NexPoint Residential Trust Inc
NYSE:NXRT
Earnings Call Analysis
Q4-2023 Analysis
NexPoint Residential Trust Inc
As investors scrutinize the performance and outlook of businesses, the story of the past year and the forecasting for the coming periods are critical. In the most recent earnings call, Brian Mitts, alongside team members Matt McGraner and McDermott, delineated the trajectory of a company which experienced both achievements and headwinds. Net income for 2023's final quarter amounted to $18.4 million, an increase from the modest $3.8 million in the same period in 2022. This uptick was on the back of relatively stable total revenue, suggesting operational improvements rather than expansion as the driver. A noteworthy leap was seen in full year net income, which surged to $44.3 million, a stark contrast to the prior year's net loss of $9.3 million. The numbers suggest not only a year of recovery but also underline the effectiveness of the company's operational strategies.
Delving deeper into these operational strides, the fine-tuning of net operating income (NOI) and rental income became apparent. The fourth quarter saw a 0.9% NOI increase, and, more impressively, full-year NOI jumped by 6.3%. The same-store rental income reflected this upward trend, demonstrating 7.1% annual growth. Occupancy, an essential indicator of demand and operational health, also rose by 60 basis points to 94.7%. These figures hint at the company's successful navigation of an unpredictable landscape, culminating in a solid occupancy rate that contributes to the belief in its robust rent collection capabilities.
Financial margins provide clues about a company's cost management. In the latest quarter, the same-store NOI margin improved slightly to 62.5%. This modest enhancement is juxtaposed with a notable increment in same-store effective rents, which reached $1,516 per month. In markets fraught with challenges, such resilience in maintaining and even growing rents is a testament to a robust operational strategy and potentially favorable property locations.
The real estate sector often grapples with the delicate balance of supply and demand. In 2024, the company is expecting to see a significant reduction in new supply within its submarkets, dropping from 25,100 units to roughly 10,832, before plunging under 1,000 in 2026. This forecasted easing of supply pressures seems to lead the company to adopt a defensive positioning while remaining optimistic about longer-term growth and portfolio health.
Rental revenue is the lifeblood of real estate companies. Despite supply-heavy markets like Atlanta and Charlotte, the company achieved a 3.8% growth in rental revenue in the fourth quarter. Bad debt, which can be a significant operational risk, showed signs of decline, reinforcing the consolidation of the company's financial health. Moderating expense growth further contributed to this positive outcome.
Looking ahead, the company disclosed cautiousness regarding several markets, particularly Atlanta, Las Vegas, and Tampa due to their tough conditions expected in the first half of 2024. However, an improvement is anticipated in the latter half of the year, with markets like South Florida, Orlando, and Nashville forecasted to perform stronger throughout, a signal to investors of potential pockets of resilience and opportunity within the portfolio.
The company has downscaled its full upgrades forecast from 1,300 units in 2023 to 235 units in 2024, a calibrated maneuver that aligns with the supply dynamics and demand elasticity in the market. This strategic reorientation towards occupancy has already yielded a high lease rate. Despite the reduction in redevelopment activity, the expected return on investment (ROI) of 17.5%, although slightly lower than the previous year's figures, still conveys the effectiveness and the anticipated impact of each investment decision.
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as a reminder, this call is being webcast through the company's website at [ nxrt.nextwan.com ]. Before we begin, I would like to remind everyone that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's current expectations, assumptions and [indiscernible]. Listeners should not place undue reliance on any forward-looking statements and are encouraged to review the company's most recent annual Form 10-K and [Audio Gap]
forward-looking statements. The statements made during the conference call speak only as of today's date and except as required by law, and [indiscernible] does not undertake any obligation on publicly updated or revise any forward-looking statements. This conference call also includes an analysis of non-GAAP financial measures. For a more complete discussion of these non-GAAP financial measures, see the company's earnings earnings release that was filed earlier today.
I would now like to turn the call over to Brian Mitts. Please go ahead, Brian.
Thank you, Kristen. Welcome, everyone. Appreciate you joining this morning. I'm Brian Mitts, and I'm also joined by Matt McGraner and [indiscernible] McDermott. I'll kick off the call and cover our fourth quarter and full year results and highlights. I'll update our [ NAV ] calculation and then provide initial guidance for 2024. . I'll then turn it over to Matt and [ Bob ] to discuss specifics on the leasing environment and metrics driving our performance and guidance as well as details on the portfolio. So let me start with the results from the fourth quarter, which as follows: net income for the fourth quarter was $18.4 million or $0.70 per diluted share on total revenue of $68.9 million as compared to net income of $3.8 million or $0.15 per diluted share in the same period in 2022 on total revenue of $69.3 million.
