do you expect that gap to continue to narrow moving forward?

Tom Baltimore

Yes, there's no doubt about that. I mean, if you look in that, obviously seeing Orlando continue to really accelerate New York City, Hawaii, D.C. even as we look out on San Francisco, so very encouraging. There is again, given the booking window what we saw here just in one month of that $44 million in incremental and about 200,000 room nights and we expect that's going to accelerate.

Ari Klein

Thanks.

Operator

Our next question comes from the line of Jay Kornreich with SMBC. Please proceed with your question.

Jay Kornreich

Hi, thanks. Good morning.

Tom Baltimore

Good morning.

Jay Kornreich

As the morning as you mentioned seeing solid pick up in the urban markets, can you just give us a little more color with what you're seeing on the ground and maybe highlight how San Francisco is improving and drive back, is this transient in group demand?

Tom Baltimore

Yes, I mean, obviously we've been talking a lot about San Francisco. I've been out there personally several times over the last several months and no doubt I think the mayor's leadership there, we continue to have outreach through our operators there with Chief of Police. The other leaders and industry conditions continue to improve, so the safety and security issues an important part of that. And as you think about city wise, about 34 events, just south of 42,000 room nights, as we look out. Here, obviously in the second quarter, you got RIMS conference, there, hard rhythm, about 6000 attendees RSA, probably about 20,000 attendees, providing pretty good city wide coverage here as we look out hence giving us more confidence to reopen part 55, so very, very encouraged.

Obviously, as we said earlier, you're looking at Hilton San Francisco, which was at 30% occupancy in March and increasing to 60% there and in April and we expect probably second quarter to be in 65% range. So, it's a very, very encouraging picture, obviously the JW Marriott and Hilton. Fisherman's Wharf had been really strong performance for us in the mid to high 80s and what we saw in April and we expect obviously in the second quarter, having occupancies in that mid-70s as we look out, so still a little flat on RevPAR, a little bit more of a discount there than we're seeing in other markets. But no doubt the outlook is far more encouraging than what we saw 30, 60, 90, 120 days ago.

Sean Dell'Orto

And I would add to that, if I could just to say that and think about pickup activity across the portfolio. It certainly has been driven a lot by some of the urban markets here lately. Hawaii and Orlando remain consistent. Performers putting up together about $4 to $5 million a month for the year for each month for pickup, but you think about looking at the four main urban markets. I think they're been really challenged New York, San Francisco, Chicago and D.C.

You had about $4.5 million of cancels at the end of the year for '22. By the time we get to February, it was just over a million dollars of cancels amongst those four markets and they turn around in March, it was $11 million positive pickup across those four assets or four markets I should say with big, a big jump for New York, which is up $7 million pickup. So, I think in the end you -- clearly, you're seeing that turnaround in that inflection point driven by the urban markets and on the group side.

Jay Kornreich

Got it. That's great color. Thanks to that. And then just as a follow-up, I believe you've previously targeted the summer months for international demand more strongly returned to market like Hawaii and so New York. And I know we spoke about the Japanese customer base and I'm curious of your updated thoughts on demand from other countries returning as there's been some uptick in COVID cases abroad, specifically in China, I'm just curious how you see the international demand coming back throughout the year?

Tom Baltimore

Yes, I don't see China -- obviously China has been a pretty small part when you think about it, largely you're getting the international coming from obviously the U.K., coming from Canada you're having from Mexico. If you think back we were near about 79 million in terms of inbound on the international front in 2019. We don't expect to probably get back to those levels for certainly a few more years. But and as we think about the Japanese travel we're very confident that's going to come back, but really you're going to see it coming out of the three markets that I mentioned. Coming out of Europe, coming out of Mexico coming out of Canada will be clearly where we'll be anchored.

Jay Kornreich

All right, that's great. Thanks so much for the time and congrats on the quarter.

Tom Baltimore

All right, thanks.

Operator

Our next question comes from the line of Bill Crow with Raymond James. Please proceed with your question.

Bill Crow

Good morning, guys.

Tom Baltimore

Good morning, Bill.

Bill Crow

Tom, I'm curious whether you're tight. I'm curious whether y'all are building in a recession scenario for 2023. I think about 30% of the economists are kind of there now, but I wondered how you think about that, when you think about capital allocation?

