Buy Transport Corporation; target of Rs 350: ICICI Direct

ICICI Direct's research report on Transport Corporation

Revenues grew 19% YoY to Rs 663 crore. The freight and shipping division grew 20% and 52% to Rs 311 crore (I-direct estimate: Rs 297 crore) and Rs 100 crore, respectively, whereas, the supply chain division grew a mere 10% to Rs 261 crore EBITDA margins contracted 34 bps to 9.1%. The margins came in above I-direct estimates mainly due to lower admin & other expense to sales ratio (3.6%). The resultant EBITDA grew 15% YoY to Rs 61 crore However, PAT grew a mere 7% YoY to Rs 30 crore as a better operational performance was negatively impacted by higher depreciation and interest expense.

Outlook

We believe utilisation of the capacity in the medium term will push TCI towards blended margins of ~10% with a RoCE of ~15%. With multi-modal capabilities, we believe TCI has developed a strong moat around its business thereby delivering sustainable growth rates. On an SOTP basis, we value the company at Rs 350 per share with a BUY recommendation on the stock.

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Read More First Published on Feb 25, 2019 03:55 pm

Superior Uniform Group Inc (SGC) Q4 2018 Earnings Conference Call Transcript

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Superior Uniform Group Inc  (NASDAQ:SGC)Q4 2018 Earnings Conference CallFeb. 21, 2019, 2:00 p.m. ET

Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

Operator

Good afternoon, everyone and welcome to the Superior Group of Companies 2018 Fourth Quarter and Year End Earnings Conference Call. With us today are Michael Benstock, the company's Chief Executive Officer; Andy Demott, its Chief Operating Officer; and Mike Attinella, Chief Financial Officer and Treasurer. After the speakers' opening remarks, there will be a question-and-answer session. This call is being recorded and your participation implies that you agree to this. If you do not then simply drop off the line at this time.

Now I will turn the call over to Hala Elsherbini, Senior Vice President of Halliburton Investor Relations, who will read the safe harbor statement. Please go ahead.

Hala Elsherbini -- Senior Vice President

Thank you. This conference call may contain forward-looking statements about Superior Group of Companies business opportunities and its anticipated results of operations. Please bear in mind that forward-looking information is subject to risks and uncertainties, and actual results may differ from what you hear today. Many of these risks and uncertainties are described in Superior Group of Companies annual report on Form 10-K, in this morning's news release and the company's other filings with the SEC.

Forward-looking statements in this conference call are based on management's current expectations and beliefs. Management does not undertake any duty to update the forward-looking statements made during this conference call or elsewhere. Please note that all growth comparisons that management makes today will relate to the corresponding period in 2017, unless otherwise noted.

With that, I'll turn the call over to Michael.

Michael Benstock -- Chief Executive Officer

Thank you, Hala, and good afternoon everyone. Thank you again for joining us to review our fourth quarter and fiscal 2018 results. I'll focus first my remarks on our performance highlights of strategic direction and market dynamics, with Andy providing more detail on our operational segments and integration progress followed by Mike's financial highlights.

We closed the fourth quarter in fiscal 2018 on strong footing and again delivered positive results on revenue and earnings marking our 25th consecutive quarter with year-over-year sales increases. Our Promotional Products segment regained its positive momentum underpinned by a fortified sales force. The Office Gurus delivered another strong quarter and year of impressive performance. Our Uniform segment fell short of expectations and organic growth slowed. We are aggressively addressing as we've said in previous conferences, the shortfall from multiple angles and we've made tremendous progress integrating, realigning, our expanding Uniform product assortment and service lines to optimize our go-to-market strategy. Andy will provide more detail our on integration and operational activity shortly.

For the year, we execute on a number of strategic initiatives and strengthened our brand-building solutions across our diverse yet complementary product portfolio. We completed our transformational acquisition of CID resources which greatly broadens our healthcare Uniform offering while giving us entry into the fast-growing retail scrub market. We quickly responded to trade disruptions to mitigate most of our tariff exposure. We elevated BAMKO sales force and that strategy is yielding exciting results.

The strategic direction of the company is anchored and capitalizing on our shared services model. We are accelerating efforts on all fronts and leveraging the unique strengths of each business segment to optimize operational efficiencies and capture the power of our scale across our platform. In addition, we made key leadership hires promotions and appointments that address our multifaceted strategic plans. In May, 2018, we also changed our corporate name to better represent our full branding solutions to Superior Group of companies.

Before turning the call over to Andy. I'd like to provide more details on the effect of the U.S. tariffs on Chinese imports for our company. Uncertainty remains around the implementation of additional tariffs. Our proactive stance, which began actually in 2017 to mitigate risk is multi-prong, first our exposure in China has continued to decline in the steady pace as we moved manufacturing to other countries outside of the tariff mandates, once we complete the China commitments that we currently have a merchandise that extend approximately through the second quarter will be down to roughly 13% of finished products that we purchase coming from China. After carefully considering all of our sources of supply we believe that leaving this portion in China is prudent and no further reduction to this will be required.

Secondly, we've already implemented price increases where agreements allowed us to and where we felt appropriate and continue to review the pricing levers that are available to us. Thirdly, we continue to work with some of our best suppliers in China, some of them are the beneficiary of Chinese government subsidies for manufacturers, China also has made monetary policy adjustments to offset some of the pressure on manufacturers. As we've discussed many times our redundant manufacturing strategy further insulates us from geopolitical disruptions such as those were experiencing in the current macro environment.

As detailed last quarter, the impact of tariffs on our Promotional Products segment is not significant despite the fact that the bulk of their production is in China and is in subject to tariffs. Contract structure, including current market pricing practices and pass-through clauses mitigate risks with these products. Alternative sourcing, price increases and contract structure all play a role in reducing tariff risk. Our focus remains on the sustainable long term growth of our company. Our continued investment in foundational innovative and operational initiatives positions us well to meet our near-term and long-term strategic growth.

Our shared services model affords us a great deal of opportunity and flexibility to drive growth and economies of scale while simultaneously tempering the rising cost of doing business. And while widespread employee turnover rates are also causing churn within our customer relationships. We are meeting some of these with headwinds with innovative strategies and seeing good traction on both existing and new opportunities. The health of our markets are strong and the diversification of our business model further fortifies our market position and allows us to adapt quickly in the dynamic global environment.

I will now turn the call over to Andy. And then I'll return with my closing remarks after which Mike will provide the financial overview.

Andrew D. Demott -- Chief Operating Officer

Thank you Michael, and good afternoon everyone. My comments today will focus on our key operational, integration highlights for the quarter in the fiscal year. Let's take a look at our segment performance. The Uniform segment Superior Uniform Group's comprised of HPI, Fashion Seal Healthcare and CID again delivered a net sale gain. This was largely due to the addition of CID resources. However organic growth lagged historical trends in light of the acquisition process and initial integration within our organization. As Michael noted, we have developed strategies of realignment of our sales and marketing that we believe positions us for accelerated future growth. We also took the first step to conversion of CID to SAP and we expect to complete the SAP conversion project in CID by early next year. We didn't list technical consultants to ensure integration targets were achieved expeditiously and without disruption to our customers.

Additionally, as we've learned more about CID's inner workings, we see greater opportunities, operational and organizational efficiencies. We reinforce CIDs customer relationship under the SGC umbrella and establish significant sales collaboration with Fashion Seal Healthcare.

Through our shared services, we are well under way with shared warehousing and employee new manufacturing and sourcing strategies. One of the highlights of this strategy include supporting what we believe is a robust growth profile at CID with an additional near-shore, low cost factory primarily to achieve quicker response and delivery of CIDs fashion scrub products to the retail market. We've committed to building an additional factory in Haiti comparable in size and adjacent to our existing facility. The new factory will house 350 operators working primarily on CIDs fashion oriented scrub apparel.

In addition to providing factory support for HPI in Fashion Seal Healthcare products. For CID, this nearshore option, which will replace some dutiable countries' production, but more importantly, will be there to handle CIDs growth. We'll also reduce shipping cost to facilitate more rapid fulfillment capabilities. We anticipate this facility will be completed late this summer and will be filled the capacity within 24 months. The ERP implementation at HPI is expected to be completed later this year. This will give HPI a much better insight into the buying habits of their customers. We are also maximizing warehouse space and making smart technology investments to enhance our shared services capabilities. Upcoming technology investments include plans, update our semi-robotic hardware in our Arkansas facility, which will more than double our speed and further improve our efficiency taking us again to a true state-of-the-art facility for many years to come.

The increased automation will assure -- ensure effective operations in all labor environments. We are also expanding our divisions' use of our resources in our office in Hanoi to expedite and expand our capabilities and product development.

Turning to BAMKO, our Promotional Products segment. We are very pleased with the results of their fortified sales strategy as they delivered a strong quarter of double-digit organic sales growth. The team also just rolled out their proprietary ERP platform should develop over the last two years in our India office that will also be used by Tangerine Public Identity and future acquisitions. And they also consolidated their subsidiaries on the one financial reporting system to gain further efficiencies.

As we discussed in the past, our promotional product strategy is driven by BAMKO's strong infrastructure, marketing prowess and award winning customized approach to illicit lasting emotional brand connections. We look forward to continued momentum in the organization. Additionally, the integration of Tangerine progressed smoothly and is nearing completion after a year of hard work.

The Office Gurus, our Remote Staffing segment posted another round of impressive results. Our customer retention remains strong and we are expanding in line with our customers' rapid growth. We are staying ahead of demand in this segment and as we discussed last quarter, as you make a facility is on target to welcome its first employees in the next few weeks. We will be making additional strategic hires to further augment our growth in the next year.

Now I'll turn the call over to Mike for the financial highlights.

Michael Attinella -- Chief Financial Officer and Treasurer

Thank you, Andy, and good afternoon everyone. We filed our 2018 10-K this morning. So, I'll limit my review to key an income statement and balance sheet items for the quarter and the fiscal year. Let's begin by looking at the fourth quarter. Net sales increased 31.1% to $95 million, largely driven by the 2017 acquisition of Tangerine and our Promotional Products segment and 2018 acquisition of CID in our Uniform segment. Together they represented 84.1% of the sales growth.

Our legacy businesses delivered organic sales growth of 5.2%. The Office Gurus or TOG was up nicely by 22.5% and BAMKO reported a strong gain of 32%. Similar to last quarter, sales softened in our legacy Uniform businesses comprised of HPI, Fashion Seal Healthcare, and Superior I.D. Collectively, these businesses reported lower organic sales of approximately $2.3 million. And while these sales did not meet our expectations, we are aggressively working on better -- driving better results through a more disciplined sales execution and regain our growth trends. Consolidated gross margin remained -- reasonably consistent at 35.5% compared to 35.9% a year ago.

The difference is a result of higher sales mix of lower gross margins from our Promotional Products business, offset by improved gross margins from TOG and CID, both of which enjoy higher gross margin rates. Of note, we didn't realize a full lift from CID's higher margin profile due to promotional activity to support year end retail sales and clearance of discontinued merchandise.

As a percent of sales consolidated SG&A increased to 28.2% compared to 26.1% in Q4, 2017. This decrease in operating expense leverage came from the amortization of intangibles related to our acquisitions investments to support growth at TOG losses and investments related to our supplemental executive retirement plan and CIDs OpEx leverage as our business model is more selling and marketing expense dependent than our other Uniform businesses.

Of note BAMKO realized improved operating expense leverage from greater sales volume resulting in the 220 basis point improvement as a percentage of sales. Income from operations decreased to $6.9 million and operating margins were 7.3% for the quarter compared to 9.7% in Q4, 2017, the impact of the gross margin mix as well as the 210 basis point increase in operating expenses pressured operating margins during the quarter.

Additionally, interest expense increased on a comparative basis as a result of the term loan related to the CID acquisition together with an increase and the one month LIBOR rates. Overall, we reported net income of $4.6 million compared to $1.9 million of a year ago. Diluted EPS was -- $0.30 compared to $0.12 and a year-ago period on 2.3% higher shares outstanding.

Our effective tax rate for the quarter was 19.5% compared to 72.4% of the year ago. Of note, fourth quarter 2017 earnings per share included a significant one-time impact of $0.26 per share related to the implementation of 2017 Tax Act. We also paid a regular quarterly dividend of $0.10 per share.

Now let's shift to the full year highlights. On a year-over-year basis, net sales were up 29.8% to $346.4 million compared to $266.8 million in the prior year. The increase in net sales was driven by our acquisitions of Public Identity, Tangerine in 2017. And our 2018 acquisition of CID collectively, contributing 28.9%. TOG added 3% and BAMKO added 1.1%. Overall gains were partially offset by a decline of 3.2% from our legacy Uniform businesses. Total sales for Uniforms and Related Products increased by 16.4% year-over-year, largely due to the CID acquisition, which accounted for 20.5% of that increase. TOG continued its upward trajectory that net sales to outside customers increasing by 41.6%. Significant market penetration in both new customer engagements and existing customer relationships, continue to drive segment growth. Our Promotional Products segment sales increased 88.6% with the 2017 acquisitions of Tangerine and Public Identity contributing 81.5% of the increase, while other sales growth in this segment was just over 7%.

Of note, BAMKO achieved record bookings during the fourth quarter. Consolidated SG&A was 28% of sales for 2018, compared to 26.5% in 2017. SG&A expense in 2018 included $2.1 million of acquisition related expenses for CID. Losses on investments relating to our supplement executive retirement plan, amortization of acquisition related intangibles, investments in management, leadership and other costs to support the growth of TOG and higher selling and marketing expenses within our CID business plan.

