Earnings Call Transcript - CTO Q3 2022

Operator, Operator

Good day and thank you for standing by. And welcome to CTO Realty Growth Inc. Q3 2022 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Matt Partridge, Chief Financial Officer. Please, go ahead.

Matt Partridge, Chief Financial Officer

Good morning, everyone, and thank you for joining us today for the CTO Realty Growth third quarter 2022 operating results conference call. With me today is our CEO and President, John Albright. Before we begin, I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The Company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the Company's Form 10-K, Form 10-Q, and other SEC filings. You can find our SEC reports, earnings release, supplemental and most recent investor presentation on our website at ctoreit.com. With that, I’ll now turn the call over to John.

John Albright, CEO

Thanks, Matt, and good morning, everyone. I'm very pleased with our team's strong execution during the third quarter across all phases of our business. We opportunistically sold several legacy properties, including our multi-tenanted office property. And as we discussed during our last earnings call, we invested in our first public-anchored asset Madison Yards in Atlanta, Georgia. We also completed a number of capital markets transactions that fortified our balance sheet, continued to have good success with our leasing initiatives, and drove more than 36% year-over-year AFFO growth during the quarter. On top of it all, we had a nice start to the fourth quarter with our acquisition of West Broad Village in Richmond, Virginia, which is a very high-quality property that we believe has great long-term upside. If you look at our transaction activities over the past four months, we found some excellent grocery anchor opportunities as we continued our portfolio repositioning efforts by taking advantage of the disruption in the market and executing on strategic asset recycling. During the quarter, we sold 245 Riverside, our only remaining office property in Jacksonville, Florida. And we also sold two single-tenant assets in our master lease property outside of Miami and Hialeah, Florida for a total disposition volume of $57 million at a 6.3% blended exit cap rate. These disposition proceeds and the proceeds from our asset sales during the first half of the year effectively matched funded our purchase of Madison Yards. As we've highlighted in the past, the 162,500 square foot property sits on a great infill location along the belt line in Atlanta, Georgia. It was an opportunity to enhance our portfolio's tenant quality while also improving our geographic exposure by further investing in Atlanta, which we believe is one of the best markets in the country. The asset has excellent stable cash flow, a terrific customer draw in public, and represents a great core property that has benefited from the rapid pace of growth of the Inman Park and Reynolds submarket and the long-term prospects of the broader Atlanta area. West Broad Village, which is our most recent acquisition that we acquired two weeks ago, spans more than 392,000 square feet on 33 acres and has some similar characteristics including a very strong grocer in Whole Foods, as well as great complementary retail tenants in REI, Dave & Buster's, and HomeGoods. We acquired this property significantly below replacement costs with 17% vacancy, which we believe provides us upside as we emphasize value-added leasing and look to reposition the asset as a dominant lifestyle property in the high-end Short Pump submarket of Richmond, Virginia. Overall, if we take a step back and look at how our portfolio has evolved since the beginning of the year, we've been able to trade out of office and single-tenant assets and reinvest into properties anchored by tenants such as Whole Foods, HomeGoods, Publix, REI, Raw Stretch for Less, and Best Buy, while further diversifying our overall tenant exposure and giving our portfolio more long-term upside through lease-up of acquired vacancy and retenanting units that currently have below market rents as they become available. We've been able to drive attractive net investment spreads, while also more than doubling our grocery-anchored asset exposure to nearly 30% of the portfolio and increasing our overall retail and mixed-use portfolio makeup to nearly 90%. While we're excited about these new investments, we're also highly focused on maximizing the value of our existing portfolio through active asset management, leasing, and our capital investment program. We're starting to see the benefits of the leases we've signed over the past few quarters with new leases beginning to open at a number of our properties. The most notable gains have occurred at Ashford Lane, where nearly a dozen new tenants have opened or will open over the next few months. The property is currently 78% occupied and more than 85% leased, and with the progress we've made on the line, we have a strong tailwind until the remaining unleased vacancy to drive additional revenue in the next 12 to 24 months. The operational gains are not just through revenue growth; we're also finding ways to operate the properties more efficiently. The combination of the two resulted in year-over-year store NOI growth of 12% in the quarter and is up more than 20% year-to-date. From a leasing perspective, we signed seven new leases in the quarter, totaling 43,000 square feet at an annual average rent of over $36 per square foot, with more than half of that lease square footage coming from existing vacancy acquired when we purchased the property and the largest of the new leases at our property in Winter Park, Florida, where we now lease the entire top floor. Two of the new leases were in locations where the tenant either vacated the property or was relocated to a previously vacant villa. In these transactions, we grew expiring rents by 47%. Of our nine renewals and extensions during the quarter, we experienced nearly 8% growth in comparable new per square foot lease rates, and we continue to benefit from meaningful tenant demand for our high-quality locations. Within our structured investments portfolio, we anticipate the borrower of the WaterStar loan to fully repay the outstanding balance before the end of the year, which will allow us to pay down debt until we find new additional opportunities for reinvestment. All of our successes are not without some challenges. We've been notified that the WeWork location at our Shops at Legacy property in Plano, Texas, will be going dark before the end of the year. We have a corporate guarantee in place that should mitigate the anticipated impact as we work to find a replacement tenant. While we recognize that it will take some time and effort to find the right tenant, we believe we can find a productive backfill that will benefit the property given the strength of the market. Additionally, we do have Regal Entertainment in our portfolio at our Beaver Creek Crossing property outside of Raleigh, North Carolina. We've been in dialogue with their representatives, and there are currently no indications that our lease will be rejected in bankruptcy. However, given that the box is separately parceled in the Raleigh market, which is one of the fastest-growing and most in-demand markets in the country, we believe we have an attractive set of alternatives available to us should they decide to vacate the space. Finally, on the capital investment side of things, the work at Ashford Lane is largely complete, and we expect that the space to be fully operational and active as we head towards the holiday season. I'll now pass it over to Matt to talk about our performance in the quarter, capital markets activities, and increased guidance.

