Earnings call: Sotherly Hotels Q2 2024 results show steady growth

Sotherly Hotels Inc. (NASDAQ:), a well-known hospitality company, has reported its financial results for the second quarter of 2024, revealing a positive trend in revenue per available room (RevPAR) and hotel earnings before interest, taxes, depreciation, and amortization (EBITDA). The company has seen RevPAR growth across several key properties, driven by increases in occupancy, though average daily rates (ADR) have slightly decreased. Sotherly Hotels has also reaffirmed its full-year guidance, expecting strong performance in the latter half of the year.

Key Takeaways

• RevPAR increased by 4.3% compared to the same quarter in 2023, with standout growth in properties like The Georgian Terrace and The Whitehall.
• Total revenue for Q2 2024 reached $50.7 million, a 3.4% increase from the previous year.
• Hotel EBITDA improved by 5.8%, amounting to $15.7 million.
• Sotherly Hotels reaffirmed its full-year guidance, projecting total revenue of $179 million to $182.6 million.
• The company completed significant refinancing activities, addressing nearly $100 million in mortgage debt.

Company Outlook

• Sotherly Hotels expects full-year 2024 RevPAR to range between 104% and 106% of full-year 2023 RevPAR.
• The company anticipates a similar performance to last year, with the majority of earnings in the first two quarters and some in the fourth quarter.
• There are no significant one-time items expected for the year, in contrast to the previous year’s $700,000 grant from the State of Georgia.

Bearish Highlights

• ADR decreased by 1.4% despite the increase in occupancy.
• The company is cautious with its balance sheet due to mortgage market conditions and the need for capital improvements.
• Over $21 million in unpaid cumulative preferred dividends remain, with no clear timeline for repayment.

Bullish Highlights

• Group business revenue grew by 3.8% over the prior year, with group rate outpacing the overall portfolio’s ADR.
• The company successfully executed secured loans for two DoubleTree by Hilton properties.
• Sotherly Hotels remains optimistic about the fall travel months and the performance of urban hotels in Atlanta and Houston.

Misses

• The timeline for fully repaying preferred dividends is uncertain, depending on the resolution of mortgage debt and the reopening of capital markets.

Q&A Highlights

• Tony Domalski, a representative of the company, confirmed that the financial performance for the first six months is on track with the previous year.
• Dave Folsom discussed the over $21 million in unpaid cumulative preferred dividends and the cautious approach to the balance sheet.

In conclusion, Sotherly Hotels Inc. has demonstrated resilience and strategic financial management in the second quarter of 2024. With solid revenue growth, improved EBITDA margins, and a cautious yet optimistic outlook for the future, the company is well-positioned to navigate the challenges of the hospitality market.

InvestingPro Insights

Sotherly Hotels Inc. (SOHO) has shown some positive financial trends in the second quarter of 2024, particularly in revenue growth and hotel EBITDA. However, it’s important to consider a broader set of financial metrics to understand the company’s overall health and investment potential. According to InvestingPro, here are a few key data points and tips that investors should be aware of:

InvestingPro Data:

• The market cap stands at a modest $24.03 million, indicating a smaller player in the hospitality industry.

• The company’s revenue for the last twelve months as of Q1 2024 is reported at $176.66 million with a growth of 3.22%.

• SOHO’s EBITDA for the same period is $37.75 million, although the EBITDA growth has seen a decline of 8.85%.

InvestingPro Tips:

• Sotherly Hotels is currently trading at a low EBITDA valuation multiple, which could suggest the stock is undervalued compared to its earnings before interest, taxes, depreciation, and amortization.

• The company is also trading at a low revenue valuation multiple, potentially offering an attractive entry point for investors based on its revenue figures.

These financial metrics and InvestingPro Tips provide a more nuanced view of SOHO’s financial status. While the company has reaffirmed its full-year guidance, it’s important to note that analysts do not anticipate the company will be profitable this year, and the stock price has performed poorly over the last decade. Moreover, SOHO does not pay a dividend to shareholders, which may be a consideration for income-focused investors.

For those interested in further insights, InvestingPro offers additional tips on SOHO, which can be found by visiting These tips can help investors make more informed decisions by providing a deeper analysis of the company’s financial health and market position.

