Greetings and welcome to Physicians Realty Trust Fourth Quarter 2020 Year End Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Brad Page.

Thank you. Good morning and welcome to the Physicians Realty Trust fourth quarter 2020 earnings conference call and webcast. Joining me today are John Thomas, Chief Executive Officer; Jeff Theiler, Chief Financial Officer; Deeni Taylor, Chief Investment Officer; Mark Theine, Executive Vice President of Asset Management; John Lucey, Chief Accounting and Administrative Officer; Laurie Becker, Senior Vice President, Controller; and Dan Klein, Deputy Chief Investment Officer; and Amy Hall, Senior Vice President, Leasing & Physician Strategy. During this call, John Thomas will provide a summary of the company's activities and performance for the fourth quarter of 2020 and year-to-date as well as our strategic focus for 2021. Jeff Theiler will review our financial results for the fourth quarter of 2020. Then Mark Theine will provide a summary of our operations for the fourth quarter of 2020. Following that, we will open the call for questions. Today's call will contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. They are based on the current beliefs of management and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe our assumptions are reasonable, our forward-looking statements are not guarantees of future performance. Our actual results could differ materially from our current expectations and those anticipated or implied in such forward-looking statements. For a more detailed description of potential risks and other important factors that could cause actual results to differ from those contained in any forward-looking statements, please refer to our filings with the Securities and Exchange Commission. With that, I would now like to turn the call over to the company's CEO, John Thomas. John?

Thank you, Brad. And thank you for joining us this morning. Before we discuss 2020 and the fourth quarter, we want to commend our team in Texas that has answered the call to keep our buildings open and operating during last week's historic winter weather. We had four buildings with frozen pipes and water damage and we've been working around the clock to get the buildings back in operation. As of this morning, three of those buildings are operational with tenants actively using their leased space. We anticipate the final small building not yet open to be opened within the week. All of our buildings are insured for events like this, any deductible costs will be ultimately recoverable from the tenants. With all of these challenges, 2020 turned out to be a very successful year for Physicians Realty Trust. From the onset of the pandemic through December 31st, 2020, we collected cash equal to over 90% of all rent and other charges due from our tenants, culminating in the collection of 99.6% of rent due in the fourth quarter. The single deferral granted during the year representing about 0.5% of total billing since April is in payback and is being paid timely by that tenant. We ended the year with the lowest outstanding accounts receivable balance we've ever had as a percentage of revenue, and an occupancy rate of 96%, the highest of all public owners of medical office facilities. Our portfolio's resiliency is directly attributable to our focus on the clinical and financial quality of our healthcare provider tenants with more than 61% of our rentable square feet leads directly to investment-grade quality tenants. We also believe our pure play focused strategy on medical office facilities, with a balance between off-campus and on campus locations was instrumental to our…

Thank you, John. In the fourth quarter of 2020, the company generated normalized funds from operations of $56.7 million. Normalized FFO per share was $0.26 versus $0.27 in the same quarter of last year due to reduced leverage. Our normalized funds available for distribution were $53.0 million, an increase of 14% over the comparable quarter of last year. And our FAD per was $0.25. Our full year FAD was $208.5 million or $0.99 per share, which was an increase of 6.1% over the prior year. We are highly focused on this metric as it is the most standardized and comparable way to measure our company's performance versus our direct peers. And we will continue to focus on growing our FAD per share at an outsized rate for our shareholders. The foundation of the company remains our $5 billion pure play medical office portfolio, which is 61% leads to investment-grade quality tenants, the highest percentage of any public medical office portfolio. Consequently, the DOC portfolio has been one of the best performing portfolios among all REITs, healthcare, and otherwise during the pandemic. We collected 99.6% of our rent in the fourth quarter and over 99% for the full year. We have just $1.3 million remaining to be paid back in the one COVID deferral granted, as the first few payments were already made in January and February of this year. We expect the entire balance to be repaid by June 2021. We intentionally reduced leverage throughout 2020 issuing 19.3 million shares at an average price of $19.06, generating net proceeds of $364 million. As a result, we ended the year with a comfortable leverage of 5.1 times debt to EBITDA, including our pro rata share of JV debt, which puts us in an excellent financial position going into 2021. We have…