Operating income declined by 3.8% to $24.6 million and operating margins were 7.1% for 2018 versus 9.6% in 2017. Income taxes normalized in 2018, as we're not adversely impacted by the implementation effects of the 2017 Tax Act. The effective rate for 2018 was 20.7% versus 39.4% last year. The decrease in the effective rate is generally attributed to the reduction in the federal tax rate of 13%, the writedown of deferred tax items at the end of 2017 of 6.9% and the one-time transition tax in 2017 or repatriated earnings of 6.7%. Offsetting this decrease was an increase in compensation-based taxes of approximately 7.3%, which is mostly attributable to a reduction in the tax benefit realized in 2017 from the exercise of stock appreciation rights.

Net income for the year rose 13% to $17 million, diluted earnings per share were $1.10 versus $0.99 in the previous year. Net income in 2018 was reduced by approximately $2 million of direct expenses or $0.13 per diluted share associated with the CID acquisition costs. Net income for 2017 was negatively impacted by $4 million or approximately $0.26 per share -- diluted share as a result of the increases, our fourth quarter tax provision associated with the 2017 Tax Act.

Now for a few balance sheet highlights. We continue to focus on optimizing our balance sheet to maintain ample liquidity and financial flexibility. As stated in our press release and 10-K, we restructured our amended and restated credit agreement, which financed the CID acquisition. The restructuring reduced a principal amount of $65 million using $20 million of proceeds under our revolving credit facility. We secured improved interest rates, lower incremental cost and enjoy a longer maturity. Principal and interest is do monthly with prepayment optionality. We continue to return value to our shareholders in the form of quarterly dividends. During 2018 we paid cash dividends of $5.8 million, an increase of 10.8%. As we advance into 2019, our financial position remains strong, supported by free cash flow and ample liquidity to fund our current obligations and future growth.

We also have the flexibility to be more conservative in managing our working capital for making adjustments to improve inventory turns at our DSO. As we've noted in past that our CapEx investments increased every four to five years above our maintenance levels of 1% to 1.5% of sales. For the next two years, we planed to increase our CapEx investment strategy the 2.5% to 3.5% of sales to support our infrastructure growth across our business segments.

We take a strategic review of our ROI metrics when making our CapEx investment decisions and we believe our investments over the next 12 months to 24 months will help to improve our speed to market enhance our manufacturing supply chain capabilities and greatly improved efficiencies, operational flexibility and collaboration across our enterprise.

I'll now turn the call back over to Michael for his closing remarks. And a general outlook for 2019.

Michael Benstock -- Chief Executive Officer

Thanks, Mike. As Mike just outlined, we believe the strategic and aggressive investments that we are directing toward our brands, technology products, people diversification and infrastructure will drive a long-term sales outlook, which remains unchanged. As a reminder, our long-term guidance reflects annual average organic sales growth in our Uniform business to exceed 6% promotional products should generate average organic growth of greater than 12% per year.

This reflects potential for customer overlap that will happen as we continue to do additional acquisitions in this segment. And Remote Staffing should add organic growth in excess of $7 million per year. On a consolidated basis, this would yield a company wide average organic sales growth of greater than 8.5% over the next three to five years.

We are resuming our acquisition strategy and promotional products. While we took a brief pause, we continue to explore strategic opportunities in this very fragmented market which lately has had a remarkable increase of private equity consolidation. We believe we are the better strategic long-term partner for many of these businesses. We expect to execute one or two acquisitions annually to build out BAMKO as a top tier branded products agency. Want to extend our thanks to all of our dedicated SGC team members for their hard work and meaningful contributions to realizing our long-term success goals. Superior customer experience is at the heart of our business, and we could not succeed without the dedication and innovative drive and creativity of our entire team.

With that, we'd like to open the call for your questions.

Questions and Answers:

Operator

We will now begin the question-and-answer session. (Operator Instructions) And our first question comes from Kevin Steinke of Barrington Research. Please go ahead.

Kevin Steinke -- Barrington Research -- Analyst

Good afternoon, everyone.

Michael Benstock -- Chief Executive Officer

Hey, Kevin.

Kevin Steinke -- Barrington Research -- Analyst

I wanted to start off by talking about the Uniform segment you mentioned that it fell a bit short of your expectations, but just wondering if you could offer any more color around that statement in terms of maybe what you're seeing in the new business pipeline and I think Andy might have mentioned something about distraction from acquisition integration. I just want to make sure I'm hearing that all correctly and what other color you might offer on that segment?

Michael Benstock -- Chief Executive Officer

Sure. Let me -- let me break it out in some pieces. It's a good question, Kevin. I expected that this would come up if not today, then someday in the future, but HPI certainly has had their challenges. And HPI today recognizes most of our -- it's about half our Uniform business. And it is our Employee ID part of our non-healthcare side of our Uniform business. And as we've said on past conference calls, we see -- we saw the delays of 2017 and 2018 and we see the pipeline for now.

We have seen a lot of turnover among the people that we were dealing with. Really, literally, I've never seen anything like this before in our history. I personally believe it's a good thing. Yes, some of our relationships are changing out. But as I say so, our -- the relationships with the 94% of companies that we don't deal with. When you look at our market share, it's about a 6% market share on the Uniform side of the business. So I'm very excited that more opportunities in ever are in front of us. Certainly, there are some that are much bigger, and I look at those. You get one of those, it moves the needle a lot. And you're not going to get one of those every year there are more than a few of those that even come up as a possibility in a given year. But every few years, we will win one of those, and that will just as we did years ago with a major airline. if you recall, right after we bought HPI and we had major quick service restaurant chain that they took on and those things do move the needle and they will for us in the future, too. But we're not relying on those few, big opportunities that you get every single year. They still literally hundreds of opportunities in the course of a year that come up we've got to be better at identifying them. I think we're pretty good, but we could be better.

We are getting in front of more people, I can tell you that people that traveled for us last year on behalf of HPI and our whole that whole employee ID segment we're road warriors and traveled more than they had ever traveled before. And that was to get in front of mostly customers that they had not been in front of before. We spoken about in the last couple conference calls that we don't think we're going to see any lift from this, or have any great news from this until really you get later on in this year and that still holds true.

Now let's go to the healthcare side of our business. Start with Fashion Seal Healthcare we talked about Fashion Seal Healthcare being in a very commoditized mature market, that really hasn't had a lot of excitement and it for many, many years remember one point we were trying to sell direct and then we backed off that strategy. And we have a modicum of success, but we backed up that strategy. We bought CID because CIDs model was to sell indirectly, through retailers.

And I can tell you I have never seen Fashion Seal Healthcare more energized not in my 40 years here long time and with the collaboration between them and CID, we're going to see great things out of these two divisions working together. And I have to tell you know this is was not an intended consequence of this acquisition. We believe CID on its own broad enough to the marketplace. But what the President of Fashion Seal Healthcare and the President and all the leaders of CID and leadership of those two teams have done as create created probably the most synergistic opportunities that I've seen in this company in many, many years and yes it's product-driven, so we're developing products around that, that will meet the marketplace for each side of that equation that does take time you develop it then you put in purchase orders. And you don't get product in for six months, so you can't sell it. But I'm telling you that the, that what is happening between Fashion Seal Healthcare and CID is the most exciting thing that's happened in our Company in a long time on the Uniform side of our business and will drive future growth in this company beyond most of our expectations.

I'm very encouraged by what's going on. I believe we have really just as we picked the winner when we bought HPI years ago, that was our largest acquisition at that time. And that certainly did wonderful things for our company. I think the same is true with CID over the long haul and -- but just got to be patient. They were -- Andy speaks about distractions. Of course, they were. I think more -- I don't think we've been distracted since we bought CID. I think this distraction comes from CID having been distracted for almost nine months before they sold their business to us. And actually if you think about all the preparation that went into preparing decks and working with consultants I think that is probably a two year distraction they had before we bought them, which definitely flattened out their business. They run a incredible trajectory 20 something percent CAGR year-after-year-after-year. And they were doing great and they flattened out in 2017 prior to the acquisition in 2018 pretty flat as well even down a little bit.

But part of that is because they did not have the resources to go through a process with a investment banking firm, and also at the same time manage to develop all the products. So from a product development standpoint it definitely slowed them down, they didn't develop new collections, they didn't develop as many new lines, I can tell you that the week after we closed on our transaction, they sent a very large team to -- of their design staff to Hanoi to begin developing three collections at one time, all of which have been very, very well received out in the market, actually out marketplace now selling probably three of the best received lines created a great buzz out in the marketplace for what these products are, the fabrics, the silhouettes, every -- the fit, everything. We hit a home run with this one and you'll know more about that in the future as you start to see CID's numbers improve, but I feel very good from a product development standpoint that they are that they've expanded their capability to do product development.

I have to tell you, I went and visited their Hanoi office earlier in the year, and I might have mentioned this on the last call. I don't remember if I went there before right or right after. I think it was after, actually. And I was amazed, I was so amazed that I took the people from our other divisions that's the healthcare from the design side and from our sourcing side I said you guys need to go to handle and see what's going on there. They have created a wonderful environment there that we're -- the entire company now is going to capitalize on in working with us to bring products to market sooner.

So I'm very encouraged by what's going on in Uniform side. I really -- I'd love to tell you I was pleased with last year's results, but I'm not pleased with last year's results. I don't think in all the years we've been doing this, even though we had double-digit increases, I ever said I was pleased with our results. I think one time I talked about them being epic because we did have that one epic quarterback way back when. But I'm not satisfied, and we're working really hard to improve that, as well as on the operational efficiency side and the operational efficiency is not just create to contain costs or lower cost. It's also to provide better service to our customers at a lower cost and a lot of things Andy and Mike spoke about are things that we're right in the middle of doing. Long answer. Sorry for the long answer, but I think I covered.

Kevin Steinke -- Barrington Research -- Analyst

No problem, no, that's a lot of good commentary and good information in there. So if I could just follow up a little bit on some of that. I think in reference to the turnover and some of your contacts, your Uniform customers. I believe you might have said in the prepared remarks, some innovative go-to-market strategies. And I don't know if you've found different ways to protect the opportunity in light of current market conditions. So, any comment on that.

Michael Benstock -- Chief Executive Officer

Yeah, all right, well, the first part of that is, you know, getting in front of more people and having successful first meetings and on the Uniform side of our business. One of the exciting thing is that they have BAMKO as a resource. And BAMKO really is, as you know, was this branded merchandise but is almost very, very similarly run as an advertising agency marketing agency, and so they become somewhat of a marketing agency, as a matter of fact, we're going to be reorganizing some jobs over the next few months to take advantage of all the marketing capabilities we have, where we have graphic artists and we have marketing and digital capabilities kind of broken up throughout all the different companies. We're going to bring them together under shared service, but more of an agency approach.

But there aren't very many Uniform companies that have that kind of agency capability internally and so the idea is to get from the customer and they're helping us be better at that, but also once we're in front of the customer to be more relevant and to provide materials and differentiation that sets us apart from everybody else is getting front of that potential customer. And then of course from the design standpoint, we feel now with what we're doing with Henoi from a product development standpoint and using all the tools of the company from a design standpoint, we have used even CID people to help us who are basically been designing scrubs for the last 10 years, seven years, whatever, we've been -- they've helping us on other parts of our business as well. And I think there's going to be more and more of that which is only going to add to our success. And then there are lot of other strategies which some which I can't talk about, but rest assured, that we're not saying we never sitting back saying let's do next year, what we did last year.

We're always looking for new ways to approach things and I think we, we have done that I mean, and certainly, we're doing what everybody else is doing on the SEO and digital side to try to drive customers to us. What we know who the customer base is on the, particularly on the HPI side, I mean it's not. I wish I could tell you it's 10,000 customers, potential customers, but it's not, it's less than a thousand that we want to do business with, that we feel would be the right customers for us. So we pretty much know what every one of those customers is doing and with whom and when their contracts are up and what we need to do to get in front of them.

Did that answer your question, Kevin?

Kevin Steinke -- Barrington Research -- Analyst

Yeah, that's great. That's very helpful. Thanks. So you continue to talk about the cross selling opportunities created by CID. In terms of to laundries and dealers and new product development on that side. I mean maybe just an update on how that's progressing. And does the new facility in Haiti tie into those efforts?

Michael Benstock -- Chief Executive Officer

Let me answer the second part of the question first. The new facility in Haiti will be is really being put there for CID's growth, also to give us a choice with non-dutiable countries or dutiable countries that are having to move product and dutiable countries to non-dutiable countries just to have a lower cost basis. And CID has their production pretty set, but at the anticipated growth levels we're going to need more and more and more production every single year and we've got to stay ahead of that and that is the reason we are Haiti. Now the first part of your question. Andy's going to answer. Go ahead, Andy.

Andrew D. Demott -- Chief Operating Officer

I think as far as the cross selling opportunities as Michael mentioned earlier, I mean, we've made some tremendous progress on that relative to CID and Fashion Seal healthcare, I think those two teams have worked together better anything that I've ever seen before. I think those are a lot of seeds have been planted bringing products to both our customers that were starving for more of the retail-inspired product that CID offers as well as us introducing CID into the laundry so that the customers that we're dealing with. We're also seeing nice cross-selling opportunities continuing to see that between BAMKO. BAMKO's customers and our Uniform customers, we are very pleased with where that's at.

Michael Benstock -- Chief Executive Officer

Yeah, Kevin, the the group at CID and Fashion Seal Healthcare. I would say, has spent -- CID's in Dallas and we're in Florida. But that hasn't stopped us. I don't think a day has gone by since this acquisition, where we haven't been sitting with them or they haven't sitting with us in each other's offices working on strategies, visiting customers together. Actually making determinations when there are opportunities to how they might feed see that through a retail or distributor or laundry in order to keep our -- to create loyalty with that customer base.