For the fourth quarter, NOI was $42.2 million on 38 properties as compared to $41.8 million for the fourth quarter of 2022 on 40 properties, a 0.9% increase in NOI. For the quarter, same-store rental income increased 3.8% and same-store occupancy was up 60 basis points to 94.7%. This, coupled with an increase in same-store expenses of 2%, led to an increase in same-store NOI of 4.5% as compared to Q4 2022.
Rental income for the fourth quarter of '23 on the same-store portfolio was up 1.3% quarter-over-quarter from the third quarter of '23. We reported Q4 core FFO of $17.4 million or $0.60 per diluted share compared to $0.75 per diluted share in the fourth quarter of '22. We continue to execute our value-add business plan by completing 113 full [indiscernible] during the quarter and leased 132 renovated units, achieving an average monthly rent premium of $214 and a 19.9% return on investment. And [indiscernible] to date in the current portfolio as of 12/31, we have completed 8,534 full and partial upgrades, 4,761 kitchen and laundry appliance installations and 12,348 [ technology ] package installations, resulting in $169, $49 and $43 average monthly rental increase per unit and 20.9%, 64.7% and 37.8% return on investment, respectively.
Moving to the full year. Full year results are as follows. Net income for the year ended December 31 was $44.3 million or $1.69 per diluted share which included a gain on sales of [indiscernible] $67.9 million. This compared to a net loss of $9.3 million or negative $0.36 per diluted share for the full year 2022, which includes a gain on sale of real estate of $14.7 million.
For the year, NOI was $167.4 million on 38 properties as compared to $157.4 million [ on ] 40 properties for the same period in 2022 for an increase of 6.3% in NOI. For the year, same-store rental income increased 7.1% and same-store occupancy was up 60 basis points to 94.7%. This, coupled with an increase in same-store expenses of 5.5% led to an increase in same-store NOI of 8.2% as compared to the full year 2022. We reported core FFO in [ 2023 of ] $73.5 million or $2.80 per diluted share compared to $3.13 per diluted share in 2022.
Since inception of the business in 2015 and XRT has generated 10.92% compound annual growth in core FFO. For the fourth quarter, we paid a dividend of $0.46 per share on December 29. Since inception, we have increased our dividend 124.5%. For 2023, our dividend was 1.62x covered by core FFO with a payout ratio of 61.6% of core FFO. Moving to our NAV. Based on our current estimates of cap rates in our markets and forward NOI, we're reporting a NAV per share range as follows: $47.64 on the low end, $61.23 on the high end, $54.43 at the midpoint. These are based on average cap rates ranging from 5.5% from the low end to 6% on the high end, which remained the same as last quarter and increased 60 basis points year-to-date to reflect a rise in interest rates and absorbable increases in cap rates in our markets.
Before we go to guidance, [indiscernible] I'll touch on our 2023 dispositions and subsequent events since 12/31. [ September '22, ] we completed the sale of Silver Brook in Dallas for gross proceeds of $70 million, representing a cap rate of 4.55%. The gain on sale was $43.1 million and $16 million of the $19.5 million net proceeds were used to pay down -- partially paid down the corporate credit facility on September 25.
On December 13, we completed the sale of Timber Creek in Charlotte for gross proceeds of $49 million, representing a cap rate of 5.01%. The gain on sale was $24.8 million and $17 million of the $24.5 million net proceeds were used to pay down the corporate credit facility on December 15. We currently have 2 properties, Old Farm, located in Houston, [indiscernible] Lake located in Charlotte under contract that we expect to close in the first half of the year. The estimated net proceeds of $66.1 million will be used to fully pay down the rest of the corporate credit facility. Going to guidance for 2024. We are issuing initial guidance as follows: for core FFO per diluted share, $2.85 at the high end, $2.60 at the low end with the midpoint of $2.72.
For same-store revenue, [ 0.9% ] increase on the high end, 1.1% increase on the low end with a midpoint [indiscernible] same-store expenses increase of 4.3% for the high end, 6% for the low end, a 5.1% increase for the midpoint which results in a same-store NOI of a 2% increase on the high end, a 2% decrease on the low end and a 0% or flat increase at the midpoint.
