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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Sun Communities Fourth Quarter 2019 Earnings Conference Call.
At this time, management would like me to inform you that certain statements made during this call, which are not historical facts, may be deemed forward-looking statements within the meanings of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions and the company can provide no assurance that its expectations will be achieved. Factors and risks that could cause actual results to differ materially from expectations are detailed in yesterday's press release and from time to time in the company's periodic filings with the SEC. The company undertakes no obligation to advise or update any forward-looking statements to reflect events or circumstances after the date of this release.
Having said that, I would like to introduce management with us today: Gary Shiffman, Chairman and Chief Executive Officer; John McLaren, President and Chief Operating Officer; and Karen Dearing, Chief Financial Officer. After their remarks, there will be an opportunity to ask questions.
I'll now turn the call over to Gary Shiffman, Chairman and Chief Executive Officer. Mr. Shiffman, you may begin.
Good morning, and thank you for joining us as we review our 2019 fourth quarter and full year results and provide an overview of 2020 guidance for Sun Communities. During 2019, Sun continued with its track record of delivering industry-leading results for its shareholders. We've generated same-community NOI growth of 7.3%, added nearly 2,700 revenue-producing sites and delivered annual core FFO per share growth of 7.4%.
We had a very active and successful year sourcing and acquiring operating communities. In 2019, we invested in 46 operating properties valued at $815 million, which added over 10,300 sites to our portfolio. Approximately 80% of our operating asset acquisitions in 2019 were manufactured home communities, with the balance comprised of RV Resorts. Our largest transactions for the year were a $115 million single-asset acquisition of Hacienda Del Rio in Florida, which closed in January, and the 31-property predominantly age-restricted Jensen portfolio valued at approximately $344 million that closed in October.
We deployed additional capital through the construction of expansion sites and ground-up development projects, investing approximately $282 million through our ground-up developments and expansion activity. We completed the construction of 1,050 sites and 4 premier ground-up developments, a 50-site redevelopment and 1,200 expansion sites in 16 existing communities. While our acquisition pipeline remains full across both manufactured housing and RV, there are fewer, large, high-quality portfolios for sale today. Therefore, we expect our acquisition activity in 2020 to be dominated by single asset and small portfolio transactions. Subsequent to year-end, we closed on the 230-site Cape Cod RV Resort located in East Falmouth, Massachusetts, for $13.5 million. The sustained demand for high-quality, affordable housing and vacationing is once again evident in our portfolio and home sales results.
Our total portfolio achieved 96.4% occupancy at the end of the year with our manufactured housing portfolio, finishing the year at a 95.5% occupancy level. We are pleased to share that our properties are highly sought after, as evidenced by the number of applications we receive each year to live in a Sun community. Over the last 5 years, applications to live in a Sun community have averaged over 47,000 per year. This sustained new resident demand across the portfolio reinforces our confidence in the viability and success of executing on our expansion and select ground-up development strategies. As a reflection of our performance and the continued confidence in Sun's ability to generate industry-leading results, the Board of Directors has approved a 5.3% dividend increase for 2020. This represents the fourth consecutive year that Sun has increased its dividend. Our dividend will now be $3.16 per share, up from $3 per share in 2019.
In 2020, Sun Communities is well positioned to continue executing on its sustainable business model, which is booked on 4 core investment strategies. First, we invest in our existing communities. Second, acquisition of accretive operating communities and resorts. Third, the construction of expansion sites. And fourth, the development of select greenfield projects. Each pillar is intended to contribute to Sun's potential to generate a predictable and growing earnings stream for the near and long term. We are committed to the continued implementation of these core investment strategies, which, in turn, strengthens our business platform, supporting our potential to generate industry-leading growth.
With that, I'll turn the call over to John and Karen to discuss our results and guidance in greater detail.
Thanks, Gary. For 2019, Sun delivered robust fourth quarter and full year results, demonstrating the strength of our platform and highlighting the quality of our properties. A large part of our performance for the year comes from the consistent growth of our Same Community portfolio. In the fourth quarter, Same Community NOI grew by 7.6%, primarily driven by a 4.5% increase in weighted average monthly rent, continued occupancy gains and expense growth of 3.6%. For the full year, Same Community delivered 7.3% NOI growth, driven by 6.2% revenue growth and a 3.8% increase in operating expenses. Our 6.2% Same Community revenue increase for 2019 was driven by a 6.3% increase in manufactured housing revenues, a 10.2% increase in annual RV income and a 2.3% increase in transient RV revenues. Transient RV revenues continue to grow even with a 9% reduction in available site nights due to our success in converting over 1,100 transient RV sites to annual leases over the course of 2019.
