Safehold Inc

Good morning and welcome to Safehold's second quarter 20 earnings conference call. If you need assistance during today's call, please press star zero. If you would like to ask a question, please press one zero. As a reminder, today's conference is being recorded. At this time for opening remarks and introduction, I would like to turn the conference over to Jason Fuchs, Senior Vice President of Investor Relations and Marketing. Please go ahead, sir.

Good morning, everyone. Thank you, Tiffany, and thank you for joining us today for Safehold's second quarter 2020 earnings call. On the call today, we have Jay Sugarman, Chairman and Chief Executive Officer, Marcus Alvarado, President and Chief Investment Officer, and Jeremy Foxkeen, Chief Financial Officer. This morning, we plan to walk through a presentation that details our second quarter 2020 results. The presentation can be found on our website at safeholdinc.com and by clicking on the investors link. There'll be a replay of this conference call beginning at 1 p.m. Eastern time today, and the dial-in for the replay is 866-207-1041 with the confirmation code of 707-9588. Before I turn the call over to Jay, I'd like to remind everyone that statements in this earnings call which are not historical facts may be forward-looking, or actual results may differ materially from these forward-looking statements, and the risk factors that could cause these differences are detailed in our SEC reports. Stateful disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. Now, with that, I'd like to turn the call over to Chairman and CEO, Jay Sugarman. Jay?

Thanks, Jason, and thank all of you for joining us today. The last three months in our country have been extraordinarily challenging ones. The tragic toll of COVID on many families and many businesses continues to grow. and the negative impact to our economy has been nothing short of historic. We again offer our sympathies to those affected and our thanks for those working to help overcome this challenge. We also hope the renewed focus on racial equality and equal opportunity can help set us on the right path for the future. A prosperous United States where all are respected, where all can contribute, creates the best long-term environment for us to deliver shareholders the full promise of Safehold's unique business strategy. And we certainly hope for better times ahead for all of our country. In the meantime, we're pleased that Safehold's strategy continues to deliver solid returns, even during this difficult period. Our combination of principal safety, strong growth prospects, and embedded value positions us to continue to expand our platform and capture value for shareholders. While our growing scale enables us to provide increasingly compelling capital to our customers. That capital is capital efficient, cost efficient, and risk reducing. Our new modern form of ground leasing continues to get better and should continue to offer a better alternative for many customers that will help them access the low-cost capital they need to meet their goals and their return targets. With respect to the quarter, while transaction volume in the overall market has been significantly reduced, we remain confident we will win our fair share of deals as transaction activity picks up and continue to explore new accretive ways to deploy capital to gain market share. The strong performance of our existing portfolio, the significant dry powder at our disposal, and the low rate environment all set us up nicely to push forward once the market reopens. and we've been fielding more calls recently as the market tries to find its bearings. While still hard to predict, we are starting to see signs that it should be a more active second half of the year. And with that, let me turn it over to Jeremy for the details of the quarter. Jeremy.

