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Preferred Apartment Communities Inc (APTS) Q3 2020 Earnings Call Transcript

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APTS earnings call for the period ending September 30, 2020.

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Preferred Apartment Communities Inc (APTS 0.12%)
Q3 2020 Earnings Call
Nov 10, 2020, 11:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Good morning, and welcome to Preferred Apartment Communities' Third Quarter 2020 Earnings Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Paul Cullen, Executive Vice President, Investor Relations. Please go, ahead.

Paul Cullen -- Executive Vice President of Investor Relations

Thank you for joining us this morning. And welcome to Preferred Apartment Communities' third Quarter 2020 earnings call. We hope each of you have had an opportunity to review our third quarter earnings report, which we released yesterday after the close of the market. In a moment. I'll turn the call over to Joel Murphy, our President and Chief Executive Officer to share some initial thoughts, and then John Isakson, our Chief Financial Officer, who will share some additional details about financial metrics and capital markets. Then Joel will return to conclude our prepared remarks.

Following Joel's remarks, we'll be pleased to answer any questions you might have. Also present with us this morning is, Mike Cronin, our Chief Accounting Officer; Jeff Sherman, Michael Aide and Boone DuPree, the business leaders of our multifamily, grocery anchored retail, and office verticals.

I'd like everyone to note that forward-looking statements may be made during our call. These statements are not guarantees of future performance and involve various risks and uncertainties, and actual results may differ materially. These risks and uncertainties include but are not limited to the impact of COVID-19 pandemic on the business operations and the economic conditions in the markets in which we operate, our ability to mitigate the impacts arising from COVID-19, and the information about third quarter and October 2020 results -- excuse me, rent collections in light of COVID-19.

For a discussion of these risks and uncertainties, you should review the forward-looking statements disclosure in yesterday's earnings press release, as well as our SEC filings. Our press releases and other SEC filings can be found in our website at The press release also includes our supplemental financial data report for the third quarter 2020 with definitions and reconciliations of non-GAAP financial measures and other terms that may be used in today's discussion and the reasons management uses these non-GAAP measures.

We encourage you to refer to this information during your review of our operating results and financial performance. Unless we otherwise indicate all per share results that we discuss this morning are based on basic weighted average shares of common stock and Class A partnership units outstanding for the period.

I would now like to turn the call over to Joel Murphy. Joel?

Joel T. Murphy -- President and Chief Executive Officer

Thanks, Paul. Good morning, everyone, and thank you for joining our third quarter call. We hope that you and your families are well. As we stand here in November, we are eight months into this pandemic. And we continue to execute on our strategic and tactical goals. We have all learned to operate in this evolving COVID environment, both at our corporate offices and across our portfolio and we remain focused on the health and safety of our associates, our residents and tenants as well as the communities we serve.

We expect that COVID will impact the economy and its future growth prospects in ways that may be unpredictable for quite some time, all of this, even with the very encouraging news announced yesterday as to the promise of the Pfizer vaccine. But we also believe that in many cases COVID has served to accelerate trend that were already there, magnifying the importance of high quality well located and well run assets.

As we reported yesterday, our operational results have been outstanding, relative to the current environment in every product type. Cash rent collections including deferrals for the third quarter were 99% for multifamily and 98% for student housing. For grocery anchored retail, we collected 96% and for office, we collected 99%. We believe this solid performance is driven by two key factors.

First, as of today, our portfolio is comprised of 100 owned assets in key asset classes, multifamily, grocery anchored retail and Class A office. The quality of our portfolio in tenant base provides stability, particularly in times of economic uncertainty. Additionally, each product type is run by specialized management teams with deep sector experience.

Second, our Sunbelt suburban market focus allows us to benefit from positive economic drivers, including a diverse employment base, high educational attainment, strong population and employment growth and rising household incomes. These broadly positive trends reflects the benefit of net migration to the Sunbelt, which has been going on for many years and which has only been accelerated by the COVID-19 pandemic.