I mean, they've done a fabulous job, last year it was kind of a tough year for CID. And I didn't mentioned this earlier and probably I should have. But when CID went through this process of selling the company, the entire marketplace knew they were selling the company. The knew they've been owned by private equity seven years, they very honestly approached the market their largest customers and said, we're trying to sell the business. So there's a certain amount of nervousness around that to begin with. And obviously, some of that nervousness was created by competitors, who thought they would capitalize on letting everybody know the CID was for sale, what kind of disruption that would bring to them and on.

And then, of course, we bought them, bare company, which worried some of those people and even worried quite some of the CID internal sales people. What's a big company going to do? They're going to get rid of our sales force. They're going to integrate them into their sales force. So they're going to start selling direct and it took us about a month to put together really after that acquisition in May. What our plans were, how we're going approach to market. And we obviously have been thinking about it during diligence but lot of things we couldn't discover during diligence.

And then to go out and sell that to the community of -- here's our position in the marketplace. We're going to back off direct sales. We think 5,000 stores retailers in the United States can do a much better job than our eight salespeople could do selling into these direct channels and so we're going to work with you all through CID and when you have CID opportunities that includes CID product or Fashion Seal Healthcare product, we're going to be there for you. And if you show us loyalty, we're going to show you loyalty, but we're not going to go direct regardless.

And it took really until probably the end of the year, January, maybe even part of January, this should be -- everybody believed that. And so we're seeing some positive momentum from that. And you'll see that in the future. But I -- in terms of the synergies, the Fashion Seal Healthcare and CID working together in cross selling. I can tell you that Peter, who runs our -- Peter Benstock, who runs our Fashion Seal Healthcare is probably spending more time today on CID opportunities, spending on the traditional Fashion Seal Healthcare on opportunities and hence some of the reasons why he made some changes internally. And as you know, Danny Schwartz is promoted to Vice President. I think we did a release on that and is managing the sales force now. So every -- putting all the people in place to make sure we can manage a much bigger organization.

Kevin Steinke -- Barrington Research -- Analyst

Okay, good. That's helpful. When -- and thinking about your increased CapEx targets for the next of couple years, trying to just think about what all factors into that? You talked about the new facility in Haiti, I mean are you going to build something else for Remote Staffing in Jamaica? You mentioned some automation projects. So just trying to get my arms around what all layers into those higher CapEx expectations?

Andrew D. Demott -- Chief Operating Officer

Yeah, Kevin, this is Andy. I'll start. Mike could probably jump in with a little bit. The major projects there, we are updating the semi-robotic warehouse in Eudora, Arkansas. That's a project -- we've talked about that warehouse being state-of-the-art for years when we put it in probably back in the mid '90s and it has served us very well and in fact they are still one of the most efficient warehouses out there in our business -- in our industry, but this opportunity that we're investing in really gives us the opportunity to substantially improve that, to be able to much more efficiently deal with that. They handle greater capacity with better resources there. I think that would be a tremendous deal.

That project will actually we'll end up doing in some stages where we'll do it side-by-side with our existing system. There won't be a situation where we shut the existing robotic system down one day and start new one the next day. We certainly don't like to have those big bang type situations when we can avoid it. I don't think anybody has ever put a big bang warehousing without creating disruptions. So we're doing everything to avoid that and do it in stages that pricing will likely take a couple of years. We'll start seeing benefit probably in a little over a year from now whenever we put the role of completed the first wave of that.

You mentioned in Jamaica, there we are not building a facility there. We actually will be leasing a facility. There won't be a tremendous CapEx involved with that. Mike, you want to touch on Haiti?

Michael Benstock -- Chief Executive Officer

Lot of what we have is -- it's technology space this technology base this technology in the warehouses, that's end of life or service throughout the company, it's the creation of a lot of this, and this things we're doing in developing programs to run ERPs to run BAMKO and Web developments that we're doing that will carry us for the next few years of course that will be an ongoing issue. Mike, can speak of Haiti because that's not actually the equipment is CapEx, but the rest isn't.

Michael Attinella -- Chief Financial Officer and Treasurer

Yeah. So, and what we're doing in Haiti, as Andy said, we're building we're opening a manufacturing facility near where other facility is in Haiti, we're going to lease the it's a build-to-suit lease, if you will, for the manufacturing facility will put the equipment in the facility. One of the upsides of -- beyond the upside that Andy talked about with respect to doing this in Haiti is we can leverage our back office administration activities that we have in Haiti and be able to execute that facility at even lower costs, then does a and offshore and nearshore manufacturing facility provide us normally. So we have a relatively small investment with respect machinery and equipment not that much investment in the factory because that's going to be on a lease program, but we're excited about getting that opportunity under way in Haiti with our the facility there.

Andrew D. Demott -- Chief Operating Officer

And of course, Kevin, the other investments we're making, we are wrapping up the SAP implementation at HPI, which will yield some significant benefits from an integration perspective, with the rest of our legacy Uniform business as well as putting SAP in the CID where I mean they really are in significant need of a new ERP system there.

Michael Benstock -- Chief Executive Officer

The thing is, we used to talk about when people asked us about CapEx and you've asked us yourself that our CapEx normally ran in that 1.5% range and that about every five years or so. We have some big expense that I mean that's really what's happening this time, except we're taking that big expense and we're spreading it out over two years.

Kevin Steinke -- Barrington Research -- Analyst

Okay. Great. Got it. I guess I'll ask few other numbers related questions here and related to the other segments. But, so you mentioned well, I guess this is still Uniforms, but you mentioned you didn't realize full CID gross margin in the fourth quarter. I believe you mentioned some promotions and inventory clearance. I mean, is that kind of a normal fourth quarter type of occurrence or related to some of the distractions, you mentioned. Just wondering what was going on there.

Michael Benstock -- Chief Executive Officer

Yeah. So direct answer to your question is no, not really. We don't see an anticipate that this going to be a lot of margin drag during the fourth quarter with respect to sales of CID. Certainly they do a little bit of promotion activity in the fourth quarter, but it's not that terribly seasonal of a business such that, that will occur routinely that's going to have an impact on the margins. This quarter, discontinued inventory was an impact that gave rise to a drag on margins. And the sales levels that we experienced or realized at CID were lower than we typically would experience.

So, the amplification of the impact of discounted and promotional sales did impact the overall gross margin percent and gross profit percent that we did realize. So the percentage of promotional sales were higher than what we would typically realize in CID than what we would see on a typical routine quarter-end basis -- fourth quarter basis. Does that makes sense.

Kevin Steinke -- Barrington Research -- Analyst

Okay. Got it. Yeah, got it. Thank you. In promotional products, sorry if I missed this, but the gross margin came in at 30.7%. You'd been running 26% to 28% through the first nine months of the year. So I what accounted for that higher gross margin? Was it a mix, product mix, or what was going on there?

Michael Benstock -- Chief Executive Officer

Yeah, primarily, it was product mix that we have a couple of very large customers that are legacy customers within that business. But as we've grown that business, we've grown it with customers that provide us and afford us better overall margins. So as that mix changes and evolves, we've been able to see and enjoy higher overall gross profit rates. That's what we saw in the fourth quarter. And we -- as we target customers that do have higher general gross profit opportunities to us, that should continue to -- we should continue to realize that.

Kevin Steinke -- Barrington Research -- Analyst

Okay. Great. And then you mentioned record bookings for BAMKO or promotional products in the fourth quarter. I mean -- so I guess we should take that as they're even better than what you experienced in the third quarter in terms of our bookings?

Michael Benstock -- Chief Executive Officer

Correct.

Kevin Steinke -- Barrington Research -- Analyst

Okay. So we should, I guess, see some continued momentum in that business early in '19?

Michael Benstock -- Chief Executive Officer

That would be the expectation.

Andrew D. Demott -- Chief Operating Officer

Yes. Kevin, as Michael touched on briefly in his remarks, if I may add. BAMKO, we said earlier last year that they've gotten a little distracted with the acquisitions and had, for lack of a better word, taking their eye off the ball on the growth a little bit, put heavy emphasis in investing and growing and improving our sales force. And the results that we've seen in the bookings in the third and fourth quarter are a result, to a large extent, of that sales force investment. And those people are, I mean, that team is doing very well, and we feel very good about it.

Michael Benstock -- Chief Executive Officer

And getting better by the day.

Kevin Steinke -- Barrington Research -- Analyst

Okay. Great. And then you mentioned resuming the acquisition strategy and Promotional Products. Is that an indication, I guess, that you feel like you have the sales talent in place now? I think there was some -- you made some commentary about getting the various businesses in that segment on a common financial system. So let's say -- I mean, I guess does that imply you feel like you have the infrastructure in place now. Operationally, where you feel comfortable with moving ahead with more acquisitions in that space.

Michael Benstock -- Chief Executive Officer

Yes. One of the things that caused us to pause, not only the fact that they need to really tie up on loose ends with the acquisitions they had done, but also was that there were in the last stages of development of their ERP system which has been rolled out to BAMKO we rolled out in the next couple of weeks to Tangerine and Public Identity, but it went very, very well at BAMKO. It was very well tested. That's one of the advantages of our staff being the ones who developed it, is they can, they can test each piece as they went along and certainly this is going to make them much more efficient.

It's a much better idea for us to have everybody on one platform and be going to and when we're -- the sooner for our business to be able to show them what our capabilities are electronically versus the ones that they currently have and what we -- what we've developed in our new product, which is called core why is I think something far superior to what anybody has in the Promotional Products business. And so we become maybe -- we have a little bit of advantage from a standpoint of where those business owners are looking to sell their business might want to join.

Kevin Steinke -- Barrington Research -- Analyst

Okay. Great. And then in Remote Staffing you talked about continuing to invest ahead of growth, we saw sequential increase in the SG&A expenses in that segment, which is an uncommon. But is that kind of the expectation? As you continue to grow the top line so strongly, we'll see -- continue to see some of those investments in SG&A and maybe continuing sequential increases on that line.

Michael Attinella -- Chief Financial Officer and Treasurer

Yeah, I think we'll continue to see that at least through 2019, as we continue to grow that business. What we saw in 2018 was continued investment in some of the restructuring of how we go about bringing our call center agents in with respect to investment in training some additional investments in leadership and the continuing growth of our beliefs facilities. So as we continue to grow that process for to support demand we saw that increase in operating expense investment. As we grow and continue to grow demand in that organization, we will expect to see some degree of sequential OpEx growth moving forward.

Michael Benstock -- Chief Executive Officer

Every one of those investments we make, whether it's in people, whether it's in CapEx, I mean, we look at it on ROI basis and we're pretty conservative in that regard. Whether we're doing an acquisition, whether we're doing CapEx, whatever, we expect a good return on our investments. And so we're not -- really, that business has been great. It's been growing by a few hundred. I won't say exactly how many because I really don't want to give away that information to the public. But it's been growing by at least a few hundred each year for the last couple of years and actually could even greater growth in that in the future.

We've got to stay ahead of that you think about every couple three years you might -- we might have another 1,000 people, for instance, as an example. That's about as many people as we want to manage under one roof before we start looking for another location. So we're actually opening in Jamaica and at the same time, we're looking for where we are going to be two or three years from now where is our next location. It could be in Jamaica. It could be a second location in Jamaica, but Jamaica is not tried and true for us yet. So we're looking at other places. So we know what our alternatives are. So it's a constant process, great process. As good as that business is growing, I wish we had that in all of our businesses.

Kevin Steinke -- Barrington Research -- Analyst

Okay. Great. That's all I had. Thanks for taking all the questions.

Michael Benstock -- Chief Executive Officer

Great.

Operator

(Operator Instructions) And this concludes our question-and-answer session. I'd like to turn the conference back over to Michael Benstock for any closing remarks.

Michael Benstock -- Chief Executive Officer

Thank you, Andrea, and sorry for jumping in there on you. We appreciate all of your time today, and we look forward to updating you on our first quarter 2019 results in April. In the meantime, enjoy the rest of your winter.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Duration: 55 minutes

Call participants:

Hala Elsherbini -- Senior Vice President

Michael Benstock -- Chief Executive Officer

Andrew D. Demott -- Chief Operating Officer

Michael Attinella -- Chief Financial Officer and Treasurer

Kevin Steinke -- Barrington Research -- Analyst

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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

Helix Energy Solutions Group (HLX) PT Lowered to $10.00 at Cowen

Helix Energy Solutions Group (NYSE:HLX) had its price target reduced by equities researchers at Cowen from $11.00 to $10.00 in a research note issued to investors on Thursday. The brokerage currently has an “outperform” rating on the oil and gas company’s stock. Cowen’s target price indicates a potential upside of 37.93% from the stock’s current price.

HLX has been the topic of a number of other reports. Zacks Investment Research upgraded shares of Helix Energy Solutions Group from a “hold” rating to a “buy” rating and set a $9.25 target price on the stock in a report on Wednesday, October 31st. ValuEngine upgraded shares of Helix Energy Solutions Group from a “sell” rating to a “hold” rating in a report on Saturday, January 19th. One investment analyst has rated the stock with a sell rating, one has given a hold rating and four have issued a buy rating to the company. The company currently has a consensus rating of “Buy” and an average target price of $9.81.