Tom Baltimore

Bill, it's obviously it's on everybody's minds. Right now, we've got obviously the parade of horribles out there and obviously the war; clearly rising inflation. There's some evidence that some belief perhaps inflation starting to peak and I'm not -- I'm certainly my crystal balls, not better than anybody else is on that front. And you've obviously got really a challenging environment and certainly given that uncertainty. I would say one of the things Bill that this team has done as well as anybody is just think about how we handled the last crisis. We didn't panic. We didn't do a dilutive equity raise. We shut down hotels. We reimagined the operating model, so it's really part of our DNA, and really part of our strength is to be able to toggle between defense and offence. As we look out, we're very encouraged what we're seeing on the demand side as we've articulated and you're seeing and obviously providing the guidance and having confidence there. There is no doubt we're going to continue to work really hard to reshape the portfolio, continue to sell the non-core assets and reinvest obviously back, whether it's through buyback, whether it's through the ROI projects, whether that's through paying down debt, we'll find that right balance, but you will continue to make sure that we will continue to make sure that the balance sheet is protected here, so that we have that optionality.

Bill Crow

And a follow-up is on the group demand that you're paced to pick up so dramatically in the quarter. I'm curious, since one of that was in the year for the year -- does that mean it's smaller groups and where there's some markets and then they just hit on New York that seemed to gain a lot of share, other markets that really did a good job of increasing their group pace over the last 90 days.

Sean Dell'Orto

On the pace side, Bill, I would say the ones I've mentioned on the urban side, I think naturally saw good 300 to 400 basis points improvement. New York specifically talked about that, Chicago has been one that really since it has picked up and D.C. has been really strong late, and has continued to strengthen. I'd say it's probably in the 80%, 85% range at this point, so, really encouraged by that. Boston's also showed some good pick up, when it's actually been a little bit lower on the scale coming into the year, so it's actually picking up the new year for the year pretty well. So, we'd like those markets, San Francisco has been one where it's been more, reducing the cancellations and starting to kind of get the inflection point we're actually picking up. So, I think we're at that juncture right now. So, I think overall, it's mostly the urban side that the resort areas have been just fairly consistent. And I would say not driving the recent resurgence as much because it has just been solid throughout.

Bill Crow

Great, thanks for the time. Appreciate it.

Operator

Our next question comes from the line of Stephen Grambling with Goldman Sachs. Please proceed with your questions.

Stephen Grambling

Thanks, following up on Smedes question about the volatility in the hotel transaction debt markets, what do you think changes that dynamic and as related follow-up, I guess, with residential mortgages now well over 5% versus maybe three-ish before seems like cap rates there are probably following as some of these properties look like they're more likely underwater versus the debt load. What do you think this dynamic means for hotel cap rates, in other words, do you generally see any crossover in the investor base or a correlation with multifamily resi properties? Thanks.

Tom Baltimore

Yes, I mean, it's a fair question, Stephen. But I think if you look historically at where cap rates have been, maybe we're seeing 25, 50 basis point depending on certainly where particular markets. But we're not seeing any kind of softening as we're looking to market assets right now. And again, just given the amount of capital that's out there and we're talking hundreds of billions of dollars, certainly looking for only so many resi deals, industrial deals and low cap rate deals to get done in three and four times, 3% and 4% versus where we think hotels are going to trade. So, we think in many respects, it's just going to make this asset class even more attractive. And certainly being a daily leasing business. So, we're not seeing any issues, we're not seeing really the need for any sale or financing. We have a robust process and all the assets that we're currently marketing at this point.

Stephen Grambling

Awesome. That's it for me. Thanks so much.

Tom Baltimore

Thanks.

Operator

Our next question comes from the line of Neil Malkin with Capital One. Please proceed with your question.

Neil Malkin

Hey, everyone, thanks. First one, Blackstone has been pretty active recently acquiring some of the public REITs kind of trading at discounts to private market values. Obviously, I think lodging sectors would be a good poster child for that. I know that Blackstone had a couple of failed attempts at acquisitions. Lodging REITs over the last several years, I'm just wondering do you think that Blackstone could potentially look at your sector and what do you kind of think the likelihood of some M&A or private equity take privates are this year for lodging?

Thanks.

Tom Baltimore

It's a great question. And I think listeners know that I've been one of the stronger advocates for the need for consolidation or take private in the sector, and obviously, Blackstone this industry as well as anyone and other PE firms. So, I would expect again, just given the amount of capital that's on the sidelines, that they clearly the hotel trade would accelerate over time. When that happens, I certainly am not going to try to predict a comment when Blackstone or any other PE firm makes the decision to enter the space in a more meaningful way. Other than to say, given the disconnect that and not only for Park, but for others in terms of how wide the gap is in NAV, you would expect that it certainly would be enticing over time.