There is an excellent discussion on these topics in emerging trends in real estate, the recently issued joint annual report of the Urban Land Institute and PWC, which I urge you to read. Next, let me now provide an update on each of our business units. For the third quarter, multi housing comprised 57% of our revenues. Again, our third quarter collections of 99% in our core multifamily business have been outstanding. We have collected 97.4% of multifamily rents for the month of October and expect that to continue to trend toward 99% as we've seen in previous months by the end of November.

Our portfolio consisting of high quality apartment assets in key Sunbelt suburban markets continue to perform well, which we are quite proud of in this environment. For the third quarter, our multifamily year-over-year same-store NOI was slightly positive at 0.1%. We are pleased to report that for the quarter even in light of COVID, our same store average physical occupancy of 95.6% is identical to what we reported for the third quarter of 2019.

While our multifamily same-store revenues were down 0.3% from a year ago, we still achieved topline growth. It was just offset by additional bad debt and concessions, both of which we believe will moderate in the coming quarters. As we look ahead, while we are always focused on managing our availability and maintaining a strong and steady occupancy throughout our portfolio, we now have a renewed focus on rent growth as the initial impact of COVID-19 has passed.

In fact, our combined rent growth for September move-ins and renewals turned positive for the first time since April, and we expect this trend to continue. Additionally, we are no longer needing to offer rent deferrals to residents, and we're seeing those who have taken advantage of the program previously, generally paying current under their new structure. Turnover range below 2019 levels and traffic has improved significantly since the onset of COVID and remains steady and reliable across our portfolio.

Our strategy to own newly constructed Class A communities in growing Sunbelt suburban markets has certainly proven resilient during this economic slowdown. We also believe that our strategy will benefit from net migration, employment and housing trends as the economy recovers. However, I'd be remiss not to mention and thank our associates. A strategy alone can only take us so far. Our associates across the entire company and all product types have worked diligently in an ever-changing climate this year, and have not only cared for their own families, but our residents and our tenants. Our results are certainly reflection of their dedication and I thank them.

While operations are taking the spotlight this year, we continue to actively invest in multifamily. During the third quarter, we closed on a $20.7 million real estate investment loan in connection with Atlanta Multifamily Development that includes a purchase right at completion with a well-respected and well capitalized sponsor that we have done business with several times before.

Additionally, subsequent to quarter end, we acquired a 281 unit newly constructed community in a growing suburb of Orlando. Earlier this year, we stated it was our intention to exit the student housing space to concentrate on our core Sunbelt multifamily business. As we announced on November 3, we completed the sale of our student housing assets to TPG for approximately $478 million, which resulted in approximately $245 million of net cash proceeds that closing after satisfaction of approximately $233 million of secured mortgage debt and other closing adjustments and costs.

TPG is a very experienced institutional real estate owner and operator and this sale confirms the scope and the diligence of the process we ran with CBRE, quality of the assets and the strength of their operational performance. Next, grocery anchored retail comprises approximately 21% of our revenues. Our 100% pure play grocery anchored centers are 92.5% leased. These centers are anchored by market-leading grocers including Publix, Kroger and Harris Teeter. We continue to see strong foot traffic at our centers and all of our shopping centers have remained open throughout the pandemic.

Our strong cash collections are continuing to trend positively with third quarter collections of 95%, an increase of 400 basis points over our second quarter cash collections of 91%. Adjusted for deferrals, our collections for the third quarter were over 96%. This positive trend continues in October and as of yesterday, our cash collected for October is 96%. We credit this solid outperformance to our 100% focus on grocery anchored centers in Sunbelt markets as well as our deeply experienced and engaged asset management team.

We do remain focused on collecting outstanding rent, both current and deferred across our retail portfolio. We worked with our tenants to come to mutually beneficial deferral agreements that approached the relationship holistically and for the long term. Examples include obtaining extended term, release of certain lease restrictions on use, and creating outparcel opportunities in our common areas that had previously been lease restricted.