Get Helix Energy Solutions Group alerts:

NYSE:HLX opened at $7.25 on Thursday. The company has a debt-to-equity ratio of 0.24, a current ratio of 2.35 and a quick ratio of 2.65. The company has a market cap of $1.01 billion, a P/E ratio of 38.16 and a beta of 2.82. Helix Energy Solutions Group has a fifty-two week low of $5.05 and a fifty-two week high of $10.89.

Helix Energy Solutions Group (NYSE:HLX) last posted its quarterly earnings data on Monday, February 18th. The oil and gas company reported ($0.09) earnings per share for the quarter, missing the Zacks’ consensus estimate of ($0.08) by ($0.01). The company had revenue of $158.36 million for the quarter, compared to analysts’ expectations of $155.42 million. Helix Energy Solutions Group had a return on equity of 1.78% and a net margin of 3.87%. The business’s revenue for the quarter was down 3.0% on a year-over-year basis. During the same period in the previous year, the business posted $0.34 EPS. As a group, equities analysts forecast that Helix Energy Solutions Group will post 0.24 EPS for the current year.

A number of institutional investors have recently added to or reduced their stakes in the business. Mirae Asset Global Investments Co. Ltd. raised its holdings in shares of Helix Energy Solutions Group by 3,701.3% in the 3rd quarter. Mirae Asset Global Investments Co. Ltd. now owns 3,776,940 shares of the oil and gas company’s stock valued at $37,312,000 after purchasing an additional 3,677,580 shares in the last quarter. Victory Capital Management Inc. raised its holdings in shares of Helix Energy Solutions Group by 42.1% in the 4th quarter. Victory Capital Management Inc. now owns 9,899,519 shares of the oil and gas company’s stock valued at $53,556,000 after purchasing an additional 2,931,608 shares in the last quarter. Rothschild & Co. Asset Management US Inc. raised its holdings in shares of Helix Energy Solutions Group by 269.4% in the 3rd quarter. Rothschild & Co. Asset Management US Inc. now owns 2,848,109 shares of the oil and gas company’s stock valued at $28,139,000 after purchasing an additional 2,077,146 shares in the last quarter. Fiera Capital Corp acquired a new stake in shares of Helix Energy Solutions Group in the 4th quarter valued at $11,153,000. Finally, Systematic Financial Management LP raised its holdings in shares of Helix Energy Solutions Group by 613.6% in the 3rd quarter. Systematic Financial Management LP now owns 1,355,759 shares of the oil and gas company’s stock valued at $13,395,000 after purchasing an additional 1,165,769 shares in the last quarter. Institutional investors own 96.38% of the company’s stock.

Helix Energy Solutions Group Company Profile

Helix Energy Solutions Group, Inc, an offshore energy services company, provides specialty services to the offshore energy industry primarily in Brazil, the Gulf of Mexico, North Sea, the Asia Pacific, and West Africa regions. The company operates through three segments: Well Intervention, Robotics, and Production Facilities.

Featured Story: Benefits of owning preferred stock

Top 10 Warren Buffett Stocks To Invest In Right Now

tags:PPL,DGI,HZO,PATI,ATAI,CSX,KOP,TISA,SNP,DBD,

Berkshire Hathaway Inc. (NYSE:BRK.A) is an American conglomerate with investments in a variety of businesses from American Express to Coca-Cola. It reported Q3 earnings last week, which were in line with analysts' expectations, as the group revealed a 7% increase in operating profit compared to the same period last year.

Although the group revealed mixed performance from its various subsidiaries, investors have snapped up the opportunity to increase exposure to the American Conglomerate with shares hitting an all-time high during yesterday's trading session (Nov 14). Yet, for investors questioning whether Berkshire Hathaway is overbought, there are encouraging signs for continued long-term growth and capital gains. Let's take a look at the main winners and losers in Berkshire's portfolio. (See also: Where Warren Buffett Might Invest Berkshire's Huge Cash Pile? Berkshire Hathaway Inc. Stock)

Top 10 Warren Buffett Stocks To Invest In Right Now: PPL Corporation(PPL)

Advisors' Opinion:

• [By Shane Hupp]

  Pembina Pipeline (TSE:PPL) (NYSE:PBA) had its price target lifted by BMO Capital Markets from C$50.00 to C$52.00 in a research report report published on Tuesday morning.

• [By Paul Ausick]

  PPL Corp. (NYSE: PPL) dropped about 1.7% Tuesday to post a new 52-week low of $30.44 after closing at $30.95 on Friday. Volume was around 4.1 million about 10% below the daily average of around 4.6 million. The company had no specific news.

• [By Max Byerly]

  PPL (NYSE:PPL) had its target price dropped by equities researchers at Morgan Stanley from $29.00 to $28.00 in a research report issued to clients and investors on Wednesday. The firm presently has an “equal weight” rating on the utilities provider’s stock. Morgan Stanley’s target price would indicate a potential upside of 7.16% from the stock’s previous close.

• [By Chris Lange]

  The stock posting the largest daily percentage loss in the S&P 500 ahead of the close was PPL Corp. (NYSE: PPL) which fell about 5% to $28.08. The stock's 52-week range is $25.30 to $39.90. Volume was 8.4 million compared to the daily average volume of 7.4 million.

Top 10 Warren Buffett Stocks To Invest In Right Now: DigitalGlobe, Inc(DGI)

Advisors' Opinion:

• [By Ethan Ryder]

  COPYRIGHT VIOLATION WARNING: “DigitalGlobe (DGI) Earning Somewhat Positive Press Coverage, Report Shows” was published by Ticker Report and is owned by of Ticker Report. If you are accessing this piece on another domain, it was stolen and republished in violation of US & international copyright & trademark laws. The original version of this piece can be read at https://www.tickerreport.com/banking-finance/3360325/digitalglobe-dgi-earning-somewhat-positive-press-coverage-report-shows.html.

Top 10 Warren Buffett Stocks To Invest In Right Now: MarineMax, Inc.(HZO)

Advisors' Opinion:

• [By Lisa Levin]

  MarineMax, Inc. (NYSE: HZO) shares were also up, gaining 24 percent to $21.80 as the company posted upbeat Q2 results and raised its FY18 outlook.

  Equities Trading DOWN

• [By Lisa Levin]

  MarineMax, Inc. (NYSE: HZO) shares were also up, gaining 24 percent to $21.75 as the company posted upbeat Q2 results and raised its FY18 outlook.

  Equities Trading DOWN

• [By Ethan Ryder]

  MarineMax (NYSE: HZO) and Advance Auto Parts (NYSE:AAP) are both retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, institutional ownership and valuation.

• [By Max Byerly]

  Get a free copy of the Zacks research report on MarineMax (HZO)

  For more information about research offerings from Zacks Investment Research, visit Zacks.com

• [By Max Byerly]

  MarineMax, Inc. (NYSE:HZO) EVP Charles A. Cashman sold 25,000 shares of the business’s stock in a transaction dated Monday, May 7th. The stock was sold at an average price of $22.92, for a total value of $573,000.00. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through the SEC website.

• [By Lisa Levin]

  MarineMax, Inc. (NYSE: HZO) shares were also up, gaining 24 percent to $21.70 as the company posted upbeat Q2 results and raised its FY18 outlook.

  Equities Trading DOWN

Top 10 Warren Buffett Stocks To Invest In Right Now: Patriot Transportation Holding, Inc.(PATI)

Advisors' Opinion:

• [By Shane Hupp]

  Patriot Transportation Holding Inc (NASDAQ:PATI) VP John D. Milton, Jr. sold 5,601 shares of the business’s stock in a transaction that occurred on Thursday, June 14th. The shares were sold at an average price of $22.51, for a total value of $126,078.51. Following the sale, the vice president now owns 402 shares in the company, valued at $9,049.02. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website.

Top 10 Warren Buffett Stocks To Invest In Right Now: ATA Inc.(ATAI)

Advisors' Opinion:

• [By Paul Ausick]

  ATA Inc. (NASDAQ: ATAI) traded down about 14% Monday to set a new 52-week low of $0.82, based on revalued shares that closed at $0.72 on Friday but traded up about 250% on Monday at $2.53. Volume was more than 200 times the daily average of around 42,000. You’re on your own here to figure this one out.

Top 10 Warren Buffett Stocks To Invest In Right Now: CSX Corporation(CSX)

Advisors' Opinion:

• [By Max Byerly]

  Here are some of the news stories that may have effected Accern Sentiment’s rankings:

  Get Encana alerts: Encana Corp (ECA) Rising Higher 7.95% Over the Past Four Weeks (fisherbusinessnews.com) Encana Corporation (ECA) Most Active Stock Price trades 19.10% off from 200- SMA (nasdaqchronicle.com) Mid-Day Movers –: Encana Corporation (NYSE:ECA), CSX Corporation (NASDAQ:CSX), MGIC Investment Corporation … (journalfinance.net) Featured Stock: Encana Corporation (ECA) (stockquote.review) Active Stock Evaluation – Encana Corporation (NYSE: ECA) (financerater.com)

  ECA has been the subject of a number of research analyst reports. Morgan Stanley raised shares of Encana from an “equal weight” rating to an “overweight” rating and upped their price target for the company from $15.00 to $18.00 in a report on Wednesday, January 24th. Evercore ISI raised shares of Encana from an “in-line” rating to an “outperform” rating and upped their price target for the company from $10.84 to $16.00 in a report on Wednesday, March 7th. Zacks Investment Research downgraded shares of Encana from a “hold” rating to a “sell” rating in a report on Wednesday, January 31st. Scotiabank raised shares of Encana from a “sector perform” rating to an “outperform” rating and upped their price target for the company from $13.00 to $14.00 in a report on Friday, February 16th. Finally, Goldman Sachs cut their price target on shares of Encana from $17.25 to $14.00 and set a “buy” rating for the company in a report on Friday, April 13th. Two analysts have rated the stock with a sell rating, two have given a hold rating, twenty-two have given a buy rating and one has issued a strong buy rating to the stock. The stock presently has a consensus rating of “Buy” and a consensus target price of $15.28.

• [By Asit Sharma]

  CSX Corporation (NASDAQ:CSX) surprised investors with extremely healthy results on its release of first-quarter 2018 earnings Tuesday after the markets closed. While lower volumes compressed the company's top line, leading to essentially flat revenue of $2.9 billion, net income soared 92%, to $695 million, due to cost-cutting and the fruit of productivity initiatives. Shares responded in kind, as CSX stock gained nearly 8% in Wednesday's trading session.

• [By Garrett Baldwin]

  Let's talk the top news in the marijuana industry today… including four stocks that could surge up to 1,000% during this election year. Here's what you need to know…

  The Top Stock Market Stories for Tuesday Goldman Sachs Group Inc. (NYSE: GS) is leading a busy day of earnings reports on Tuesday. Shares are off 0.4% after the firm despite reporting a 40% year-over-year jump in profits and stronger-than-expected revenue. The firm reported earnings per share (EPS) of $5.98 on top of $9.40 billion in revenue. The Wall Street giant was expected to report EPS of $4.67 on top of $8.71 billion in revenue. The investment bank's first six months of 2018 were its strongest in nine years. The stock slipped after the company announced that president David Solomon will be replacing CEO Lloyd Blankfein when he steps down from his role. Blankfein has been CEO for 12 years. It's fair to say that Amazon.com Inc. (Nasdaq: AMZN) went to the dogs on Monday. The company has extended its Prime Day promotion through 3 a.m. on Wednesday. The announcement came after the firm suffered significant outages during the start of the event on Monday afternoon. Rather than get access to deals, many customers were met with pictures of dogs, the firm's standard error page. Finally, pay close attention to events on Capitol Hill on Tuesday. The U.S. House Judiciary Committee will question leaders of Alphabet Inc. (Nasdaq: GOOGL), Twitter Inc. (NYSE: TWTR), and Facebook Inc. (Nasdaq: FB) about how they store and filter user content. Last year, the Senate and House of Representatives slammed the companies for their roles in and responses to Russia's interference in the 2016 election. Three Stocks to Watch Today: CSX, NFLX, KKR CSX Corp. (Nasdaq: CSX) will help lead today's earnings calendar. Wall Street expects that the company will report EPS of $0.86 on top of $2.98 billion in revenue. Shares of Netflix Inc. (Nasdaq: NFLX) slipped after the firm's user-growth estimates and quart
• [By ]

  CSX Corp. (CSX) shares rose slightly ahead of its first-quarter financial results, which will be released after the bell Tuesday, April 17.

Top 10 Warren Buffett Stocks To Invest In Right Now: Koppers Holdings Inc.(KOP)

Advisors' Opinion:

• [By Logan Wallace]

  Mackay Shields LLC reduced its holdings in shares of Koppers Holdings Inc. (NYSE:KOP) by 61.8% during the 2nd quarter, according to the company in its most recent 13F filing with the SEC. The institutional investor owned 22,786 shares of the specialty chemicals company’s stock after selling 36,800 shares during the period. Mackay Shields LLC owned about 0.11% of Koppers worth $874,000 at the end of the most recent reporting period.

• [By Logan Wallace]

  Koppers (NYSE:KOP) was downgraded by ValuEngine from a “hold” rating to a “sell” rating in a research report issued to clients and investors on Friday.

• [By Stephan Byrd]

  Koppers (NYSE:KOP) was upgraded by equities research analysts at TheStreet from a “c” rating to a “b-” rating in a report released on Friday.

