Veris Residential, Inc.

Good day everyone and welcome to the VAERS residential fourth quarter 2021 earnings conference call. Today's call is being recorded. I would like to remind everyone that certain information discussed on this call may constitute forward-looking statements within the meaning of the federal securities law. Although we believe the estimates reflected in these statements are based on reasonable assumptions, we cannot give assurance that the anticipated results will be achieved. We refer you to the company's press release annual and quarterly reports filed with the SEC for risk factors that impact the company. With that, I will now hand the call over to Mavadnia, Vice President, I'm sorry, Veris Residential Chief Executive Officer. Please go ahead.

Good morning, and welcome to our fourth quarter 2021 earnings call.

I'm pleased to be joined by Amanda Lombard, our Chief Accounting Officer, who I would like to welcome to the team. Amanda will be assuming the role of Chief Financial Officer on April 1st, taking over from David Santana, who I would like to thank for his unwavering commitment and contributions to the company during the past four years. 2021 was a transformative year for our company as we made significant progress in simplifying and refocusing the portfolio. strengthening our balance sheet, and further enhancing our multifamily operational platform. We continue to execute on initiatives aligned with our strategic objective of being an environmentally and socially conscious, transparent, and forward-thinking pure play multifamily REIT, as evidenced by our renewed ethos and corporate values as Veris Residential, which began with the reconstitution of our board in the summer of 2020. We enter 2022 from a position of strength with a number of non-strategic asset sales that we anticipate will generate significant additional liquidity and provide even more optionality for the company throughout the course of the year. The operating fundamentals across our 6,691-unit multifamily portfolio once again showed strong momentum during the quarter. The portfolio was 96.6% occupied as of year-end, ahead of pre-pandemic levels. During the past year, we tapered concessions and realized the rental growth rate for new leases at 13.9% and renewal leases at 11.6% on a net basis during the fourth quarter. The same store 5,499 unit operating portfolio was 96.4% occupied as of year end, up from 86.9% in December 2020 and 2.8% above pre-pandemic levels. driving sequential same-store revenue and net operating income growth of 3.4% and 7% respectively. During 2021, we launched three lease-up properties comprised of 866 units, all of which stabilized during the year, well ahead of our internal expectations for leasing velocity and rent levels achieved. In fact, by year-end, occupancy at the Capstone and Port Imperial, which received LEED Silver certification in early 2022, and the Upton and Short Hills both exceeded 99%. In a further step to continue strengthening our operational platform, we made a decision to terminate our third-party management activities effective December 31st, 2021. This will free up valuable resources that we will allocate to managing our own assets, including House 25. We believe our Class A multifamily portfolio that offers unique living environments that align with our residents' lifestyles and values is poised to continue to benefit from a favorable macroeconomic backdrop, including continued job and wage growth, declining home purchase affordability, and the anticipation of a wider return to office. Turning to our dispositions, since commencing our suburban office disposition program at the end of 2019, we've completed over $1 billion of sales across 36 assets. including approximately $741 million sold during 2021. Proceeds generated from these sales were used to repay corporate bonds, reduce overall indebtedness, and further strengthen our balance sheet. In January 2022, we completed the disposal of 111 River Street in Hoboken for $210 million and have another office property in Jersey City currently under contract for $380 million. As a result, our multifamily portfolio represented 56% of our net operating income at the end of 2021, up from 38% in the prior year. We expect this level to rise to around 71% when adjusted for the aforementioned office sales and a four-quarters contribution from recently stabilized lease-up properties, all else held constant. Additionally, to further simplify the business and recycle capital, we progressed in monetizing select land parcels. We currently have six land parcels with a total value of $155 million under binding contracts. As we look to our office portfolio, the waterfront assets were 72% leased at year end. During the course of 2021, we signed 181,500 square feet of leases, comprised of 85,500 square feet of new leases and 96,000 square feet of lease renewals and expansions. January 2022, We executed a new 15-year, 130,400-square-foot lease with Collectors Universe at Harborside 3. Collectors Universe will replace MUFG, who were not in occupation of their full space. We negotiated the surrender of 100,300 square feet of their lease with a corresponding early termination fee to facilitate this new lease. The new lease with Collectors Universe is value-enhancing as it captures an increase in term to 16.5 years, up from eight years, with a rent per square foot of just under $42, while improving the occupancy and overall weighted average lease term at the property. While the pace of return to office remains subdued during the fourth quarter due to Omicron, we anticipate a more widespread return to office during 2022. We continue to believe that Harborside's live, work, play proposition, coupled with the incentives offered through Jersey City's Emerge program, will appeal to a wide cross-section of office tenants as validated by the recently executed Collector's Universe lease. As noted earlier, various residential is much more than a name change. It is a culmination of our efforts over the past 18 months to weave environmental and social considerations into the fabric of the company. Considerations that will inform our future decision-making as we seek to continue to maximize long-term shareholder value as a responsible and transparent company. To that end, we have already made significant progress on reducing the environmental impact of our portfolio and operations and strengthening our commitment to diversity through our endorsement of global initiatives, including the CEO Action for Diversity and Inclusion Pledge, the UN Women's Empowerment Principles, and the Climate Group's EV100 initiative. In fact, we are pleased to report that we were the first real estate company in the U.S. to become a member of EV100, joining a diverse group of blue-chip institutions, and have committed to rolling out electric vehicle charging points across our properties by 2030. Furthermore, as of year end, 25% of our wholly owned multifamily properties were LEED certified, and 100% of them received the WELL health and safety certification in the fourth quarter, demonstrating our commitment to the environment, as well as the health and well-being of our employees and residents. Overall, 2021 marked a year of tremendous progress for our company, with strong operating results and a number of strategic milestones achieved. We're excited for what lies ahead and remain well-positioned to continue executing on our transformation plan during 2022. With that, I'm going to hand it over to Amanda, who will update you on our financial performance during the quarter.