So with that, let me turn it over to Matt and Bonner for additional commentary.
Thanks, Brian. Let me start by going over our fourth quarter same-store operational results. Our Q4 same-store NOI margin improved to 62.5%, up 20 basis points over the prior year period. Same-store effective rents ended the quarter at $1,516 per month, up 20 basis points year-over-year.
Occupancy ended 2023 at 94.7%. That was up 60 basis points year-over-year. We saw sizable occupancy growth in some of our supply heavy markets as we implemented a more defensive strategy late in the year. Atlanta and Charlotte finished the year at 96.2% and 95.7%, respectively, while [ Phoenix ], South Florida and Tampa all finished the year over 95% occupied. Fourth quarter same-store NOI growth was 4.5%, driven by 3.8% growth in rental revenue and 4.1% growth in total revenue.
We continue to see moderating expense growth with Q4 down 2 percentage points year-over-year. Bad debt also continued to trend down and finished Q4 at 1.9%, down from 2.7% earlier in the year. Payroll declined 180 basis points in Q4, continuing the downward trend in Q2 and Q3. [ Repairs and maintenance ] expense growth was 5.4% in the quarter, continuing to moderate as well from often elevated post-COVID comp in 2022. And real estate taxes also moderated and true-ups booked in Q4 reflect a reduction to our overall real estate taxes for the year, ending at 4.2% growth.
In 2023, we [indiscernible]. As we enter the second [indiscernible] the year, our market started to see the effects of delivering record high supply, indeed, almost a 4 decade high. Though positive for the year, new lease rental rates turned negative in the second half of the year, putting stress on top line revenue growth. Expenses continue to moderate and our efforts to reduce further -- reduce turnover costs help maximize growth. Implementing AI and centralization of labor has started to pay dividends, most notably in Q4 2023, which we will continue to improve on in 2024.
On the occupancy front, we're pleased to report the Q4 same-store [indiscernible] remained over 94.7% positioning us well for 2024. And as of this morning, the portfolio [indiscernible] occupied, 96.5% leased with a healthy 60-day trend [indiscernible]. 2024 retention has also started off strong, with both January and February over 50%, February month-to-date is 59% and March [indiscernible].
Turning to full year 2023 same-store NOI performance. Our full year same-store NOI margin improved by 65 basis points to 61.6%. Same-store revenues decreased -- increased, excuse me, 7.1%, while same-store NOI registered a strong 8.2% growth year-over-year. Six of our 10 same-store markets grew NOI by at least 7%. Notable same-store [indiscernible] NOI growth markets for the year were South Florida, Orlando, Nashville and Tampa as each grew NOI by 9% or more. Turning to 2023 additions and dispositions. NXRT disposed of silver booked on September 22, 2023 in Timber Creek on December 13, 2023. These sales generated a blended 30% levered IRR at 5.28x multiple on invested capital and [ $44 million in ] net proceeds, of which as Brian mentioned, it was used to pay $33 million to [indiscernible] facility.
We're excited to report that Old Farm will finally close by the end of February 2024, which will generate a 22% levered IRR multiple with 2.92 invested capital and $48 million of net sales proceeds. We will use $24 million of the net sales proceeds and pay off the remaining drawn amount on our credit facility. We will press release the closing to close the gap on the strategic disposition.
As Brian mentioned, we're also under contract to sell Radborne Lake, which will generate a 19x -- excuse me, 19% levered IRR at 3.5x multiple on invested capital and $18 million in net sales proceeds. As Brian mentioned -- turning to our 2024 guidance. As Brian said, at this time, we're expecting same-store NOI growth to be relatively flat for 2024 as we enter peak supply. Across our same-store properties, we are forecasting 1.4% to 3.2% rental income growth. We're forecasting 1.1% to 2.8% total revenue growth, 2.7% controllable expense growth and 1.6% to 3.8% total expense growth.