Top 10 Warren Buffett Stocks To Invest In Right Now: Top Image Systems Ltd.(TISA)

Advisors' Opinion:

• [By Ethan Ryder]

  Get a free copy of the Zacks research report on Top Image Systems (TISA)

  For more information about research offerings from Zacks Investment Research, visit Zacks.com

• [By Money Morning Staff Reports]

  Before we get to our latest pick, here are last week's top-performing penny stocks:

  Penny Stock Sector Current Share Price Last Week's Gain Melinta Therapeutics Inc. (NASDAQ: MLNT) Healthcare $1.74 104.01% Pernix Therapeutics Holdings Inc. (NASDAQ: PTX) Healthcare $0.83 84.40% Top Image Systems Ltd. (NASDAQ: TISA) Healthcare $0.82 59.85% Jason Industries Inc. (NASDAQ: JASN) Healthcare $2.21 58.99% Maxwell Technologies Inc. (NASDAQ: MXWL) Financial $4.66 51.79% Marathon Patent Group Inc. (NASDAQ: MARA) Healthcare $0.52 51.47% Forward Pharma A/S (NASDAQ: FWP) Basic Materials $1.53 43.57% Dixie Group Inc. (NASDAQ: DXYN) Healthcare $1.40 42.86% Trevena Inc. (NASDAQ: TRVN) Services $1.41 39.60% Alliance MMA Inc. (NASDAQ: AMMA) Healthcare $4.95 36.18%

  Don't Miss Out: The Treasury is sitting on an $11.1 billion cash pile, and a loophole entitles Americans to a sizable portion. Some are collecting $1,795, $3,000, or $5,000 every month thanks to this powerful investment…

• [By Joseph Griffin]

  Get a free copy of the Zacks research report on Top Image Systems (TISA)

  For more information about research offerings from Zacks Investment Research, visit Zacks.com

Top 10 Warren Buffett Stocks To Invest In Right Now: China Petroleum & Chemical Corporation(SNP)

Advisors' Opinion:

• [By Todd Campbell]

  The following table highlights the 10 biggest energy companies by market capitalization. Some of these companies operate upstream, midstream, and downstream businesses, but all of them derive the majority of their revenue from upstream operations.

  Rank Company Market Cap 1 ExxonMobil $348 billion 2 Royal Dutch Shell (NYSE:RDS-A)(NYSE:RDS-B) $286 billion 3 Chevron (NYSE:CVX) $223 billion 4 Petrochina Co. Ltd. (NYSE:PTR) $218 billion 5 Total SA (NYSE:TOT) $163 billion 6 BP Plc (NYSE:BP) $143 billion 7 China Petroleum (NYSE:SNP) $107 billion 8 Equinor ASA (NYSE:EQNR) $89 billion 9 ConocoPhillips (NYSE:COP) $84 billion 10 Schlumberger Ltd. (NYSE:SLB) $84 billion

  Data source: Yahoo! Finance on Sept. 13, 2018.

• [By Joseph Griffin]

  Sinopec (NYSE:SNP) announced a Semi-Annual dividend on Wednesday, March 28th, Zacks reports. Investors of record on Friday, May 25th will be paid a dividend of 4.568 per share by the oil and gas company on Thursday, June 21st. The ex-dividend date is Thursday, May 24th.

• [By Ethan Ryder]

  These are some of the news articles that may have effected Accern’s scoring:

  Get China Petroleum & Chemical alerts: China Petroleum & Chemical (SNP) and Statoil (STO) Critical Analysis (americanbankingnews.com) Sinopec to Import Record Crude Volumes From United States (finance.yahoo.com) Read This Before Buying China Petroleum & Chemical Corporation (HKG:386) For Its Upcoming $0.4 Dividend (finance.yahoo.com) Chevron (CVX) vs. Sinopec (SNP) Financial Analysis (americanbankingnews.com) Sinopec (SNP) Plans $4.57 Semi-Annual Dividend (americanbankingnews.com)

  China Petroleum & Chemical traded down $5.56, hitting $94.22, during trading on Thursday, MarketBeat Ratings reports. The company had a trading volume of 254,400 shares, compared to its average volume of 190,689. The stock has a market capitalization of $125.83 billion, a PE ratio of 16.92, a price-to-earnings-growth ratio of 1.83 and a beta of 1.29. China Petroleum & Chemical has a 1-year low of $69.60 and a 1-year high of $105.61. The company has a quick ratio of 0.62, a current ratio of 0.98 and a debt-to-equity ratio of 0.12.

• [By Max Byerly]

  News headlines about Sinopec (NYSE:SNP) have been trending somewhat positive on Saturday, Accern reports. Accern identifies positive and negative media coverage by reviewing more than twenty million news and blog sources in real time. Accern ranks coverage of public companies on a scale of negative one to positive one, with scores nearest to one being the most favorable. Sinopec earned a coverage optimism score of 0.23 on Accern’s scale. Accern also gave headlines about the oil and gas company an impact score of 45.9265677546286 out of 100, indicating that recent media coverage is somewhat unlikely to have an effect on the stock’s share price in the near term.

Top 10 Warren Buffett Stocks To Invest In Right Now: Diebold, Incorporated(DBD)

Advisors' Opinion:

• [By Paul Ausick]

  Diebold Nixdorf Inc. (NYSE: DBD) dropped about 25% Friday to set a new 52-week low of $3.55. Shares closed at $4.75 on Thursday, and the stock’s 52-week high is $23.50. Volume totaled around 13 million, about six times the daily average. The company had no specific news.

• [By Matthew Frankel, CFP®]

  It's been a rough couple of weeks for Diebold Nixdorf (NYSE:DBD) shareholders. After a disappointing earnings report that included the company saying it may have trouble with its debt load, and a subsequent wave of short-selling, Diebold plunged by a staggering 65% during the first nine days of August.

• [By Ethan Ryder]

  Here are some of the media headlines that may have impacted Accern Sentiment Analysis’s analysis:

  VeriFone (PAY) and Diebold Nixdorf (DBD) Financial Survey (americanbankingnews.com) NCR (NCR) versus Diebold Nixdorf (DBD) Critical Survey (americanbankingnews.com) Diebold Nixdorf, Incorporated (DBD) stock represents -49.50% move from 52-week high (analystrecommendation.com) Self-checkout System Market 2018 Key Players – Diebold Nixdorf, ECR Software (ECRS) Corp., Pan-Oston Co, NCR … (theanalystfinancial.com) Diebold Nixdorf (DBD) Downgraded to “Neutral” at JPMorgan Chase (americanbankingnews.com)

  Shares of Diebold Nixdorf stock opened at $14.80 on Monday. The company has a current ratio of 1.39, a quick ratio of 0.98 and a debt-to-equity ratio of 3.53. Diebold Nixdorf has a 52 week low of $12.90 and a 52 week high of $29.80. The stock has a market capitalization of $1,123.92, a price-to-earnings ratio of 13.10, a price-to-earnings-growth ratio of 4.24 and a beta of 2.05.

• [By Shane Hupp]

  Here are some of the news headlines that may have effected Accern Sentiment Analysis’s rankings:

  Get Diebold Nixdorf alerts: DIEBOLD NIXDORF INTRODUCES INTEGRATED DIGITAL ONBOARDING SERVICE FOR LEADING BANK IN MIDDLE EAST (cmo.com.au) Global Interactive Kiosk Market Share and Outlook by 2023: Source Technologies, KIOSK Information Systems … (chemicalreport24.com) Diebold Nixdorf Shares Down 23.1% Since SmarTrend’s Sell Call (DBD) (mysmartrend.com) Diebold Nixdorf Inc (DBD) Expected to Post Quarterly Sales of $1.10 Billion (americanbankingnews.com) Brokerages Expect Diebold Nixdorf Inc (DBD) to Announce $0.01 Earnings Per Share (americanbankingnews.com)

  Shares of Diebold Nixdorf stock remained flat at $$12.10 during trading hours on Wednesday. The stock had a trading volume of 402,311 shares, compared to its average volume of 1,270,288. Diebold Nixdorf has a twelve month low of $11.43 and a twelve month high of $25.00. The firm has a market cap of $919.09 million, a price-to-earnings ratio of 10.71, a PEG ratio of 3.95 and a beta of 2.01. The company has a current ratio of 1.31, a quick ratio of 0.86 and a debt-to-equity ratio of 3.70.

• [By Stephan Byrd]

  10 15 Associates Inc. boosted its stake in Diebold Nixdorf Inc (NYSE:DBD) by 9.6% in the 1st quarter, according to its most recent disclosure with the Securities and Exchange Commission (SEC). The firm owned 107,563 shares of the technology company’s stock after buying an additional 9,425 shares during the period. 10 15 Associates Inc. owned 0.14% of Diebold Nixdorf worth $1,656,000 at the end of the most recent reporting period.

National Health Investors Inc (NHI) Q4 2018 Earnings Conference Call Transcript

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National Health Investors Inc  (NYSE:NHI)Q4 2018 Earnings Conference CallFeb. 19, 2019, 12:00 p.m. ET

Contents: Prepared Remarks Questions and Answers Call Participants Prepared Remarks:

Colleen Schaller -- Director, Investor Relations

Hello, everyone. This is Colleen Schaller, Director of Investor Relations. Welcome to the National Health Investors Conference Call to review the Company's results for the fourth quarter of 2018. On the call with me today is Eric Mendelsohn, President and CEO; Roger Hopkins, Chief Accounting Officer; Kevin Pascoe, Chief Investment Officer; and John Spaid, Executive Vice President of Finance.

The results as well as notice of the accessibility of this conference call on a listen-only basis over the Internet were released this morning before market opened in a press release that's been covered by the financial media. As we start, let me remind you that any statements in this conference call which are not historical facts are forward-looking statements. NHI cautions investors that any forward-looking statements may involve risks or uncertainties and are not guarantees of future performance. All forward-looking statements represent NHI's judgment as of the date of this conference call. Investors are urged to carefully review various disclosures made by NHI in its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in NHI's Form 10-K for the year ended December 31st, 2018. Copies of these filings are available on the SEC's website at www.sec.gov or on NHI's website at www.nhireit.com.

In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in NHI's earnings release and related tables and schedules, which have been filed on Form 8-K with the SEC. Listeners are encouraged to review those reconciliations provided in the earnings release together with all other information provided in that release.

I'll now turn the call over to Eric Mendelsohn.

Eric Mendelsohn -- President & Chief Executive Officer

Thank you, Colleen. Today, I'll talk about the opportunities and challenges NHI will execute on through 2019. Since our Q3 earnings release, we've closed a number of new investments and completed the Holiday restructure including the acquisition of the Vero Beach building. Our pipeline is as active as I've ever seen it with some distressed product as well as stabilized. Our focus on operator relationships and our low cost of capital are significant contributors to our activity. Our challenges this year come from the 5% of troubled operators that you've heard me speak about in the past. Let me first say that the operator that we entered into a forbearance agreement with in 2017 is doing great and we recently ended the forbearance agreement with them. We're delighted with their progress and are looking forward to growing with them in the future.

During Q4, we took possession of the three communities that were part of the litigation we continue to have with the affiliates of East Lake Capital. We've entered into transition and management agreements on two of the communities and an interim manager is in place on the third. We continue to have security deposits in place to offset the ongoing transition costs and expect to show positive momentum on the communities as the year progresses. At this time, the trauma inflicted by the previous operator was severe and we cannot give you a firm assessment on how quickly these properties will return to the form of cash flow, but we expect to have a much better picture to share with you during our Q1 call.

We also previously mentioned, there are two other operators that we're having difficulties with. The first one is the single property operator in Wisconsin that we expect to transition during Q1. This property is financially supported with deposits and the operator guarantee, mitigating the impact as the property is transitioned. The second operator situation is more uncertain at this time and more difficult for us to give you a definitive outcome. It consists of five memory care buildings run by Autumn Leaves. We are in talks to forebear LaSalle (ph) which includes failure to pay rent, but their continued ability to operate those communities is not certain. We are giving them some time during which they will either perform or we will move on to plan B.

Moving on to our opportunities, we're extremely excited to enter into a new investment with LCS on a project very similar to our Timber Ridge project in Issaquah, Washington. LCS and their entrance fee product continues to experience very robust demand. The new LCS Sagewood Phase II development is substantially pre-sold. We also announced two new relationships with Ignite and Wingate, both have interesting strategies around skilled nursing, which Kevin will talk about more in a moment.

As we gave guidance for 2019, we reflected on the challenges and the opportunities in front of us. It's my strong desire to continue to under-promise and over-deliver and this year is no exception. The entire NHI team is committed to making that happen by executing on our opportunities and by quickly addressing the challenges I previously mentioned. We will keep you well informed over the coming quarters on how we're doing.

With that, I'll turn the call over to Roger. Roger?

Roger R. Hopkins -- Chief Accounting Officer

Thanks, Eric. Hello everyone. Eric has just described the challenges we faced late in the fourth quarter with three tenants, which collectively accounted for 3.6% of our total revenue in 2018. Payment defaults on our lease agreements occurred, we engaged outside counsel to assert and protect the interests of our shareholders. We charged the escrow accounts of these tenants, a total of $2.5 million at year-end for payment of delinquent property taxes and our legal expenses including $135,000 for a portion of unpaid December rent associated with the repossession of three facilities leased to SH Regency Leasing and affiliate East Lake Capital.

We will pursue all measures to maximize the collection of originally scheduled cash rent of $10.6 million in 2019 plus the recovery of all expenses we incurred in the process of ensuring compliance with our lease agreements. We will also exercise our rights under agreements with personal guarantors to recover expenses and unpaid rent to us. Finally, we will transition leased operations to new tenants or third-party managers when we believe it is advisable. The situations we have described did not have a material impact on our planned financial results for the fourth quarter and full year.

