Barron's Streetwise - Ugly Turnaround Attempts

Episode Date: December 6, 2024

What’s holding back Intel, Boeing, and other iconic names. Plus, progress at AT&T. And REIT picks from Janus Henderson. Learn more about your ad choices. Visit megaphone.fm/adchoices

Calling all sellers, Salesforce is hiring account executives to join us on the cutting edge of technology. Here, innovation isn't a buzzword. It's a way of life. You'll be solving customer challenges faster with agents, winning with purpose, and showing the world what AI was meant to be. Let's create the agent-first future together. Head to salesforce.com slash careers to learn more. This is a business where if you think about the demographics, they have a huge and visible demand tailwind. So the 80-year-old and over demographic is what matters for this business.

And that demographic growth is ramping up really materially through the end of the decade. Is it butterscotch candies? Maybe it's a bingo card maker. You're stereotyping the over 80 group, and I won't have it. Hello, and welcome to the Barron Streetwise podcast. I'm Jack Howe, and the voice you just heard is Greg Kuehl. He's the Global Property Equities Portfolio Manager at Janus Henderson and the business he's talking about, it's senior housing, of course.

In a moment, Greg will share some of his favorite REIT ideas, that's Real Estate Investment Trust. Before that, we'll talk about some of the ugliest turnarounds of 2024 and one turnaround that so far is working out just fine. Listening in is our audio producer, Jackson. Hi, Jackson. Are you eating right now? Well, I'm nibbling. I'm not going to eat during the podcast, but I was, I got a gingerbread house that my boy put together and I was kind of, I took the roof off the thing. I was going to, we're going to, I'm going to have a, one of these episodes,

a takedown of the whole gingerbread house industry, because you put them to, it sounds nice. In theory, you've got a confection house, little house you can eat. You put it together. It looks great. And then you go to eat the thing. They're rock can eat. You put it together. It looks great. And then you go to eat the thing. They're rock hard. They're always rock hard. It's an affront to the packaged food industry and really the home building industry. So you tried to outsmart them this year by eating it as quickly as possible and not waiting

till Christmas. Got it. Right. Like the day after it was set up. Yeah. It doesn't matter. It's still hard. Right. Like the day after it was set up. Yeah. It doesn't matter. It's still hard.

That expose will have to wait until another day. What do we want to start with here? Let's start with the good news. AT&T, right? Right. They had a big investor day presentation this past week with a slide deck. You know how I love a slide deck. It says, our future, the best connectivity provider in America. And they talk about fiber broadband service. And they don't really talk about anything else, which is great news if you've been a long-suffering AT&T shareholder who is lately getting a bounce in the stock. No peacock acquisition in their future? Definitely not. Let's hope not. We don't see any signs of anything like that. You're

referring, of course, to AT&T's past doing some deals that never really paid off for shareholders. One of those was Time Warner, a phone company getting into show business. It got into satellite television, putting a dish on the top of your house to get TV. Turns out that is not really the way of the future. We have to figure out what we're going to do with all those dishes. Bird feeders. And we have to give some credit here, much as I like to pretend it was all my idea when things go right. This came to us this past spring from Peter Cepino over at Wolf Research, and we did an episode on AT&T and it was titled Jackson, the bull case for AT&T. And I remember Peter saying, well, go ahead and have him say it, Jackson.

AT&T just might make for the best stock, even though it's not the best telecom company. And around the time of that episode, I also did a column on this in Barron's magazine and the stock since that column has returned 46%. That's more than double the return for the S&P 500. It's way more than Verizon, which has returned 13%. It's just shy of T-Mobile, which has returned 52%. So AT&T wasn't quite the best stock, but it's a great performance nonetheless. And there's still a giant dividend yield over 4.5%. The company in its presentation

talked about the four years into 2024. It boasted about reducing debt by $25 billion and investing around $140 billion into the business in 5G and fiber. It's now bearing the fruit of that investment. Subscribers are up. Revenue from those subscribers is up. Churn is at a reasonable level. That's the percentage of customers who are leaving AT&T. And probably the best news about this presentation is that the company talked about really just doing more of the same. So a little less splash, a little more well-behaved oligopoly, as Peter called it. That's a fair way to put it. There are capital allocation return priorities here from now through 2027. In other words, where is the company going to spend the dough? $20 billion plus on dividends, $20 billion on share repurchases. And there's a

target, it's only a target, but it's $18 billion plus of free cash flow by 2027. And if you look at the stock's recent market value, that would work out to over a 10% free cash flow yield based on recent prices. So we'll see if AT&T can keep the good news coming. And I wanted to bring you that upbeat note first, because everything I say from here forward will be piling on companies that are already struggling. We had two key CEO departures this past week, Intel and Stellantis, the carmaker. Pat Gelsinger is out at Intel. He was on the podcast, Jackson, when he talked about his turnaround plan.