Full transcript – Sotherly Hotels Inc (SOHO) Q2 2024:

Operator: Good morning, all, and thank you for joining us for the Sotherly Hotels Q2 2024 Conference Call and Webcast. My name is Carly, and I’ll be coordinating your call today. [Operator Instructions] I’ll now hand over to Mack Sims, Vice President of Operations, to begin. Please go ahead.

Mack Sims: Thank you, and good morning, everyone. If you did not receive a copy of the earnings release, you may access it on our website at sotherlyhotels.com. In the release, the company has reconciled all non-GAAP financial measures to the most directly comparable GAAP measure in accordance with Reg G requirements. Any statements made during this conference call, which are not historical may constitute forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that these expectations will be attained. Factors and risks that can cause actual results to differ materially from those expressed or implied by today’s forward-looking statements are detailed in today’s press release and from time to time in the company’s filings with the SEC. The company does not undertake a duty to update or revise any forward-looking statements. With that, I’ll turn the call over to Scott.

Scott Kucinski: Thanks, Mack. Good morning, everyone. I’ll start off today’s call with a review of our portfolio’s key operating metrics for the second quarter. Looking at the second quarter results for the composite portfolio compared to 2023, RevPAR increased 4.3%, driven by a 5.8% increase in occupancy and a 1.4% decrease in ADR. Looking at the second quarter results for the composite portfolio relative to 2019, RevPAR increased 7.5%, driven by ADR growth of 11.7%, while occupancy declined 3.8%. Year-to-date RevPAR performance represents an increase of 4.1% over the same period in 2023, driven by a 6.6% increase in occupancy and a 2.3% decrease in rate. Looking at the year-to-date results for the composite portfolio relative to 2019, RevPAR was up 4.5%, driven by ADR growth of 10.5% and occupancy decline of 5.3%. This occupancy gap to pre-pandemic levels reflects the additional upside for the portfolio moving forward. Overall, our portfolio of second quarter results, characterized by strong occupancy growth, were in line with our expectations. The continued occupancy growth signals lodging fundamentals for our portfolio have normalized, with a more well-balanced revenue picture. While the quarter’s notable occupancy gains were partially offset by a 1.4% decline in ADR, this decline in rate was isolated to our South Florida, Atlanta and Houston properties where travelers showed increased price sensitivity. Looking at some highlights across the portfolio. The DeSoto in Savannah, Georgia continues to be a standout performer for our portfolio, growing RevPAR 6.8% over prior year and more than 33% over 2019. The DeSoto’s well-balanced mix of group and leisure business helped it outperform its competitive set, gaining 440 basis points in fair share during the quarter. The hotel was able to easily outperform its budget profitability metrics for the quarter due to well-managed expense controls and profitable catering revenue. Hotel Alba in Tampa posted commendable results during the quarter, growing RevPAR by 7.8% over prior year and nearly 63% over 2019. The property was able to gain significant RevPAR share of nearly 800 basis points over its competitive set during the quarter. While the Tampa market appears to be softening a bit from a rate perspective, Hotel Alba’s mix of leisure, business travel and contract business led to excellent top and bottom line results for the hotel during the quarter. The breakthrough in performance during Q1 at our urban locations continued during the second quarter. The Georgian Terrace in Atlanta grew RevPAR by 8.5%, despite a 7.1% decrease in rate. The decline in rate is predominantly attributed to a more robust citywide calendar last year, which included multiple nights at Taylor Swift concerts. The hotel’s strong occupancy growth of 16.9% during the quarter was driven by increased corporate and association business at the hotel, while the potential for recovery in the film industry business segment presents additional growth prospects moving forward. The Whitehall in Houston fueled by strong occupancy growth of 18.4%, grew RevPAR by 9.4% over prior year. The Whitehall’s occupancy improvement was predominantly driven by growth in the transient business segment with increased demand from the adjacent Chevron (NYSE:) headquarters building due to its recent relocation from California, an encouraging sign for the property’s growth prospects moving forward. The Whitehall outperformed its competitive set during the quarter, gaining 620 basis points in RevPAR share. Looking at profitability metrics for the portfolio. Hotel EBITDA margins have stabilized, with second quarter hotel EBITDA margin improving 69 basis points over prior year on a clean comparative despite a slight decline in rate for the quarter. The increased occupancy rate in our hotels during the quarter allowed our management teams to take advantage of economies of scale and drive additional high margin non-room revenue in order to improve flow-through. With fully opened and staffed amenity offerings at our hotels, along with the stabilization of wage costs, we expect margins to remain relatively stable going forward. Turning to corporate activity. In July, we announced that the company executed a secured loan on the DoubleTree by Hilton Jacksonville Riverfront hotel in Jacksonville, Florida. The loan, which carried a floating interest rate based on SOFR plus 3%, has an initial principal balance of $26.25 million with an additional $9.5 million available to fund the product improvement plan at the hotel. The company also announced that it entered into a new 10-year franchise agreement with Hilton Worldwide to relicense our Jacksonville Hotel as a soft-branded DoubleTree by Hilton under the name Hotel Bellamy. As part of its relaunch efforts for the hotel, the company will undertake a complete renovation of the property with a cost of approximately $14.6 million and an estimated completion date of January 2027. Renovation plans for the property will include a complete transformation of its guest rooms, public spaces, building exterior, pool and sundeck, existing food and beverage offerings as well as the addition of a new riverfront dining concept. Also during the second quarter, we announced the company executed an extension on its first mortgage loan for the DoubleTree Philadelphia Airport Hotel. The interest-only loan, which has been reduced by $3 million to $35.9 million, matures in April 2026 and carries a floating interest rate based on SOFR plus 3.5%. As part of the transaction, we purchased interest rate cap, capping SOFR for a portion of the loan at 3%. In addition, we announced the company has entered into a new 10-year franchise agreement with Hilton Worldwide to relicense the hotel under the DoubleTree by Hilton flag. As part of the new agreement with Hilton, the company will undertake a renovation of the property with a cost of approximately $11.5 million and an estimated completion date of April 2026. Renovation plans for the property will include upgrades to guest rooms, public spaces, food and beverage offerings and building’s exterior. I will now turn the call over to Tony.