In December, we announced $205.3 (ph) million in mortgage and construction financing with two operators bringing the total announced investments in 2018 to $364.4 million (ph). Last month, we announced $90.2 million in purchase leasebacks, so 2019 is off to a great start. We also have nearly $160 million in loan and development commitments described in our 10-K, which will be funded primarily in 2019.

NHI's management is focused on resolving the disruptions caused by the three tenants in default and on executing accretive new investments in our priority pipeline. For the fourth quarter of 2018, normalized FFO per diluted share declined to $1.35 from $1.37 (ph) in the same period one year ago, because of the recognition of straight-line rents for GAAP purposes, which was $4.2 million in the fourth quarter of 2018 compared to $7.1 million in the same period last year.

Normalized AFFO increased 4% to $1.27 per diluted share compared to $1.22 (ph) in the fourth quarter one year ago. For the full year, normalized FFO increased 3.2% to $5.46, normalized AFFO increased 6.1% to $5.04 per diluted share. As I've described on previous calls, at NHI we are more focused on the growth of AFFO because we exclude the accounting convention of straight-line rents, which tends to make comparability from period-to-period less useful. Furthermore, we believe AFFO is the best quarterly and annual indicator of growth in our portfolio and demonstrates our ability to increase quarterly dividends to shareholders.

NHI's total revenues for the fourth quarter and full year were $74 million and $294.6 million, which were 4.2% and 5.1% (ph) increases respectively over the same periods in 2017. These increases reflect good investment volume in both new deals and in the utilization of our capital to accomplish sizable renovation projects for tenants at our facilities, which automatically boost our lease revenue. Further, we are purchasing new buildings for our portfolio or renovating existing ones, we encourage our operators to maintain facilities, which are up-to-date and with appearances and finishes that today's seniors expect. We make acquisitions and provide funding for new construction and renovations by deploying a careful mix of debt and equity to maintain our low leverage profile as John will explain shortly. This approach has allowed NHI to access new debt and equity capital from both public and private sources. Our 2018 increases in interest expense and depreciation expense are reflective of our growing portfolio.

Our general and administrative expenses declined 8.3% to $2.8 million in the fourth quarter compared to $3.1 million in the prior year and increased only 2.5% for the full year to $12.5 million. These increases were only 4.3% of total revenues for 2018 and compared to 4.4% for the prior year. Our non-cash share-based compensation was $359,000 for the fourth quarter and $2.5 million for the full year. Approximately 60% of our annual non-cash compensation expense occurs in the first quarter due to vesting schedules.

Moving on to our dividend. This morning we announced a 5% increase in our quarterly dividend to $1.05 per outstanding share. We currently estimate our normalized FFO payout ratio for 2019 will be in the mid 70% range and our normalized AFFO payout range will be in the low to mid 80% range. These ratios may fluctuate throughout the year as we manage through our properties in transition.

As for our guidance in 2019, while we have significant new business and a robust schedule of funding commitments for 2019, the uncertainty over the three tenants in default described earlier makes us very cautious to estimate the expected growth in our non-GAAP financial metrics for 2019 as shown in our earnings press release this morning. We currently estimate normalized FFO will be in a range of $5.43 to $5.53 per diluted share for 2019 while we estimate normalized AFFO will be in a range of $5.04 to $5.10 per diluted share. These estimates include our expected new investments, the funding of our ongoing commitments mentioned earlier, and the composition of new debt and equity capital to properly align our capital resources for growth and maintaining low leverage. We will adjust our guidance as we are able to estimate with more certainty, the resolution of defaults among those tenants described earlier.

I'll now turn the call over to John Spaid, who will discuss our uses of debt and equity capital. John?

John Spaid -- Executive Vice President, Finance

Thank you, Roger. For the quarter ended December 31st, our debt capital metrics were net debt-to-annualized EBITDA 4.5 times; weighted average debt maturity at 5.3 years; and fixed charge coverage ratio of 5.6 times (ph). For the year ended December 31st, our weighted average cost of debt was 3.9%. NHI ended the fourth quarter with $84 million outstanding on our revolver leaving us with $466 million in available revolver capacity.

Turning to our ATM program, during the fourth quarter we sold 444,291 shares of our common stock. The shares were sold at an average price of $77.69 per share resulting in net proceeds after commissions of $34 million. Proceeds were used to reduce our revolver debt. After our fourth quarter ATM activity, we have approximately $192.4 million in capacity remaining under our shelf facility. With our leverage currently at the midpoint of our 4 times to 5 times (ph) net debt-to-EBITDA ratio, NHI continues to be well positioned for future accretive investments.

I'll now turn the call over to Kevin Pascoe to discuss the portfolio. Kevin?

Kevin Pascoe -- Chief Investment Officer

Thank you, John. Looking at the overall portfolio, at the end of the third (ph) quarter, the EBITDARM coverage ratio was 1.64 times, senior housing was 1.19 times, and our skilled portfolio was 2.58 times. Taking a look at our larger operating leases, Bickford Senior Living represents 18% of our cash revenue and has an EBITDARM coverage ratio of 1.1 times for the trailing 12 months ended September 30th. This EBITDARM calculation now exclude two smaller properties held for sale, which will be a net positive for Bickford once sold. The four remaining developments continue to lease up nicely on or ahead of schedule and add additional cash flow to the Bickford portfolio. These development properties excluded from same-store have a T12 EBITDARM coverage of 1.4 times as of the third quarter ended 2018. It is anticipated two of the four development properties will be rolling into the same-store coverage calculation next quarter.

The portfolio we purchased in mid-2018 in Ohio and Pennsylvania continues its transition into the portfolio. The capital improvements are nearly complete and Bickford will be well positioned to compete with these properties going into the spring selling month. Our relationship with Senior Living Communities represents 15% of our cash revenue including net entry fee income, their EBITDARM coverage ratio was 1.28 times on a trailing 12-month basis as of third quarter-end. We have agreed with SLC to take over the Charlotte property we took back from East Lake and we'll be working with SLC to reposition the asset, which is currently non-operational. We expect to reopen the building in late second quarter as a Class A asset similar to the high-end assets we have in our SLC portfolio.

Looking at National HealthCare Corporation, our partnership with NHC accounts for 14% of our cash revenue and had a corporate fixed charge coverage of 3.66 times. Holiday Retirement, which represents 14% of our cash revenue, had an EBITDARM coverage ratio of 1.17 times. The third quarter saw net positive move-ins and occupancy for the quarter average 89.2%.

Earlier this month, we announced the purchase of the Isles of Vero Beach, a senior living community in Florida owned by an affiliate Holiday Retirement. The community consists of 157 independent living units and 75 assisted living units. It was acquired for $38 million as a part of our lease restructure and will be leased back to an affiliate of Holiday for $2.6 million annually and added to the amended master lease announced in November of last year. The annual lease escalators began in November 1st, 2020 and vary between 2% and 3% of current rent based on an average (ph) revenue growth on our Holiday portfolio. This purchase was accomplished as part of the restructuring and extension of the Holiday amended master lease. As a result of this purchase and in consideration of the terms of the amended master lease, Holiday has made a cash payment to NHI of $17.1 million and relinquished $10.6 million in a cash security deposit. Beginning February 1st, 2019, annual cash rent for the portfolio was $34.1 million. Trailing 12 EBITDARM coverage on the Holiday portfolio would be 1.25 times as of third quarter-end adjusting for the impact of the recent lease amendment.

Moving on to other new investments, we are delighted to expand our relationship with Life Care Services. In December, NHI committed up to $180 million to recapitalize and finance the expansion of Sagewood, a 567 unit Continuing Care Retirement Community in Scottsdale, Arizona. At closing, NHI funded $86.8 million of this commitment. The Class A CCRC currently consists of 316 independent living units, 44 assisted living units, 28 memory care units and 78 skilled nursing beds, and the project will fund the completion of a 101-unit independent living expansion. Serving the greater Phoenix/Scottsdale area, the existing independent units have approached 100% occupancy in 2018 and the expansion is 96% presold. The borrower is a joint venture between Westminster Capital and LCS. The financing includes a $118.8 million senior loan and a $61.2 million construction loan with proceeds from the entrance fees of the new expansion to be applied to the construction loan balance. The senior loan has a 10-year maturity and a 7.25% interest rate that escalates 10 basis points per year after the third year of the loan. The construction loan has a five-year maturity and an 8.5% interest rate.

Also in December, we announced a commitment to finance the development of a 144-bed skilled Nursing Facility in Oak Creek, Wisconsin, near Milwaukee, for a commitment of $25.4 million with a 9.5% initial yield. The yield earned during construction will be capitalized into NHI's investment. The initial funding under the commitment totaled $4.7 million. Construction is under way and expected to be completed in the second quarter of 2020. A 12-year lease term begins post-construction with two 10-year renewals and a 2% annual escalator. In addition, there is a $2 million earn out based on the operator meeting certain metrics in 2024 and 2025. The facility, Ignite Medical Resorts Oak Creek, will be operated by a tenant entity owned by affiliates of Villa Healthcare and Ignite Medical Resorts. We are excited about owning new skilled nursing product and also Ignite's hospitality focused operating strategy while taking on medically complex patients.

In January, we announced the purchase and leaseback of the senior living campus, Wingate at Silver Lake in Massachusetts for a total investment of $50.3 million. The lease has a 10-year maturity with three, five-year renewal option and an initial annual lease rate of 7.5% plus annual fixed escalators. NHI has committed up to $1.9 million for agreed-upon capital improvements to the campus over the next two years, which we added to the lease base. The campus, located south of Boston in Kingston, consists of three separate buildings with 34 independent living units, 69 assisted living units, and 164 skilled nursing beds. The operator, an affiliate of Wingate Healthcare, is a family owned business that has been in operation for over 25 years and currently operates 37 communities predominantly located in the Northeast. We like Wingate campus approach to senior housing.

Turning to our pipeline, we saw an increase in activity during the second half of the year in both senior housing and skilled nursing opportunities, which we're able to turn into accretive transactions with high quality operating partners. As Eric mentioned, the current pipeline is very positive (ph) and we feel very positive about our ability to continue to make accretive investments.

With that, I'll hand the call back over to Eric.

Eric Mendelsohn -- President & Chief Executive Officer

Thank you, Kevin. And with that, we'll open the line for questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions) Our first question coming from the line of Chad Vanacore with Stifel. Please proceed with your question.

Chad Vanacore -- Stifel -- Analyst

All right. Thanks and good morning all. So how much recovery of these non-performing leases is assumed in 2019 guidance. Any additional details on changes in rent assumptions or a rough timeline could help us with modeling?

Eric Mendelsohn -- President & Chief Executive Officer

Sure, Chad. This is Eric. As you noticed, our guidance range is very wide. So we've -- the low-end of the guidance assumes very little rent and the high-end of the guidance assumes medium amount of rent based on the previous rent amount.

Chad Vanacore -- Stifel -- Analyst

All right and Eric, you had mentioned that one property you are already transitioning to, I assume that you're getting rent from that. Another property is going to be offline for a little while, are you putting some CapEx, can you give any more details around those?

Kevin Pascoe -- Chief Investment Officer

Sure. This is Kevin. Yes, the Charlotte community that we have that would be leased to Senior Living Communities is currently being repositioned. We're going to provide CapEx dollars and then lease the community to them. So there will be a period of time where there is a lease-up for that community and very minimal rent coming off of what goes through the lease-up, but we're going to reopen that as a repositioned asset that will be much improved physical plant from what we took back over.

Chad Vanacore -- Stifel -- Analyst

All right. Kevin, did you say that that was offline right now, the building is dark and then you're going to have SLC go out there and lease it up?

Kevin Pascoe -- Chief Investment Officer

Yes, that is right.

Chad Vanacore -- Stifel -- Analyst

Okay. And then, it's going to reopen, did you say second quarter, I couldn't hear you on that initial comment?

Kevin Pascoe -- Chief Investment Officer

Yes, it should be later in the second quarter is what we're expecting at this time.

Chad Vanacore -- Stifel -- Analyst

Okay and then just thinking about the progression of earnings throughout the year. Is it fair to assume that we should expect a dip in the first quarter of '19 before recovery later through the year?

Roger R. Hopkins -- Chief Accounting Officer

Chad, this is Roger. You should probably foresee a dip in the first quarter and as you know that is a period of time where we also issue our annual stock option awards. So there's a natural dip there due to vesting of a good portion of those in the first quarter and we will be continuing to work through the three tenant problem that we've described.

Chad Vanacore -- Stifel -- Analyst

All right. So, one of those issues was with East Lake that's got three properties but you're moving one. What's resolved this quarter? What's left to be dealt with on that front?

Eric Mendelsohn -- President & Chief Executive Officer

So we've got two of the three under new arrangements with new operators. We have an interim operator on the third community that we took back. We will have a -- we're working toward finalizing (technical difficulty) now and we'll be able to give an update on that in the next call.

Chad Vanacore -- Stifel -- Analyst

All right. I will hop back in the queue. Thanks.

Eric Mendelsohn -- President & Chief Executive Officer

Thanks, Chad.

Operator

Thank you. Our next question coming from the line of Jordan Sadler with KeyBanc Capital Markets. Please proceed with your question.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Hey, guys. Good afternoon. Wanted to just come back to the guidance a little bit, it seems that there -- you've got the year-to-date investment activity baked in, but -- and maybe some additional activity, I just want to clarify what you're guiding us toward in the release here?