This is back in July of 2021. That was the year after the stock peaked. It's been declining pretty much ever since. We gave Pat and his plan, I thought, a fair hearing. But the one thing I remember about it was there was this promise that it would catch up with AMD, Advanced Micro Devices, on technology, but that investors would have to wait a few years to see that plan play out. And a few years is just a long time in that business to wait for a new CEO's plan to work. So it was hard to get super excited about the stock, even at 11 times earnings back then. Here's the briefest of explanations of what went wrong at Intel and what Pat Gelsinger did to try to fix it.

Intel is a company that designs chips, computer processors. It also manufactures or fabricates chips. Those sound closely related, but they're really not. They're very different jobs. And that has become a problem. Intel has been losing share in both servers and personal computers, including to the powerful combination of AMD and a company called Taiwan Semiconductor. AMD designs the chips. It's nimble and fast moving.

Taiwan Semiconductor has vast scale and really unmatched ability to fabricate leading edge designs. In other words, it's nice to be able to design chips without having the burden of also having to make them. And it's nice to be able to invest richly in making chips efficiently without the burden of having to design them. So that combination of these two companies has really leapfrogged Intel.

And Intel's plan to fix that has been to build up its own factories, its own manufacturing business. It's done that with the help of a U.S. government push to spur domestic chip manufacturing. But here are some problems. First of all, it's very expensive to do that. But here are some problems. First of all, it's very expensive to do that. So over the two years ended 2020, Intel generated positive free cash flow of $38 billion. But over the two years ending this year, it's likely to burn through $25 billion in cash. That's all that money that it's spending to build up manufacturing.

What's supposed to happen is Intel is supposed to make up for all that spending by doing third-party contract manufacturing. In other words, not just making its own designs, but making the designs of other chip makers. The problem is if you're a rival of Intel's in designing chips, do you really want to be dependent on it for your manufacturing? It's not clear how many companies will. So that business is still losing loads of money. Intel itself still uses Taiwan Semi for its latest chip designs. We're supposed to reach a moment sometime next year where Intel catches up with AMD on its chip designs. Its plan was to race through designs quickly to retake the lead. But then you have to wonder, if that's what we're headed for next year,

why would Pat Gelsinger leave early? That thought is causing investors to lose confidence, not that they had a ton of it going into this past week. Intel stock is down around 58% year to date. It's an atrocious performance, especially if you consider what else is going on in chips. Of course, I haven't yet mentioned artificial intelligence and NVIDIA. We've had NVIDIA founder Jensen Wang on this podcast. He talked about setting out to build a supercomputing company, but the market that was ready for him back then was video games. We didn't yet have an artificial intelligence market, so NVIDIA was known as a maker of chips for computer graphics for years. It turns out that the highly parallel processing

that you use to draw a lot of video game pixels at the same time, that's also useful for the job of artificial intelligence. Intel at one point, two decades ago, had an opportunity to buy NVIDIA for $20 billion. It turned that down, and today, NVIDIA's market value is over $3 trillion. That is so much larger than Intel. Its market value peaked somewhere over $275 billion in 2020. It's recently hanging around the $100 billion area. Intel has made its own AI chips. They have not set off a buying frenzy.

Now Intel needs a new CEO, and you might think, well, wait, if they're spending all this money and losing all this money in the manufacturing business, why don't they just slice that off, sell it, get back into chip design, and become leaner? That's a great idea, except that the company was recently awarded nearly $8 billion by the U.S. government to build up that domestic chip production. So Intel might be stuck doing what's not working for a while. And I could go on here. The company is still highly dependent on the PC business, and that industry looks, quote, grim. That's according to B of A Securities in a note this past week. If and when demand for PCs rebounds, they might increasingly

run on smartphone-type chips. That's a market that Intel left years ago. So I recently wrote a column for Barron's about the ugliest turnarounds of 2024, and Intel is the ugliest on my list. I'll mention three others right now. Intel is the most loathed among them. It's covered by 45 analysts on Wall Street. Just 7% say to buy the stock. So if Intel isn't working out, does this mean the CHIPS Act is failing? I think this is mostly on Intel.