We continue to be an internal growth business at our core and to that [indiscernible] our guidance includes the following assumptions regarding our value-add programs. We expect to complete 235 full interior upgrades on select assets. At an average cost of $17,150 per unit, generating $250 average monthly premiums or approximately 17.4% return on invested capital. We expect to complete 611 partial interior upgrades at an average cost of $3,910 per unit, generating $78 average monthly premiums or 24% return on investment -- on invested capital. This includes bespoke additions such as new stainless steel appliances, backsplashes, tub and [indiscernible], our 2024 guidance also includes the following acquisition and disposition assumptions. 0 to $200 million of acquisition guidance, which given our current cost of capital, we have prioritized balance sheet cleanup and share buybacks, given our implied cap rate is north of 7% at the moment. And $150 million to $300 million of dispositions. Disposition activity could reach the higher end of the range if our team can identify additional assets that can be accretively added via tax-efficient capital recycling strategies that we've implemented in the past. So in closing, so far in 2024, we're off to a good start prioritizing occupancy and increased resident satisfaction and retention. Our balance sheet is much healthier after materially delevering through last year's hiking cycle.
Though our posture to start the year is defensive. We are expecting modest growth this year, specifically in the second half of the year as supply growth begins to [ wane ]. Our internal view is that we are in the high of the supply storm, so to speak, right now through the third quarter in our submarkets.
In 2024, for example, we see 25, 100 units delivering in our submarkets. In 2025, that number is more than half to 10,832 units. And then in 2026, there's just under 1,000 units of new supply delivering in our submarkets across the entire company. So while we, again, will continue to have a defensive posture going -- starting the year, we are optimistic about the portfolios, intermediate to long-term growth prospects for the foreseeable future. That's all I have for prepared remarks. Thanks to our teams here at NexPoint and BH for continuing to execute.
And I'd like to turn the call back over to Brian.
[indiscernible] we'll go to Q&A now. .
[Operator Instructions] And the first question comes from the line of Kyle Katorincek with Janney.
Given your provided NAV range, how do you consider the trade-off of closing the value gap between your stock price and NAV via buybacks versus purchasing assets with long-term appreciation?
Kyle, it's Matt. It's a good question. I think the way we're thinking about it currently is, we can't find any assets that we like better in the market than our own portfolio at -- again, at north of a 7% implied cap rate. Assets that are being launched, so to speak, are for sale, which are still few and far between are way south of that pricing south of a 7% implied cap rate. So as that cap rate range continues to compress. I think you'll see us start continuing to or start being more active on the acquisition cycle and utilizing sort of reverse [ 1031s ] where we use our portfolio as currency like we've done in the past -- over the past 10 years, buying a deal and then selling something in our portfolio to finance it.
Okay. And then in terms of disposition guidance, considering the sale Old Farm, Radburn Lake and then Stonecreek Old Farm, assuming price [indiscernible] similar to Old Farm gets you to around $170 million with the midpoint of guidance for '24 being $225 million. Our incremental sales likely to be assets with near-term expiring caps and higher rates of interest.
No, not necessarily. I think the assets that we'll prioritize for disposition will be those that are requiring a heavier CapEx lift and/or in the -- more of a supply concentrated submarket because I think we're -- given where we are at peak rates or at least we believe we're great, then we think that the greater risk to the portfolio health is again, heavier CapEx or some markets that have oversized supply.
Okay. And then one last for me. What are the maximum of sales you can do in our REIT rules for '24?
Off the top of my head, I'm not positive. I think to the extent that we utilize 1031s, it's a nonissue for 2024, that I do know for sure, but we can get back to you on the specific number.
Your next question comes from the line of Linda TSai with Jefferies.
In terms of dispose, how much of your portfolio would you expect to recycle to help delever over the next few years?
I think as we look into 2024 and 2025, the more likely scenario would be probably a greater portfolio of sales in sort of individually delevering. Once we get through the old farm sales, as I mentioned, we're fully paid off on our credit facility and feel pretty good about where the where the capital stack sits in terms of being hedged with ove r-- mid-90s percent of our debt still being hedged. So yes, again, the more likely scenario, I think, is just an outright disposition of the portfolio.
But yes, in terms of incremental delevering, I think we're at equilibrium.
Got it. And then when you say modest growth in the second half, which markets might you see return first? Yes, good question?
So I think as it relates to the markets that are going to be tougher or Atlanta, Las Vegas Tampa in the first half of the year. We do see those picking up in the latter half of the year, kind of stronger markets throughout for us, we think are obviously South Florida and then Orlando and Nashville. We think are going to get better to the second half of the year.
Last question. Just on Atlanta, any updates there on kind of fraudulent activity? And what's your bad debt expectation for year-end?