Thank you, Mahbub. Before I begin, I'd just like to say that I'm very pleased to be joining the Veris residential team at such a pivotal point in this transition and look forward to being a part of the next chapter. For the fourth quarter, we reported a net loss available to common shareholders of $0.32 per share and core FFO per share of $0.17. For the year, our 2021 core FFO was $0.68 as compared to $1.07 for 2020. The year-over-year reduction in core FFO was primarily due to the impact of our ongoing suburban office disposition program and was partially offset by increases in our multifamily NOI and a reduction in interest expense. Quarter over quarter, core FFO per share was flat as disposition activity was muted during the period. As Mahbub mentioned, our multifamily operations continue to be strong. Our occupancy exceeded pre-pandemic levels, which together with lower concessions was the main driver behind 3.4% revenue growth on a sequential same-store basis. Sequential same-store NOI is up slightly more at 7%, primarily due to a one-time reduction in real estate taxes in the fourth quarter. Same Store NOI was up 21% for the fourth quarter of 2021 as compared to the same period in 2020. This increase was also driven primarily by higher occupancy as a result of the general recovery from the pandemic and to a lesser extent from completing unit renovations at two of our stabilized properties. Excluding the impact of $800,000 of real estate tax catch-up payments in the fourth quarter of 2020, the fourth quarter 2021 Same Store NOI increased by 16.2% year over year. Across the portfolio, net effective rents were still behind last year's rents due to higher concessions in our New Jersey waterfront assets, which we expect to burn off by the third quarter of 2022. As we move forward, we should continue to benefit from renewing our leases at market rents, which can already be observed in our positive net effective rent growth rates mentioned by Mahbad earlier. Total NOI contributed by our multifamily operations increased due to the stabilization of three development projects in the fourth quarter of 2021, well ahead of our expectations. These properties, located in Weehawken, West New York, and Short Hills, along with the Emory in Massachusetts, which was stabilized in Q1, contributed NOI of $4 million for the fourth quarter. Given these three development projects stabilized during the quarter, we expect to see increased NOI contribution from these properties in upcoming quarters. Turning to our office portfolio, office leasing was modest in the quarter, with only two leases signed for 5,300 square feet. However, as Mahbub mentioned, after quarter end, we signed a lease with Collectors Universe and received a $25 million lease termination payment on the space from MUFG. I'd also like to point out that going forward, we will no longer report on same-store NOI for the office portfolio. Turning to the balance sheet, during the quarter, we refinanced the two construction loans on the recently stabilized capstone in Port Imperial, which is part of our unconsolidated JV, and the Upton and Short Hills with permanent financing. We took out an additional $22 million in proceeds and reduced the margin by 155 basis points and 75 basis points, respectively. We also purchased a cap on the Upson loan. Additionally, in January, we used the net proceeds from the sale of 111 River to reduce leverage, repaying the $150 million mortgage and using the remaining proceeds to reduce the credit line. Lastly, on development, our only multifamily development under construction right now is House 25, with budgeted total costs of approximately $470 million. We have fully funded all the equity in that project and are still expecting to meet our budget. This concludes our prepared remarks. Operator, can we open the call for Q&A?