In the aggregate, these deferral agreements totaled $1.5 million for the second and third quarters with repayment primarily over the course of '20 and '21. The specific details of our actions on reserves in connection with our grocery anchored retail portfolio are contained in our supplemental financial data released last night. We believe the headline is the low amount of these reserves on an absolute basis, and on a relative basis when compared to the total revenues in our grocery anchored segment, when compared to our total companywide revenues and when compared to similar disclosures by other public retail owners.

This supports our view that grocery anchored retail located in suburban Sunbelt markets has significantly outperformed. This solid performance has allowed us to focus on revenue growth. On the leasing front, we continue to be successful with both retaining current tenants and signing new leases. During the third quarter, we signed 185,000 square feet of new leases and renewals, an increase of approximately 66,000 square feet over our second quarter activity.

We continue to be pleased with our leasing volume and momentum and our ability to retain tenants and the rental rates we are achieving. Finally, office comprises 22% of our revenues. We continue to enjoy the stability of our multi-year office leases and stand 96% leased as of quarter-end across 3.2 million square feet in Sunbelt markets such as Atlanta, Charlotte and Raleigh. There is no doubt uncertainty related to the future of office, while so many continue to work from home, but we have collected 99% of our office rents year-to-date, and only 11% of our office portfolio is expiring in '21 and '22.

Keep in mind that these are high quality Class A suburban office properties in Sunbelt markets. We believe a more likely consequence of COVID rather than the demise of the office building is to have accelerated migration trends to the Sunbelt particularly from coastal urban markets that were already under way.

Now onto some governance and capital strategy comments. Recently, we announced two important proposals recommended by our Board to enhance our governance and improve our capital flexibility. First, was an approval to give common stockholders the ability to amend our Company's bylaws. And second approval to reduce the Company's call option on its Series A Redeemable Preferred Stock from 10 years to five years. We believe both of these proposals are stockholder friendly measures and both ISS and Glass Lewis have recommended FOR votes for both proposals.

We issued a press release on November 5 announcing that we adjourned our special stockholder's meeting until November 19 to allow stockholders more time to vote on these proposals. As a reminder, we need two-thirds outstanding of our outstanding shares to vote in favor of these proposals. As of yesterday, November 9, approximately 65.4% of shares outstanding had voted. Of these shares, 97.9% and 95.7% had voted in favor on the first and second proposals respectively. We are very encouraged with the overwhelming support from our stockholders that we have received to-date.

Now let me turn the call over to John Isakson to walk you through more details about our financial performance. John?

John Isakson -- Chief Financial Officer

Thanks, Joel. To begin, I echo with Joel sentiments for the safety and health of everyone on this call. All my best to you and your families. Turning to our results. For the third quarter 2020, PAC generated revenues of approximately $126 million, FFO of approximately $0.17 a share, core FFO of $0.26 a share, and AFFO of $0.07 a share. You will note our property revenues are up over 9.3% compared to the third quarter of 2019, owing to the continued growth in all of our property verticals.

Our results also reflect lower revenues from a reduced balance in our real estate investment loan program and lower income from purchase option amortization associated with these loans. Additionally, the Company has incurred a variety of COVID related operational cost at the property and corporate level. Finally, as we have transitioned to paying our preferred stock redemptions in cash, the deemed dividends from these redemptions grew significantly, which largely contributed to our preferred dividend increase of $6 million. All these factors combined to drive the reduction in net income review.

Our core FFO result of $0.26 a share was an improvement from our second quarter result this year of $0.22 a share, an increase of 22.1%. This increase was primarily driven by a general improvement in our revenue streams and a reduction in interest expense.