Thanks Jeff. Since inception, DOC has been dedicated to building a best-in-class relationship-driven operating platform that utilizes local market expertise and scale to drive tenant retention, cost efficiencies, and profitable growth for shareholders. We have executed consistently on this plan, expanding our in-house property management function into most of our largest markets, while leveraging the local market expertise of facility partners were best. This frontline team helped keep our facilities open, clean, and available for patient care throughout the pandemic. We are encouraged by the positive signs of the recovery due to the vaccine and are grateful for our asset management, property management, and engineering teams who have demonstrated extraordinary resilience in the face of the pandemic, as well as the recent severe weather in the Southern United States. This team has earned a 95.9% positive tenant satisfaction rating in our work order system throughout the pandemic and extreme weather. Our portfolio's resiliency is a direct reflection on the clinical and financial quality of our healthcare provider partners. Our portfolio known for its industry leading 96% occupancy also achieved industry leading rent in CAM cash collection of 99.6% in Q4 2020. Under the leadership of Joey Williams and Ann Gurka, our accounts receivable team worked closely with asset management throughout the year to collect 99.1% of contractual rents and CAM for the period from April through December 2020. Continuing the trend, we have collected 99.3% of January 2021 contractual rents, on-track to meet or exceed the fourth quarter collection rate. February-to-date collection results are also strong and consistent with previous months. We have received no new requests for rent deferral. Again, these results are a direct reflection on the quality of our healthcare partners, the quality of our facilities, and the reason we view medical office buildings as the most…

Thank you, Mark. As Mark mentioned, we've made great progress toward our ESG goals and we're especially committed to energy and water conservation and exceeding IREM Certification of our buildings. We are blessed to have great leadership in our organization from the Board down to several of our Executives leading us on the DE&I journey as well. We are not satisfied with our progress there, but we are determined to make a difference inside and outside of our organization for equity across each of our communities. We're also excited to recognize Amy Hall and her promotion to Senior Vice President of Leasing & Physician Strategy. Amy has been with us since 2016, leading our Leasing team and is responsible for more than 4 million square feet of leasing activity since she joined. She has done a fantastic job. We look forward to her leadership for years to come. Finally, 13 properties across our portfolio are being used for vaccination sites in our and we are accommodating our health system partners and others in this important community. We expect more and more vaccine is made available to the community providers in our business. We will now respond to your questions. Omar?

At this time, we will be conducting a question-and-answer session. [Operator Instructions] And our first question is from Nick Joseph with Citigroup. Please state your question.

Thank you. Maybe just starting with the Davis Joint Venture, can you talk about what was attractive about doing that the ultimate size of where that JV could go? And then how you think about acquired assets either through JV or on the balance sheet?

Yes, great question Nick and good morning. So Mark Davis and his team have been partners with us for really since 2014. And they've really developed and sourced a number of great opportunities for us every year and we have some new development projects getting started with them now. So that joint venture really evolved out of a kind of a strategy where we find buildings off market, they find buildings off market, some kind of fit our long-term strategy and some may require some value-add or lease up or just not ready for kind of our long-term strategic purpose. So truly a way to kind of have two pockets of ownership, so the REIT when it's directly optimistic or idealistic for us and then with Mark for those where we need to kind of combine to purchase. So it just gives us another tool in the toolbox. And we have two joint ventures in place right now. We have the other PMAK joint venture with Remedy that has been very successful and has really another strategic kind of alignment and purpose. So good source of capital, good partners to work with and provides us really maximizes the opportunities for us going forward for the REIT in particular.

Thanks. And then just on the 2021 growth, how do you think about funding that either through dispositions or additional equity issuance? And then how does that play into leverage levels of where you expect to be at the end of this year?

Hey, Nick. This is Jeff. So as we talked about in the prepared remarks, target leverage is about 5.25 times. Obviously, we're a little bit under that right now. So we've got a little bit of dry powder to the extent we need to utilize that. But we would primarily think about funding the acquisitions through debt and equity issuance. We have -- we've been doing some opportunistic dispositions, but we don't have a big disposition pipeline for 2021. So I don't think it's going to be that meaningful in terms of funding, it will be mainly through capital markets activity.

Thank you.

And our next question is from Jordan Sadler with KeyBanc Capital Markets.

Thanks, good morning, I

Hi, Jordan.

Wanted to touch base -- hi. I wanted to touch base on the acquisition pipeline, a bunch, obviously came through nice acceleration in the fourth quarter. And then some rally leads on 2021. But the guidance of 500 suggests that the 4Q pace could potentially continue, would be talk about what you're seeing and where these opportunities come from. What they look like maybe just some characteristics.