Thank you, Jay, and good morning, everyone. I'll turn to slide three in our earnings presentation where we present an overview of the second quarter. We're pleased with the performance of our portfolio and business during this extraordinary period. As expected, we received 100% of our ground rent during the quarter, which has given us the confidence to continue raising our dividend. In addition, solid earnings and the quality of our portfolio has led to strong stock performance, keeping us the number one performing wheat year to date. Further, we were able to close several transactions this quarter in what has been a challenging environment for real estate. We remain open for business with a significant amount of dry powder that we're actively looking to deploy. Turning to slide four for the quarter's results. Revenues were 37.4 million for the second quarter, up 90% from 19.7 million for the same period last year. Net income for the quarter was $12.6 million, up 111% from $5.9 million for the quarter last year. And earnings per share was $0.24, up 39% from the $0.18 for the same quarter last year. Year-to-date figures were also strong, with revenues of $77.5 million up 87% from $41.5 million, net income of $30 million up 75%, from 17.1 million and earnings per share of 60 cents up 19% from 51 cents reported for the same period last year. On slide five, we show historical dividend and stock performance. As announced, we raised our dividend by 4% to approximately 64.9 cents per share. This is the second consecutive year we've raised our dividend by 4% and is consistent with our current policy to grow our dividend at twice the rate of inflation. Additionally, our stock has been a strong performer this year, in part because the market has begun to recognize the value embedded in a long duration contractually growing high credit quality cash flow stream with significant principal safety. Slide six provides more detail on our portfolio. As we discussed last quarter, the real estate industry has significantly curtailed acquisition and disposition activity in the face of COVID-caused uncertainty. Nevertheless, we closed four deals this quarter, totaling $61 million. At the end of the quarter, our portfolio stood at $2.9 billion, and based on our cash at hand and capacity to draw on our revolving credit facilities, We have approximately $900 million of levered purchasing power to continue our growth. On the next slide, you can see the geographic breakdown of our portfolio as we continue to diversify across the US with a focus on the top 30 MSAs. Slide eight shows our portfolio metrics. The average ground rent coverage of the assets in our portfolio was 4.0 times this quarter, down from 4.1 times at the end of last quarter, reflecting some of the emerging impacts of COVID-19 on some of our customers. Over the coming quarters, we expect this metric to further reflect the impact of the broader economic slowdown on our customers' properties. Weighted average ground lease to value was 37%. The combined property values we use for this metric are based on CBRE appraisals, which are conducted annually based upon when we acquire a given asset. As CBRE continues to appraise additional assets in our portfolio, we would expect our GLTV metric to reflect the broader economic slowdown on the value of our customers' properties over the coming quarters. That being said, we take a long-term, through-cycle view of our portfolio and continue to believe our portfolio is well-protected through a combination of our senior position in the capital stack, diversification, and the long-term nature of our contract, as demonstrated by our receipt of 100% of ground rent. For the quarter, annualized gap rent after depreciation and amortization was $155 million, or 5.5% yield. annualized cash rent was $98 million, representing a 3.5% cash yield. Our portfolio is 62% office, 19% hotel, and 18% multifamily. And our weighted average lease term is 89 years. Turning to slide nine, at the end of the quarter, unrealized capital appreciation stood at $5.2 billion. representing a 12 times growth since our IPO in mid 2017. Our UCA valuation process obtains appraisals on the properties in our portfolio on an annual basis with a portion being reappraised each quarter. As such, this metric does not fully reflect the impact of COVID-19 on the value of our UCA. As CBRE continues its appraisal process, we would expect to see the broader economic slowdown reflected over the coming quarters. Slide 10 presents detail on our capital structure. Our equity market capitalization is $2.7 billion with $1.2 billion of book equity. We presently have $296 million of cash and revolver availability. We're conservatively leveraged at 0.6 times to equity market capitalization and 1.4 times debt to book equity. We have $1.7 billion of total debt, and as we previously announced, we closed $106 million of long-term financing during this quarter. The weighted average interest rate of our debt is 4.0 times, which is a 150 basis point spread to the 5.5% yield of the portfolio. Our cash interest rate is 3.1 times, and our debt has a 31 years average maturity. In conclusion, Safehold had strong, steady performance in the second quarter. We're focused on continuing to execute our strategy and remain confident in the long-term vision of what we're building at Safehold. And with that, let me turn it back to Jay.

Thanks, Jeremy. So I just wanted to reiterate what I said last quarter that Long-lived assets financed with long-lived debt mean we are mostly focused on long-term values. And while sectors, values, and interest rates will all go through cycles, good assets in good locations usually win out. And our goal for Safehold is to assemble a high-quality portfolio of ground leases in the top 30 markets and create a unique and valuable platform for investors and customers alike. As Jeremy said, we are still big believers in that vision. Operator, let's go ahead and open it up for questions.

Thank you. Today's question and answer session will be conducted over the phone. To ask a question, please press one zero at this time. We will take as many questions as time permits. Once again, please press one zero to ask a question. We will pause one moment to assemble the roster. Our first question comes from Nate Crossett with Bernberg. Please go ahead.

Hey, good morning, guys. Hey, good morning. I wanted to kind of dig into the investment activity. I think you mentioned there was four deals. Just wondering where were they? What were the property types, rent coverages? And then it looked like the effective yield of 5.2 was a bit below average. So I was just wondering if there was anything to note there.

Hey Nate, it's Marcos. So it's four transactions, two in the residential space, one in the lab space, and one hospitality asset. You know, consistent with our strategy, I think we are excited by the fact that these are actually four transactions that were all post-COVID, so post the disruption. And I think our percentage of CPV and our coverages reflect that. One of the ground leases we acquired was an existing one and has a short duration, only 44 years. And because of that, the yield is slightly lower, which pulled down the average.

Okay. That's helpful. Maybe you guys could just characterize the activity you're seeing today versus a month ago. You know, I think you mentioned that you're hoping to see an uptick toward the back half of the year. But can you maybe quantify it a bit and just Tell us how the dialogue maybe changed in the last month or so.