Tony Domalski: Thank you, Scott. Reviewing performance for the period ended June 30, 2024. For the second quarter, total revenue was approximately $50.7 million, representing an increase of 3.4% over the same quarter in the prior period. Year-to-date, total revenue was approximately $97.2 million, representing a 5.1% increase over the same period last year. Hotel EBITDA for the quarter was approximately $15.7 million representing an increase of 5.8% over the same quarter 2023. Year-to-date, hotel EBITDA was approximately $28.1 million, representing an increase of 4.2% over the same period last year. For the quarter, adjusted FFO was approximately $7.5 million, representing an increase of 6.8% over the same quarter 2023, and year-to-date adjusted FFO was approximately $12.7 million, representing an increase of 8.5% over the same period last year. Please note that our adjusted FFO excludes charges related to the early extinguishment of debt, unrealized gains and losses on derivative instruments, charges related to aborted or abandoned securities offerings, ESOP and stock compensation expense as well as other items. Hotel EBITDA excludes these charges as well as interest expense, interest income, corporate, general and administrative expenses, realized gains and losses on derivative instruments, the current portion of our income tax provision and other items as well. Please refer to our earnings release for additional detail. Looking at our balance sheet as of June 30, 2024, the company had total cash of approximately $37.3 million, consisting of unrestricted cash and cash equivalents of approximately $18.9 million as well as approximately $18.4 million, which was reserved for real estate taxes, insurance, capital improvements and certain other items. At the end of the quarter, we had principal balances of approximately $323.2 million in outstanding debt, at a weighted average interest rate of 5.68%. Approximately 92.6% of the company’s debt carried a fixed rate of interest when taking into account, the company’s interest rate hedges. We anticipate routine capital expenditures for the replacement and refurbishment of furniture, fixtures and equipment, full amount to $7 million for calendar year 2024. As previously announced, we anticipate beginning a product improvement plan at the DoubleTree Hilton Philadelphia Airport later this year, with anticipated capital expenditures related to this project to total approximately $3 million for the year. We are reiterating guidance with a forecast of anticipated results for the full year previously disclosed in March. Our guidance considers market conditions and accounts for current and expected performance within the portfolio. We’re projecting total revenue in the range of $179 million to $182.6 million for the full year 2024. At the midpoint of this guidance, this represents a 4% increase over prior year. Hotel EBITDA is projected in the range of $46.1 million to $46.9 million. And at the midpoint of this guidance, it represents a 3.8% increase over prior year. And adjusted FFO was projected in the range of $12.8 million to $13.8 million or $0.64 to $0.69 a share. At the midpoint of the guidance, this represents an 8.7% decrease over prior year. And I will now turn the call over to Dave.

