Global Medical REIT Inc
NYSE:GMRE

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Global Medical REIT Inc
NYSE:GMRE
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Price: 7.8 USD -0.76% Market Closed
Market Cap: 521m USD
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Earnings Call Analysis

Summary
Q2-2024

Solid portfolio performance amid new acquisitions and challenges

Global Medical REIT's Q2 2024 saw 96.2% portfolio occupancy and $34.2 million in total revenue, down 6% year-over-year due to prior dispositions and tenant-related reserve recognition. They faced a $3.1 million net loss, stemming from a $3.4 million property sale loss. Despite challenges like the Steward Health Care bankruptcy, the firm remains optimistic about re-leasing. The company is actively expanding, having acquired part of a 15-property portfolio for $30.8 million and maintains a $120 million investment pipeline. Future acquisitions and selective asset sales aim to sustain growth, backed by strong balance sheets and favorable market conditions.

Earnings Call Transcript

Earnings Call Transcript
2024-Q2

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Operator

Greetings, and welcome to Global Medical REIT Second Quarter 2024 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Steve Swett, Investor Relations. Thank you, Mr. Swett. You may begin.

S
Stephen Swett
executive

Thank you. Good morning, everyone. Welcome to Global Medical REIT's Second Quarter 2024 Earnings Conference Call. On the call today are Jeff Busch Chief Executive Officer; Alfonzo Leon, Chief Investment Officer; and Bob Kiernan, Chief Financial Officer. Please note the use of forward-looking statements by the company on this conference call. Statements made on this call may include statements which are not historical facts and are considered forward-looking.

The company intends these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements. contained in the Private Securities Litigation Reform Act of 1995 and is making the statement for the purpose of complying with those safe harbor provisions.

Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond the company's control, including, without limitation, those contained in the company's 10-K for the year ended December 31, 2023, and its other SEC filings.

The company assumes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, on this call, the company may refer to certain non-GAAP financial measures, such as funds from operations, adjusted funds from operations, EBITDAre and adjusted EBITDAre. You can find a tabular reconciliation of these non-GAAP financial measures to the most currently comparable GAAP numbers in the company's earnings release and its filings with the SEC.

Additional information may be found on the Investor Relations page of the company's website at www.globalmedicalreit.com. I would now like to turn the call over to Jeff Busch, Chief Executive Officer of Global Medical REIT. Jeff?

J
Jeffrey Busch
executive

Thank you, Steve. Good morning, and thank you for joining our second quarter 2024 earnings call. Our high-quality diversified portfolio continues to produce solid results. At the end of the second quarter, portfolio occupancy was 96.2% with a weighted average lease term of 5.8 years. And portfolio average rent coverage ratio of 4.6x. For the second quarter, our net loss attributable to common shareholders was $3.1 million or $0.05 per share compared to net income attributable to common shareholders of $11.8 million or $0.18 per share in the second quarter of 2023.

FFO attributable to common shareholders and non-controlling interest in the second quarter was $0.20 per share and unit down $0.01 from the prior year quarter, and our AFFO attributable to common stockholders and non-controlling interest was $0.22 per share and unit, down $0.01 from the prior year quarter. During the quarter, we entered into a purchase agreement for a 15-property portfolio of outpatient medical real estate for an aggregate purchase price of $80.3 million at an 8% cap to be completed in 2 tranches.

These properties are fully occupied and leased under triple net and absolute net leases. Subsequent to quarter end in July, we closed on the first tranche acquiring 5 properties in the 15 property portfolio for an aggregate purchase price of $30.8 million. We have to complete the acquisition of the 10 remaining properties during the fourth quarter of 2024. We are optimistic about the overall acquisition market in our asset class and are pleased with the improvement in market conditions.

Currently, our investment pipeline consists of approximately $120 million of assets at attractive cap rates. As we think about our growth opportunity, we are focused on maintaining a strong balance sheet, an important element to our prudent approach is utilizing select dispositions to fund a portion of our growth. Our dispositions can be part of asset recycling program or in response to expectations regarding long-term property performance.

During the quarter, we closed on the sale of a medical facility in Mishawaka, Indiana, receiving gross proceeds of $8.1 million and in July, we closed on the sale of a medical facility in Panama City, Florida that we generated $11 million of gross proceeds. We continue to selectively sell assets as we move forward.