Yes, it's improved. In terms of where it was last year. It was over -- almost 3%. We're seeing it down at the end of January at 1.7%, 1.8%. And in underwriting basically, call it, a 2% expectation for the year in Atlanta, and that we expect to be one of the higher bad debt markets. obviously, but it has incrementally improved over the past couple of months. And the trend in January is encouraging because given the holiday season. And at the start of the year, sometimes you have a little bit of a lag of bad debt. So not out of the woods yet, but do feel better about it. .
Your next question is from the line of Conor Peaks with Deutsche Bank.
On the value-add program, and you touched on in your opening remarks, could you compare redevelopment activity you're expecting in 2024 versus 2023? And if there's any expected difference in ROI or redevelopment mix?
Yes. I'll turn the specifics of 2023 over to Bonner to compare year-over-year. My recollection is roughly over 1,000 units of full upgrades last year versus a couple of hundred or so this year. Do you have it Bonner?
Yes. Yes, that's right. So as we look at the portfolio, understanding the softness, the supply in the market, when we're pushing 200 to 250 premiums in a market where new supply is $400 to $500 in [indiscernible]. We're getting a little bit of a difficult -- more difficult time getting that demand. So for now, as Matt mentioned on the call, we prioritized a shift to occupancy for the year and are really focused on achieving those occupancy holds. We've down the full -- the base case for full upgrade to 235 units, hundred of those are number times.
The demand in that asset individually is special. We're getting $300 premium there evenly, and it's more a function of just the workflow over the demand across the rest of the portfolio. we're asset by asset. So in a market where we're not getting a trade out, we're not doing a full right now. We're finding areas of those properties where we can drive value. So in a market where we may have had a first-generation upgrade. We can go back through, add stainless steel appliance package out of backlash a private pay things like that, we're adding value there. But overall, year-over-year, we were forecasted to do about 1,300 units in 2023. 235 fold this year, shipping that focus, and we're pretty proud to report that we're 96.9% leased today. So I think you're seeing that come to fruition and work out in the numbers.
Expecting this on the -- just to add to expecting the 17.5% ROI, I think compares just modestly down from last year, I believe it's 19% or 20%. So still getting the higher ROIS.
Your next question is from the line of Buck Horne with Raymond James. .
Just wondered if maybe I missed it, if you could to specifically break down what the new lease with the average new lease spread was during the fourth quarter and maybe as of January and kind of what renewal spreads were and just kind of break down all of that as it blends together.
Yes. Sure, Buck. Thanks for the question. New leases were down blended for the quarter, 7.8%. And then renewals were just 21 basis points for blended. When you average the plan negative 4-point -- or excuse me, negative 4.4% January has looked better. So the new leases were down 6.25%, renewals are 40 basis points for a blended negative 2.69% and -- and so we are seeing a little bit better as we filled up the assets and have a strong occupancy base, which was the goal.
Got it. That's helpful. Appreciate the color there. Are you guys using concessions in the market? Or what are average concessions right now for competitive Class B properties? Or what's the -- what are the market conditions out there right now?
Yes, I'll start and I'll kick it to Bonner to add to that. I'd say that for our assets, in particular, in the submarkets, we really bought occupancy in the fourth quarter. That was a priority of ours. And so we were roughly giving a blended. I mean, call it a blended concession in the market that we were seeing is about a month as a yield star rate was [indiscernible]. And then I think as we sit here today, we still think that we're -- we need to be defensive through the first and second quarter as supply delivers as they're giving new assets are giving sometimes 2 or 3 months, but we, again, expect that to wane during the third quarter. .
If you have anything to add to that?
1 Yes. I think as we -- look at what we did in the fourth quarter, we had to give some concessions in a couple of markets. We're feeling more supply pressure Charlotte comes to mind, Las Vegas. And a lot of those concessions are a month free for us. When the new supply is offering a couple of months free, the renter, the prospect is looking for a little bit of a discount. So in some of those markets where we were a little light on occupancy in Q3, we utilized concessions in Q4 to help build that churn. . As we look here at 2024, the bulk of the concessions, I think -- and it's not a big number, let's call it, basis points on GTR. We typically utilize the dynamic pricing model and folks more than that. But the concessions are more heavy in the first quarter. Overall, this year, I think our concession usage is probably going to come down. based on -- we're 97.5% leased today. I think our folks on retention. You see that in the renewal trade-out would be more definitive there. And I think that, that should prove out and we should not need as many concessions towards the back half.