Dave Folsom: Thank you, Tony, and good morning, everyone. We were generally pleased with our portfolio’s results for the second quarter, which were in line with our top and bottom line expectations. Our portfolio’s RevPAR growth of 4.3% over prior year was driven by strong occupancy growth, especially at our slower to recover urban hotels in Atlanta and Houston, which continue to stabilize. Our group-centric properties also continue to perform exceptionally well during the quarter, growing group revenue over prior year while delivering strong transient leisure results. Despite softer-than-expected leisure demand during the quarter, which led to a slight rate decline for the portfolio, we are optimistic that as we move into the fall travel months, that are traditionally characterized by more group and business travel demand, we will be able to drive better rate growth. Overall, we were pleased with our managers’ ability to achieve solid expense controls, and deliver strong flow-through while also competing well amongst our competitive sets during the quarter. As Scott mentioned in his remarks, the recovery we experienced at our urban hotels in Atlanta and Houston to start the year continued during the second quarter. As one of our largest assets by historical EBITDA contribution, the occupancy recovery of nearly 900 basis points over prior year at the Georgian Terrace in Atlanta was an encouraging sign for our portfolio. The Georgian Terrace’s ability to gain 960 basis points in RevPAR share year-to-date speaks to the significant progress made by the hotel sales staff over the past 12 months. The Whitehall in Houston has a similar story, improving RevPAR share 900 basis points year-to-date as our sales team continues to gain traction with citywide groups and business transient travelers. Despite these strong performances, we believe our portfolio is positioned for relative outperformance, given our exposure to slower to recover urban markets, such as Atlanta, Houston and Philadelphia, which are still tracking below historic occupancy levels. While the DoubleTree Hotel at the Philadelphia Airport showed positive signs of demand improvement during the second quarter by growing RevPAR 7.6%, it is still running 1,250 basis points below second quarter 2009 occupancy – 2019 occupancy, providing plenty of upside opportunity. The Philadelphia market strong improvement during the second quarter is an encouraging sign for its continued recovery, especially considering the performance of this hotel is highly correlated with market-related factors such as air traffic volume and citywide events. Group business continued to be an important growth story for our portfolio during the second quarter, with the segment’s revenue growing by 3.8% over prior year. Importantly, group rate, which outpaced the overall portfolio’s ADR, grew 1.8% during the second quarter. The DeSoto in Savannah continued its remarkable streak with another record-breaking quarter for group business, which grew an impressive 48% with 8% rate growth over prior year. The Georgian Terrace, meanwhile, delivered 87.6% growth in group revenue over prior year, a commendable sales effort by our team. Looking at the total portfolio, the group revenue picture remains solid for the balance of the year, with full year bookings pacing 6.4% ahead of last year. On the balance sheet front, by midyear, we have successfully addressed nearly $100 million in mortgage refinancings, restructurings and extensions while concurrently meeting all our capital and funding needs for life cycle improvement plans at several of our hotels. As Scott mentioned, in July, we completed the refinance and relicense of our DoubleTree by Hilton Hotel in Jacksonville, Florida, which given the current lending environment, we view as a positive outcome for the company. We believe the hotel’s direct riverfront location is perfectly suited to our repositioning strategy that will yield the Jacksonville market’s first full-service lifestyle hotel. We believe our strategy with its overall goal of driving rate, coupled with the strength of the Hilton reservation system, will position the hotel for success for the foreseeable future. Looking ahead, we will continue to conservatively approach upcoming debt maturities for our portfolio, which are spread evenly over the next several years. As we look at the second half of 2024, we are cautiously optimistic regarding operating fundamentals for the balance of the year. Despite leisure customers becoming more price conscious and perhaps a slowing economy, forward booking trends remain relatively strong, particularly for the upscale and upper upscale lodging segments. Urban hotels are expected to outperform the broader lodging market, driven by positive corporate and group travel trends. Full year 2024 RevPAR for our portfolio is forecasted to range between 104% and 106% of full year 2023 RevPAR. We believe that our portfolio of well-positioned hotels, fueled by growth trends in the group and business transient segments will continue to deliver strong results for our shareholders. And with that, operator, we can open up the call for questions.

Operator: Thank you very much. [Operator Instructions] Our first question comes from Connor Mitchell of Piper Sandler. Connor, your line is now open.