Neil Malkin

Okay, great. Other one for me is just kind of going back to leisure ADR, I think everyone that we've heard report is pretty confident about the stability of leader ADR and sort of a reset compared to last cycle and rates. I'm just very cautious on that. I mean, if you look at sort of, people have never had more savings or at least previously from the lack of student debt having to pay interest, a lot of people were paying nothing for housing, a lot of fiscal stimulus, unemployment et cetera and it just doesn't seem to me that, it seems more likely that these people are doing these sort of non-sustainable purchases versus like how many people out there in the country can afford to pay $800, $1000 for a room, keep it at 80% occupancy for a whole quarter.

And just doesn't seem like these very high ADRs are sustainable, long-term and I just like to get your take on, what you're kind of seeing at your more the coastal leisure oriented properties, the kind of the demographic mix there, and any trends that you're seeing that would give you caution of, that we are potentially seeing that the peaks of revenge, and I have a lot more money mania going on, in those sorts of hotels, versus the next sustainable thanks.

Tom Baltimore

Yes, I think it's important to keep in mind as we all move toward a more hybrid working model. This concept of sort of leisure kind of building, combining both your business and leisure, I think provides more optionality. And I think it provides an opportunity for hotel owners and operators to continue to find that right balance, both in product and service, and in pricing. So, there's no doubt I think that the leisure trade remains strong. We continue to see that and even in markets like a Key West where we said we were up 150% to 200%. Now while we expect to see a slight moderation there, we still believe that you can expect that trade to continue to be strong here as we look out. Your comment about trees, don't grow to the sky, I think is fair. But we certainly don't see any peak at this point.

Neil Malkin

Okay, thanks.

Tom Baltimore

Okay, great.

Operator

Our next question comes from the line of Robin Farley with UBS. Please proceed with your question.

Robin Farley

Great. Thanks so much, my questions have been asked by now, but just one circling back on the group, the group topic. And I know you've talked a lot about the acceleration in the last month or two. I guess it's just surprising for 2023 given that there seems like there will be groups that haven't met for three years, and even groups that meet only every two or three years that there would be something of a backlog in demand for '23 group. From what you're seeing, do you think that you'll get '23 group to be above 2019 levels, I guess it's surprising that the pace for '23 is still so not so far below. But that 73% of '19, was 73% of '19 as of early '18, right now where 2019 ended up. So, I assume we're further behind what full looks like? So, just your thoughts on whether '23 and if not what are your folks hearing from the ground in terms of why are these groups coming back that haven't met in three years. So, thanks.

Tom Baltimore

Robin, to your point, we certainly expect that it's going to continue to accelerate. As we noted in my prepared remarks, and then obviously, we saw a three fold, 300% increase just between March and February. And again 200,000 room nights are about $44 million and about 117,000 room nights of that in 2022 in the year for the year. And again, about 77,000 room nights plus or minus in the 2023. Obviously that was $44 million and really a 30 day window. So, we fully expect and the body language and the feedback that we're getting from our operating partners is we expect that's going to continue to accelerate. So, I think you're spot on. We're not at all concerned, as we've said we would expect that we'd get back to 2019 levels during calendar year 2023 and in some markets, we may even get back even sooner here and the fourth quarter so of 2022 just given how things are accelerating.

I think Hawaii is an example of that and just given the fact that the second quarter we expect it will be over 7%. Again, those are the two resorts there, two world class resorts that we have there. And of course what we're seeing in markets like QS continue to accelerate there. But we would expect that group is only going to continue to accelerate that need to be together reclaiming, recapturing, bringing whether it's incentive, whether it's group and training, we would expect that to continue to grow.

Robin Farley

Okay, thank you.

Tom Baltimore

Great, thank you.

Operator

Our next question comes from the line of Patrick Scholes with Truist. Please proceed with your questions.

Patrick Scholes

Hi, good afternoon.

Tom Baltimore

Hi, Patrick.

Patrick Scholes

I think in your 2Q outlook, you gave a range of down 14% to 16% for RevPAR versus 2019, how would you think about what for the three specific customer segments, the Transient Leisure, Transient Business and Group, ballpark what would are your expectations for those three segments in relation to down 14% to down 16% versus 2019? Thank you.

Tom Baltimore

Yes, I think I mean, I think you're going to see just kind of a continuation of improvement across obviously, the group and business transient standpoint, I haven't really, we haven't broken it out in that regards too much detail, but I would say that, you're still going to see, you're still going to see leisure basically that add or suddenly up on a relative to '19. So, call that kind of a slight pause again, you've got the leisure kind of running out on up of April there, so you get some strong April, but you kind of have it in pulling down in May, with a group you've got.

I would say, group is still going to be somewhere in the neighborhood of call it kind of on pace with that with our guidance, because again, you've got some strong group here coming back, we're still obviously below normal levels, and then stay on business transient while it was still recovering, we're probably still pacing at close to 60%, 65% of '19 levels as we kind of entered the quarter. I think you're still looking at that being down 20% or so, 20.5%.