I think it's early to say what's going to become of all that CHIPS Act spending. Clearly, a lot of money is being spent on a company that's not doing great. Maybe that manufacturing business will end up being separated somehow down the road with Intel still retaining a stake. But I think the thought behind promoting chip production here in the U.S. was not just about, hey, let's create jobs, let's do something for the economy.

I think it's more to do with, wait a second, the world suddenly seems incredibly dependent on Taiwan for the production of high-end chips for AI and all sorts of things. And if China says that Taiwan is part of China, and if we're telling China, hey, you can't buy the latest AI chips from NVIDIA, might that cause a problem down the road where China says, well, if we can't buy them, then you can't make them because we're going to more forcefully exert our control over Taiwan. And maybe the powers that be are thinking, let's try to circumvent that process by just kind of moving more chip production over here into the U.S. so we're not as dependent on Taiwan down the road. Taiwan Semi has built a big manufacturing plant in Arizona, and the early reports are that things there are going well.

So I can't remember if I answered your question or danced around it, but I guess the answer is it remains to be seen on the Chips Act, but things aren't going very well for Intel. We have three more companies to get to. The candidates for second ugliest turnaround of 2024 are Stellantis and Boeing and one that I've talked about already, CVS. And I'm picking Stellantis, whose CEO also left this past week. Does everyone know what Stellantis is? It's based in the Netherlands. It's a mashup of France's Peugeot and Italy's Fiat, but Fiat came with Chrysler. So there's an American car business there too. And it was run until recently by a Portuguese executive named Carlos Tavares.

And he's best known for helping to turn around a Japanese company, Nissan. We are the world. Thank you. I was surprised with Intel that it had hit a high just four years ago and how recently that decline had hit a high just four years ago and how recently that decline had happened. With Stellantis, it had record sales and profits just last year, and both measures are now plummeting. In hindsight, during the pandemic, when there were shortages of cars, Stellantis became too fixated on high-priced vehicles, especially in North America. That's where the profit is. There are some Jeep Grand

Wagoneer SUV models that went above $100,000. Jackson, who out there is paying more than $100,000 for a Jeep? I want names. $100,000, that's two loaded Honda Pilots. Who's buying one Jeep instead of two loaded Honda Pilots? Someone with a lot of money and not much driveway space. I think the brand's supposed to be all about adventure, not opulence. But anyhow, I'm not a car marketing expert. All I know is that Stellantis' U.S. dealers have been complaining about inventory they can't sell. That stock has also a lousy performance this year, down 39%. I think customers right now are looking for cheaper cars. I bought two cars during the

pandemic. Prices were way up. For people who take out loans to buy cars, interest rates are way up. Insurance costs have gotten crazy too. Jackson, I haven't had an accident. I haven't had a speeding ticket. I've been living a good, clean automotive life over here and my insurance costs are way up. At one point, I went from one to two cars in my family. And you would think, I mean, I'm pretty sure the way the insurance business works, the whole idea of risk pooling is that when I get my second vehicle, I'm a lower average risk across those two vehicles for the insurance companies, but they don't treat it like that. They treat it like I'm likely to get in an accident with both cars at the same time. How would that even happen?

Yeah. I just changed my insurance every six months. And your identity or just your insurance? It's a lot of time on hold, I'll say. And a lot of putting those new slips in your glove box. Anyhow, don't get me sidetracked. The point here is that people are feeling the sting of high insurance costs and high loan rates, and they want cheaper vehicles. And when you look in Stellantis' pipeline, there are premium vehicles and loads and loads

of electric vehicles, even though we've seen in recent trends that customers are shying away from those they'd rather buy hybrids for now. So Stellantis makes the number two spot on my list of ugly 2024 turnarounds just because there's not an obvious fix for its problem soon. Stellantis stock is also unpopular on Wall Street, just 37% of analysts say to buy. The other two companies I won't go into great detail on, we've talked about them before. One is Boeing, and just over half of analysts who cover that stock say to buy it, even though there's a long list of problems. There were fatal crashes years ago that grounded a key model and halted production.

That led to years of cash burn. Just as the company was digging its way out, there were mechanical mishaps this year that restarted the process. There was a worker strike. Boeing came to a deal on that. It changed CEOs this past summer. It's been issuing large amounts of stock to raise money. So why would investors be less disgusted with this stock than the other two I mentioned? Why would slightly more than half of

analysts say to buy shares of Boeing? Here's one idea. There's no alternative to jumbo jets for mass travel over long distances. I'm not aware of a Star Trek teleportation device in the works. And there are only really two viable suppliers of jumbo jets in most market, Europe's Airbus and Boeing. And Airbus is already booking planes a decade out. So they're stretched thin. The world definitely still needs Boeing planes.