Turning to AFFO. In addition to several of the factors just mentioned, our AFFO result was also impacted by the performance of our investment loan program. We have noted multiple times that as these loans are repaid, our core interest gets paid and recognized in our AFFO number, making it lumpy from quarter-to-quarter. In the third quarter, we received full repayment including interest, totaling $18.7 million on our Palisades loan investment. The payoffs on our loan investment program are difficult to predict due to the timing of the sales of these assets, whether to beat the pack with third parties, and that's somewhat exacerbated by the COVID-19 environment.

The third quarter ending balance in our investment loan program stands over $380 million in commitments with over $320 million drawn at quarter's end. The investment loan book, which was 25% of our asset base is now less than 7%. It is important to mention that on a year-over-year basis, our per share metrics were also impacted by an increased share count. This is primarily due to redemptions being paid in common stock pre-COVID, and to a lesser extent executive and Board compensation, Class A share conversion, and ATM issuance. We did issue a small amount of common stock early in the third quarter through our ATM program and it paid for redemptions in common stock pre-COVID.

In the current environment, our ample liquidity and undervalued common stock price have led us to paying all of our most recent redemptions in cash. We believe our liquidity will allow us to meet redemptions in cash going forward, until we reach a point where the stock price is more attractive and that opens up additional liquidity options for us.

Turning to our balance sheet. In the third quarter, we continue to work to enhance our capital structure and free up liquidity. Having refinanced seven assets in the second quarter, we completed an additional refinancing in early July. As previously mentioned, these financings totaled almost $290 million, removed over half of our multifamily debt maturities over the next three years and reduced our average interest rate on those assets over 70 basis points to 2.91%.

Due to these efforts and other transactions, We have been able to reduce amounts outstanding on our line of credit. The balance of which was $33 million at the end of the third quarter versus $93 million at the end of the second quarter. Subsequent to quarter end, we reduced the balance on our line of credit to zero. In addition to the performance of our portfolio and our financing efforts improving our liquidity, the trends in redemptions for our preferred stock continue to be reasonable.

In July, we had approximately $9 million in redemptions, $13 million in August, and $15 million in September, all manageable increments. For the quarter, we redeemed a total of 37,391 shares across all of our preferred stock Series combined. For the same period, we issued a total of 42,465 shares between the Series A1 and M1 preferred stocks.

In summary, we had a net issuance of approximately 5,000 shares between all of the classes of preferred stock. As we look ahead, we remain focused on long-term value creation and growth. We see the most attractive opportunities in our multifamily acquisition and investment loan program. The pipeline for both has been increasing. We continue to see positive metrics at the market level and submarket level in most of the markets we target for both multifamily acquisitions and loan investments. Many of the properties in our acquisition pipeline have recent operations that mirror or own from an occupancy and collection standpoint, further reinforcing the notion that these markets are healthy and weathered the pandemic relatively well.

The debt market for multifamily acquisitions remains robust. The GSEs continue to operate normally with pricing and capital availability that has been consistent with pre-COVID level. Like companies have been more active in the multifamily space in recent months and we have seen some of our larger LIFO partners offering terms and rates equivalent to the GSEs. We believe debt capital for the multifamily sector will continue to be readily available and on terms attractive to us as a buyer.

In our investment loan pipeline, we continue to see attractive risk-adjusted returns on proposed developments. Underwriting continues to be thoughtful and appropriate for the current environment. Our borrowers are providing more equity and proposed deals and construction financing continues to be available at attractive levels and rates. As always, we will continue to balance opportunities in the market, both for investment loans and acquisitions in the multifamily space to try and create the optimal risk-adjusted returns.

I'd like to now turn the call back over to Joel for some closing comments. Joel?

Joel T. Murphy -- President and Chief Executive Officer

Thank you, John. You know, I know that both John's comments and my earlier comments contain a lot of references to important company numerical metrics. These are no doubt and for sure important as you assess us and in how we assess ourselves. But let me step back away from these measures just for a minute and speak to you more broadly about our governance, our strategy and our broader objectives for the balance of '20 and on into '21.