So, you know, as we've mentioned in prior quarters and on this call, you know, we're a transaction based business. And if you survey the large brokerage houses, you know, I think transaction volume is down something like 70 percent in the quarter. What gives us optimism going forward is the amount of dialogue that is going on between our investment teams. They're clients in the brokerage community. So if I go back in time, you know, kind of April, you know, pipeline meetings in our Monday morning investment calls were somewhat slow. And, you know, today there are plenty of transactions that we're looking, we're pre-screening, we're sizing, we're quoting, we're issuing LOIs. But we need the transaction markets to open up for those to ultimately become live deals that we end up closing. So I think the dialogue feels a whole lot more better, a whole lot better than it was a month ago. And we continue to remain optimistic about Q3 and Q4.

Okay, that's helpful.

And just lastly, how is the dialogue on kind of office properties right now? I'm just trying to get a sense of how work from home, potentially firms leaving New York City is kind of seeping into the dialogue.

Yeah, you know, we try to take a very long term view. And so we're believers in New York, over the long term, and we'll just use New York as an example. And, you know, certainly over the short term, there's going to be some impact on rents. And there will be some winners and the losers. in what we classify as kind of the A assets and the B assets. But we, at our basis of $300, $400 a foot, feel really, really good about the long-term prospects of owning high-quality land in various urban markets. So there's certainly going to be some noise in the office, and we're taking that into account in our underwriting, but we will continue to actively pursue those assets.

Good. Thanks, guys.

Our next question comes from Rich Anderson with SMBC. Please go ahead.

Thanks. Good morning. And Jay, no storms today, so hopefully we won't get cut off this time. So you mentioned, and it's quite obvious, stock has continued to perform very well this year through all this. Thank you for having me. The extraordinary level of circumstances and the bounce back that could happen, you know, if we if we get to a vaccine conversation or something like that.

Sure. A couple things in your question, I'd say, you know, first and foremost, you know, we do think there's been a lot of progress made in getting people to just do the bond math and to understand, you know, the significant discount that we had been trading at. So I think as much as risk off and certainly collecting 100% of rent and being at the very low percentage of LTV is a very strong positive in tough times like these. But I also think we spent a lot of time with investors really helping them understand the qualitative and quantitative measures that are a good way to understand the value of our company and we think there's been a lot more Thank you for joining us today. and for investors, I think that combination of principal safety, the ability to grow a new market and basically be the largest and only publicly traded company doing it, really revolutionizing this $7 trillion industry, makes us very comfortable that for investors, this is still early innings. While we've made some progress getting people to understand at least the bond math of our cash flows, which is one of the three big components. We still don't think our growth prospects or the unrealized capital appreciation embedded in our portfolio has really even gotten any attention yet. So I agree with you, Rich, that safety in a market like this is powerful, but I think even more powerful is as we get more investors to understand The combination that we deliver for customers and a combination of attributes we can deliver to investors. That's when I think you'll see the full power of Safehold. And we're not there yet. And I think this is the kind of market where we're building our foundation and our reputation by going through something like this and having the right collection numbers we have. But we're excited when the market does come back. Transaction activity does pick up. Risk on, as you said, does come back to really reignite the real estate market transaction flow. And that's going to be good for us. So we may be doing relatively better now, but I think we're really more excited about continuing to build the business and just demonstrating to more and more people that this new industry that we've built is a unique one and a very, very valuable one.

Got it. Thank you. Further to that, I understand the thesis is not about market conditions so much as about the product as an alternative to fee simple. But do low rates cause you concern? It seems the Fed is going to protect a low rate environment for some period of time Does that make the conversation a little bit more difficult at the margin because the availability of debt or mortgages is somewhat more attractive and may stay there for a period of time?

Good point. I mean, it cuts both ways. The 30-year is down 150 basis points since our IPO. It's down 100 basis points this year. And that has different impacts. One, it makes the alternatives a little bit cheaper. So we have to constantly provide a better capital solution for our customers. But our cost of funds is going down. Our cost of debt has gone down. We can be more flexible. We can create some capabilities we didn't have when we went public because with rates this low and our borrowing costs continuing to decline, we're still delivering the kind of ROEs that we think are generating Very significant alpha the day we close the deal. And as the portfolio gets bigger, as our diversification increases, we think our cost of capital will decrease. And that's going to give us flexibility to really compete very effectively, we think, with the fee-simple alternatives and still make the kind of returns that get us excited. So as I mentioned in my remarks, we're looking at a lot of different ways to attack this market. There's ways when rates go up and there's ways when rates go down. And we certainly think there's very bright prospects ahead, even in a low-rate environment.