Matt Partridge, Chief Financial Officer

Thanks, John. With the inclusion of West Broad Village, our income property portfolio consists of 19 properties, comprising approximately 3.1 million square feet of rentable space across 15 markets. Our largest markets are now Atlanta, Georgia, Dallas, Texas, Richmond, Virginia, and Raleigh, North Carolina, where we've seen strong tenant demand, excellent population growth, and above-average wage growth. Fidelity continues to be our largest tenant exposure, but with the shift in portfolio that John talked about, we've added a number of high-quality retail tenants to our top 20 tenant list, and we've nearly finalized our transition to retail and mixed-use assets. At quarter end, our portfolio was 92% occupied, and we reported leased occupancy of more than 94%. Total revenues for the third quarter increased nearly 40% to $23 million, and year-to-date total revenues have increased by 31% to $60 million. The $6.5 million year-over-year increase in quarterly revenues, $4.5 million was driven by income property and structured investment revenue gains, while the other $2 million was from mitigation credit and subsurface sales. Our year-over-year same property NOI growth for the quarter was 12%, with Crossroads Towne Center in Chandler, Arizona, The Strand in Jacksonville, Florida, and our restaurants in Daytona Beach, representing the largest contributions to that growth. Our same-property NOI statistics only include assets owned for the entirety of the measurement period in both 2022 and 2021, and the effects of the properties we acquired in the fourth quarter of 2021 and year-to-date 2022 do not impact these results for the quarter. In the third quarter of 2022, core FFO was $0.47 per share, representing a 38% increase compared to the third quarter of 2021, and third quarter 2022 AFFO was $0.49 per share, representing a 36% increase over the third quarter of 2021. Year-to-date core FFO was $1.41 per share, and AFFO was $1.47 per share, representing a year-over-year per share growth of 55% and 41% respectively when compared to the first nine months of 2021. The third quarter was the first quarter our convertible notes resulted in a dilutive impact on our earnings per share under Accounting Standards Update 2020-6. As a result, we adjusted net income per share and NAREIT defined FFO per share, to remove the interest expense associated with our convertible notes, and we added approximately $3.1 million shares to our diluted weighted average share count, to reflect the impact of our convertible notes as if they were converted at the current conversion ratio as of the end of the third quarter. We reversed these adjustments for our calculation of core FFO per share and AFFO per share in order to reflect the actual incurred interest expense and current basic share count as reflected on the face of our P&L. We did not make this adjustment for our year-to-date net income per share and NAREIT defined FFO per share, because the effects of the adjustments would be antidilutive. We'll continue to evaluate whether or not the adjustments required under ASU 2020-6 will be dilutive or antidilutive in each subsequent quarter and we'll adjust our net income per share in NAREIT defined FFO per share accordingly. Because we removed these effects from our core FFO per share and AFFO per share, the impact does not influence our guidance or the comparability of those quarterly and year-to-date results to our guidance. As previously announced, the company paid a third quarter regular cash dividend of $0.38 per share on September 30, to shareholders of record on September 12. Our quarterly dividend represents a 14% year-over-year increase over the company's Q3 2021 cash dividend and a 1.8% increase over our Q2 2022, quarterly cash dividend, with a current annualized yield of approximately 7.6%. This represents a Q3 2022 AFFO per share cash payout ratio of 78%. On the capital markets front, it was an active quarter. As we previously discussed, in July, we completed our 3-for-1 stock split effective July 1, and within the quarter, we issued approximately 