There's a company in China called Comac that makes jumbo jets, but those are mostly for its home market. And there's, of course, Brazil's Embraer. They make narrow body jets for regional flights. So even though Boeing's turnaround seems far off, it also seems inevitable. Boeing stock has lost 39% year to date. The last company on the list is CVS. That one has lost about 25%. I'll refer you to past episodes of this podcast where we focused on CVS and its problems. Basically, the drugstore chain business is lousy and CVS is planned for the retailization of healthcare where people would go to its clinics and stores for their healthcare needs. That hasn't really taken off. That's not making a lot of money for the company. People are still going to doctor groups and hospitals for care, and that favors a company like United Health Group.

Both it and CVS own big medical insurers, but United's a true healthcare business. CVS has been buying some more traditional medical practices, but that's going to be expensive and take a long time. The good news is, even though CVS's free cash generation has been cut by more than half, it's still projected to generate close to $6 billion in cash this year. Shares go for 11 times earnings. The company has a big Medicare Advantage business, and analysts say that the incoming Trump administration could be good for margins in that business. We'll see.

Trump administration could be good for margins in that business. We'll see. And that is my list of the ugliest turnaround attempts of 2024. I tried to pick only companies with still quite large market values, not companies that are in bankruptcy proceedings or anything like that, and companies with iconic brands. Someone asked, why didn't you put Nike on the list? That's a fair point. Probably a subject for us to tackle in a future episode. But right now we have to get to REITs. I want to know whether REITs look good here and which types of REITs and which REITs in particular. And we've got just the person to ask

about that. His name is Greg Kuhl and he's the Global Property Equities Portfolio Manager at Janus Henderson. We'll hear from him after this quick break. Welcome back. REITs are real estate investment trusts. Investors buy them for some capital appreciation, but also dividends. I'm looking at the Schwab US REIT ETF. That's a bundle of REITs trades under the ticker symbol SCHH. And the recent dividend yield there is 3.6%. Jack, do you think people know the basics of how REITs work? These are smart listeners that we have. Or do you think I should give the briefest of explainers? I'm not sure I know entirely how REITs work.

A REIT at its core is basically, I don't want to use the phrase tax dodge because that sounds like something dodgy. But the deal is you can avoid taxes at the corporate level if you pass all of the income from your assets onto shareholders as dividends. And you're allowed to do this with real estate. But typically when we talk about REITs, we're talking about companies that own office buildings or parking garages or hotels or hospitals. Data centers is a big category now. It's an easy way for investors to basically become landlords economically without having to look after the properties themselves. Okay, that's enough for me. I've got a gingerbread house to gnaw on like an old dog bone here. Jackson, why don't we get to my conversation with Greg Kuhn at Janus Henderson? Sounds good.

When inflation's running at 9% year over year, like it was a couple years ago, it's awfully hard for anyone in the market to say, I think that the Fed's going to stop hiking. I think that interest rates are high enough. Now that we've come back down, that has changed. And if you think about the listed REITs, we bottomed just about a year ago in the end of October 23. Since then, US REITs are we bottomed just about a year ago in the end of October 23. Since then, U.S. REITs are up about 40%. So we've seen the bottom and we think we're in the early stages of what probably is a new real estate cycle. Is it similar to how home buyers, people shopping for homes would think,

like, boy, we'd like for these mortgage rates to be lower so that we could get better financing terms when we buy a house? Or is there more to it for REITs that matters when it comes to the level of interest rates? So I think that's part of the dynamic, just the cost of debt. But if we think about listed REITs, it's different than they were 20 years ago. They actually don't operate with that much leverage. So 30% loan to value is the ballpark for the listed REITs. So I think really the bigger deal on interest rates has to do with the way that real estate is valued. So if you think about just simplistically the value of a building, you take the cash flow divided by what's called a cap rate.