Your next question is from the line of Michael Lewis with Truth Securities.
I think there's kind of a consensus about new supply sometime around midyear, and you talked about that a little bit in some of your markets. I think it's a little tougher to forecast the demand side. I was just wondering if you had a job growth forecast built into your guidance and what you kind of think on the demand side when you were putting together those ranges?
Yes. I mean, we do. We utilize largely RealPage as a consultant to walk through quarterly demand and job growth prospects in all of our submarkets. And one thing that was a little bit encouraging this year is that they do expect to see absorption kind of be maintained across our submarkets, not enough to outstrip the 4 decade high of supply that's peaking this year, but it's still -- but yes, the job growth forecasts are factored into are factored into those numbers, and we'd be happy to share those with you. .
And then just lastly for me. It's part of your strategy to use the variable rate property debt and hedge it and that's helpful with the renovation strategy. It kind of all fits together. When you talked about selling assets and should we expect -- we're calculating net EBITDA that's still around 10x, so maybe a little bit north of that. I don't know how -- maybe talk a little bit about how you look at the leverage and kind of what the end game is here, right? So I'm trying to think about forecasting our dispositions and how much you wanted to delever and what the leverage should be for this strategy, right? I think it makes sense, you might have elevated leverage because your strategy is a little bit different than some of your peers, but do you have a target leverage or kind of an end game with the dispositions and paying down debt? .
Yes. It's a great question, one that we consider or talk about it often. So I think my overall view on this is more notwithstanding last year because everything that could go wrong last year went wrong. Just rapid hiking cycle, supply, bad debt, fraud, everything, it's just kitchen sink. And so as we look into 2024, 2025 at a more normalized hopefully, more normalized capital markets environment. A lot of us think that we're at peak rates. So we consider, for example, putting more swaps on this year. But if we did that, it'd be a be great.
So I think the better way that we think about it is making sure that our portfolio is as liquid as possible at any given time in any given year, given the GSE financings, the Class B liquidity in the market, these portfolios will trade again, will trade again at competitive cap rates. And the worst -- in our view, one of the worst things we can do is to go out and fix debt or fixed debt today at potentially peak rates because a new buyer or a buyer of our portfolio at some point, we'll likely have a better cost of capital. or different cost of capital so that our -- that's the way we think about it. Get in improve the asset, sell it, recycle the capital and continue to do that.
Our hope is this year, we'll be able to potentially find a couple of assets later in the year to recycle capital into and putting less leverage on that replacement asset is a strategy that we've employed in the past to incrementally delever. And then as that going to '25 and '26, if things play out the way they are in supply wanes, and there's no new starts, starts down 40% year-over-year. We think our pricing power will be higher. I think demand for our units will be higher and that could potentially translate into either more value for assets when we sell them. or return to being able to raise equity ourselves. And so at that point, I think that we'll look to delever
Okay. Is it fair to say -- I mean, it sounds like it's kind of a property-by-property fluid situation. You're not looking at this and saying, the right leverage for this strategy is 8x or the right strategy is maybe you look at debt to gross asset value or something, it sounds -- it's more kind of a moving target depending on the market. That's fair?
Yes. I mean, look, before we were -- before we got hit with the 500 basis point increases of interest rates in 12, 14 months, we were -- we took the portfolio down from 14, 15x when we went public in 2015 down to kind of where it is today. and that was intentional, and it is intentional. We still want to delever incrementally. But excluding last year, our investors who we speak to often didn't want to see us go raise equity to pay down 2%, 3% debt at the time. . So again, everything that could go wrong went wrong last year, and we're -- our balance sheet is about as healthy as it's ever been, especially after we close old farm next week, and have fresh capital on the balance sheet to go buy back stock or pay down debt. We'll make that decision. There's a couple of properties that we can just take the leverage off and have an unencumbered property or 2. But that's -- it isn't -- we do want to delever, but to do it wholesale right now is not what we think is best.
And at this time, there appear to be no further questions. I will now turn the call back to management for closing remarks. .
Yes. I don't know anything further. Do you, Matt?
No, I appreciate everyone's time today. And again, thanks to our team here [indiscernible]. With that, we'll end the call and look to talk to you after the first quarter.
Thank you all for joining today's conference call. You may now disconnect. .