Yes. Thanks, Jordan. So this is John. The pipeline is, we're really excited about that the near term items that we, again, have identified are existing relationships, repeat customers, repeat health systems, more and more health systems are really self-developing, building their own buildings. And so kind of maximizing the opportunity where they're constructing those on their nickel, and then kind of pre-selling them to us for long-term, partnership and hold, so very attractive. And that's been -- most of the investments we made in the fourth quarter and in our near term pipeline, or just that. So, not trading with another institutional owner, but dealing directly with the health system themselves. Got some good opportunities in the development pipeline, as I talked about a minute ago with Mark Davis and others, and that was very successful for us last year as that getting better yields, but getting fantastic product, again, for the long-term hold for the REIT. So there are some portfolios, small portfolios out there trading, it's kind of trading and re-trading and re-trading. And we -- again, we see everything, we looked at those, but nothing of any bulk has been that attractive to us. So we'll grow primarily through the one-off of market relationships.

And on the development opportunities, is that maybe 20% to 25% of what you're looking at?

That's probably about right. So we -- kind of the gross value of what's going on in under construction or kind of in documentation right now is kind of net 60 to 80 million range. So, again, $100 million of gross value product a year is kind of a simple goal, but we'll do more if we can find it.

Okay. And then lastly, just on the mezz with the landmark, can you just maybe give us a little bit more color on that maybe LTV and the sort of I think the term is reasonably short, it's a sort of two to four-year type deal. But just sort of any other color there will be helpful?

Yes. So there is -- again, we’ve had a long-term relationship with landmark and then the ownership there and have had opportunities with them as well in the past. This is one of the best portfolios of medical office building that he's explored, selling for the last two or three years, but it's one of the best portfolios, it's been around for the last five years, if you will, probably the best since the big deal. And then, the other day, he wasn't quite ready to sell. But he wanted to recap landmark deal. And again, we use mezz as a tool for long-term ownership. So we can't -- yes, he still has control on when that happens. And but we are -- we'll be first at the door through mezz. So plus or minus 10% to the kind of LTV, but it's a very valuable portfolio and getting more valuable.

So the 54 represents about 10% of the capitalization.

That's about right.

Okay. One for Mark just on the OpEx, if I could. I noticed I heard a little bit of description around taxes and COVID expenses, but the 3.5% increase sequentially. Mark is that 4Q pace going to be sustained through next year? Is that we're going to see some moderation?

Yes. Good morning, Jordan. Thanks for question. And same-store there. As I mentioned in the prepared remarks, and you just alluded to, the majority of the increase in operating expenses both year-over-year and sequentially was real estate taxes. There's three or four properties that were reassessed and bumped up in Q4. So we think that's kind of limited to that quarter and won't be reflected going forward. But again, while operating expenses were up, our recoveries were also really showing the insulated nature of our triple net portfolio.

Okay. And so it was that sort of an accrual for the full year 2020 sort of catch up on those three to four properties.

Yes. That's right.

Okay.

Exactly.

Thank you. Appreciate it.

Thanks, Jordan.

And our next question is from Juan Sanabria with BMO Capital Markets.

Hi. Good morning, and thanks for the time. Just hoping to piggyback on Nick's question on the Davis Group Joint Venture. John, maybe if you could speak a little bit too about the differences in strategy between on balance sheet and the fund. I don't want to put words in your mouth, but maybe it's sounded like the joint venture with the Davis Group would be more non-core or rejects [ph] type opportunities, just a little bit more clarity on that?

Yes, I think that's a simple way to think about and again, it's there to park assets that are not quite ready for our ownership, maybe kind of through lease up, or there's no development in there today, but potentially for a development project as well. Or it may be an asset that's, again, just not part of our today long-term focus and strategy. So it's, again, think of it as a place to park assets that, again, the kind of the idea evolved out of a seller who had multiple assets, we wanted one and a couple were great tenant, great credit, but just were smaller, didn't really listed our long-term goal. So we kind of parked too in the Davis one with Mark Davis and we got one outright for ourselves. So, it's really just a strategic tool. We like to be responsive to our health systems. And, when they want to monetize buildings, they don't want to deal with three or four sellers, or buyers, they want to deal with us. And so, again, we view it as a very strategic tool for place to park assets, and/or participate in the value creation that we see in other portfolios out there that right.