So that's sort of an interest rate that you value the building at. It's a little bit like a valuation of a bond, right? So cap rates tend to be higher than, let's a little bit like a valuation of a bond, right? So cap rates tend to be higher than let's say the 10-year treasury. So 10-year treasury is at five, you might say cap rates, the return I get on this building needs to be 100 or 200 basis points above that, right? So the overall level of rates comes down, that discount rate that you're valuing your building at also comes down. So values go higher just mathematically with lower rates in real estate. Which parts

then of the REIT universe look particularly attractive to you now when you weigh those things together? Yeah. So I think there's two really standout property types at the moment. One would be senior housing. So this is assisted living. It tends to be higher end private pay, meaning not government reimbursed product, but somewhere you might send your mom or dad if they're getting on in years and having trouble with daily activities. This is a business where if you think about the demographics, they have a huge and visible demand tailwind. So the 80-year-old and over demographic is what matters for this business.

And that demographic growth is ramping up really materially through the end of the decade. It's going to be ramping up to 4% to 5% per year demand growth. And then if you think about the next layer of that is really the penetration within that group, how many people of the 80- plus are going to use this product? Well, this group of 80 plus year olds is more wealthy than the one that came before it. So this is an expensive product for a lot of people, but there should be more of that group that can afford to do this. That's the demand side of things. On the supply side, one benefit of the higher interest rate environment that we've seen the last few years was developers couldn't really access capital to build new buildings. So in the face of what is

the highest demand that we've seen in a generation almost for this product, there is literally almost nothing under construction for senior housing. So if you play this out over the next five, six years, there's scenarios where the entire industry is just effectively full of these buildings because of that supply demand mismatch. We think there will be development that will start. But even if you and me today decided, hey, this is a really great idea, let's go build a few of these buildings. It would take us at least three years to find a site, get it entitled, build the building. So you've got a runway here. So I guess the two things that means is that if you're a customer for one of these places, you can expect prices to stay high and

push higher because there's more demand than supply. But if you're an investor in them, I guess that would be good for your REITs and the underlying value of the portfolio. Give me some ballpark metrics. If you're investing in this space, what kind of yields are you seeing? Where do you expect the return to come from? Just the dividend yield? Or do you expect there to be some capital appreciation too? Yeah.

So these are going to be capital appreciation and growth stories at this point. I think what we've seen the last couple of years is this story has gotten pretty well understood. The dividend yields on these stocks are two to 3% looking at the two biggest names in the stock. So that's below average. At the same time, the cashflow growth from these properties is growing well into the double digits year on year. And we think that'll continue. So occupancy growth, rent growth, and then expenses have been relatively controlled. So it's going to be an earnings growth story that could be double digit earnings growth plus a lower dividend yield.

Are you allowed to name any of the ones that are your favorites? Yeah. So I think, look, Welltower is a name that we hold in our different products. It's one of our larger positions, and it's also the most concentrated exposure that we can get in REITs to senior housing. And you mentioned that there were two groups that you find particularly attractive now. So this is one, senior housing, and what's the other? So the other one, again, going back to supply and demand, is data centers. So this one is a little bit different in that it's not entirely a supply constraint story right now. There are certain markets where you can see a lot of construction happening of data centers. The supply constraints may come into play a year or two from now because there are issues with power availability and transmission.

But it's really a demand story. So you can see different people have different approaches for forecasting demand here. But you know, one that intuitively makes sense to me is thinking about the biggest player upstream from the data centers, NVIDIA, right. And so like, we see how much product they're shipping out every quarter, and all of those machines are going somewhere, right? A lot of them are going into data centers. So you can forecast, okay, we know how many machines they sold. We know how much power those use, roughly speaking. So once they're installed, the demand is

X amount of power. And that's how data centers are rented. You're basically buying power from the landlord. So you can then have a decent forecast of demand, which if you think about that over the next two, three, four years, it far outstrips all the supply that's being built. And then if you get past the current cycle of construction and data centers, it becomes less obvious where some of the players in the data center space are going to be able to source power to build more buildings. So that's again, pricing power, you know, should be pretty good for those landlords, especially, you know, 25, 26. This is interesting to me because I've,

I've heard about nothing but artificial intelligence and data centers for like a few years now. And so when I know their data center reads out there, but I think to myself, well, wait a second, is this all, is it all baked in? Because everybody's already talking about it, but you're saying that you think that the average investing public has not yet fully grasped just how much demand we're talking about. Is that the idea? So there's two things there. I think, yes, the answer is probably that there's a bigger imbalance into the future than people appreciate. The other part of the answer is the most attractive investment opportunities from a stock don't

always align with where the most attractive fundamental stories are, right? So I think to your point, maybe there is a fair amount priced into these. We'll see what happens in the next year. It's interesting. There's only two public data center REITs in the US, despite how much you hear about it. There used to be five or six. They all got taken private several years ago, but we think we'll actually see some re-IPOing of those private entities just because they need so much capital to build out these data centers. And there's really, it's more capital than you can source just from the private market.