In terms of tenant-related items, last quarter, we discussed Steward Health care bankruptcy announcement and their exposure in the company's portfolio. At the time of the filing, Steward represented 2.8% of the company's annualized base rent, primarily in one facility in Beaumont, Texas.

Prior to the bankruptcy announcement, the company was actively pursuing re-leasing opportunities at this facility and is optimistic about our long-term prospects at this location. Bob will provide an update and more details regarding the financial assets of our Steward relationship in his remarks.

Overall, I'm pleased with our second quarter results and we want to thank the entire team for their hard work and contribution to our results. With that, I turn the call over to Alfonzo to discuss our investment activity and the current acquisition market conditions in more detail.

A
Alfonzo Leon
executive

Thank you, Jeff. The transaction market for our target assets, which align with our investment criteria continues to show signs of promising progress we remain actively engaged with a wide range of physician groups, brokers and corporate sellers to identify acquisition opportunities.

As Jeff mentioned, in the quarter, we entered into a purchase agreement to acquire a 15-property portfolio of outpatient medical real estate for an aggregate purchase price of $80.3 million to be completed in 2 tranches. These properties align with our investment criteria, being fully occupied and leased under triple net or absolute triple net agreements.

As Jeff discussed earlier, we completed the first tranche subsequent to quarter end, acquiring 5 properties encompassing roughly 95,000 leasable square feet for an aggregate purchase price of $30.8 million with aggregate annualized base rent of $2.5 million, and the second tranche is expected to close in the fourth quarter of 2024. The ability to close the deal in 2 tranches provides us with additional flexibility to prudently fund the transaction.

As a reminder, the second tranche of this deal is currently under contract and subject to customary terms and conditions including due diligence reviews. Accordingly, there is no assurance that the company will close this acquisition on a timely basis or at all.

We see this transaction as indicative of current market trends where sellers are increasingly accepting higher cap rate deals due to the ongoing challenges in the refinance market and pressure on real estate funds to sell.

Regarding the asset that we acquired in July, note the following details. We acquired the 5 properties in the first tranche at an average price of $325 per square foot, an 8% ingoing cap rate, 5.4 Years of weighted average lease term and 2.2% average rent bumps. The 5 properties in the portfolio include a family medicine clinic in Cerritos in Southeast L.A. leased to PIH Health, a regional health network with 3 hospitals and 26 clinics with an A rating. 2 ophthalmology-focused outpatient clinics into the Detroit MSA leased to Henry Ford, a $7 million revenue health system with an A2 credit rating. A multi-specialty clinic and surgery center in Minot, North Dakota leased at Trinity Health the region's dominant health system with 3 hospitals and 18 clinics with a BB minus rating, a primary care-focused multi-specialty outpatient center in Spartanburg, South Carolina, lease to the county with an AA1 rating.

On the disposition front, during the quarter, we closed on the sale of a medical facility in Mishawaka, Indiana, receiving gross proceeds of $8.1 million resulting in a loss on sale of $3.4 million. The lease at this property was set to expire at the end of the year, and our decision to dispose of this property was based on our lease renewal expectations and outlook for finding a suitable tenant replacement. The property was originally part of a 4-property portfolio the company purchased in 2019.

After quarter end in July, the company sold a medical facility in Panama City, Florida, receiving gross proceeds of $11 million. The property had a net book value of approximately $8.9 million at the time of sale. This sale was part of our general asset recycling process, whereby we identify assets that we believe can be sold at gains and the proceeds reinvested accretively by the company. Looking ahead, we will remain persistent and disciplined in seeking opportunities that align with our investment strategy and underwriting standards.

We plan to leverage our competitive advantages, including scale, access to capital the potential use of OP unit deal structures to unlock opportunities and drive value. As Jeff mentioned, our current investment pipeline consists of approximately $120 million of health care assets. I'd now like to turn the call over to Bob to discuss our financial results. Bob?

R
Robert Kiernan
executive

Thank you, Alfonzo. At the end of the second quarter 2024, our portfolio, consistent of gross investments in real estate of $1.4 billion and included 4.7 million of total leasable square feet, 96.2% occupancy, 5.8 years of weighted average lease term, 4.6x rent coverage, a 2.2% weighted average contractual rent escalations.