With respect to occupancy, our Same Community portfolio gained 220 basis points during 2019 and is now at 98.4% occupied adjusting for recently delivered and still vacant expansion sites. Without this adjustment, our Same Community manufactured housing portfolio is 95.8% occupied, and gives us confidence that we still have 250 to 300 basis points of occupancy to gain, given that 70% of our manufacturing communities are at 98% of occupancy or greater.
Revenue-producing site gains for the fourth quarter were 669 sites and totaled 2,674 revenue-producing site gains for all of 2019, a 2.8% increase over 2018. Of our revenue-producing site gains for the year, nearly 1,100 or approximately 40% were in our manufactured housing expansion communities. As mentioned previously, we had over 1,100 conversions from transient RV sites to annual leases, where we generally see a revenue pickup of 40% to 60% for the first year after conversion. As has been our strategy in prior years, we once again built expansion sites to create additional growth opportunities in communities and resorts that are near capacity and have prospective resident and guest demand. In 2019, we completed the construction of over 1,200 vacant expansion sites across 16 communities and resorts.
Home sales activity totaled over 800 for the quarter and approximately 3,450 homes for the year. Sun also grew new home sales by 8.6% to 571. Of note, our average new home selling price was just over $142,000 for the fourth quarter, largely driven by sales in Florida, where we are seeing prices north of $200,000 at our Ocean Breeze properties in Jensen Beach and Marathon Key. These 2 properties were repositioning opportunities, one of which was the result of damages incurred during Hurricane Irma in 2017. They now feature best-in-class amenity packages, helping to drive record home prices for a manufactured home community in their respective markets. Our greenfield development projects continue to progress and will allow us to drive incremental growth over the long-term as new phases are completed, and sites are filled.
During the year, we delivered over 1,000 sites across 4 communities: Carolina Pines in South Carolina, Jellystone Golden Valley in North Carolina and our properties in Granby, Colorado, River Run and Smith Creek Crossing. We also delivered the first 50 sites at Ocean Breeze Marathon Key, which we discussed earlier.
Pursuing ground-up development not only enhances our risk-adjusted returns, but also allows us to stay at the forefront of new trends and amenities for both manufactural communities and RV Resorts. In these communities, we are incorporating state of the art efficient building methods and materials as part of our long-term sustainability program. The sector continues to enjoy great tailwinds, given the need for affordable housing and vacationing across the age spectrum. We believe that our strategy, coupled with our high-quality communities and resorts, places us in a very competitive position to sustain our track record of industry-leading growth. We are proud of our accomplishments in 2019, and we're extremely motivated by what lies ahead. With that, I'll turn the call over to Karen to discuss our financial results and our guidance. Karen?
Thanks, John. Sun reported core FFO per share of $1.10 for the fourth quarter, $0.02 ahead of the top end of our guidance range. For the 12 months ended December 31, 2019, core FFO per share was $4.92, which was also $0.02 ahead of the top end of our revised 2019 guidance, and an increase of 7.4% over 2018.
During the year, we deployed a total of $1.2 billion in growth initiatives, including the acquisition of operating properties, the purchase of fully-zoned and entitled land parcels and the construction of expansion sites and ground-up development. As Gary mentioned previously, we purchased Cape Cod RV Resort in Massachusetts for $13.5 million in January.
Moving on to our balance sheet. We ended 2019 with $3.4 billion of debt outstanding at a 4% weighted average rate and a weighted average maturity of 11.1 years. We have extended our weighted average maturity by over 2 years since this time last year, as we opportunistically refinanced over $900 million of debt in 2019. Unrestricted cash on hand was $22.1 million, and we had a net debt to trailing 12-month recurring EBITDA ratio of 5.5x.