566,000 shares of common stock through our ATM program, for total net proceeds of $12.3 million, at an average issuance price of $22.02 per share. We refinanced our credit facility, extending the maturity date of our revolver to January 2027 and increased the commitments by $90 million, to a total size of $300 million. We also entered into a new $100 million term loan, with an expiration date of January 2028, and we fully swapped the term loan effectively fixing SOFR for the life of the loan. We received terrific support from the bank market during these two transactions, so I'd like to acknowledge and thank all of our banking partners for their commitment to our strategy and our team. Finally, we repurchased approximately 86,000 shares of common stock for $1.6 million, at a weighted average gross price of $19.17 per share. We ended the quarter with approximately $47 million of cash and restricted cash and approximately $262 million of undrawn commitments under our revolving credit facility. Net debt to total enterprise value at quarter end was approximately 43%, and our net debt to EBITDA was 6.4 times. Looking at the balance of the year, we revised our full year 2022 guidance to account for our Q3 2022 results and revised expectations for transaction and leasing activity, the current capital markets environment, a steepening yield curve, and other influential assumptions. Our new core FFO per share guidance range is $1.71 to $1.74 per share, which is an increase of $0.13 per share at the low end and $0.10 per share at the high end. Our new AFFO per share guidance range of $1.79 to $1.82 per share is an increase of $0.09 per share at the low end and $0.06 per share at the high end. Our revised guidance assumes no additional acquisitions or structured investments for the balance of the year. Furthermore, we have revised our disposition guidance to a range of $81 million to $83 million of property sales, at an exit cap rate of 6.2%. With that, I'll turn the call back over to John for his closing remarks.

John Albright, CEO

Thanks, Matt. This was a great quarter of execution regardless of some of the challenges at hand. We believe our rock-solid balance sheet, strong market presence, high-quality portfolio, and embedded same-store NOI growth from our year-to-date and future leasing activity have us well positioned to continue delivering outsized earnings and cash flow growth through the end of the year and for the foreseeable future. We appreciate all of our team's hard work, and I want to thank our investors and partners for their continued support. With that, we will open it up for questions. Operator?

Operator, Operator

And thank you. Please hold on for our first question. Our first question comes from Gaurav Mehta from EF Hutton. Your line is now open.

Gaurav Mehta, Analyst

Good morning. Thanks for taking my question. I was hoping, if you could provide some color on what you guys are seeing in the transaction market as far as cap rates.

Matt Partridge, Chief Financial Officer

Yes. So it's kind of interesting. There's not a lot of activity going on right now with regards to transactions because there's a little bit of a standoff between buyers and sellers. That obviously is a challenging environment if you're looking to sell a property because there's really no debt market for secured debt. So if you're out in the market trying to sell something, you probably have to sell it. I would say that roughly in those situations, kind of like us, people only want a really good deal. I'd say cap rates are out like 100 basis points or more depending on the kind of quality of the property. But right now, there's not a lot of transactions happening. There's probably less inventory out there being sold because people are determining this is not a great time to be selling an asset.

Gaurav Mehta, Analyst

I would like to ask about the strong tenant demand you mentioned in your prepared remarks. Could you provide some insight on whether you have observed any signs of weakness or softness from your tenants, or is the demand for your properties still holding strong?