Roger R. Hopkins -- Chief Accounting Officer

This is Roger. We do have a line of sight on investment in the first half of this year. We've already announced $90 million so far in January. We had good volume last year, which (ph) there will be a spillover effect this year and about $160 million of commitments to loans and leases, the majority of which we will fund this year. As mentioned, first quarter is tempered by the fact that a good number of the stock options that are awarded to our employees each year will vest in the first quarter and we're working through the three tenant problems that we have outlined and so those are going to take a little while to resolve in the first quarter and we think we'll have much more clarity on the direction of those three portfolios by our May conference call.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

But specifically, you're saying there is an incremental $160 million of funding baked into the guide or is that include the $90 million you've already done or --

Roger R. Hopkins -- Chief Accounting Officer

It does, it does include the incremental investment of $160 million in commitments over the year and --

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

In addition to the $90 million?

Roger R. Hopkins -- Chief Accounting Officer

Yes and we have -- we've been very conservative because there's a lot of unknowns with respect to the three portfolios that we've described and we're working very diligently on those portfolios and we expect to have more clarity in May.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Roger, what portion of the $160 million comes from the remaining to be funded amounts under your -- the investments that were made in 2018, that $136 million or $137 million that's remaining?

Roger R. Hopkins -- Chief Accounting Officer

Well. For example, Kevin described our new investment with LCS (multiple speakers) on the Sagewood property and we've got approximately $93 million (ph) yet to fund on that the majority of which would occur in 2019. We also have construction commitments to Bickford Senior Living, which will be funded monthly. We've got several renovation projects. We mentioned the new tenant Ignite Medical Resort, we'll be funding construction there this year, remaining of about $20 million.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay. So, it sounds like the bulk of the $160 million is comprised of your existing funding commitments, just having to fund?

Roger R. Hopkins -- Chief Accounting Officer

That's exactly right and the majority of which we believe will occur in calendar 2019.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay and then maybe while I have you, Roger. The -- just taking a little bit of a different angle on Chad's line of questioning there. Can you maybe walk us from 4Q to 1Q in terms of revenue from those three combined tenants that are troubled as you described them. So, if those three tenants amount to roughly $10 million of total rental income on an annualized basis, how much did you book in 4Q, is that a $2.5 million number from those few tenants and then how much will you be booking in 1Q?

Roger R. Hopkins -- Chief Accounting Officer

Well, let me take just a little bit different approach with it because I examined the revenue that we lost from those three tenants. We couldn't expect what would occur that did occur and so let me just give you a little context. In the case of the East Lake portfolio as we described in our 10-K, we took possession of two buildings on December 7th and then we took possession of the third building on December 14th. We had been in litigation for over a year, it was completely unpredictable as to when we would be able to take possession and then Eric and Kevin have described our strategy with respect to putting new operators in those facilities. So we had a loss of revenue in December related to East Lake with regard to a small one property operator, we did not --

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Can you quantify that? You just say, you just didn't collect rent for December?

Roger R. Hopkins -- Chief Accounting Officer

Yes, the cash rent and straight-line rent together would be approximately $320,000 that was not collected, which we could not foresee.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay.

Roger R. Hopkins -- Chief Accounting Officer

Okay. The second one was a one property portfolio...

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

And would you -- sorry -- and so, you would say you collected $640,000 from that tenant in the quarter, because you got October and November?

Roger R. Hopkins -- Chief Accounting Officer

I don't have the exact numbers in front of me...

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay, I can follow-up with you offline.

Roger R. Hopkins -- Chief Accounting Officer

Sure.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

It's fine, but I think for the sake of the community it would be helpful because you obviously, I know this is -- and Eric, you describe them as a small amount or 5% of your tenants that you have exposure to causing this disruption, but it is disruptive to the earnings and we're trying to obviously model this, some of this is known activity as it relates to you guys, I know there's color in the K, but there's not -- the level of detail that would be helpful to be able to sort of project your earnings throughout the rest of this year and if we get a little bit more granularity it might help?

Eric Mendelsohn -- President & Chief Executive Officer

Sure.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

And then my only other question there is, do you still have one property left with East Lake? Is that the CCRC? What's the status there?

Kevin Pascoe -- Chief Investment Officer

Sure. This is Kevin. We have two CCRCs that were leased to an affiliate of East Lake that are then sub-leased to an operator Watermark Communities, who is a high quality operator doing a good job. Those buildings are doing fine. So, they are not the operator of those buildings.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay. Those are going to stay in place?

Eric Mendelsohn -- President & Chief Executive Officer

Yes. They are still in place and performing.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay and then my last question for you is what's in the guidance as it relates to holiday's rent? I think there was a rent -- you talked about the rent cut being to $31 million in cash rent for beginning January 1, '19, but what's the straight-line rent?

Roger R. Hopkins -- Chief Accounting Officer

Jordan, this is Roger. We may have to discuss that offline because I don't think I have a number readily available for that. We do have (technical difficulty) disclosure however about cash rent we expect from Holiday, which will be $31.5 million (ph) this year plus the property in Vero Beach, which we acquired on January 31st, that has first year rent of $2.550 million.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

I get it. Just a very big delta between 2017 -- sorry, '18 and '19 rent coming from that large tenant and you did recast that lease in the amendment and that will materially impact that straight-line rent number, which is how we get to the FFO guidance that you provide, which is that $5.43 to $5.53, you know, every $400,000 moves the needle and so, I'm just curious what's embedded in that guide that you just offered from the tenant, it can't be just $31 million I would imagine?

Roger R. Hopkins -- Chief Accounting Officer

Yes, there would be an impact to straight-line rent.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Right. So, little bit of color there would be helpful too. I'll hop back in the queue. Thank you.

Eric Mendelsohn -- President & Chief Executive Officer

Thanks, Jordan.

Operator

Thank you. Our next question coming from the line of Daniel Bernstein with Capital One. Please proceed with your question.

Daniel Bernstein -- Capital One -- Analyst

Hi. Good morning. Actually I want to switch gears a little bit to Bickford. That coverage has been coming down some. So maybe if we can talk about a little bit about what's impacting the coverage, their operations, is it systemic or is it just a couple of properties, and maybe -- we'll start there.

Kevin Pascoe -- Chief Investment Officer

Sure, Dan, this is Kevin. I guess what I would start with is a couple of things. First, what you're seeing in the coverage is a little bit of the wage pressure that we've been talking about the last few quarters. There has been some incremental costs that have come into the buildings as they continue (inaudible). There's also a little bit of transition that you're seeing there from the Minnesota portfolio that we had transitioned in last year, and then also the Ohio and Pennsylvania portfolio that we had in the middle of last year as well, which is still transitioning in, as I mentioned on the call, we've put some CapEx dollars in those buildings, feel like they're going to be in a good position to compete that are starting to get the wage situation in those specific buildings figured out. Going through the transition, there was some turnover. The previous operator was soliciting employment from their prior employees, things that we've guarded against, but it was still happening. So they're getting back up to speed. Again, that did put a little bit of pressure on the coverage. That said, we spent a lot of time with Bickford, we feel good about where their organization is. They continue to invest in the company and in the buildings and the other thing I'd add is if you looked at the markets that we have Bickford buildings in, the occupancy is in line with those little (ph) after-market, but they do a better job of being able to drive revenue and increase revenue overtime. So, I still feel really good about their ability to compete and do well and the other thing I remind you of is that there are buildings that they have in their portfolio outside of ours and other investments that they have that provides cash flow to the organization. So, again, we spent a lot (technical difficulty).

Daniel Bernstein -- Capital One -- Analyst

Hey, guys, you just cut off.

Kevin Pascoe -- Chief Investment Officer

Dan, you hear us?

Daniel Bernstein -- Capital One -- Analyst

I can hear you now, yes.

Kevin Pascoe -- Chief Investment Officer

Sorry about that. I'm not sure where it cut off, but yes, we feel good about the organization. We spent a lot of time with them and I feel like they're doing all the right things to be able to compete and do well.

Daniel Bernstein -- Capital One -- Analyst

Is there anything in terms of the transition assets that you could say occupancy or I think you mentioned the labor getting that under control, anything else on those transition assets you can say that, that make you feel comfortable?

Kevin Pascoe -- Chief Investment Officer

Mainly just that, that we've put the CapEx dollars and those buildings haven't been touched in probably 10 or 15 years. So to bring them back up to the quality that they needed to be and be more in line with what Bickford presents to the market will be really good for them to go out and be able to sell those buildings and be able to present well to the market. And we've got the spring selling season coming up here where they usually see a good occupancy increase. So, we're excited about the opportunity they have.

Daniel Bernstein -- Capital One -- Analyst

Okay and then I know this is a little bit further out, but there were some purchase options in 2020, I was in reading in the K, it worked about maybe $9 million rent, any insight on how those tenants might react or whether they would exercise those options and when do they have to notify you if they exercise those options to purchase the assets?

Kevin Pascoe -- Chief Investment Officer

Yes. This is Kevin, again. Each one's a little bit different. So the notice period that we get is again a little bit different, the way the option works is different. We go into it expecting that they're going to, and that's the way we're going to manage that relationship. That said, we're going to be active in trying to see if there's a way to reposition or buyout the option or anything is on the table in terms of being able to recapitalize those buildings to the extent we want to keep them. There's some of those that I would say would be OK if they bought. So each one is a little bit different, but I would -- the way I approach it is expecting them to exercise it, it is their option, so that's the way that we generally think about it.

Daniel Bernstein -- Capital One -- Analyst

Okay. One switching gears, just wanted to ask about the acquisition pipeline, where do you see cap rates heading, where is the kind of underwriting you're doing in terms of lease coverage. Just trying to get a sense of why there's more opportunity today than there was six months ago, I mean what are you seeing different in terms of the bid-ask spread and what's (technical difficulty).

Eric Mendelsohn -- President & Chief Executive Officer

Again, I feel like that varies widely by market, if you're going into what are lot considered your core or core plus market those cap rates have stayed compressed for sometime now, and I haven't really seen that change a lot. I think we have talked about on prior calls that a lot of the areas that we service, more of the secondary type markets, there has been a little bit of cap rate expansion. I don't know that the pool of opportunity has changed that much. I think what we're trying to communicate is that there is still a fair amount of activity and that we're still able to get free (ph) transactions done, which we've demonstrated a couple of times now. So again, feel good about the pipeline, feel good about what's out there and our ability to make accretive investments. Hopefully that answers your question.

Daniel Bernstein -- Capital One -- Analyst

Almost, but would you say you're looking more at value-add and construction loans, like what you've been doing, places where you can put CapEx in, something that's been under-managed maybe under-funded over the last five years, 10 years and tend (ph) it to one of your better operators and turn those assets around, that's kind of how it sounds to me, but...

Eric Mendelsohn -- President & Chief Executive Officer

Yes. I think that's fair. We are looking -- we like stable assets and to the extent they can provide cash flow and stability to the portfolio, but the value is going to be in those value-add opportunities. When we look at opportunities, each one is a little bit different. We're always trying to price it through a management fee and CapEx to make sure we get an assessment of cash flow and then refine the appropriate cash flow stream. That said, there is a story that's along with some of the asset can be repositioned and create value and coverage down the road, that's definitely something that (inaudible) entertain and to the extent we can have a portfolio that has a little bit of all of that, that's really interesting.

Daniel Bernstein -- Capital One -- Analyst

Okay. Sounds good. I'll hop off. Thank you.

Operator

Thank you. Our next question coming from the line of Todd Stender with Wells Fargo. Please proceed with your question.

Todd Stender -- Wells Fargo -- Analyst

Hi. Thanks, Kevin, probably just stick with you, you extended more credit to Life Care, looks like in Q4. Can you talk about what Life Care's using the money for. The coupon is a little higher this time I guess than your last senior loan to them. Can you just describe maybe some of the underwriting and just some of the details around that? Thanks.

Kevin Pascoe -- Chief Investment Officer

Sure. So, this is a Class A CCRC in the Greater Scottsdale, Phoenix area Arizona. The pricing was up mainly just because really it's a large investment. The terms were a little bit different that -- again, we're making a large investment with them and it was a small increase (ph) over what we had before. And this one, the thing that is a little bit different is we do not have a true purchase option. We will have the ability to look at it from (ph) sale, but there is definitely value in having that option, so we felt like a premium is warranted if we weren't getting that defined option like we had on Timber Ridge. So, that's kind of the pricing aspect. This -- the funds are going to pay for the next expansion which is 101 unit independent living, so the full of dollars were to recap the loan that was in place and then pay for the expansion. It is basically the exact same deal from that perspective as what we did with Timber Ridge, so we'll fund up to the full about $180 million (ph) commitment, and then as entry fee comes in from that expansion, the 100-unit expansion that will pay down the loan and that will be left with -- I think the numbers $118 million (ph) in senior loan at the end of the day.

Todd Stender -- Wells Fargo -- Analyst

And for how long, what's the duration (technical difficulty).

Kevin Pascoe -- Chief Investment Officer

The term is similar, the 10-year term. We do have a lock out for a couple of years, so it will be out there for at least two years and then there is prepayment fees thereafter. So, we would expect to have the loan -- our expectation or at least what the way we understand the way they're looking at the world is they're going to get it built, they're going to get filled and then they'll look at a recapitalization event and at that point we'll be well positioned to have that look and see if that's an additional investment that we want to make.

Todd Stender -- Wells Fargo -- Analyst

Is this cash flowing, do they pay a coupon or does this just accumulate?

Kevin Pascoe -- Chief Investment Officer

It's cash flowing. Yes...

Todd Stender -- Wells Fargo -- Analyst

Got it. Just a quick one, the Vero Beach asset you just acquired, does that go into the existing master lease and any coverage on that individual property?

