Eastgroup Properties Inc Q2 FY2023 Earnings Call

Good day and welcome to the EastGroup Properties Second Quarter 2023 Conference Call. Please also note this event is being recorded. I would now like to turn the conference over to Marshall Loeb, President and CEO. Please go ahead.

Good morning, and thanks for calling in for our second quarter 2023 conference call. As always, we appreciate your interest. Brent Wood, our CFO, is also on the call. And since we’ll make forward-looking statements, we ask that you listen to the following disclaimer.

Please note that our conference call today will contain financial measures such as PNOI and FFO that are non-GAAP measures as defined in Regulation G. Please refer to our most recent financial supplement and to our earnings press release, both available on the Investor page of our website. Also refer to our periodic reports furnished or filed with the SEC for definitions and further information regarding our use of these non-GAAP financial measures and a reconciliation of them to our GAAP results. Please also note that some statements during this call are forward-looking statements as defined in and within the safe harbors under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements in the earnings press release, along with our remarks, are made as of today and reflect our current views about the company’s plans, intentions, expectations, strategies and prospects based on the information currently available to the company and on assumptions that we have made. We undertake no duty to update such statements or remarks as a result of new information, future actual events or otherwise. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. Please see our SEC filings included in our most recent annual report on Form 10-K for more detail about these risks.

Thanks Keena. Good morning. I’ll start by thanking our team for a strong start to the year. They continue performing at a high level and capitalizing on opportunities in a fluid environment. Our second quarter results were strong and demonstrate the quality of our portfolio and the continued resiliency of the industrial market. Some of the results produced include funds from operations coming in above guidance, up 11% for the quarter and 10% year-to-date. For over 10 years now our quarterly FFO per share has exceeded the FFO per share reported in the same quarter prior year, truly a long-term growth trend. Our quarterly occupancy averaged 98.1%, which was consistent with second quarter of 2022 and quarter-end occupancy of 98.2% is up 30 basis points from March 31st. Quarterly releasing spreads reached a record at approximately 53% GAAP and 38% cash with these results pushing year-to-date spreads to 51% GAAP and 35% cash. Cash same-store NOI came in up 6.4% for the quarter and 8.7% year-to-date. Finally, I’m happy to finish the quarter with FFO rising to $1.91 per share. Helping us achieve these results is thankfully having the most diversified rent roll in our sector with our top 10 tenants falling to 8.3% of rents, down 50 basis points from second quarter of 2022 and in more locations. In summary, I’m proud of our start of the year. Statistically, it was one of the best quarters on record all with continued recession concerns. We’re responding to strength in the market and user demand for industrial product by focusing on value creation via raising rents and new development. This market strength is what allowed us to end the quarter 98.5% leased, average over 98% occupied and continue pushing rents through a wider and wider geography. As we’ve stated before, our development starts are pulled by market demands within our parks. Based on our read-through, we’re forecasting 2023 starts of $360 million. And while our developments continue leasing up, we’re closely watching demand with the goal of a balanced, fluid response pending what the economy allows. What’s promising to see is the decrease in industrial starts, primarily due to capital market volatility and credit tightening. Starts have fallen three consecutive quarters with second quarter 2023 being almost 50% lower than third quarter 2022. Assuming reasonably steady demand, then turning into 2024, the markets will tighten, allowing us to continue pushing rents and create earlier development opportunities. Given the capital market volatility, we’ve taken a measured approach towards transactions since mid-22. That said, when we find the right strategic opportunities, we pursue them. We’re seeing these windows mainly on the development side and being strategically opportunistic on core investment opportunities. Brent will now speak to several topics, including assumptions within our updated 2023 guidance.