John Albright, CEO

Yes. We keep on expecting it to soften up. It hasn't softened up. The only softness we've seen and heard about is really from local tenants in the markets where our properties are located, but the more national regional tenants' demand is still strong.

Gaurav Mehta, Analyst

Okay. Thank you.

John Albright, CEO

Sure.

Operator, Operator

And thank you. One moment for our next question. Our next question comes from Rob Stevenson from Janney Montgomery Scott. Your line is now open.

Rob Stevenson, Analyst

Good morning, guys. John, can you talk a little bit about where the rent is on the WeWork space versus market? And how much term is left on that lease?

John Albright, CEO

Yes. So roughly, there's definitely eight or nine years left on the lease term, and the rent is probably $2 above market. So the opportunity there will be going after the guarantee and what's owed and then bringing in another tenant. And there's been word already kind of gotten out in the market even though they haven't really done any sort of official notice, and we've had a bunch of operators that want to take over the space.

Rob Stevenson, Analyst

Sort of similar co-working type of thing?

John Albright, CEO

Correct.

Rob Stevenson, Analyst

Okay. And then given your comments on Regal at your Raleigh location, I mean, do you want them to stay? Is it better for you longer term if they go, if they turn back in the lease and you could do something else with the space? I mean how far down the road have you guys gotten in terms of game planning what winds up happening if Regal leaves?

John Albright, CEO

Yes. I mean, I would say that, look, I think Regal in that location is a really nice use because it's a very neighborhood, kind of, community center. It was very activated for families that live around there. So I think it's a nice complement. But if they decide that it's not working for them, we do have great alternatives. So it's just a lot more work to make that happen because it's not going to be using the theater box or lease. We wouldn't pursue another theater. We would pursue an alternate use which is better credit and that sort of thing. So, those uses would be nice complements as well, but I just think the theater actually works pretty well for the center.

Rob Stevenson, Analyst

Okay. And then how is AMC doing in the new Atlanta asset and any of the other movie theaters that you guys have? Are you concerned about them at this point?

John Albright, CEO

Yes. So AMC at Madison Yards, I mean, that's one of their newest theaters probably in the country. I mean it opened up right before the pandemic and it's not super large, and they've been very consistent at least when the new shows like Top Gun and everything came around; it was very strong. I suspect without any kind of banner movies coming out right now, it's probably slipped off a little bit. But the center is so packed with people that if there's a good theater and so many people live around – a good show and there's a lot of people who live around there, it would be a hassle to go to a movie somewhere else just because of the traffic in Atlanta. So it has a nice capture audience there. And again, it's only eight screens, so it's not an enormous project.

Rob Stevenson, Analyst

Okay. And then Matt, is there any material delay in terms of some of the leases that you signed and when they start flowing through the top line? Just trying to reconcile a little bit the difference between third quarter FFO, or core FFO and the fourth quarter implied guidance?

Matt Partridge, Chief Financial Officer

Yeah, there is. I mean, there's about $2.3 million, $2.4 million of rent that's been signed that hasn't commenced. And that's all on space that's currently not cash flowing. So there's some pretty good tailwind heading into next year that will come online probably late fourth quarter, whereas maybe originally we thought it would be early fourth quarter. So there's been some timing delays on certain things. We had a few pull up into the third quarter as well. So they're constantly moving around.

Rob Stevenson, Analyst

Okay. Thanks, guys. Appreciate the time.

Matt Partridge, Chief Financial Officer

Thank you, sir.

Operator, Operator

And thank you. One moment for our next question. Our next question comes from Matthew Erdner from JonesTrading. Your line is now open.

Matthew Erdner, Analyst

Hey guys, it’s Matthew for Jason. Congrats on the good quarter. Could you provide an update on the leasing efforts at Ashford Lane?

John Albright, CEO

Yeah. Ashford Lane has been incredibly busy. We're in a great situation there in that we've signed a restaurant tenant for the last remaining space at the lawn, and we'll be moving that tenant that's there now to the second-floor office space. So we've upgraded that use in a much higher paying tenant. And then we're getting leasing office vacancy with relocating the existing tenant. And we've had another lease sign this week, smaller tenants. And we have two or three other leases in the works right now. So it feels really good that this one is going to be fully stabilized by the end of the year or first quarter next year. But there could be a situation where we just wait for the right tenant on some of the spaces that are left. But yeah, everything has been very strong there.