Of course, thank you. And if you'd like to ask a question, please signal by pressing star one on your telephone keypad. If you're on speakerphone, please check your handset and make sure your mute function is turned off so that your signal reaches our equipment. Again, it is star one if you'd like to ask a question. And we'll go ahead and take our first question from Manny Crouchman with Citi. Please go ahead.

Hey, good morning, everyone. Amanda or Mahbub, I think in Amanda's remarks, she said you're not going to offer same-star NOI stats for the office portfolio any longer. What's driving that decision? I mean, office is still a significant part of your portfolio. Is that just a matter of interfering with plans to sell it? Is that something else that you would cut back that information?

Hi, Manny. It's Marbot here. I think the decision was really based on the fact that now with the expectation of, well, with the sale of 111 River and the expectation of the sale of our other office asset that's under contract, what remains is actually relatively small as a percentage of the overall portfolio, around about 30%. And I've been pretty clear that that's not really strategic to the business long-term going forward. So that was really the rationale behind that decision.

And maybe following on that, just what is the timing to then exit that non-strategic position? Is it something we should think about in 22 or 23 and realizing that depends on the transaction market? If you had your claim come true, when would you be out of that office?

Yeah, it's a great question. But I've been in the seat for a year now and I've been pretty clear from the beginning that we're going to be pragmatic about this transition. We're also going to be measured and balanced in the decisions that we make. So no plans to buy or sell anything just because that's the easiest thing to do. We'll do it in a measured and balanced way at the right time. I do expect this year to be a year of transition for us, but I wouldn't want to put a timeframe on any further asset sales.

Thanks. And then, Amanda, realizing that you just got into the seat, but just as you think about the funding plans going forward, where does the capital come from? I guess some of it will come, hopefully, if these assets do sell, but with a stock price, it's still a challenge. How do you fund the multifamily growth going forward?

And, Manny, if you don't mind, I'm going to take that one. So, look, I think we haven't... No, no problem. So, I think you're really talking about the recycling of capital, and at this point in time, it's not expected that we wouldn't be looking to raise fresh capital. So, it's really about recycling. And as and when capital frees up, so as we approach closing on the current transactions and potentially future transactions, and we have that capital in sight, we'll be working with the board to determine the highest and best use for that capital. But certainly at this point, the plan is very much to organically recycle capital to a higher and better use within the company.

Thanks, everyone. Thanks, Manny.

And we'll go ahead and move on to our next question from Brian Spann with Evercore ISI. Please go ahead.

Hey, good morning. Obviously, the office leasing has been muted the past couple quarters. So what do you attribute that slowdown to? And I guess how focused are you on leasing up the waterfront at this point, just given the office leasing has been sluggish and yet transaction pricing seems okay? So just trying to get a sense of priorities there and kind of the timeline of pivoting toward the pure play multifamily.

Good morning, Brian. I think all good questions. In terms of muted pipelines, certainly fourth quarter was somewhat muted. We'd attribute that to Omicron, but there are also some positive signs really on both sides of the river. Here on the waterfront, we had 197,000 square foot of leasing done, which was above the five-year average for the fourth quarter. across the river in Manhattan as well. You had four consecutive months running into December of 2.5 million square foot plus of leasing. And there are some interesting anecdotal stats out there that you can see, the number of tenants in the market looking for 50,000 plus square foot, for example, in Manhattan is around about 70% of the level pre-COVID. So more tenants looking, they're looking for high quality space generally. So most of that leasing that I mentioned across the river has really been 75% of it has been in higher quality buildings. So new buildings, redeveloped buildings, but more sort of true class A buildings, which should bode well for us given that's what we own here at half the cost. So some really positive signs and going back to the waterfront in the first quarter with the collector's universe lease and a couple of other leases that we're aware of signed and we understand imminently to be signed on the waterfront. We could be matching that. We're getting very close to that full year 21 number of 400,000 square foot signed on the waterfront in the first quarter. I think some positive signs, and in terms of our commitment to continuing to lease the waterfront, absolutely. And I think the Collectors Universe lease demonstrates that. We are highly committed to continuing to lease on the waterfront. We own these assets until we don't, and we will continue to manage, operate, and lease them with the due care and attention that we always have.