Good morning. Our second quarter results reflect the terrific execution of our team, strong overall performance of our portfolio, and the continued success of our time-tested strategy. FFO per share for the quarter exceeded the upper end of our guidance range at $1.91 per share, compared to $1.72 for the same quarter last year. $0.02 of second quarter FFO was attributable to an involuntary conversion gain recognized as a result of roof replacements that were damaged in a hurricane. Excluding the gain, FFO per share was at the upper end of our guidance range at $1.89 per share, an increase of 10% over the same quarter last year. The outperformance continues to be driven by stellar operating portfolio results and the success of our development program. From a capital perspective, the strengthening in our stock price continued to provide the opportunity to access the equity markets. During the quarter, we sold shares for gross proceeds of $165 million at an average price of $169.72 per share. During this period of elevated interest rates, equity proceeds remain our most attractive capital source. In our updated guidance for the year, we increased our stock issuances assumption from $180 million to $475 million, $300 million of which is complete, and removed any unsecured debt assumption. As a reminder, the Company does not have any variable rate debt other than the revolver facilities, and our near-term maturity schedule is light, with only $50 million scheduled to mature through July 2024. Although capital markets are fluid, our balance sheet remains flexible and strong with healthy financial metrics. Our debt-to-total market capitalization was 18%. Unadjusted debt-to-EBITDA ratio is down to 4.4 times, and our interest and fixed charge coverage ratio increased to 7.8 times. Looking forward, FFO guidance for the third quarter of 2023 is estimated to be in the range of $1.87 to $1.93 per share and $7.58 to $7.68 for the year, a $0.08 per share increase over our prior guidance. Those midpoints represent increases of 7.3% and 9% compared to the prior year, respectively. Revised guidance produces a same-store growth midpoint of 7.3% for the year, an increase of 30 basis points from last quarter’s guidance. We also increased the midpoint of our average occupancy by 10 basis points to 97.8%. This is the result of outperforming our budget expectations in the second quarter, along with continued optimism for the remainder of the year. In closing, we were pleased with our second quarter results and are well-positioned entering the latter half of the year. As we have in both good and uncertain times in the past, we rely on our financial strength, the experience of our team, and the quality and location of our portfolio to lead us into the future. Now Marshall will make final comments.

Thanks, Brent. In closing, I’m proud of the results our team created. We’re carrying that momentum forward. Internally, operations remain historically strong and we’re constantly working to strengthen the balance sheet. Externally, the capital markets and the overall environment remain clouded. And while never fun to experience, this is leading to a marked decline in development starts. In the meantime, we’re working to maintain high occupancies while pushing rents. And longer term, I’ll remain excited for EastGroup’s future. There are several long-term positive secular trends occurring within last mile, shallow bay distribution space and sunbelt markets that will play out over years, such as population migration, evolving logistics changes, on-shoring, near-shoring, et cetera, which we’re well-positioned for. And we’ll now open up the call for your questions.

We will now begin the question-and-answer session. The first question comes from Craig Mailman with Citi. Please go ahead.

Nick Joseph here with Craig. Marshall, you touched on what’s happening in the overall industrial construction market in terms of new starts coming down, obviously from recent peaks pretty materially. How are you thinking about your own new development starts and underwriting them given current construction costs and also what you're seeing on the demand side today?

We approach it a couple of ways. First, we’ve pushed up our development yields. Internally, our goal is generally in the high sixes to sevens on new starts. I’ve always liked our model because as we build out a park the team in the field typically calls and says we’re 99% leased in Dallas and the last phase leased up and we need to build a couple more buildings. Often the benefit is we’re talking to two or three of our own tenants in that submarket who need more space. So we taper new supply into demand and if one of our projects has not leased up, we won’t start the next phase until the market fills the inventory. That’s how we’re viewing it. Demand feels more normalized after COVID, still strong but not frenetic like 2021 or early 2022. What’s unique now is how hard it is for merchant developers—local and regional builders—to get capital and to determine yields to flip buildings. We have the advantage of being able to hold product in growing markets, so supply is tapering off and that encourages development opportunities looking into 2024 assuming no major economic shock. I hope that helps.

Yes, very helpful. Thank you. And then maybe on the increased cash same-store NOI guidance for the year — it implies deceleration in the back half of the year but you touched on occupancy and demand you’re still seeing. Can you walk through how we get to the midpoint in the updated guidance?