In the second quarter of 2024, our total revenues decreased by approximately 6% compared to the prior year quarter to $34.2 million due primarily to the impact of dispositions that were completed in 2023. Additionally, the recognition of reserves for $800,000 of rent and the write-off of $100,000 of deferred rent, primarily related to our tenant Steward Healthcare in our Beaumont facility contributed to the decline.

Total expenses for the second quarter of 2024 were $32.8 million compared to $35 million in the prior year quarter. The decrease was primarily due to disposition transactions that were completed during 2023 and lower interest expense.

Our interest expense in the second quarter was $7 million compared to $8.5 million in the comparable quarter of last year, reflecting lower borrowing rates due to lower leverage, the impact of our interest rate swaps and lower average borrowings compared to the prior year period.

Our operating expenses were $7.2 million for both the second quarter of 2024 and the prior year quarter. Regarding the second quarter 2024 expenses $4.9 million related to net leases where the company recognized a comparable amount of expense recovery revenue and $900,000 related to gross leases. G&A expenses for the second quarter of 2024 were $4.6 million compared to $4.5 million in the second quarter of 2023.

The increase primarily resulted from an increase in noncash LTIP compensation expense which was $1.3 million for the second quarter of 2024 compared to $1.1 million for the same period in 2023, partially offset by a decline in general corporate expenses.

Looking ahead, we expect our G&A expenses in the second half of 2024 to be in the range of $4.4 million and $4.6 million on a quarterly basis. Net loss attributable to common stockholders for the second quarter of 2024 was $3.1 million or $0.05 per share compared to net income attributable to common stockholders of $11.8 million or $0.18 per share in the second quarter of 2023. The loss in the second quarter of 2024 was primarily due to a $3.4 million loss recognized on the sale of the medical facility in Mishawaka, Indiana.

The results for the second quarter of '23 reflected a gain on sale of investment properties of $12.8 million. FFO attributable to common stockholders and non-controlling interest in the second quarter of 2024 was $13.9 million or $0.20 per share and unit compared to $14.7 million or $0.21 per share and unit in the second quarter of 2023.

AFFO attributable to common stockholders and non-controlling interest in the second quarter of 2024 was $15.7 million or $0.22 per share and unit compared to $15.9 million or $0.23 per share and unit in the second quarter of 2023. Moving on to the balance sheet. As of June 30, 2024, our gross investment in real estate was $1.4 billion. At June 30, 2024, we had $620 million of total gross debt with a weighted average remaining term of 2.5 years.

At quarter end, 83% of our total debt was fixed rate debt. Our leverage ratio was 43.8% and our weighted average interest rate was 3.89%. Lastly, as of today, the current unutilized borrowing capacity under the credit facility is $261 million. We did not issue any shares of common stock under our ATM program during the second quarter or to date in the third quarter.

As we consider funding options for the acquisitions that we have closed, we're expected to close later this year, we will continue to be disciplined as we seek to maintain leverage in our target range of 40% to 45%.

With respect to our investment portfolio and our 2024 lease expirations, we are pleased with our progress on renewals and based on activity to date, we are currently trending towards a retention rate of between 75% and 80% on this year's expiring leasable square feet. Regarding capital expenditures on the portfolio, during the second quarter, our cash spend was approximately $3.2 million.

Year-to-date, through June 30, our cash outflows for capital expenditures were approximately $5.2 million, with slightly more than half of that related to tenant improvements. Currently, for the full year 2024, we're projecting total capital expenditures of $11 million to $13 million.

As Jeff mentioned, during the quarter, Steward Healthcare announced to file for Chapter 11 bankruptcy. At the time of the bankruptcy filing, Steward represented 2.8% or $3.1 million of the company's annualized base rent, of which 86% related to our facility located in Beaumont, Texas. Post bankruptcy, the company has received base rent payments on its Steward leases for the months of June, July and August.

The company has been proactively exploring releasing options at the Beaumont facility since before the bankruptcy announcement, and we remain optimistic about our long-term prospects at this location. In conclusion, as we look to the second half of the year, we believe that our strong portfolio and ample liquidity provide a solid foundation for our future growth. We are encouraged by our acquisition opportunities and look forward to sharing our progress with you. This concludes our prepared remarks. Operator, please open the call for questions.

Operator

[Operator Instructions]. The first question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets Inc.

A
Austin Wurschmidt
analyst

Great was hoping to get some additional details regarding the $120 million investment pipeline. Maybe just starting with whether this amount includes the second tranche of the 15 property portfolio? Or is the $120 million on top of that kind of remaining $50 million or so?