Great. And then last question on the dividend and the policy to grow at a 2x inflation. Do you have an estimate of what your payout ratio is in common markets? Vocabulary for the REIT industry, you obviously focus on EPS and have perhaps a broader swath of investors outside of the REIT-dedicated community because of the type of product it is. But I'm wondering what the true cash flow number is as it relates to your dividend and what kind of room you have to continue to grow it.

Yeah, I think there's three simple kind of rules that we try to follow. One is we do try to pay a dividend that's growing at double the inflation rate. We do try to pay out all the current cash flow to meet that standard. So our payout ratio is going to center around all the free cash flow. and then the remaining, the delta between our earnings and our cash payouts is really in effect reinvested into the portfolio at these above market returns. So those are sort of the three pillars is we're going to pay out the current cash flow, we're going to in effect reinvest in the assets with the delta between our ROAs and our cash yields and that should drive not only this double digit or double inflation dividend growth but it's actually allowing us to in effect reinvest in these above market returns as a core part of the business. And I think that's something that, you know, when we do our compounding sort of calculations for people, they start to see the power of that idea that we are paying out a nice dividend from the current cash flow, but we're also getting a chance to reinvest these excess ROAs at the same above market returns and let that ride and let that compound. So that's kind of how we think about the dividend. The double inflation makes us feel really good, but it's also that compounding effect for the embedded ROAs above the cash flow that's really creating this long-term value proposition.

Okay, so basically 100% payout in consistent terms with other REITs.

Yeah, we're trying to... We don't need to... Hold anything back. We have no capex, no operating expenses. Obviously, grant leases are very, very good that way. So cash coming in, we will return to shareholders.

Got it. Thanks very much.

As a reminder, if you'd like to ask a question, please press 1-0. Our next question comes from Anthony Pellion from J.P. Morgan. Please go ahead.

Okay, thank you. I guess first question is, it sounds like your deal pipeline is percolating a bit more, but just from like a practical point of view, when do you think you start to see things close again and pick back up from from actually putting the dollars out the door? Like, do we think that 3Q can actually, you know, be less volume and maybe 4Q before maybe 1Q they start to close? Or how should we think about just cash out the door in the near term?

What does it feel like? You think it's going to be fourth quarter when these things start closing?

You know, it's as you guys have seen with us over time, it's somewhat lumpy. And so that's why, you know, we often don't give you guys specific guidance. And especially given the environment post-COVID, it becomes a little bit more difficult. So I think it's a fair estimation, Q4, Q1, where you start to see things ramp up. If you go back to, you know, prior crises, usually takes nine to 12 months from the event for the private market to start to really open back up. And so that kind of feels like the end of this year, early next year. But that being said, given the dialogue we're having, our cost of capital solution and option for clients, you could see that potentially happening earlier as well.

Do you think you could do another $60 million in the third quarter or was some of the 2Q stuff entered into pre-COVID.

No, the Q2 stuff was all, you know, post. So, yeah, you know, I remain optimistic that hopefully we can do better than Q2.

Okay, that's helpful. And then as you're looking at the pipeline and just sizing up what's happened, is there any part of the market that's emerging is either more interesting for you or not, whether that's Property type preference or not or geographic preference or not or type of sponsor perhaps?

I would say the multi-space is probably the most active engagement within our pipeline. And the reason being is those assets are actually trading. The government agencies are providing both fee and leasehold capital. And so although values are down, we've seen some of the high-quality assets trade 5%, 6%, 7%, 8% down. from pre-COVID and there's actual trades. So I would say that we feel good about that asset class. And as I mentioned before, we're still engaged in the office assets in high quality locations. And even though there probably will be some significant short term, maybe medium term issues within that space, we're believers in the long term, especially where we invest.

Got it. And then just where's on the debt side, in these sort of like 30-year type transactions that you all have done with the rate kind of matching the terms of the underlying collateral. Where's pricing today for that, both going in cash-on-cash and just on an effective rate basis?