Patrick Scholes

Okay, thank you. That's it.

Operator

Our next question comes from the line of with Chris Darling with Green Street. Please proceed with your question.

Christopher Darling

Thanks, good morning.

Tom Baltimore

Hi, Chris.

Christopher Darling

Tom, I am hoping you can provide, hey, how are you doing, I'm hoping we can provide a few thoughts on the supply backdrop across your portfolio. Do any market stand out on the positive or negative side and more broadly, I'm curious, how that outlook for supply kind of plays into your confidence around some of your urban markets recovering over the next couple of years?

Tom Baltimore

Yes, Chris, thank you for the question. I mean, as we look out, I mean if you think about just three of our larger markets in Hawaii, looking at near impossible to get new product on there, and just given the barriers to entry, so there clearly we would expect to be virtually no supply, added hope. San Francisco is another market where we see certainly in sub 1% supply. Orlando is another certainly low supply. So, when we look out kind of our exposure vis-à-vis our peers, it's certainly a sub 2%. And as we look out across the industry, as we think about '23, '24, '25 again, you're behind, you're below the long-term average of 2%, and probably in the 1% range. And just think about urban markets, and again, would be very difficult to replicate our portfolio, whether it's clearly in a San Francisco, New Orleans, Chicago, even a Two City Block and what we have in New York, New York, probably the one market with a little more supply, but you've also got a bunch of hotels that are also being taken out, and probably at a reset lower than where it was in the 2019 level.

So, we see that again as another opportunity and a real benefit. And while you're seeing other select Service, you're not seeing urban full service hotels get done, given the fact that that entitlement process can be three, four or five years. So, see that being a real benefit. And of course, we know we trade at a huge discount placement costs probably 55% plus or minus and you're also seeing obviously in this inflationary environment, that's probably increased given the fact that you're looking at replacement costs probably rising another 10% to 15% if not more.

Christopher Darling

Got it. Appreciate the thought. That's all from me.

Tom Baltimore

Great, thank you.

Operator

Our next question comes from the line of David Katz with Jefferies. Please proceed with your question.

David Katz

Hi, afternoon everyone. Congrats on the quarter and thanks for taking my question. You have a target out there I think of 200 or 300 of asset sales. I'm curious if you can elaborate on sort of how that number is derived. And what if any, potential gating factors would be out there that that might cause it to get bigger and go up?

Tom Baltimore

Yes, it's a great question, David. Look, the reality is we set a target last year, sort of $300 million to $400 million, we were just kind of inside of $500 million, what we constantly are doing is looking at the portfolio. And, there were four or five assets, as you may recall, that we were self operating that were as part of the spin, we were required to obviously hold those for a period of time, those are assets like that smaller assets, but ones that we're working aggressively to certainly recycle that capital, there are other joint venture assets, there are other assets within the portfolio that we're working through.

We've set a reasonable target, I would expect, given how hard this team is working that we're going to exceed that. And again, raising those proceeds only gives us additional optionality. And as I articulated early, really given where we're trading, we think the highest and best use is to really invest back into this portfolio, either buying back stock, whether it's reinvesting through ROI projects, or alternatively, certainly finding the right balance and paying down debt as well. So, we're very confident that you'll see us continue to reshape the portfolio. And we've sold 32 assets for just over $1.7 billion. We've been very thoughtful and targeted about that. And this is really a continuation of our recycling, where we've really had a lot of success over the last five plus years.

David Katz

Got it, so if I'm sort of taking the context really is that that 200 or 300 is a baseline and it sounds like just complexity and sort of finding the right moment and circumstance to execute is what the gating factor ultimately is.

Tom Baltimore

Yes, it's a fair point. I mean, I think last year, so you think about what we sold, we were being told that we really would be difficult to move urban assets, you may recall that we sold two in San Francisco, it really comparable to 2019 pricing. So, it's not a fire sale, it's thoughtful, it's targeted. As I've said, there's plenty of capital whether it's through PE firms, high net worth, family offices, no shortage of capital as people are going to be looking for higher returns and being in both real estate or being in certainly in lodging where you've got a daily leasing business and certainly perception of more pricing power. We believe confidently that better days are ahead for lodging for the industry, and certainly for Park and only so many three and four capped industrial deals you can do.

David Katz

I concur, thanks very much. Appreciate it.

Tom Baltimore

Yes, thank you.

Operator

That concludes our question-and-answer session. I'd like to hand it back to Tom Baltimore for closing remarks.

Tom Baltimore

We appreciate the opportunity to visit with you today, and we look forward to seeing many of you in upcoming meetings and in NAREIT. Stay safe, be well, and I look forward to seeing you soon.

Operator

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.