A
Alfonzo Leon
executive

The pipeline does not include the second tranche. I mean, this is stuff that is in our pipeline that we've been pursuing in various ways and in discussions with various parties. The market has improved pretty significantly since the last earnings call and there's more willing sellers that are willing to sell their assets at attractive pricing.

A
Austin Wurschmidt
analyst

And what's the composition of these assets Alfonzo? And maybe can you share some details around the economics and then just timing that you'd expect to close on the deals.

A
Alfonzo Leon
executive

Sure. So these are medical office buildings. I mean our focus has been on medical office buildings in our pipeline. And geographically, it's in markets that are like the types of market that we've been pursuing historically. And these are quality buildings with quality tenants.

A
Austin Wurschmidt
analyst

And as far as the cap rates on the $120 million, where would you expect kind of that to shake out on average?

A
Alfonzo Leon
executive

Sure. So I mean we're targeting cap rates that are north of 8% caps and are finding opportunities that are in the high 8s and even in the 9% caps.

J
Jeffrey Busch
executive

This is Jeff. I just want to add to that. It's a very exciting time, which I haven't said in a long time for us, if interest rates start to fall as projected, and there's opportunities out there in our niche at very attractive properties, good quality like we bought the $80 million portfolio, extraordinarily good quality at an 8% cap. and there is higher 8 caps and highers out there for us in our niche that we'll be able to absorb, and we could have a very good year of that.

A
Austin Wurschmidt
analyst

That's helpful. And then just lastly, on the funding side, Jeff, you spoke about the asset recycling program with that pipeline kind of the acquisition pipeline building are you marketing additional assets today? And what's your latest thoughts on cap rates on the disposition side? That's all for me.

J
Jeffrey Busch
executive

Yes. No, I agree with you on disposition, we always look this properties out there that we could sell or if we could do 1 point to 2 above sometimes -- but we're really monitoring also the equity side of the business. The reason is if the Fed, which people think now after multiple times, brings the rates down, which my belief is finally going to happen, but we'll see.

Our stock historically, the 3 times the market thought it was coming down had a really nice jump, and we could be very accretive for the properties we're going to buy. So it would be a combination of selling properties at lower cap rates and making the spread and also possibly raising money to acquire these new properties. It's really nice.

This is the first time out there that the market has sort of capitulated on -- the market of selling real estate has sort of capitulated that the pricing is going to be substantially higher. So it matches to being accretive for us.

Operator

Next question comes from the line of Juan Sanabria with BMO Capital Markets.

J
Juan Sanabria
analyst

Just a question following up on the dispositions. Could you comment or provide the cap rates for what you sold in the second quarter and in July to date, recognizing there was some vacancy risks with the upcoming expiration.

A
Alfonzo Leon
executive

Sure. So on the Panama City, we sold that for a 7.1% cap. And on the Mishawaka assets, I mean, again, just to point out, I mean, this is one that we felt like the re-leasing prospect was going to be very difficult, and it made sense to sell and we had found a buyer that was user -- owner user of the property.

And keep in mind, too, that this was part of a portfolio that we acquired back in 2019, a $94 million portfolio. And we allocated roughly $16 million of that value to this property. And since then, we've collected more than $9 million of rent from this property from an A-rated system, and we're able to sell it for just over $8 million. And the other 3 properties have outperformed.

We got a 10-year renewal on the Las Vegas property. On the Oklahoma property, we got an expansion and a 14-year renewal and the surprise Arizona property had a long-term lease to begin with, and these are all properties that have very strong rent coverage. And so from our perspective, when we bought the portfolio, we underwrote it as a package. And as a whole, this portfolio has performed very well.

J
Juan Sanabria
analyst

But what was the rent accrued in the second quarter with regards to the Wisconsin asset?

A
Alfonzo Leon
executive

The Wisconsin asset?

J
Juan Sanabria
analyst

Yes. Yes, just back into the cap rate.

A
Alfonzo Leon
executive

Oh, sure. I mean it was north of about -- it is a low double-digit cap rate.

J
Juan Sanabria
analyst

Great. And then, Bob, you spoke to expected retention on upcoming expirations for the balance of the year. So I guess, what has been the implied occupancy that we should think about by year-end? And does that have any impact to FFO per share with presumably some expected move-outs or timing before you release?