Due to our operational success over these past months, we've been able to sharpen our focus on further in key strategic goals for our company, for our assets, and for our balance sheet. The student housing sale was an important early step in this process. With a clear focus on this strategic objective, combined with the execution of a well-designed and well-led process, we were able to dramatically simplify our business model, while harvesting significant capital for balance sheet enhancement and for growth through select multifamily acquisitions and multifamily real estate investment loans in suburban Sunbelt markets.

Next, the initiation by our management team and our Board of the two proposals we now have in front of our common stockholders, and which I described previously, has allowed us the opportunity to proactively engage with our shareholder base. We are gratified with the warm reception these two proposals have met with, evidenced by the overwhelmingly high percentages of affirmative FOR votes obtain thus far. These two proposals and fund passage would not only enhance our corporate governance, but would also allow us the flexibility to strategically redeem our Series A preferred stock much earlier, so as to provide PAC with greater balance sheet and expense control flexibility.

We look forward to continuing to keep you updated as these initiatives take further shape, yet we will always continue to keep our focus on the performance of our underlying real estate assets. Now let me turn the call back over to Paul. Paul?

Paul Cullen -- Executive Vice President of Investor Relations

Thank you, Joel. Now I'd like to ask the operator to open the floor for any questions you may have. Operator?

Questions and Answers:


Thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question will be from Aaron Hecht with JMP Securities. Please go ahead.

Aaron Hecht -- JMP Securities -- Analyst

Hey guys, good morning. Joel, you talked about the sale of the -- of the student housing portfolio and corporate governance changes that you guys are attempting to make. Is the idea here to allow yourself to repurchase preferred stock with the proceeds from the student housing sale? And what do you expect the balance sheet to look like, near term and longer term after you execute on these goals? And is there any other plan to dispose of other assets to fundamentally change the balance sheet in the future?

Joel T. Murphy -- President and Chief Executive Officer

Hey, Aaron. Thanks, thanks for that question. As usual, you go to the heart of the matter. So look, on redeployment right now, and I know you know this. Until we have the final results of the shareholder vote, we can't discuss any specifics that were inspected our use of net proceeds other than what we've really said which you touched on and that's that -- this capital can be used to enhance our balance sheet accretively and be used to grow our core multifamily business through accretive acquisitions and real estate investment loans, and grow further earnings from there.

So until we get to that point and then really looking at it and those decisions are made with all this in mind, what we do know and what we do like is that this creates great optionality for the best path forward and the creation of long-term value for our shareholders. Now you also raised because really on this, it's not only just capital proceeds on student housing, but you did also raised this open the door for sale of additional assets. And the answer to that, sure, if market conditions merit, no need to actually do it, but we'll make every decision we made based on where we are at that particular moment with what that trade looks like with the primary focus on it being accretive, both in the short term and the long-term.

Aaron Hecht -- JMP Securities -- Analyst

Got you. That makes sense. And then on the retail side, occupancy has obviously been strong and pretty constant most of the year. Collections trending up since bottoming down a little drop here month over month in October. So wondering, is there an issue may be with CARES Act money potentially running now for tenants here near term, does that caused a little downward move or is there something else going on? And I guess in general are you seeing an increase or decrease for your retail is at this point in time and by what degree?

Joel T. Murphy -- President and Chief Executive Officer

Yeah, Aaron, I would attribute all of those completely just as to timing. We're not feeling any trend of like, oh my goodness, anything on funds. Certainly a lot of our tenants to take advantage of that and we helped them do that. That's really just more about timing in particular situations. There is nothing directionally or trend other than it's positive, and I think and where you really see this is the increase in leasing activity, both as renewals, and then on new leases and really some pricing strength that they are having on the retail team seeing. I don't view anything other than feeling really good about where we are on that.

Aaron Hecht -- JMP Securities -- Analyst

Got you. And then one more if I may, you talked about the migration in your prepared remarks. Are your leasing agents in your multifamily communities, are they collecting that data, and would you able to share that with us at this time?