What's your favorite one here? And can I assume that these also are REITs that have kind of smaller dividend yields, but more growth potential? Yep, that's right. So that's very similar type of dividend yield plus growth that we talked about with the healthcare names. So, you know, lower dividend yield, but probably double digit growth. The two names that exist are Digital Realty and Equinix. And the one that we own generally across the board is Equinix.

Why do you prefer it to Digital Realty? So I think there's reasons to like both of them, just candidly. I think Equinix for us is, it's been an underperformer versus digital over the last year and a half or so. So we just think on a relative value basis, it's a little bit more interesting. What about someone out there who says, well, I like REITs, but I'd like it because I go after income. I'm looking for these dividends that are the fours, fives, and sixes and percent range. Is it that the groups that pay that much, you don't find them particularly attractive or are there still groups out there that

yield that much that you think look okay here? I think there are. They're not those sort of exciting fundamental stories. It's more a story with those ones of stability and you're not expecting a whole lot of growth, but that could be fine. And we like several of those. There's a couple of examples in terms of property types there. One, broadly speaking, could be retail. So you pick your spots within retail, obviously, these days. But think about shopping center REITs so that in your neighborhood, wherever you may live, you might have a shopping center you get your groceries at, or you go for lunch once in a while. That's a stable business. And those are higher yields, like you're talking about, and lower growth. There are some interesting opportunities there. There's also a group called single tenant net lease retail. So

that could be like a Chick-fil-A standalone restaurant, could be car wash. This is maybe the most boring sector in real estate. Part of the conversation earlier, they have long-term leases with annual rent bumps and they tend to just be steady. And actually, if you look at a long-term basis, this is one of the better performing property types in all of REITs. Are you able to share a name or two from these type of REITs that you own where you think the outlook is good? to share a name or two from these type of REITs that you own where you think the outlook is good? Yeah, sure. So I think a couple there would be on the retail side, federal realty is a really high quality retail landlord has kind of been left behind over the last few years versus its peers.

That's pretty interesting to us today. Another one that's maybe a little bit more controversial and getting into another area of value is Mace Rich, which is a mall REIT. That one's a little bit more controversial and getting into another area of value is Mace Rich, which is a mall REIT. That one's a little bit more of what we would consider a little bit of a special situation or sort of a turnaround story. Malls, as you know, have been tough. That's one that we think is a little bit more deep value and has some levers they can pull to unlock that value. There was this thought that a lot of this mall space would just be repurposed into different stuff and that some of these troubled malls would have second lives.

Is that the kind of thing that Mesa Rich is involved in? Do you see that happening? Like where do we stand in terms of America having too many malls and needing to close some, but finding some uses for other ones? Are we in recovery there? Or what do you see when you look out across the mall space? Yeah, it's interesting.

I mean, I think so roughly speaking, there's about a thousand malls in the U S and we probably don't need a thousand malls. Right. So maybe there's, um, in my town, we're halfway in between two and the one that's closer to the big city is like bustling and always busy. And the one that's further away is like there's nothing going on. That's exactly, that's how it is, I think, across the board, right? And actually, probably 80% of those malls are just duds, honestly.

You think about Mace Rich, for example, though, they have a really high quality portfolio of malls. We actually think it's the highest quality portfolio of malls in the public markets. Their issue is more with the balance sheet. They have too much leverage and prior management at that company made some capital allocation decisions that the market didn't like. So they have a new CEO, new management team as of this year, and they've already started to execute on. To your point, if they do have a few malls that maybe don't have a future, the new management team has said, look, we're not putting more capital into these malls. We're not throwing good money after bad. We're going to give these back to the lenders, and we're going to focus on portfolio that we have that can grow.

And growth for malls is not like growth for senior housing or data centers. You know, the best malls are going to do low to mid single digit type of cashflow growth, but at the right price, that could still be pretty interesting. Thank you, Greg. And thank all of you for listening. Jackson Cantrell is our producer.

You can subscribe to the podcast on Apple Podcasts, Spotify, wherever you listen. If you listen on Apple, you can write us a review. If you have a question you'd like answered on the podcast, something about stocks or high finance or Christmas baking, just record it on the voice memo app on your phone and you can email us at jack.how. That's H-O-U-G-H at barons.com. See you next week.