R
Robert Kiernan
executive

Sure. I mean as we look ahead to the expirations that are coming up in the second half of the year, we're still projecting -- I mean, as we've said on previous calls, bringing steady occupancy right around this kind of 96% plus or minus, and with trending toward a little bit plus that 96%. So in that 96% and above that range.

And from an earnings perspective, again, sometimes there are renewals that have free rent periods from a timing perspective, you're subject to that from a long-term perspective or in the short term. But overall, we're projecting solid occupancy as we look ahead, and it shouldn't be -- provide that much volatility from an earnings perspective.

J
Juan Sanabria
analyst

And just one last one for me, if you don't mind. On the Steward space, I guess, in particular, the Beaumont lease. How does that compare to kind of current market levels? And I guess if there is -- if you have to release it, presumably, that is the case and how much mark-to-market, could we expect either positive or negative in your last initial assessment.

A
Alfonzo Leon
executive

So we're still in [ professions ], but I mean, yes, it's going to be very comparable to what we had.

J
Jeffrey Busch
executive

Yes, I just want to comment on the Steward property. It's an excellent property that is in pretty decent demand. So that's why we're optimistic about the releasing and the market on that.

Operator

Next question comes from the line of Rob Stevenson with Janney Montgomery Scott.

R
Robert Stevenson
analyst

Bob, what is the -- you indicated that you've gotten paid through June, July and August on Steward. What is -- is it just the $800,000 reserves and $100,000 of deferred rent write-off, is that to hit they only hit thus far from Steward or is there other May or something that you didn't get paid for as well that you think that you might down the road?

R
Robert Kiernan
executive

Right. Rob, Think of it as though March, April, May from an exposure perspective as well as expenses.

R
Robert Stevenson
analyst

Okay. And what's the cumulative of that March, April, May?

R
Robert Kiernan
executive

So that's about that $800,000 to $1 million type reserve because we're now incurring -- facing the operating expenses on that property, particularly as we think about keeping it in solid shape for renewal opportunity or re-leasing opportunities. And again, that's just a delta compared to having it be just very straightforward triple net lease growth that the tenant was funding all the expenses.

R
Robert Stevenson
analyst

Okay. And then I guess, at this point, I mean, how fast is this moving? Are you like -- are they likely to pay you for September and October? Or is August basically the extent to which you guys think that you're going to get paid and then it's up to a re-leasing process after that in order to get back to having this be cash flow positive for you guys?

R
Robert Kiernan
executive

So with the bankruptcy process, it's not totally clear to us in terms of how they're managing their time frame. So from our perspective, they have not yet rejected the lease and pursuant to the bankruptcy, they would owe us any -- under -- they would owe us a base rent and expenses during the period subsequent to bankruptcy up through to the point where they would project the lease.

And so at this point, we're just collecting that rent, post bankruptcy. But it's not clear to us when that -- when their process is going to kind of move on and provide that kind of more clarity for us even in terms of that final step. But with that said, we have it staged and are kind of working off to the side, very -- as quickly as we can to have it staged for a quicker -- as quick a transition as we could possibly have.

Recognizing that there would probably be again, a modest transition period or free rent element, things of that nature that could impact us between, again, the current situation and when we would onboard a prospective tenant.

R
Robert Stevenson
analyst

And then Trinity Health was replaced as your #1 tenant by [indiscernible] health into the second quarter. It sounded like from Alfonzo's comments, if I heard it right, at one of -- at least one of the five portfolio acquisitions you completed thus far in the third quarter is leased to Trinity.

Any of these other acquisitions out of the 5 or the 10 expected to come in the fourth quarter or the likely closings of the $120 million that you're circling with existing top tenants or other tenants that will be pushed into the top 5 by these deals?

A
Alfonzo Leon
executive

Yes. There's not going to be a meaningful move to the top 10.

R
Robert Stevenson
analyst

Okay. All right. That's helpful. And then last one for me. Can you talk about the size and scope of the tenant watch list today versus the last couple of quarters? One of your direct competitors having issues with the geriatric inpatient behavioral hospital tenant, get Steward, Genesis and some others. -- operators are cracking here and what's still a relatively robust economy. If the economy starts to weaken here, how much more are you thinking that the tenant watch list expands over the next sort of 4 quarters or so?