Joel T. Murphy -- President and Chief Executive Officer

Yeah, Aaron we probably do, I'm sure that is somewhere in there, and we could provide that directionally and it probably does vary by asset. So when you kind of mix it all together, I think what we would say is the same trend that that you and a lot of report talked about is just the net migration. The interesting thing about it, it's not like we all just kind of sat around in March and said, wow, look at this. I mean this has been the basis of the strategy for the company, really since inception across all the product types.

Aaron Hecht -- JMP Securities -- Analyst

Got you. Thanks for your time.

Joel T. Murphy -- President and Chief Executive Officer

Thank you, Aaron.


And the next question will come from Michael Lewis with Truist Securities, please go ahead.

Michael Lewis -- Truist Securities -- Analyst

Great, thank you. This may sound similar to our first question you were just asked, but I wanted to ask about balancing the uses of capital. You did an acquisition, you've been kind of redeeming or getting redemptions on Preferred, and there is some issuance in Preferred, now your -- it sounds like you're close to have an authorization to buy some of those back, which again maybe is a conversation for us, for the approval, but how do you look at the acquisition yield especially multifamily which I imagine there is still a lot of competition for those assets versus other potential uses. And as you think about that, of course your balance on the balance sheet, do you have a target net debt to EBITDA, or target leverage metric that you kind of eye as you can side what capital to put to work in acquisitions and other places?

Joel T. Murphy -- President and Chief Executive Officer

Yes, Michael, and thanks for that. Knowing that and appreciate the respect, knowing until we get to that shareholders vote. But yeah, look, we've got every different piece and metric that we look at across these. And, it really is a balancing act because we understand the value of looking at $1 and saying, OK, if you put that against Preferred, what kind of accretion, does that give you over the short and long term. You also take a capital, $1 and say, put that against some multifamily acquisition or a real estate investment loan and you can see that, and obviously that piece has also different components can also create higher return, but it can also create an asset that's growth and that's been the good as well.

So, we not only want to realign the balance sheet in that context. But we also want to show that we're growing an active company that has a good earnings stream ahead. So it's a balance between the de-levering if you will, aspects of using that capital versus earnings for growth.

Michael Lewis -- Truist Securities -- Analyst

Okay, great. And then the other one for me, the growth -- your portfolio is obviously the holding up well, and the cash collections are strong. How do you think about -- do you think that your earnings maybe would kind of bottomed here, I would -- if I asked this question six months ago, maybe I would have expected the COVID impacts to be longer, but do you think now, we got the news about the vaccine the other day, do you think earnings are may be bottoming and then a similar thing with cash flow where I realize it will be lumpy, because of the accrued interest but maybe putting that aside, no, it's kind of your base portfolio, cash flow and earnings. Do you think they're kind of bottoming here and we may have a little growth or do you think it's too early in the pandemic and the economic recovery to make that call.

John Isakson -- Chief Financial Officer

Hey, Michael, it's John. That's a great question and something that we spent a good bit of time thinking about. A couple of things to consider. Since we really haven't seen as much of a drop since our portfolio performance has been relatively consistent. I think that idea of the bottom is less important than when can we start to really see more growth. Joel noted that in September we saw in multifamily the first renewal and new lease positive rent growth and we're looking for that to continue.

I do think it's a little too early to say exactly when and how much we're going to see that. I still think it's going to be a little sporadic here for the next few months. I mean the news of the vaccine is great, but how quickly they can produce it and how fast they can distribute it I think is still a big question. But overall, I think we're in a good position. And I think the trend is going to be good. I think it's just a matter of what the slope of that line is going forward. I do think it's a little too early to tell on that.

Michael Lewis -- Truist Securities -- Analyst

Okay. And then just one last one from me kind of a point of clarification, the authorization you're seeking from shareholders on the Preferreds, is that a retroactive authorization, in other words shares that are already out there you would be able to buy back it shifts from 10 to five or is that just on you rectifying future issues, I would imagine it's retroactive. I just want to be clear.