Okay, because it seems like if you were to sell the assets as is, it wouldn't be terribly dilutive to then redeploy that capital into stabilized apartments, assuming somewhat similar pricing to what you've seen. So I guess the question at that point becomes, if and when you do sell the assets, how are you balancing? How would you balance the growth? Do you think you'd favor... stabilized acquisitions or would you rather try to wait and get a better yield on that growth through the developments?

Well, I think that's actually a balance as well. And as I said, I think there doesn't have to be a single use of capital for us that we wed ourselves to. So it can be a combination and ultimately it'll be a case of evaluating what is available for recycling and what the highest and best use for that is, but that can be multiple uses to your point. And I think that is most likely the way we'll look at it, but that's a discussion to be had with the board. And if I answered the first part of your question, if I misunderstood, I apologize, but I think my comment about leasing was we continue to own these assets and we'll continue to focus on leasing them, and I'm optimistic that With the return to office and some of the green shoots that we're seeing in tenant activity, we're very well positioned, better than we have been for a very long time, to capture some more of that leasing. But that doesn't conflict with our strategic objectives to conclude this transformation. And I've said this, again, from the beginning, from a year ago, that we're not wedded to a particular occupancy number or anything like that will be pragmatic, but balanced and measured when it comes to evaluating strategic options for the half-a-side office complex.

Okay, great. Thank you. Thank you, Brian.

And again, it is star one. If you would like to ask a question, then we'll go ahead and move on to our next question from Jamie Feldman with Bank of America. Please go ahead.

Great, thank you, and good morning. I just want to get your thoughts on the land sales during the quarter. How are you thinking about maintaining a land bank for future residential development, and how do those land sales line up with that strategy?

Morning, Jamie. So we talked about recycling capital and rebalancing the allocation of equity. throughout the company. And I think one thing that was clear to us is that we had a disproportionately large land bank for a company of our size. And in theory, you could develop out 7,000, 8,000 units. But in reality, that's a very long slog. Not all that land is entitled and ready to go. Actually, much of it isn't and would take several years to get it to that stage. So for the time being, it ends up being an inefficient use of capital. It's a drag on earnings. And if we were to develop it, in many cases, it would actually just add concentration risk to existing assets and potentially risk us cannibalizing our own assets. And so the thought there was really just to rebalance and recycle to some extent away from that existing land bank. But as I mentioned earlier, the use of capital could be towards multiple different redeployment options, and so I wouldn't rule out potential future development. We haven't announced the development staff, and we're not announcing one today, but that is certainly one option. There's a long history of successful development and a DNA that runs through the company that is valuable to us, and it's certainly an option that we'll explore in the future.

Okay. But can you talk more about the buyers? I mean, can it be, you know, maybe you don't want the concentration risk or the cannibalization, but are any of these buyers potentially building competitive supply?

Well, the use of the land will be to build multifamily and it's a wide range of buyers. So I think we want to get into a level of detail on that. But yes, the use will be multifamily. Will it be a comparable product to what we build? I don't believe so. I believe we have the highest quality assets with the best amenity offering that attract the highest rent points in the market. And the question for us is really, should we continue to develop that? And if so, where should we develop more of that product? But as I said, it's not a priority at this point. That would feel like running before we can move on.

Okay, thank you. And then can you talk about the termination fee and how that's going to flow through earnings? Cool.

Hi, this is Amanda here. So on a GAAP basis, we'll expect to recognize roughly $22 million for the termination fee, and we'll be deducting that from our core FFL.

And that'll be in 1Q22? Yep, exactly. Okay. All right. Thank you. Appreciate it. Thank you, Jamie.

Again, it is Star 1 if you'd like to ask a question. And we'll move on to our next question from Tom Catherwood with BTIG. Please go ahead.

Thank you. Good morning, everyone. Kind of following up on the capital allocation questions, Bob, I understand your comments about working with the board on deciding multiple options. When we think of timelines, you've already paid off the secured line of credit, so near-term sales should provide growth capital. Have you already started the capital allocation discussions with the board, and is your expectation that you'll have a strategic direction a quarter from now, or could it be more of a second half item?

Good morning, Tom.