Matthew Erdner, Analyst

Got it. That’s awesome. And then in terms of asking rents, what are the expectations on increases I guess there? And then for next year if you guys have any coming online?

John Albright, CEO

Matt, you want to…?

Matt Partridge, Chief Financial Officer

When you say expectations of increases, are you talking about relative to replacing existing rents that might be expiring?

Matthew Erdner, Analyst

Yeah.

Matt Partridge, Chief Financial Officer

Yeah. I mean in the quarter, we only had two new leases that we signed that were replacing existing tenants, and those were up 47%. But that's probably not a good expectation for next year, but that gives you a sense of the strength of the market and the quality of the assets and where rents are headed.

John Albright, CEO

I mean, there are some that are double because the tenants that have been there have been there for a while and that submarket has just gotten so much denser. So anything that has a tenant that's been there while, the uplift on it is pretty strong.

Matthew Erdner, Analyst

Awesome. Thank you guys.

John Albright, CEO

Thank you.

Operator, Operator

And thank you. One moment for our next question. Our next question comes from Craig Kucera from B. Riley Securities. Your line is now open.

Craig Kucera, Analyst

Yeah, thanks. Good morning, guys. John, given the challenges that developers are finding in the debt markets in particular, are you seeing more opportunities that you might move forward on in your structured investment portfolio?

John Albright, CEO

The answer is yes, Craig. I mean there are some good opportunities that seem to be starting to percolate. And we can earn equity-like yields of being in a first mortgage or mezzanine situation. We don't have anything right in front of us that we're going to be printing a ticket anytime soon. But I will say that this area should be very active for the rest of the year.

Craig Kucera, Analyst

Got it. And Matt, your G&A expense was a little higher this quarter, I think higher than expected at some time. And I'm just curious if there were any one-time expenses affiliated with the corporate move to Orlando, or should we expect that to be more of a recurring level due to some staffing increases and maybe some additional office expense?

Matt Partridge, Chief Financial Officer

Yes. No, no one-time items, just continuing to build out the team as we bring on more managed assets and build out the infrastructure.

Craig Kucera, Analyst

Got it. And can you give me some color on the – I think you have about a 350 basis point delta between what you've leased and economic occupancy. How are you thinking about the pace of when those leases will take occupancy and start paying cash over the next year or so?

Matt Partridge, Chief Financial Officer

Yes. I think there's a handful of them that will come online between now and the end of the year, and then there's another handful that will come online in the first quarter, but some of these will take a little bit longer into the – I'll call it the middle of next year to come online just because the tenants have to do their build-out. So there's a free rent period and things like that.

Craig Kucera, Analyst

Got it. And just one more for me. I'd be curious, you had some success selling mitigation credits and monetizing some of those types of non-core assets. Were those utilized by standard developers, and can you talk about the market for sales right now in that piece of your business?

Matt Partridge, Chief Financial Officer

Yes. So that was for basically development projects that are still going forward, and we expect some additional sales that happen probably at the very end of the year or maybe slip over into January. It seems like everything's kind of slipping. But projects, we haven't heard a project kind of being shelved because of the environment. I think Florida has that unique kind of tailwind for needs for development. So, so far, so good.

Craig Kucera, Analyst

Okay, thanks.

Matt Partridge, Chief Financial Officer

Thank you.

Operator, Operator

Thank you. And one moment for our next question. Our next question comes from RJ Milligan from Raymond James. Your line is now open.

Unidentified Analyst, Analyst

Hey, good morning, guys. This is John Paul on for RJ. If you guys did $0.47 of core FFO in Q3, which comes out to around $1.88 annualized, which is above consensus for 2023. Just curious if there are any one-time items in that Q3 number and how we should think about the run rate going forward.