I'll take that one. Our overall portfolio has been around 4%, and are closer to 3% on the starting rate. We're definitely seeing new deals being quoted to us inside of that. The last deals have been quite attractively priced to us, so it's given us some flexibility on our pricing to our customers. But the market is certainly not as liquid, and so we don't want to reduced from one or two deals exactly where the market is going to shake out here. But we have definitely seen rates fall towards sort of the mid threes. And that implies starting rates, you know, sub three. So that's all good news for our ability to provide capital to customers at attractive prices. But as you know, we've only closed, you know, $60 million a deal. So it's a small sample set of Financing is on those positions that we're going from. And before we get a lot more deals done, it's hard to know other than certainly rates have come down.

Okay. And then just the last one for me, I think just a bit more of a detailed one. The yields in the quarter, I think you mentioned 4.8 effective and then 5.2 underwritten effective. What's the one that we should think about for accounting purposes? Is that the 4-8 and then the 5-2? It sounds like it may be what you think you earn because of the shorter duration on one of those deals and stuff.

4-8 is the accounting effective yield, and then 5-2 is our underwritten yield. It doesn't have to do with the duration, actually. That ground lease has a percentage rent clause, which we're not, for accounting purposes, allowed to book.

Okay, got it. Thank you. That's helpful.

Our next question comes from Kevin Kim with SunTrust. Please go ahead.

Thanks, John. Good morning. Just sticking with that topic, what was the going in cash yield for the $60 million of deals you closed? Hello? Can you hear me? Give me one second. Yes, sorry. It was three and a half percent. Yeah. Thank you, Jason. Three and a half, okay. And your weighted average rent coverage of four times, can you just let me understand that a little better?

Does that actually reflect the trailing 12 months, including hotels? And I saw one of your footnotes that you might or you have this correction where if the asset is unstabilized or it's a development asset, you can use a projected stabilized NOI. Is that at all being used for hotels in this environment?

Why don't I take that one? It's Jeremy Cuban. Look, so I think you've got it right. It's largely based upon trailing 12-month NOI as reported by our properties. So as such, the full impact of the economic slowdown COVID-18 has not been reflected in this metric. Now you are specifically about hotels and whether or not we use stabilized estimates for the hotels. We don't. Our hotel properties are also for this metric. We're using reported trailing 12 months NOI as available to us from our properties.

Okay. And any Insights in terms of the conversations you're having with your hotel operators and can you just provide some maybe some color on the LTVs as underwritten and how comfortable you feel that those hotels will be money good for the long term?

I think for a minute. Go ahead, Jay. No, go ahead. I was just going to say that the, I mean, we take the hundred year view keep in of our properties as it comes to the GLTV metric that we report. The properties on our land are typically appraised annually by CBRE, typically in the quarter after acquisition. And so they only appraise a portion of our properties each quarter. So the full impact of the slowdown from COVID has not yet been reflected in this metric. I'd ask Jay or Marcos to add some commentary about the conversations that we're currently having with the hotel owners.

So, Kevan, I'd say that if you think about kind of pre-COVID world, the hotel, you know, kind of LTVs are consistent with our portfolio. And so, you know, we're, again, taking a long-term view. There currently is no dialogue with any of our hotel owners. You know, as we've said on prior calls, Our ground rent payment represents a fraction of the invested capital behind us. So for them not to pay our rent and effectively hand us an asset for that kind of spread of almost a thousand times rent payment versus capital invested just doesn't seem probable in this environment unless you see value destruction north of 70%, which although there's been some value destruction, we're not seeing it that severe by any means. Okay, thank you.

Our next question comes from Jade Romani with KBW. Please go ahead.

Thank you very much. I wanted to ask if you could give an update on the Safe Star program, any potential for opportunistic investments that that strategy could be deployed into to perhaps generate higher yields than your core strategy is targeting.

Go ahead, Jay.

Safe Start was one of the things I mentioned in terms of our programs and the new ways to create a creative deal flow. It isn't so much about creating excess returns other than giving somebody a one-stop capability through the last 20 or 30 years has been a key way to really provide the best solution for a customer. And when you provide the best solution, typically you can charge a little bit more for that level of service, that level of capability. So that's our goal at Safestar is to expand our market share, expand our footprint. and we think we are getting quite a bit of interest in that program and we continue to see I think we're up to about seven or eight deals now. It is a really valuable tool in our toolbox for certain customers and should allow us to again find some really accretive pockets that wouldn't be available to us otherwise.

and just thinking about the turmoil that's played out in the mortgage REIT and that fund space, a lot of those lenders are highly dependent on credit facility and repo financing that has mark to market provisions. I-Star historically was active in the transitional property space and I think some of the safe hold investments are on properties that have a lot of construction elements as an example. are you looking to provide ground lease financing on transitional properties or is the core focus on existing stabilized assets?