So I think maybe just starting at the beginning there, we do still have an outstanding balance on the line. We did use the proceeds from 111 River to pay down the line. So the proceeds, which were just under $50 million, you could say from that particular transaction, we determined the highest and best used to be repayment of debt. As for the future, there's a closing schedule attached to a number of these, and it varies across the different sales that we've announced. So it's really a case of looking at that schedule in the context of the discussions that we'll be having with the board to determine what that highest and best use is for recycling that capital. And we'll update you, obviously, in due course, but I'm not really in a position to give you more guidance on that today, I'm afraid.

Understood. It's just the kind of thing where I don't want to have to, every time we talk, bring up the same thing if the thought is that it's most likely a later 22 event or if it's an imminent event. So if you don't want to touch on anything but any sense of is it three months, six months, nine months, are you prepared to put any kind of thought on when you might have a little bit more kind of definitive direction?

Well, I guess a slightly different way to answer that is my expectation would be that majority of what we've announced today could close in the first half of the year. And so, you know, we'll be, that's probably about as much as I can guide you. But look, I think the timing's going to be, and I appreciate you need to model this out, but I think timing is a consideration, but use of capital is also going to determine the outcome of your projections, and that hasn't been determined either. So, What I would really, and maybe it's sort of an appropriate comment to make at this point, the numbers, I think, are just going to be in flux this year, that they are going to be a bit all over the place, but that's not uncommon for a company that's undergoing a pretty significant transformation like ours. So I think this year is really more about achieving milestones, moving forward with a transformation plan, but unfortunately there is going to be

Noise and distortion in the numbers given the number of variables that that entails Got it appreciated my bond then on the land bank it looks like Kind of pulled out some of the the units on the potential developments. It looks like it was port side one for in East Boston and maybe the option land at Liberty Landing and were those, did you decide not to pursue the option land? Did you sell some of this? What was the, how did you end up kind of with less developable units this quarter?

Yeah, that's a great question. No, it was simply the determination that it wasn't feasible to proceed with those developments. And also, you know, there's a carry-on cost of maintaining the option to develop, and so we made the decision to hand those back and not move forward.

Got it. Appreciate that. And the last one for me on third-party management, the termination of that kind of two-parter. First is, is there any kind of fee drag in 22, or kind of what's the scope of the fee drag you're expecting from that this year? And then secondly, In general, you know, we keep hearing about expense growth impacting management operations, especially on the residential side. Any expectations for how that might flow through this year?

Yeah, again, both really good questions. The first one, termination of the third-party management business. I think we explained the rationale behind that, but we want to – we are – very focused on creating a best-in-class platform to sit above best-in-class assets in the multifamily sector. And so we want to focus the resources that we have to managing our own assets and continuing to enhance and build out that platform. The gross revenue loss from that is about two cents a year. But obviously, you know, there's costs associated with that and third-party management, unless you do it in significant volume, is not a very profitable business. And then in terms of the overall cost pressures, which we're seeing absolutely across the entire labor market, I think we've done a good job of managing expenses. And if you recall, last year we announced through a series of measures to streamline our operations and run more efficiently, which is an ongoing initiative. We remain on track, despite those pressures, to still deliver on our $5 million of run rate cash expense savings this year.

Got it. I appreciate the answers. Thanks, everyone.

Thank you very much for the questions.

And we'll move on to our next question with Michael Lewis with Truist Securities. Please go ahead.

Great. Thank you. Just following up on a previous question about the board and the strategy, you could correct me if I'm wrong. I don't remember... you know, a formal end to the formal strategic review. You know, is it fair to say now the strategy is set, or is there still kind of a, you know, is there still a review going on, and is that kind of a process that's incurring any cost still, or, you know, where are we on that?

No, the Strategic Review Committee is still very much intact and very much focused on creating or maximizing value for shareholders. that is wholly independent from what we're doing as a management team. What we're doing as a management team is creating entity value through the steps that we've taken over the last year. We've got a clear strategic direction. We've got a more focused business. We've got a more stable and cleaner balance sheet. We've got a more efficient, more effective operating platform. And we have a more valuable business as a result of all of that. So that's our focus as a management team to continue creating entity value, and the Strategic Review Committee has been and will continue to evaluate any and all options available to it to maximize value for shareholders.