Kevin Pascoe -- Chief Investment Officer

It does go into the master lease and then the coverage would be similar to what you've seen on the portfolio, we sized it to be similar to how we resized the Holiday portfolio.

Todd Stender -- Wells Fargo -- Analyst

All right. Last one, so with Ignite Medical Resort, you've got just in your disclosure you described it as a development lease, I guess in your prepared remarks just sounds like it's standard issue development, it shows up as a 9.5% yield, but I imagine, some of that yield has the loan tucked in there, kind of distinguish what a market yield would look like on that property?

Kevin Pascoe -- Chief Investment Officer

Well, the yield to NHI is 9.5%. That is approved through construction and goes into our lease base. The way we would think about that is where we've done other skilled nursing is in kind of that 8.5%, 8% to 9.5% (ph) range, so to speak, so there is a premium that will go into development, which is why this is the rate (technical difficulty).

Todd Stender -- Wells Fargo -- Analyst

Okay. So day one, it's fully stabilized, what do you think the yield -- will it be a market yield property?

Kevin Pascoe -- Chief Investment Officer

NHI's yield or you're talking about cap rate?

Todd Stender -- Wells Fargo -- Analyst

Yes. I would say NHI, oh no, market cap rate, that's fair.

Kevin Pascoe -- Chief Investment Officer

It would be -- yes, cap rate on high quality skilled nursing, at least the way NHI would look at it would be kind of a low-double digit number. So call it 12%, 13% would be my guess at this point in time. if we're looking at a stabilized asset.

Todd Stender -- Wells Fargo -- Analyst

Got it. All right. Thanks.

Operator

Thank you. Our next question coming from the line of John Kim with BMO Capital Markets. Please proceed with your question.

John Kim -- BMO Capital Markets -- Analyst

Thanks. Good morning. So you have three troubled operators currently, include Holiday (inaudible) you had to deal with just in the past quarters (ph) I'm wondering if your guidance anticipate any other tenant issues in 2019?

Roger R. Hopkins -- Chief Accounting Officer

This is Roger. No, it does not. Certainly the impact of the non-payment in the fourth quarter -- including the other two aside from East Lake were impactful to -- the total impact to our FFO was about $0.04 relating to those events. On the plus side, we were able to invest money and with our ongoing commitments to new business, we were able to actually have a $0.01 higher result in AFFO on the top-end than we'd even projected. So, while we think the year-end finished well and we were successful, we certainly are considering how to deal with those three tenants that came up in the late in the fourth quarter was difficult.

John Kim -- BMO Capital Markets -- Analyst

So, it's not in your guidance, and I'm just wondering, if it is on your watch list, or do you think in a reasonable scenario for this year that there will not be any other tenant issues?

Eric Mendelsohn -- President & Chief Executive Officer

Hey, John. This is Eric. You know that our guidance is generally very conservative. Obviously this year includes the reduced Holiday rent and I'll remind everyone that if you applied this new rent on our 12-month trailing coverage, it would be roughly 1.25 (ph) lease coverage ratio, so we feel like that's a substantial improvement over where we were last year. So we consider Holiday dealt with and they don't have another lease escalator until next year. So that's the first issue that we've dealt with in terms of a lease amendment and a rent cut. We took a hard look at Bickford, we got a lot of questions about Bickford and we know people are concerned about that. We've done a deep dive with them in their operations, in their marketing strategy, in their portfolio. You'll see that two of their properties are held for sale that will be an accretive sale and help their coverage once those two properties are disposed off and then we've got the new developments coming online later in the year that will also help their coverage, so we are mindful of the thin coverage on Bickford and considered that when we planned our guidance.

John Kim -- BMO Capital Markets -- Analyst

Eric, on the coverage of Bickford, the one-one (ph) already excludes the two transition assets, correct?

Eric Mendelsohn -- President & Chief Executive Officer

Yes, it does.

John Kim -- BMO Capital Markets -- Analyst

So where do you think coverage will be by year-end, if you -- once you sell those and then you have the developments coming online?

Eric Mendelsohn -- President & Chief Executive Officer

It's a moving target, John, and because of the acquisition we did in Ohio and Pennsylvania, those properties have a lot of upside in terms of improving agency labor costs once they start hiring permanent positions and getting rid of the agency, you'll see an immediate improvement there and then some occupancy gains as well. So, I'm hesitant to predict how long that will take for those reasons.

John Kim -- BMO Capital Markets -- Analyst

Okay and a follow-up to your answer to Chad's question on what's in your guidance with (inaudible) with the transition operators, I know you gave a range in your guidance, but what is reasonable as far as what you've seen historically, what you anticipate. Should we expect like a 30% rent cut to get the coverage level to 1.25 (ph) or over, six months to nine months of downtime and then I guess as part of that, what kind of coverage do you expect underwriting to if you do restructure?

Roger R. Hopkins -- Chief Accounting Officer

Well, thinking of the three East Lake properties, we have one that's completely dark that's being renovated, so that will take six months or eight months and then you will have the lease-up after that, which could take 12 months to 15 months being optimistic. So, that Charlotte property is probably not going to start producing good NOI until 2020, mid-2020. The Nashville property that we took back is open and is still dealing with the transition trauma of lack of CapEx and lack of funds. So that's probably going to start showing a good recovery by the end of this year and then the one in Indiana is a question mark. We've got a temporary manager in there, I can tell you that the occupancy is very low and it's probably not losing money, but it's not making money. So all of these buildings, you'll probably start to see a lift in mid-2020.

John Kim -- BMO Capital Markets -- Analyst

Great. Thank you.

Operator

Thank you. (Operator Instructions) Our next question coming from the line of Eric Fleming with SunTrust Robinson Humphrey.

Eric Fleming -- SunTrust Robinson Humphrey -- Analyst

Hi. So, I wanted to ask a question from the other side of guidance. You guys have been really great at hitting your incentive targets of more than 5% growth on the AFFO line. Given where you've left the 2019 guidance right now -- is there -- what would you need to do to get to a 5% AFFO growth in '19 or is there a way to get there this year?

Eric Mendelsohn -- President & Chief Executive Officer

This is Eric. There is a way, but we don't have visibility on that right now. The way would be through accelerated acquisitions and that's something that we don't have control over. We're constantly working on it and constantly trying to wind up acquisitions that are accretive. So that's something that I can't give you clarity on at the moment. We'll probably have an update, given our guidance this year, it's something we'll be updating everyone every quarter.

Eric Fleming -- SunTrust Robinson Humphrey -- Analyst

Okay. I'll leave it that. Thanks.

Eric Mendelsohn -- President & Chief Executive Officer

Okay.

Operator

Thank you. Our next question coming -- is a follow-up question coming from the line of Jordan Sadler with KeyBanc Capital Markets. Please proceed with your question.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Hi, guys. Thanks again. I wanted to follow-up on Timber Ridge, did you mention whether or not you're exercising that option, I believe it expires in this month?

Kevin Pascoe -- Chief Investment Officer

Yes, it doesn't expire. It opens this month.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

It opens? Okay.

Kevin Pascoe -- Chief Investment Officer

We're actively evaluating.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay and can you remind us, I think the K indicates it's $115 million, a max price of $115 million or an agreed-upon fair market value, can you remind us sort of what kind of cap rate that would look like if exercised?

Kevin Pascoe -- Chief Investment Officer

So just to clarify, the minimum is $115 million with a fair market.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Sorry about that. Yes, sorry.

Kevin Pascoe -- Chief Investment Officer

Yes. So, it's a minimum of $115 million. It's a fair market option. So it's something that, again, we're actively negotiating and frankly, your question on the cap rate, that's something where we've been researching here over the last month or so to really hone in on what should be the appropriate cap rate for a Class A asset like this. So, we'll have to get back to you on that once we get further down the path, but it is something that we're very interested in, it's a fantastic asset, something that we've been very proud to have in the portfolio and something that we're taking a really hard look at.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Is that...

John Spaid -- Executive Vice President, Finance

No. Go ahead and ask your question. This is John Spaid.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

No. Go ahead, John, I'm sorry.

John Spaid -- Executive Vice President, Finance

So, I wanted to get back to you on -- actually, I wanted to get back to you on your straight-line rent question on Holiday because we should have been ready for that. So, let's just start with the original Holiday transaction of 25 assets. Cash $31.5 million, it looks like our straight-line will come in for the first 12 months with $6.25 million, so $37.75 million GAAP rent. Vero Beach then needs to be added into that equation, which looks like it will be $2.55 million for cash and another say $0.4 million for straight-line, $3 million. So, they're doing a little bit more work around Vero Beach and settling on that, but that should be pretty close to it. So that should give you what you need to determine your FFO impacts.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

What was the $6.25 million number, John?

John Spaid -- Executive Vice President, Finance

That's the straight-line rent.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

I guess the $37.75 million, that's a monthly number?

John Spaid -- Executive Vice President, Finance

No. (multiple speakers).

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

That's the annual straight line number.

John Spaid -- Executive Vice President, Finance

Yes.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Oh OK. Got you. Yes, $31 million plus $6 million, got it. Thank you. That's really helpful. How do I -- just bridging from 4Q to 1Q, do you know what the GAAP rent booked in 4Q was? (multiple speakers) that will make...

John Spaid -- Executive Vice President, Finance

I think it was $40.5 million, as I recall.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay. So, it would have been a quarter of that in 4Q.

John Spaid -- Executive Vice President, Finance

Yes.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay. That's going to make things really easy. I appreciate that very much.

John Spaid -- Executive Vice President, Finance

You're welcome.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

And then, Eric, you mentioned the distressed opportunity potentially. Can you maybe offer a little bit of insight in terms of the pipeline?

Eric Mendelsohn -- President & Chief Executive Officer

Sure, we're seeing more sales developments, more broken deals, a couple of developers who built beautiful buildings and they're a third or a half full and they want to sell them based on pro forma stabilized occupancy. So, more of those deals are starting to be surfaced and then we're also seeing what Kevin calls retread, which are deals that were marketed widely that are stabilized, but the pricing was so outrageous that nobody took them up on it. So they go back and regroup and come back six months or 10 months later with new pictures and a new broker and a new pro forma and see if they can get anyone interested.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay, that sounds senior housing-esq then...

Eric Mendelsohn -- President & Chief Executive Officer

Yes, it sounds like 2007 to me. I remember a lot of this stuff happening in 2007.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

That's helpful. And then lastly, well two others. One, just this legal recovery in the quarter, it looks like, can you just -- I may have missed what the driver of that was and is that included in the normalized FFO for the quarter?

Roger R. Hopkins -- Chief Accounting Officer

This is Roger. We did disclose that we charged the tenant escrow account for our legal expenses associated with collection of those rents. That was a portion of it. The other portion that we charged to their escrow account was their property taxes, which they had not paid and that was a substantial amount. So all together, we charged these tenants escrow accounts $2.5 million.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Well. Okay. So you must have -- and then you had $2.1 million of legal expenses in the quarter offsetting that, I'm just looking in the legal line, Roger, that says minus $396,000 under the expense category in your P&L?

Eric Mendelsohn -- President & Chief Executive Officer

Right. So, this is Eric. The legal expense is as you say and that was reimbursed and then we had some property taxes, which would show up elsewhere.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay. So that's just charging them back, but that's actually a recovery of prior expenses, I would imagine, prior quarter expenses?

Eric Mendelsohn -- President & Chief Executive Officer

Yes.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

(inaudible). Was that in normalized FFO, I don't know if it was backed out. Just curious?

Roger R. Hopkins -- Chief Accounting Officer

Well, our charge of those tenant escrow accounts would reduce our expenses, so it's in the net income when you start the reconciliation, that reimbursement of those expenses, if you will.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Yes, but you have a gain in the quarter. I'll follow-up, that's fine. And the last one I had for you, Eric, was just on Holiday in general. You made the comment that we should consider Holiday dealt with and from your perspective, I get that, but it seems like they've got one other creditor out there that just hasn't yet necessarily dealt with them that I know of at least and I'm kind of curious, do you think they as a corporate entity and credit are stabilized at this point?

Eric Mendelsohn -- President & Chief Executive Officer

That's a fair question, Jordan. When we were negotiating our settlement with them, we modeled what their span of control would look like with and without the Sabra buildings and with and without the Ventas buildings to make sure that they were still a viable business and manager and tenant if those buildings would go away and we determined that they would be, so I know that the Ventas settlement is still out there and we're waiting to see how that resolves itself.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay, do you know if they had recourse the entity -- to the corporate entity?

Eric Mendelsohn -- President & Chief Executive Officer

They had recourse to the guarantor entity, as we all did.

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Okay. Thank you.

Eric Mendelsohn -- President & Chief Executive Officer

All right, Jordan. Thank you.

Operator

Thank you. Mr. Mendelsohn, there are no further questions at this time. I will turn the call back to you.

Eric Mendelsohn -- President & Chief Executive Officer

All right, everyone, thanks for your time and attention and we'll see some of you at NIC in San Diego.

Operator

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

Duration: 69 minutes

Call participants:

Colleen Schaller -- Director, Investor Relations

Eric Mendelsohn -- President & Chief Executive Officer

Roger R. Hopkins -- Chief Accounting Officer

John Spaid -- Executive Vice President, Finance

Kevin Pascoe -- Chief Investment Officer

Chad Vanacore -- Stifel -- Analyst

Jordan Sadler -- KeyBanc Capital Markets -- Analyst

Daniel Bernstein -- Capital One -- Analyst

Todd Stender -- Wells Fargo -- Analyst

John Kim -- BMO Capital Markets -- Analyst

Eric Fleming -- SunTrust Robinson Humphrey -- Analyst

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