Jay, I'd say we look at everything and so some of the Safe Star activity that's in our kind of fits that transitional bucket where capital has somewhat dried up and our one-stop capital solution is able to offer our clients a solution whether they have a construction loan coming due or a bridge loan coming due. And so we're having a fair amount of dialogue, especially in the multi-space across these quote-unquote transitional assets.

Okay. I wanted to find out if you could quantify the value you attribute to residual rights when you underwrite a ground lease. Is it on an NPV basis so far into the future that it doesn't have Well, we always start with the cash flow stream, Jay, to make sure that we think the deal is accretive right out of the box.

As we've said before, as the portfolio grows, scales, and diversifies, We think we're building an asset class in the unrealized capital appreciation account that can be monetized and people will begin to understand its value as it gets bigger and more scaled. We have not incorporated that into our underwriting to date. We would like to be a little bit larger and a little bit bigger footprint before we really start to think about how to get that value into the and many more. Thank you.

CBRE's appraisal process done on an annual basis but certain properties are on a quarterly basis and if you think about the outlook for commercial real estate prices you know I would anticipate commercial real estate values down 15 to 20 percent overall and greater than that in certain geographies and hard hit asset classes like hospitality and retail but what do you think that would imply for the value of The purpose of having CBRE go out and do appraisals is to get a real-time check on the value of the buildings on top of our land.

And the appraisal process in and of itself is a bit of a lagging indicator. It's going to sort of phase in over four to six quarters. And appraisals in and of themselves tend to take a thoughtful look at what values are. We don't think the end game of UCA is to factor in that equation. We just want to know what are the buildings on top of our land worth. And we want to report that every quarter as best we can. Really, I look at it more on an annual basis because that's when CBRE has a chance to go through most of the assets on a full annual basis, picking up percentage each quarter. And then we look at it on an annual basis and say, how have we done? How has that portfolio grown? and we still think the growth rates in UCA year to year just looking forward in our projections are going to be very attractive. So a little bit of blips should be expected. Cyclical things will be expected, but the growth of our business is the long term driver as much or probably far more so than just the organic growth of the individual properties. So what I'd say, Jay, to take a look over the last three years, you'll see the kind of dynamic that we think still exists, but we do expect as CBR goes out and appraises into this environment where trades actually start happening, they can have a better sense of where values are. As Jeremy said, we certainly expect an impact from COVID, but it doesn't really change our long-term pieces. Thank you for taking the questions.

Mr. Fuchs, we have no further questions.

Great. Well, if anyone should have any additional questions on today's earnings release, please feel free to contact me directly. Tiffany, would you please give the conference call replay instructions once again? Thanks.

Yes, thank you. Ladies and gentlemen, this conference will be available for replay after 1 p.m. Eastern today through midnight August 6, 2020. You may access the AT&T teleconference replay system at any time by dialing 1-866-207-1041 and entering access code 707-9588. Those numbers again are 1-866- and 207-1041 with the access code of 707-9588. That does conclude our conference for today. Thank you for your participation in using AT&T teleconference. You may now disconnect.

Hi, Stephanie, are you there?

Okay, now I understand what you're saying. Mark, I understand what you're saying, but we have another question. Where it says lot 2.06, okay, that line in front of there to the line behind there, okay, that's where our ditch is, okay? And you're saying that's not where the easement is. So what we wanted to do was we wanted to put grass over there. Can we fill that in with sod and put grass on top of it? And we are in that course.

Because there might be something.

Okay, is there someone else on this line right now?

We have Jay, Elisha, let me go back here, I apologize.

We're just hearing some background noise.

Yep, we have Jason Fuchs, Jason Lee, Brett, Elisha, and Jay.

All right. We've never seen any water back there. All right, guys, I'm jumping off. Yeah, sounds good, guys. Thanks, everyone.

Thank you, have a great day

So are you talking about the new survey that I'm going to try to get or the one that you have?

You're going to give me what you can and then we're going to check our records as well. We can go back to when, I don't know when that development was built, when the house was built.

Yeah, we moved in.

We should have all that paperwork too. It's about 12 years old. We'll try to find out what we have. We probably should have a map of that development with any restrictions or any requirements that the engineer might have put on it.

Your conference is ending now. Please hang up.