And is there a target size for that joint venture?

I don't -- I don't think it's going to be a huge joint venture, but it's 100 million or so now, and, kind of can see a doubling over the next few years. But I don't -- it's -- again, it's just -- it's just one tool in the in the toolbox.

Okay. And then maybe just on the same store portfolio. Any expectations on how NOI growth should trend in 2021? That would be helpful; just you give some of the other piece parts, any color that would be helpful?

Hey, Mark Theine here. So start 20 -- let me go back to, 2019 theme store, we started at 3.1% there, and then 2020. This quarter we're at 1.5%. So, this year is a little bit lower than then where we typically are 2% to 3%. But I think that's a really a good place to look at 2021 would be in that 2% to 3% range. As we continue to focus on, tenant retention and bumping leasing, spreads where we can so 2% to 3% for 2021.

Thank you.

Thanks.

And our next question is from Amanda Sweitzer with Baird.

Thanks. Good morning, guys. Quickly following up on the Davis JV, do you have any defined purchase auctions for the remaining 51%? As some of those properties stabilized?

Great question. I'm really enjoying all this attention on the Davis. So they're great, they're great partners and we're really proud of that. The answer is yes, we have -- we have purchase rights going forward on in that through that relationship. So again, it's a -- we're a minority partner, they spend their time and effort to create the upside value. And again, we'll have the opportunity to participate in that upside value for ourselves or otherwise.

That's helpful. And then on the parking revenue, I appreciated the 4Q update. But how much of a drag was parking revenue on full year 2020 growth? And how are you thinking about that recovery in 2021? In the context of your 2% to 3%, same store growth expectation?

Yes. Thanks, Amanda, this Mark again. So as I mentioned, the same store impact from parking was 23 basis points in Q4. And we've rebounded to about roughly 80% of our normal levels, there's still a few valet services of buildings that are -- that are closed due to COVID. And you know, as those reopen, hopefully here, in the upcoming months, you know, we'll pick up a little bit of that extra margin from the valet services. But paid parking is doing well. And volumes are up at the building. So what we're missing, yes, there's just kind of that incremental margin from valet services.

Okay. And then you have the number of how it impacted full year 2020 growth?

I don't know if I have a number on the full year basis, but I imagine it'd be pretty close to the same.

Okay. That's helpful. And then finally, for me, kind of as you think about the supply outlook over the next several years, are you seeing more office owners that are looking to convert to medical office, just given kind of the uncertain demand outlook for traditional office properties today?

Yes, that's a great question. You know, in 2009, 2010, you saw a lot of suburban office go vacant or not or not, you know, occupied in that in that recession. And that became pretty competitive, or at least provided opportunities for conversion, but it also competed with medical office building. If you think about this environment, it's really the downtown CBD office buildings that, might not get fully re occupied after work from home and a move to, the suburbs, from those, those kind of office environments. So, I think, I think it's a very different dynamic, you won't see CBD office buildings, converting the medical or -- you know, really competing with medical office buildings. So, in the suburbs, again, if there was -- if there was vacancy, those are always opportunities to convert those buildings to medical, but you realize the office demand is moving to the -- to the suburbs. So long winded way of saying, I think there might be some opportunities, but when you think about the CBDs that are, vacant or low occupancy those are not typical medical office buildings in this environment.

Great. Thanks for the time.

Yes.

And our next question is from Omotayo Okusanya with Mizuho.

Yes, good morning, everyone. Back to the cash same-store NOI for fourth quarter. I mean, with the increase in real estate taxes, don't you get just passed that along? So I guess I'm still struggling with, why just wasn't passed along such that the same store number was better? Or is it just a timing issue and will be passed along in the next few quarters?

So, you're exactly right, the real estate taxes are passed along as part of a triple net expense. So the primary drivers of our same-store growth are the annual rent bumps, 96% least highest in the industry, and we've got, you know, strong rent bumps. So that' pretty much going to be the driver of our same store going forward.

Tayo, we're going to see a significant increase in property taxes in the states and localities try to recover revenue, and you're going to be more litigious than ever, but that's one of the really strong components of our portfolio is the high occupancy so that which those packs of taxes do pass through. We work hard challenging those making sure the right amount and appropriate amounts to the best we can like hell but, ultimately pass through in our high occupancy portfolio, really -- it's really a premium job to us.