R
Robert Kiernan
executive

So right now, I mean we've talked in the past few quarters about Prospect Health at Q4 or Steward in Q1. And those have been our primary tenant-related items that we've had to deal with from an accounting and forwarding perspective. And at this point, again, we continue to monitor our acute care -- we have one acute care hospital.

But again, it is something that, again, we're very actively involved with. But at this point, at point, we don't have anything that that's beyond that group that we're actively focused on. We also don't have any -- we don't have any loans to tenants that we would highlight or not either from -- in how we're managing the portfolio.

J
Jeffrey Busch
executive

I just want to add, I mean, the vast, vast majority of our business has been MOB work. And MOBs are strong out there. And in a downturn, they'd be strong. When we did purchase into some of the one acute hospital and some other type of like surgical like Beaumont and others, those were doing well, but after the pandemic and others and the billing system, the reimbursement system change, they've struggled more that you see that. But that's a very limited part of our portfolio. The vast, vast majority of our portfolio is absolute in triple-net MOBs that are doing very well.

R
Robert Stevenson
analyst

I guess one question that, that poses then Jeff and Alfonzo given that comment and given that Alfonzo indicated that the vast majority or almost all of the $120 million in your pipeline today are medical office buildings.

To do behavioral health or hospitals? Are you still interested in doing them at all? Is it just requiring a much wider return that you need another 100, 150 basis points to make that -- the risk worthwhile? Or is the focus here and for the immediate future just going to be medical office, no matter what you guys think.

J
Jeffrey Busch
executive

The market has turned so substantially for us to buy medical office building. The private equity does not get the bank lines that they had before and the rates and a lot of the sellers are capitulating and saying, okay, the rates are higher now.

So we're finding like we did early when we started and then the private equity during the pandemic saw that 99% of our tenants paid whether they had patients or not and moved into the MOB field. Right now, we find it open again.

I can't see -- I can't say never, but I can't see us being in the medical, I mean, being in definitely not in the acute hospital area. Rehabs, we got in early, and we like those. But I could see us -- I can't see us going into that field and possibly reducing our exposure to them would probably be more of a future. I love the MOB field, especially the absolute and triple-net area.

R
Robert Stevenson
analyst

Appreciate your time this morning.

Operator

Our next question comes from the line of Bryan Maher with B. Riley Securities.

B
Bryan Maher
analyst

Most of my questions have been asked already, but can I get a point of clarity on Steward? A little confused. So they paid for June, July and August but they haven't paid for March, April and May. Is that correct? That's the 100 basis points million you're going after?

R
Robert Kiernan
executive

That's correct.

B
Bryan Maher
analyst

And are they physically out of the building with no intention of coming back to that building?

A
Alfonzo Leon
executive

Yes, the first part for sure, they're out. The second part, I mean, it seem most likely.

B
Bryan Maher
analyst

Just curious if somebody would keep paying you in June, July and August, if they have 0 intention instead of making you fight to get the money.

J
Jeffrey Busch
executive

It's aren't that they haven't projected -- we feel very optimistic we could rent this out given that this is popular in the market. So therefore, we're at the point now where we'd almost like them to reject the lease and get on with renting it and getting a new tenant in, because this is a very good facility.

It's in the best part of town of this facility. It's a good medical market actually. And that's why we used the word and we've been using optimistic out there is -- but Steward, I think we're just such a small part of it, and they're confused in their bankruptcy that they just haven't rejected it. But when they do reject it, we hope to be moving very quickly and get this solified as with the [indiscernible].

B
Bryan Maher
analyst

To be clear, the property is not being operated currently, and you cannot release it until they reject it or the bankruptcy court says so.

J
Jeffrey Busch
executive

That is correct.

B
Bryan Maher
analyst

Okay. My other question maybe for Bob. With how quickly interest rates have come down here and given the fairly short 2.5 years weighted average debt maturities, is there any opportunity for you to kind of move quickly to lock in some of these lower rates? Or I guess, Jeff, with your commentary, you seem to think rates might be going a little lower. Is that the view of the firm to wait and hope for even lower from here?

J
Jeffrey Busch
executive

I think [indiscernible] going lower. I think once they start, [indiscernible] talking about 1.5 points or so. So I think we have time and we could get a good rate in the futures. If a recession happens, it will even go lower out there.

Operator

This concludes our Q&A session and today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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