Matt Partridge, Chief Financial Officer

Yes. Good to hear from you, John Paul. I think in Q3, we had the interest expense from some of the structured investments that will get paid off this quarter and then as we head into the first quarter of next year. And so either those proceeds will be used to pay down debt, or to John's point, we might find some other opportunities on the financing side to put that capital back to work. So it's a little uncertain on the redeployment side for that capital. And then we had some accrual true-ups and some percentage rent in the third quarter, which we're hopeful the percentage rent will continue, but it will obviously be performance-driven by the tenants. But I think we're not in a position yet to provide formal guidance for next year, but the $1.88 run rate certainly seems appropriate as a starting point.

Unidentified Analyst, Analyst

Got it. That’s helpful. Thank you, Matt. And then additionally my other question was on leverage. It looks like it ticked down to 6.4 times this quarter. Just wondering if you could remind us of your leverage targets and how you expect to kind of manage the balance sheet moving into next year?

Matt Partridge, Chief Financial Officer

Yes. So it did tick down. But I'll remind everybody that we did bring it back up a little bit to fund a portion of the West Broad acquisition in October. I think you can expect us to run it in that six to seven times range, but we could end up a low or above it, just given the size of the company; it doesn't take a lot to move it. The other thing I'd highlight is that with the convertible notes, the conversion price is below the stock price today. And so that's $50 million of debt that will likely convert to equity in 2025. So, from a pro forma leverage perspective accounting for that, we're pretty underlevered relative to our long-term targets.

Unidentified Analyst, Analyst

Thanks. That’s it from me. I’ll turn it over.

Matt Partridge, Chief Financial Officer

Thanks.

Operator, Operator

Thank you. One moment for our next question. Our next question comes from Michael Gorman from BTIG. Your line is now open.

Michael Gorman, Analyst

Yes, thanks. Good morning. John, I was wondering if you could elaborate on the pause in the acquisition markets, which makes sense and is something we're observing across property types. What is your perspective on where the market stands now compared to 90 days ago or even six months ago? We keep hearing about significant funds available in the private market, and REIT balance sheets are generally in good condition, including ours, as we are seeking opportunities. I'm interested in your thoughts on what it would take for the market to begin clearing in terms of necessary price adjustments.

John Albright, CEO

Yes. So, I think that again, it's probably 100 basis points; if you're talking about like a power center, it could be higher, it could be 125, 150 basis points to clear. But if you're talking about high-quality grocer-anchored properties, you're probably talking about 50 to 75 basis points. I just got back from a recent conference and that was kind of a discussion around with a lot of different sorts of owners, buyers, and capital and that was the consensus that if you have a really high-quality grocer deal, you're probably seeing 50 to 75 basis points. But if you're kind of talking about power centers, you're 100 to 150 basis points, something like that. So, in this environment, we're definitely looking for those really good opportunities where you can take advantage of the dislocation, but you don't want to buy something that's just marginally good. You really want something that's high quality, kind of like what we just bought in West Broad.

Michael Gorman, Analyst

Okay. Great. That’s helpful. That makes sense. And then, either John or Matt, just talking about the share repurchases in the quarter. I understand it was a relatively small amount and it was below where the stock is today, which is always a good sign. But I'm just curious how you balance that out versus the longer-term growth trajectory of the company and the liquidity in the shares, balancing taking advantage of an opportunity where the stock is clearly mispriced versus that long-term liquidity and long-term capital base?

John Albright, CEO

We've actively engaged in share repurchases whenever it makes sense during my time here. Our main focus is on driving value to NAV, rather than worrying too much about the company's liquidity and growth. We do hope to find opportunities for growth. Given our current results and favorable conditions in our portfolio, we feel optimistic about the company's prospects for next year. Therefore, it makes sense to take advantage of the stock. The market performance for CTO has generally lagged because we're not as widely covered, and even after 115 years, many people are still unfamiliar with us. As we continue to enhance our portfolio, more individuals are starting to recognize us. I apologize for the lengthy response, but we will always seize opportunities during market dislocations, especially when there's volatility and people are seeking liquidity. Additionally, as you saw in the last quarter, we issued some shares to capitalize on such dislocations when they arise.

Michael Gorman, Analyst

Great. Thanks. Appreciate the time, guys. Thank you.

John Albright, CEO

Thank you.

Operator, Operator

Thank you. And I am showing no further questions. I would now like to turn the call back over to John Albright for closing remarks.

John Albright, CEO

Thank you very much for attending the call, and I look forward to talking with you during the quarter. Thank you.

Operator, Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.