But is there a timing difference where you kind of get sick first, and then maybe the past week leading on to the same store artificially depress this quarter? Like, I'm just trying to understand that a little bit?

Yes, it's part it's part timing and part again, the little bit of vacancy we have is that, you know, we have to absorb that, but it's mostly timing.

Okay. That's helpful. Then just wanted to focus on the regulatory situation a little bit. Again, the idea of Biden administration, we have been focused on the expansion of ACA. And this idea of, again, being able to kind of get healthcare close to where you live, and, and things like that, and driving more flow to outpatient facilities. How does that influence your assets that you're targeting, from an acquisition perspective going forward? Do you start to get more interested in all the off campus stuff again, that may still be kind of close to big population centers? And just kind of curious how that influences how you think about your acquisition outlook?

Yes, Tayo know, we've always thought off campus, it was the more important assets long term while on campus, continue to be very important to the overall health care system. But the cost, consumers want to be closer to home. Physicians and other providers want to be closer to their homes and in off campus locations, and as -- COVID is shown why the inpatient facilities need to be preserved for high acuity patients, and, everything else needs to be -- off -- in and out outpatient setting. And if there's no real reason for that building to be next to a hospital, then why isn't it closer to my home, closer to my schools, closer to my workplace. And so that -- again, with 2020, just proved up the thesis that we've had since the beginning of the company. And again, the spread of the ACA, the support of the ACA, the spread of perhaps buying options in those states that haven't expanded the ACA, and funded by this administration in this Congress, again, will further drive more care out about inpatient setting to the outpatient setting. So I don't think it changes our strategy at all, I think it just reinforces what we've been doing since for the last seven and a half years. And then that proved out last year, and it'll be certainly supported by this administration in this Congress.

Got you. And then one more for me, if you don't mind, your comment about your operators sentiments not needing additional government aid is appreciated. Just curious with the current aid, that they have the feed those -- but PPE has to get paid back by certainty, they get the medical advances and to kind of get paid back by a certain date. Is there still a need, though, for those dates to get pushed back to give the operators a little bit more runway to recover? Or if we suddenly do -- six months from now or whatever the timing is, you feel fairly confident that your operators don't face a cash crunch?

Yes. All the systems are actually sitting there with a booked counter liability, if you will. So we see that as part of the kind of overall P&L of the providers in our buildings. So did Congress in a bipartisan way has been pushing back those payment obligations in really the CMS advanced payments already lowered the interest rates, already stretched out the term. So it's not going to be a six month call. And using your example, really surprised about when that's required to be paid back. In fact, there's some bipartisan support to just turn those Medicare advance payments into grants. And so, again, we see it as, just like any other liability on their P&L, and really evaluating the entire P&L, the entire balance sheet is part of both our credit underwriting for new investments, but also our credit monitoring, that Jeff and Q and his team do. And we're up to 92% transparency across our portfolios as we get a real good insight into bed. So there's not going to be any short term impact on paying those bags, and there's going to be plenty of government -- the government can provide plenty of time and particularly how long it takes to get the vaccines out and things like that.

Got you. Thank you.

Thanks.

And our next question is for Jason [Indiscernible] with RBC Capital Markets.

Hey, guys, looking at the landmark mezz deal, I know you noted the underlying assets are strong, but I was wondering if you could touch on the amount that are on or off campus and then provide any color on what the potential cap rate would be on a purchase down the road?

Yes. All but one are on-campus, they're all fairly new kind of 10 years or younger, but they're all there, they're fantastic assets. Cap rate on the -- there no purchase -- direct purchase options, the seller still has the ownership timing and flexibility of when and if he's ready to sell those buildings. These would be in -- I'd like to say they're going to be real cheap, but they're -- this would be the best portfolio, our best buildings out in the market if anything we're seeing today. So it would be the low-end of the cap rate range the high-end of value.

Got it. Okay. And then I know you noted that there's some smaller portfolios that you've looked at on the market today, I was wondering if you could touch on just what you aren't seeing in those portfolios that you'd be looking at that would make you pull the trigger?