Connor Mitchell: Hey, good morning. Thank you for taking my question. I guess, starting with Jacksonville, the refinancing and the renovation, the product improvement plan. It sounds like it’s a bit more going on than what you guys talked about with the Philadelphia renovations discussed in the first quarter call. Could you just remind us again, this is more of a repositioning to Philadelphia and then when it’s expected to complete the project plan?

Dave Folsom: Yes. It’s Dave here. Thanks for the question. So yes, it is more detailed than Philadelphia. Philadelphia is simply a renovation to maintain the DoubleTree standards. This is more of a life cycle repositioning, while we’re still in the Hilton reservation system. This is a more expansive repositioning the hotel to really create a new identity for the asset. I’ll let Scott tell you about the timeline.

Scott Kucinski: Yes, hey, good morning, Connor, as Dave said, it’s a complete repositioning and reenvisioning. If you look at what we’ve done in the past with Hotel Alba in Tampa or Hotel Ballast in Wilmington, it comes from that same cloth. We really think there’s a big market opportunity in Jacksonville. It’s a market we’ve been in since the – I think 1995, and we’ve seen it continue to evolve just a couple of tidbits. The Jaguars has just announced a multibillion-dollar complete transformation of their stadium right there in downtown that’s definitely going to be bringing some larger events, Super Bowl and that type of thing in the future. There’s a lot of development activity without really any of the hotels, except for Four Seasons, that’s going to be built over by the stadium coming downtown. So we’re excited to kind of put some more money into that asset and position it for some really good growth in the future. So $14.6 million, that’s a full repositioning, reenvisioning, new food and beverage. And the timeline for that, I think we said in our comments, it’s going to be starting give or take, the beginning of next year, 2025, and last for two years. We’ll wrap it up in early 2027.

Connor Mitchell: Okay. I appreciate that. And then maybe turning towards consumer and just leisure travel, it sounds like the ADR softened a bit in the back half of the second quarter. And just hoping you guys could go through kind of your outlook. I know you talked about it a bit in your opening remarks. If you think there may be some leisure and consumer travel will pick back up, steady, could follow the same trend. And then at the same time, we’re kind of seeing a change in the macro environment with a lot of discussion of potential recession, so along the same line, just wondering if you guys are thinking of maybe individual and leisure travel potentially cutting back on travel, dining, both or it might kind of stabilize where it is.

Dave Folsom: Well, I think your assessment is correct. I mean, we did see a trailing off of ADR towards the end of the quarter. I’ve looked at a lot of different earnings calls and releases. And I think our industry saw that across the board. And in Florida, where there’s – it’s highly correlated to the leisure travel segment. We saw that at several of our hotels. I mean rate has been so pronounced over the last few years as we came out of COVID, I think you get to a point where given economic conditions, you’re going to have travelers be a little more rate conscious. I think we’re seeing that. But at the same time, we’re seeing corporate booking trends and group booking trends sort of take up the slack as we mentioned in our prepared remarks. We’re not – I’m not seeing anything in the booking environment that would correlate to some sort of recessionary event that’s looming out on the horizon. That doesn’t mean it won’t happen, but we’re not seeing that as of this call. So how we react to that, it’s how we react to all recessions or down-market conditions. We manage our flow. We manage our expenses and we try to extract the highest quality revenue we can amongst all the different segments that come to our hotels.

Scott Kucinski: Yes. And Connor, I’ll just add to what Dave said. I mean the rate sensitivity really is coming from that leisure – individual leisure traveler from what we can tell. And luckily, we don’t have a whole lot in our portfolio that is solely reliant on that. South Florida is probably the most true individual leisure travel hotel that we have, the DoubleTree in Hollywood. On the contrary, on the group side of things, the booking pace is great, and the rate is very strong. We’re seeing very strong rates out of our group bookings. So it’s not really a rate sensitivity across the board. It’s really just from that one segment.

Connor Mitchell: Okay. And then kind of combining the thoughts of occupancy and changes in the ADR. Is sensitivity to pricing in the ADR the main metric you guys are really focused on, it seems that occupancy has continued to steady and improve coming out of the pandemic. It’s still slightly below pre-pandemic levels while the ADR has been better than pre-pandemic. But it seems like now it’s kind of facing some headwinds potentially. So is ADR really the one metric you guys are focused on in terms of your outlook and you believe that occupancy still has more upside and not too worried about it slipping as much? Or am I getting those confused or maybe putting more emphasis on one or the other?