Turning to 2020 guidance. For the full year, we expect core FFO per share in the range of $5.20 to $5.30, and core FFO per share for the first quarter of $1.18 to $1.21. Our 4 internal growth drivers underlie our projections of sustained high-level results. We expect a weighted average monthly rent increase of 4% and occupancy gains of 2,500 to 2,700 revenue-producing sites throughout the year, of which, over 900 are expected to be conversions of transient RV guests to annual leaseholders. We also expect another active development year as we plan to deliver 1,000 to 1,200 vacant expansion sites and 550 to 750 ground-up development sites. These stable internal growth drivers are the primary basis for our anticipated Same Community NOI growth range of 6% to 6.8% in 2020, and our 5.7% to 7.7% core FFO per share growth over 2019. As a reminder, our guidance does not include the impact of prospective acquisitions or capital markets activities which may be included in analysts' estimates. Please refer to our earnings supplemental information for additional guidance on home sales, seasonality by quarter, general and administrative expenses and other details.
This completes our prepared remarks. We will now open up the call for questions. Operator?
[Operator Instructions]. Our first question comes from the line of Samir Khanal with Evercore ISI.
You talked about the acquisition pipeline being full and to expect sort of single-asset acquisitions. I mean, last year was an outlier with the Jensen portfolio. But could you even do something even close to sort of $500 million this year, which kind of puts you closer to 2018 level? Just trying to understand what the opportunities you are seeing in the U.S. or even internationally, given that acquisitions have been a big part of your growth profile there?
Sure. Thanks, Samir. I think what -- our expectations are between $150 million and $250 million of acquisitions for the year. Certainly, we were very, very pleased with what we were able to accomplish in 2019. That said, the demand and the competition just continues to grow. I think this is a strong recognition of the cash flow stability and the limited supply in this asset class. We definitely rely heavily on our long-term relationships, having been in this business for approximately 40 years now. In addition, the reputation that we're starting to receive out there with regard to transactions like Carefree, Jensen, several others that we've done over the last 5, 6 years, is really bringing to the forefront the fact that the first call comes into Sun Communities. So it's an opportunity for us to look at a lot of properties that are not necessarily widely marketed. At the same time, we stay in contact with all the relationships that we do have, but because the supply is so limited, our expectations are, barring some unforeseen portfolio transaction, that everything will be in the onesies and twosies this year.
Great. And I guess, for Karen, real estate taxes are expected to be up, I think, about 7.6% at midpoint when I calculated, I mean coming off a pretty -- a lower pace of sort of 3% to 4%. I mean, what's driving that? And I know, Florida is always a -- sort of an unknown factor. But is there something else we need to consider in there?
No. There's a couple of things going on there, Samir. So 2019 is a bit lower than anticipated because we had some multi-year refunds on successful appeals of assessments in the state of Texas. So without those refunds, which impacted 2019, I think we'd be -- for 2020, we'd be in line with the guidance that we gave last year. The second thing impacting is certainly expansions, as you know, we continue to expand our existing community. And we endeavor to put in realistic estimates for what increased assessments may be. We really can't be certain when or if those increases will actually occur. So we try to be conservative, and we'll just update estimates on real estate taxes as the year progresses, and as we learn a little bit more.
Our next question comes from the line of Nick Joseph with Citi.
Gary, I appreciate the comments on fewer larger portfolios. On the market today, what is the typical lead time for larger deals in terms of when they begin to be marketed to when an acquisition is actually executed?
Yes. I'm going to suggest it's a few month period of time before you're really able to engage. When things are marketed, they tend to have a process where there is a professional advisory, and so there is a definite cadence and process to how that moves along, obviously, into indicative bids and through a second round and a third round. And one of the things and the great advantages that we've been able to utilize is the ability to use various securities to defer tax situations. And that, again, requires more time to really educate the seller, the seller's financial advisers. And then oftentimes, they have to go to their investors. In the case of Jensen, which was a marketed process, there were 60 family members that the committee had to go to. So definitely, as you can imagine, going to 60 family members certainly put a lengthier period of time in being able to move forward there, so -- but I think a 90-day period, roughly, to get to the selection process and then closing those on from there as well as confirmatory third-party reports that you have to get. And so 3 to 5 months to get to an actual closing.
That's helpful. And then could you just provide an update on Ingenia and any updated thoughts in terms of Sun's involvement there?
Sure. We're obviously very pleased with what's taking place with appreciation of the head stock. When we transacted our acquisition of about 10% of the head stock there, the stock based on closing yesterday, I think, was up somewhere in the high 75%, 77% from when we bought our position. We did pay a little bit of a premium. So we are up just about 60% in a little over a year. So we're really pleased with that.