We really focus our business development in our pipeline around working directly with physicians and hospitals, and the developers working with physicians and hospitals that truly a direct purchase with the tenants, the health systems are involved, the physicians that are involved. There is nothing wrong with buying from kind of from other institutional owners, but again, it's partly bad and it's partly -- you don't really get a health system relationship by buying a building owned by the third person who's owned the building, you have a health system relationship, because you have a health system relationship, and that's -- it's really a preference in our targeting. Specific kind of stats would be, the typical things, you look at Walt increases are the rents market, are they in markets that are growing? How big are the buildings, the size of the portfolio, and things like that? What are the strategic alignment with our current portfolio? So the portfolios that have traded have all been fine, fine buildings, fine owners and fine providers, but none have really met our criteria. And yet, as a package, and then, ultimately you're paying a premium. And how did that premium impact your IRR long-term from that. A lot of it's about just the relationships involved.

Got it. Okay. And then, last one for me. I know in the prepared remarks, you guys mentioned the CapEx increase in 2021. I guess I'm wondering what type of CapEx projects were put on hold? And how much of that 2021 increase is from projects that were delayed in 2020? And then I guess, going a little further, would we expected them to come down in 2022? As those ketchup projects are completed? Or how should we be thinking about that?

Yes, Jason, Mark here. So looking back a year ago, we initially put out CapEx guidance of $24 million to $26 million and then adjusted it early in 2020 during the onset to COVID-19. And $19 million was the midpoint of our revised guidance. So we came in right in line with our guidance there. And we did that really to prioritize the projects and safety of the team. And there were a few supply delays in projects like elevators that we delayed into 2021. So a little bit of that is a catch up from 2020. But our CapEx investment has been 8% of NOI kind of on average, well below our peers. And our 2021 guidance also includes some additional TI capital as leasing activity picks up. So a little bit rolling over into 2021, but 2022 probably going to be in line with that with that's $6 million a quarter so.

Okay. Thanks, everyone.

Thank you, Tayo.

And our next and final question is from Vikram Malhotra with Morgan Stanley.

Thanks for taking the questions. Most questions has been answered, just maybe as two quick follow-ons to some of the comments on growth. As you think about the pipeline from here, I'm just wondering, given sort of how off campus has held up, are you thinking about any new market sort of to enter, and then potentially kind of some maybe to exit, just anything new on the horizon?

Yes. We don't have any exit plans they're coming. Thanks for the question. We're really focused on growth. We've really kind of mature proven the portfolio the last couple of years. And so it's -- we're really excited about what we've got. And you see it with the performance of 99.6% cash collections in the fourth quarter. So the -- we're always going to have a bias, if all other things being equal between the off-campus and on-campus, as you know, and -- but we've got some great on-campus assets in the pipeline. So again, it's how the situation matches up what's the purpose of the building and what needs to be on-campus, and if it's better served to be off the campus, then that'll be our preference. We're seeing pretty good opportunities like said, but it's kind of back to our old school one building at a time, two buildings at a time and growing the portfolio creatively like that.

Great. And then just how the off-campuses sort of held up, maybe even better than expectations. Can you just give us a little bit more color on what you're seeing on pricing, how things have changed maybe over the last year and sort of spread on campus? I know, obviously, there are a lot of variances, but just your overall thoughts will be helpful?

Well, Vikram I can't help myself, but to say, we fully expect the off-campus to perform like they did last year. But no, I think you're seeing more and more people attracted to off-campus, because they see, how much better they perform last year, then many on-campus buildings. We're seeing that enthusiasm from other public buyers, and there's a small portfolio out there floating around, it's a very nice collection of mostly off-campus buildings, and great health systems involved in those buildings. And kind of rumor mill is 100 different buyers showed up to kind of underwrite their portfolio. So and pricing is ranging from five to six with all the portfolios that have been out there and trading and again, a lot of off-campus buildings in those portfolios. So I think it's going to continue to compress, but we're still the favorite son of the health systems we believe.

Okay. And just your -- as your -- is your impression that kind of cap rate for the on-campus like you just described off-campus just you described versus on? Has that narrowed even further from maybe what it was pre pandemic?

Yes, I think it's only it's probably narrow, but they're still going to be -- if there's an on-campus building, there's probably 150 buyers that show up. So there's still a large part of the capital pool that doesn't understand and appreciate the off-campus like they should, but that provides good buying opportunity for us.

Great. Thanks so much.

Yes, thank you, Vikram.

Ladies and gentlemen, we have reached at the end of the question-and-answer session. And I would like to turn the call back over to CEO, John Thomas for closing remarks.

Thank you, Omar. And thanks everyone, for joining us today. We've got a number of investment conferences coming up over the next few weeks and we look forward to digging into more details with you then. Thank you very much.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.