Okay. I mean, that sounds kind of like an ongoing, right, the door is always open. Anyway, I don't know if that sounds like a separate formal strategic review, but... Anyway, my second question I wanted to ask about, you know, I know you're not going to be reporting the same store in Hawaii in the office anymore, which I understand. Could you just kind of point us to, you know, which direction is the kind of occupancy and the revenue in that business going, you know, before asset sales, right? So the kind of steady state portfolio. And I ask that because I know you have Vonage as a big lease expiring in 2023. I think AmTrust. is expiring in the near term, is the risk of that occupancy going down while you're looking for a buyer of those assets?

Yeah, so we don't have much rolling this year. There's only around 85,000 square foot that's rolling this year. So I think your question about direction of which way that's going, obviously we've just signed a new lease with Collectors Universe that in terms of net space is 30,000 square foot more net space, but it's a significantly longer term, 16 years versus around about eight that we had. So that's a value enhancing and it's an encouraging sign. I go back to my comments about where we believe the market potentially may be going or tenant demand may be going. And I think that's going to be really the biggest potential value driver going forward for this year is going to be whether you can do more leasing and grow the top line. But in terms of rollover, there's really very little this year.

Okay. How about the ones next year that I mentioned, Vonage and AmTrust and any others? I think there's, you're right, very little rollover this year. I think next year is a bigger rollover year, 14% or 15% of the portfolio.

Yeah, no, next year we obviously have a little bit more than we do this year. From memory, I think it's around 12% or so. of the space. We proactively engage in dialogue with our tenants to retain them. We've invested a lot in Harborside and two-thirds of the renewals last, two-thirds of the leasing last year in the portfolio was renewals. So we'll continue to adopt that approach with future leases that are approaching expiry and we'll continue to focus on attracting new tenants like Collectors Universe to uh, the grateful position that Hobbit side offers.

Okay. And then just lastly for me, um, you know, you mentioned, you know, not really raising new capital, but kind of recycling capital. Um, you know, you did establish an ATM program, um, in December. I was just curious, you know, is that just to have a, you know, an arrow in your quiver kind of, uh, adjusting case or for whenever the stock price gets to, to where you think it's appropriate, um, You know, there's no intention, I assume, of utilizing that anytime soon. That's not in your capital plan.

That's absolutely correct. I think it's just we felt it's prudent for a company to have one, and that is why we put it in place. But there is no intention to use that in the midterm. Okay, great. Thank you very much.

Thank you very much.

And we'll go ahead and take a follow-up from Amanda Cushman with Citi. Please go ahead.

Hey, thanks for that. Mabad, what's the actual use of the collector's universe space? Is that going to be fully office space from their release and your release? It seems like part of that is going to be what they call a grading operation. Just wondering how much of that looks sort of like what we would call traditional office versus something that's going to look different than that.

Yeah, it's substantially traditional office. I couldn't give you the exact breakout, but it's substantially traditional office. There will be an element of obviously fitting it out for their specific use over the course of the next year or so, but it will be predominantly traditional office.

And then just if we think about the MUFG situation, if we think about other significantly underused space in that Harborside portfolio, how much of that type of dark space or phantom space, whatever you want to call it, is there that you could see another tenant either approach you or you approach them to flip that space.

In terms of dark space, there really isn't much. I mean, you'll know where the vacancy is. Other side, one, six, some in five, great floors in five. But no, in terms of dark space, there really isn't any other space that I can think of. This is a creative solution. to be able to allow a tenant who wanted to be in this building specifically to be able to occupy it, taking some of that space back, getting a reverse premium payment from the tenant, and really creating a win-win for the three parties. But if there is more of that space, it's really de minimis. There isn't really more of that in Harborside.

And then one last one on the Collector's Universe space. Just what did the upfront lease economics look like there in terms of TIs and free rents and build-out costs? And maybe if you could weigh that against, you're getting a check-in from NEFG, but how much of that check is getting sort of just put right back out to Kleister's universe?

That's a great question. So the headline rent was right under, literally a touch under $42. TI's were at market, I'd say on the low end of market, so around about $5 a square foot, and then there's a landlord contribution of $2-3 million that we'll put forward. So no, there is still a meaningful portion of the reverse premium that we got that remains after that.

Thanks, Howard. Thank you very much.

And with that, that does conclude our question and answer session for today. I would now like to hand the call back over to Muban Neo for any additional or closing remarks. Please go ahead.

Thank you, everyone, for joining us today. It's been an eventful and transformative year, and we look forward to updating you on our future progress in the coming quarters.

And with that, that does conclude today's call. Thank you for your participation. You may now disconnect.