The other thing that's been nice aside from seeing how well they performed and working together with them is that they were admitted to the ASX 200 in December, much earlier than they anticipated and that gives them access to a much larger qualified group of investors who could not begin to invest in that public company until they reached the ASX 200. So it's been positive for market liquidity and volume. And then when we look specific to the JV, we've closed 2 deals, 1 in May and June of 2019. 1 in Brisbane, we actually have developed out and acquired additional contiguous land for another 20 to 30 sites, but we're building 233 sites there with our partners, Ingenia. 22 homes are under construction,currently, and we actually now have four contracts and 1 deposit. So I'd like to think it's going right on plan. Second property we acquired was in the Newcastle area. It's 120-site development. Purchase price was about $5.5 million, and we're before counsel right now.
The entitlement is there for manufactured housing, but we want to modify the plan a little bit. And then lastly, we have a 500-site community under contract with Sungenia. It's contingent upon getting council's approval for manufactured housing lifestyle community there. And I imagine that will take 3 to 6 months to proceed. So it's been slow but steady, and that's been our approach from day 1. We're very, very pleased to be working with the Sungenia folks. I think it's been great. There are many, many things that we've learned in Australia that they do that we've brought back and are looking forward to implementing into our process of development here. And we've been able to share a lot of things with them there, and look forward to continued relationship there.
Our next question comes from the line of Drew Babin with Robert W. Baird.
A quick question following on the Ingenia question Nick asked. I know in Australia the income flowing in can often be contingent on just the timing of home sales closing. So I guess, as far as guidance goes for 2020, where can we expect that income to flow into the income statement as those come in? Is it going to be recognized as home sales? Is it going to be other income? Where and sort of when can we expect to see those inflows?
Drew, that income will flow in through our equity investment line item.
Okay. And then a quick question on recurring CapEx going into this year. It's not uniquely to your story. Certainly, it's been happening across the REIT sector, but recurring CapEx per unit has been trending upwards at a pretty robust pace. I assume that, that's going to continue by -- to some degree this year. Where do you view spending per unit for 2020 is your budget for the year?
Drew, I'll start that, and then maybe John can add something to it. But first of all, just to clarify, the Ingenia or the Sungenia home sales profit would come in on the income and loss from nonconsolidated affiliates, that's the exact line item in the profit and loss statement. Okay. Recurring CapEx. We've talked about this a lot in all of our meetings with our investors, we firmly believe in the continued upkeep of our communities and the value that it creates for our residents, our guests and our shareholders. So as we discussed in the past, and I think even last year, we have an ongoing road improvement program, particularly at the properties that are subject to harsh winters. But for 2019, that road spend was $11.3 million, and recurring CapEx would have been $215 a site if you adjusted that road work out. For 2020, our recurring CapEx is expected to be about $320 to $340 a site, and that does include another $8 million to $9 million of road work and about $3 million in our truck fleet program.
Yes. Drew, this is John. I would just add to that. I mean, the road project is actually a really interesting thing because it's really -- sort of fits within our culture in terms of being a proactive step and looking really far down the road, no pun intended, for the company. And so we undertook an assessment project a couple of years ago that literally looked at every single road in every one of our communities. And we assess them, graded them. We have a third-party that we work with, literally knows everything about roads. They build racetracks all over the world.
And it was really a pretty fascinating process, and what I learned and what we learned through that process when we started looking at the models that everything was plugged into and we graded the quality of every road that we have in our communities, that there was an opportunity over the life of roads to improve the life of the roads through various measures, not just replacing the roads, but other things that you can do. And so when we looked at that and then kind of come out the other end in the long term, it actually is pretty big value creation in terms of our spend and what we can save over the long-term life of the road. So it's really -- it was a pretty fascinating experience to go through it. And I'm really -- we're obviously very excited to have the program in place.
Great. And then one more for me. I think you mentioned that the guided increase in occupancy, it was phrased as kind of just an increase in the revenue-producing sites and I know in the past you've talked about increasing kind of the baseline same-store occupancy rate of the MH portfolio, I think, as high as 98%. Did I understand that right? Or is there sort of a true kind of same-store increase going on as well in addition to the expansion sites being added that will supplement revenue growth in '20?