Dave Folsom: No. I think you’re looking at the problem correctly. I mean, there is a lot of room to run with respect to occupancy, not only in our portfolio, but industry-wide. The industry hasn’t recovered to 2019 occupancy levels yet. Rate has been – rate has grown tremendously since the pandemic. I think we may be at a point where it’s going to take a breather. I mean, rate, as you well know, I mean, rate is – it drives flow-through and drives profitability. But at the same time, with the correct rate and increasing occupancy to more historic levels, we’re still going to be profitable as long as the hotels achieve operating efficiencies, which is what we really focus on week-to-week, month-to-month is whether or not our managers are successful in flowing dollars to the bottom line. Obviously, if we could grow rate forever, that would be fantastic, but we know we can’t. So we do think there’s upside on occupancy. We just have to manage it correctly.

Connor Mitchell: Okay. Appreciate that. And then maybe just one more quick question. On guidance, it looks like you guys have pretty much matched up for FFO from the prior year, and maybe it looks like you’re kind of expecting that same timeline. Just wondering if there’s anything – any other headwinds you’re thinking of that might result towards the bottom end of the range or maybe some improvements, maybe the ADR like we were just talking about that might reach the high end or above the high end. And then if there’s any just onetime items in the back half of 2023 that we might be forgetting, we shouldn’t be expected to carry over into 2024.

Dave Folsom: Well, this time of the year, we’re always concerned about weather-related events. We just got through one hurricane, which did not really cause any impact of the portfolio. We lost some bookings, but it’s not material in the broader picture. So this time of the year, given the coastal nature and the Florida nature of our portfolio, we’re always concerned about updating guidance until we kind of move through the end of September. And Tony, do you have any other items to add to that?

Tony Domalski: No, I think if you look at where we are for the first six months and where we think we’re going to be at the end of the year, I think we’re tracking along a very similar path as we did last year. We make most of our money in the first two quarters of the year. Pretty close to breakeven on an FFO and adjusted FFO perspective for the third quarter, and then we make some money in the fourth quarter of the year. And that’s what we’ve done historically. That’s what we did last year, and we’re expecting to do something very similar this year.

Dave Folsom: One-time.

Tony Domalski: Big one-time items, I think we had nothing – we’re not expecting anything this year. And I think last year, we had $700,000 grant from the State of Georgia, one of our properties. That’s the only large item from last year that’s not going to recur this year.

Connor Mitchell: Okay, thank you very much.

Tony Domalski: Thanks Connor.

Dave Folsom: Thank you very much.

Operator: [Operator Instructions] Our next question comes from Randolph Boyd. Randolph, your line is now open.

Unidentified Analyst: Thank you for taking the call. Would you comment on the outstanding cumulative preferred dividends and would you anticipate eventually bringing them to current?

Dave Folsom: Right. Thanks. This is Dave speaking. So we do have over $21 million in unpaid cumulative preferred dividends. We are paying the current pay for all of our preferred stock. As I’ve mentioned on the past few earnings calls, we have to be very judicious and cautious with our balance sheet, specifically with respect to the mortgage markets and how they impact our balance sheet, and the fact we have several properties facing significant life cycle product improvement plans that are mandated by the major hotel companies like Hilton, and assets that we own that also don’t have a brand that nonetheless need capital improvements. Those are our biggest concerns right now. I mean we have a bias to get that paid up and current so we can start paying current dividends on the common. But right now, we’re just being very cautious with respect to our available capital. And until the mortgage markets balance out, and stabilize, that’s our biggest focus. We’ve addressed – as I said in our – in my prepared remarks, we’ve addressed about $100 million of mortgage debt so far this year and over the next two years, we have approximately another $150 million of mortgage debt. Until that’s resolved successfully, which I think it will be, I can’t give you a date as to when we’ll be able to true up the rest of that preferred. It also depends on whether or not the capital markets reopen and a new fresh capital could become available to us. That’s something we haven’t seen yet, and I’m not sure when the capital markets will reopen. But the long and the short answer to your question is I can’t give you a timeline as to when that will be fully repaid.

Unidentified Analyst: Okay, thank you very much.

Operator: Fantastic. We currently have no further questions. So I’d like to hand back to Dave Folsom, CEO, for closing remarks.

Dave Folsom: Thanks, everyone, for joining the call, and we’ll speak next quarter.

Operator: This concludes today’s call. Thank you to everyone for joining. You may now disconnect your lines.

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