John Isakson -- Chief Financial Officer

Yes, no, that's a good point. Indeed it is retroactive. So it will affect all of the shares that have been issued today. And just as a point, the new shares that are being issued only have a two-year call.

Michael Lewis -- Truist Securities -- Analyst

Okay, got it, got it. Thanks a lot.

John Isakson -- Chief Financial Officer

Yes, sir.

Joel T. Murphy -- President and Chief Executive Officer

Thank you, Mike.


And the next question comes from Gaurav Mehta with National Securities, please go ahead.

Gaurav Mehta -- National Securities -- Analyst

Yeah, good morning. Following up on the Preferred stock maybe can you provide some color on the increase in redemption of Preferred stock. What's driving that and what kind of feedback are you getting on redemption to gross?

John Isakson -- Chief Financial Officer

Hey Gaurav, it's John. Thanks for the question. You know, one of the things to keep in mind when you think about redemptions is what the pattern of issuance was of the preferred stock. It was about five years ago, actually about six that we really started ramping up the issuance. And so we are now getting into the window where the stock is redeemable at par and what we found is that as the stock comes into that par window, which opens up after five years. That's when we get more redemption requests.

So I think going forward, it's just going to be a natural extension of the pattern of issuance. We're just going to start to see more redemption request as the stock gets to a par. We haven't seen any particular pattern with regards to the market or the company outside of just not having a redemption fee anymore.

Gaurav Mehta -- National Securities -- Analyst

I guess you know if that call option proposal is approved by the shareholders, what percentage of your outstanding Preferred you call under that callable option category now and maybe like over the next 12 months. And then what's your like target goal as far as how much Preferred stock that you guys are going to have on your balance sheet going forward?

John Isakson -- Chief Financial Officer

Sure. So assuming we get the shareholder vote, we would immediately have about $250 million available to be called and through the end of 2021 that number grows by another $430 million plus or minus. Obviously, we can't comment directly on exactly how much we would redeem that will be dependent on capital availability, the market and Company's options, but that's what would be available to be called at the maximum.

Gaurav Mehta -- National Securities -- Analyst

Okay, and lastly in the transaction market, I was wondering if you could disclose what kind of cap rates in this field, closing student housing portfolio and then what did you guys pay for Orlando acquisition?

Joel T. Murphy -- President and Chief Executive Officer

Yeah. Thank you. Gaurav. We don't know. We don't disclose cap rates going forward, I love that you ask us all the time and, but we just don't, it's company policy, but specifically here on the student housing, there is other reasons because this portfolio and that transaction because it included multiple assets across multiple markets because some are free and clear and some are loan assumptions. An aggregated cap rate would not really be a meaningful data point.

What we do know is in this transaction, the way it was structured that assumptions of those loans saved a significant defeasance and breakage fees that would have otherwise reduced our net cash proceeds. What we also know is it, we ran a really well-run and widely marketed process. We achieved a pricing point higher than a transaction that didn't close before and we believe resulted in solid pre-COVID pricing, that many parties and many analysts and others have acknowledged.

Gaurav Mehta -- National Securities -- Analyst

Okay, thank you. That's all I have.

Joel T. Murphy -- President and Chief Executive Officer

Thanks, Gaurav.


Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to Joel Murphy for any closing remarks.

Joel T. Murphy -- President and Chief Executive Officer

Hey, listen, I just would like to say thank you for taking the time to listen to our little bit more fulsome description of the release. We appreciate very sincerely your interest in our Company. Have a good day.


[Operator Closing Remarks]

Duration: 38 minutes

Call participants:

Paul Cullen -- Executive Vice President of Investor Relations

Joel T. Murphy -- President and Chief Executive Officer

John Isakson -- Chief Financial Officer

Aaron Hecht -- JMP Securities -- Analyst

Michael Lewis -- Truist Securities -- Analyst

Gaurav Mehta -- National Securities -- Analyst

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