Yes. I think that we talk about 70% of our communities at 98% or greater. There are more and more at 99% and greater as we know the high demand for affordable housing continues but we do have some room in our existing portfolio. And one of our big focus is, aside from expansions, actually creating kind of occupancy ability is to acquire properties that have occupancy in them. And when we can buy them at a accretive cap rate, and by the occupancy -- as a vacancy, I'm sorry, I keep saying occupancy. The vacancy sort of along with them, that's even better. So we look for 3 places. We look for creating vacancy through the expansions. We look for the vacancy that's existing in our existing portfolio. And in acquisitions, we've always had a focus, of course, to look for accretive opportunities that have growth, but a lot of that growth is driven through filling up the vacancy.
Our next question comes from the line of John Pawlowski with Green Street Advisors.
Karen, is the unsecured market becoming more interesting to you and the team? I know capital needs are pretty light right now, but just putting more optionality in place for the next 3 to 5 years for the balance sheet of the company.
John, we meet with the rating agencies on a regular basis just to stay updated on the market. And we really just view the potential for unsecured borrowing. It's just another option to consider when evaluating all of the sources of capital that we have and whenever the capital is needed.
I guess, a follow-up. Some of your residential comps are coming to market with some pretty eye opening rates, 10-year money in the mid-2s, there's 30-year paper out there in the 3s. So I guess, how do you weigh that versus the term loans that you're doing a bit higher rate? I guess, why isn't it becoming more attractive?
I think we do view it all, and we consider the possibility of some shadow rating and an understanding of where that pricing may come out for us. And then we have to weigh that against our existing debt schedule and balance sheet and what that means. And I guess, that is an ongoing process, John. And most recently, we were in front of one of the rating agencies, and we are expecting some information back on it.
Okay. And then one last one for me. It's a question on obsolescence of competing privately owned MH communities that you see out in the market. Curious if there's any interesting trends on the closure of parks and repurposing into other uses? And essentially, do you think there's been negative net supply of MH out there in the country the last few years?
It's Gary, and John could add anything he's got. But I think the only thing that I would point to is a real interesting case study to that effect. We are looking at a new development in Colorado in Fort Collins. And they're very proactive about courting Sun for -- because of the fact that 2 manufactured housing communities have been closed down there for repurposed use of the land, and they currently have a moratorium in place, preventing removal of any of the manufactured housing zone land for any other purpose, as they study it for a year. And one of the strong suits that Sun has come in and suggested is that we'd be happy to replace anything that got removed. And right now, we are looking at a 300-site opportunity there. So that's the only one I know, I don't know if John knows...
I would just add to that, Gary, John, that I think one of the sort of unique advantages that we have is that we've actually completed projects now. And so what we present in this arena around maintaining, sustaining, building affordable housing, we can actually present things that are no longer rendering. So they're actual work that we've done. And 1 project that we're looking at -- that Gary and I are looking at right now in Florida is a repurposing, but it maintains the entitlements that are survivable so we're focused on making sure that we are absolutely part of the conversation where we find out about it.
Our next question comes from the line of John Kim with BMO Capital Markets.
A couple of questions on your ground-up activity, development activity on Page 3 of your press release. Of the 284 completed sites, can you provide some color on the current occupancy of those sites? And how long it takes to stabilize?
Sure. This is John, again. Just to kind of give you sort of the overall on the ground-ups, we actually completed over 1,100 sites approximately in the ground-up developments in 2019. It's going really well, okay? What we shared previously for development, we will target basically a 300-site community in our model with a high single-digit unlevered IRR upon stabilization, which in the case of RV, is approximately 3 years, in the case of manufactured housing is 5 years. On the RV side, you get some acceleration because once you open those sites, every one of them is available to be leased that day. It's the same thing in MH, just the lease-up is a longer period of time.
Just giving you a little bit of color on what we've built thus far, I'm especially pleased with the performance of Cava Robles, which is in Central California Wine Country. We opened that up. That was 332 sites that we opened up in mid- to later 2018. So it really had its first full year of operation in 2019. But what's awesome is that Cava is tracking significantly ahead of the return target thus far. So it's been a good success. It's an RV resort and again, it's open for transient stays, vacation cottage stays and those sorts of things. We also opened up Carolina Pines and Myrtle Beach and Jellystone Golden Valley in North Carolina last year, midway through the year as well. And really their first full year of operation is going to be this year. And so I think they're reporting those results next year will bring to light some of the answers to the question that you asked as well as Smith Creek and River Run, which opened later in 2019. But those communities are also on their growth path for 2020.
Finally, I'd add that our development continues. As we're in the ground constructing at Costa Vista RV Resort, which will be approximately 300 sites that are on San Diego Bay as well as Whitewater RV Resort, which will be approximately 300 sites in the whole country in Austin, Texas. And soon to be in ground with a new 500-plus site manufactured home community development just south of Austin. So what's great is that Cava's performance has exceeded our expectations. We've got new projects that came online last year that we look forward to their first full years this year as well as the pipeline of what we have that's either in the ground or close to being in the ground, I just described. Additionally, in the pipeline that we have beyond are various parcels that we're looking at to get entitled over the course of 2020 and '21.
Trying to just add and give you some sort of color, having done this for many, many years because our roots were developers and getting back into the development business now where we can build for, we think, much better returns for our shareholders than buying in certain markets that are just too costly. It does take 2 years for the entitlement and billing process from start to finish till we close on a property. So where we look to 3 or 4 developments per year to start, we are working on many more than that. And only a few of them succeed all the way through entitlement. And many of them are rejected, basically for the same nimby reasons that have existed in the bias against oftentimes what's viewed as the old trailer park tarnished image or the transient nature of the RV community. So there's a lot of work that goes into our development pipeline. And we're very, very selective where we actually would pull the trigger on a new ground-up development.
There's still a significant amount of remaining construction sites of those projects? Do you have the entitlements with them already? And what would be the timing as far as completing those sites?
That's a great question. And entitlements are gotten before we close on the property for all the sites. So they are fully entitled and zoned. And we will bring them on as demand is there. It takes anywhere from 9 to 12 months to actually bring one of these second- and third-phase sites online. We treat them much as we do our expansion sites. One of the great benefits from these additional phases is that the upfront loaded costs in the -- are borne in the first phase and Phase II, III and IV might look very much like our expansion sites, where a greater margin of the revenue falls down to the bottom line. So we look at these additional phases as almost building inventory of potential expansion sites for the future. So I think it's a little bit of added benefit. We're building the initial returns to that high single-digit. And in the case of River Run, for example, that's 1,100 sites, I think, we will be building it out over the next 5, 6 years. And as each one of those phases gets built out, it will look more and more like an expansion from a profitability standpoint.
Okay. You provided guidance on your revenue-producing site deliveries for this year, but can you provide any color on expansion and development CapEx in 2020, where that would fall in relative to the $282 million you had last year?
I think we look at it to be a little bit similar to 2019. The ratios may change a little bit, development costs might go up a little bit and expansion down or vice versa. But it's more a matter of when we actually get the site plan approvals as to which we'll get done faster in 2020, but very similar to what it looked like in 2019.
And is the Ingenia JV in this figure? Or is that a separate line item?
That would be a separate line item.
Okay. My last question is, just given the limited investment opportunities in the U.S. coupled with the U.S. dollar, basically being at 17-year highs versus the Aussie dollar and versus the loonie. Are you more proactive or aggressive on underwriting acquisitions in either Australia or Canada today?
Yes, I'd like to suggest that we're not necessarily more active. We certainly also know that, that swing in value can go either way. But what we are doing is really just continuing to try and focus on the right opportunities. And I oftentimes talk about the right opportunities to be opportunities that certainly can create accretion, but can benefit from being placed on the Sun platform. So when we're outside of areas that we can actually utilize the Sun operations platform, we're just very, very conservative and cautious with how we think about things.
Our next question comes from the line of Wes Golladay with RBC Capital Markets.
Looking at the transient revenue last year, it looks like the comp revenue per site was up 2% despite all the units that went to permanent. Is that growing revenue per a transient side around high single digits. Does that seem accurate?
Yes.
Okay. And then I'll follow-up to that one. Is that mainly occupancy driven? Or you're getting a lot of rate there?
It's both, okay? But it's -- primarily, it's weighted more towards rate.
Okay. So do you think much more room to push occupancy there?
Yes, for sure.
There are no further questions in the queue. I'd like to hand the call back to management for closing comments.
Well, on behalf of the management team, we're pleased to be able to report these earnings, and we look forward to reporting our first quarter. And as always, invite anyone to reach out to any one of us if there are any follow-up questions. Thank you.
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.