Good morning, Nick. It really comes down to occupancy versus rate increases. Rate increases remain strong but occupancy comparisons get tougher. We had favorable comparisons in prior quarters where occupancy gains stacked with rent growth. In the second quarter our same-store compared 98.4% to 98.4% so the occupancy component flattened. Our budget also calls for a modest pullback in occupancy basis points for the remainder of the year, and the third and fourth quarter comparisons to last year’s occupancy are 98.5% and 98.8% respectively, which are high benchmarks. We hope to do better than projected at year-end, but as Marshall says, same-store is only one of many components that contribute to the bottom line and our FFO growth has been strong driven by several pieces working together.

Thank you very much.

The next question comes from Vikram Malhotra with Mizuho. Please go ahead.

Thanks so much for taking the question. You touched a little on being conservative around occupancy but seeing strong rent spread strength in parts of Texas and Florida. Can you give us your updated view of rent growth in the second half across some of your key markets and does that imply rent spreads will continue to widen into the second half?

Broadly speaking, we're viewing rent growth this year in a range that could be high single digits to lower double digits — call it 8% to 13% or 14% — and it’s tracking in that range. Tenants are taking longer to make decisions, but we’re staying full. Southern California remains strong but the delta versus other markets like Texas, Florida, Georgia and the Carolinas is not what it was three years ago. There’s embedded rent growth in those Sunbelt markets and rents continue to expand. We had one of our best quarters and best first halves historically, during a period where a recession was widely anticipated, which feels promising. Supply is coming down dramatically — perhaps the most since the global financial crisis — so if demand holds, there could be more upward pressure on rents in 2024 than in 2023.

To clarify, was that comment about stronger upside more specific to your submarkets like Texas, or broader?

Supply is coming down nationally and I like our markets in particular. The combination of our presence in key Sunbelt markets and national supply falling is favorable. We don’t need a great economy to gain share given trends like e-commerce growth, population growth and changes in logistics. So yes, our markets could benefit more than the national average.

Makes sense. You referenced near-shoring and on-shoring and noted El Paso’s rent spreads are solid. Any specific anecdotal evidence that these trends are building and translating into warehouse demand?

We’re seeing it in releasing spreads and occupancy in a few main markets. El Paso has rental rate growth that is historically strong, almost California-like in some cases. Juarez and Tijuana have very low vacancy rates, which continues to drive those markets. San Diego — particularly Otay Mesa near the border — remains strong with many Fortune 1000 companies, transportation and 3PLs in that area. Arizona and Nogales also show solid demand for cross-border logistics. These trends aren’t a light switch, but they build incrementally and feel sustainable.

Makes sense. And on cost of capital, you’re raising equity given the relative attractiveness of equity versus debt today. Apart from deleveraging and development spreads, are you monitoring other opportunities to take advantage of your relative cost of capital?

We’re seeing opportunities due to access to capital challenges for others. Some merchant developers have shovel-ready sites but can’t source capital or debt at acceptable economics. We’re discussing joint ventures or stepping in to provide capital in exchange for promote features or fees, often acquiring sites that are already through zoning and permitting. So the opportunities are largely on development sites where we can step in closer to break ground. We prefer to keep a strong balance sheet, and where others are constrained we can be opportunistic.

The next question comes from Nick Thillman with Baird. Please go ahead.

Hi, this is Daniel Hogan on for Nick. Looking at your development pipeline, it looks like you’ve pushed back some delivery dates for projects like Springwood and Stonecode. Those are larger buildings — did you push them back only a quarter, and is that a function of longer development timelines or slower lease-up assumptions?

It’s mostly development timing. There are two factors: weather can play a role at certain stages, and delivery times have normalized — particularly long lead times for electrical equipment like transformers and panels. Availability, not pricing, has driven some delays. Our construction teams are experiencing lead times of about a year for some electrical components, so that has impacted schedules slightly.

Got it. Given less shallow-bay competition on the supply front, have you seen any mid- or large-box developers put capital into breaking up their spaces to compete with shallow-bay product, or is that still a similar trend?

You could see some attempts, but it’s challenging. Our average tenant size is around 30,000 square feet and 75% of revenue comes from tenants under 100,000 square feet. Large buildings, say 800,000 or 1 million square feet, are deep and don’t lend themselves to efficient subdividing for 50,000 or 70,000-square-foot tenants. You lose loading door efficiency and need fire-rated demising walls, which are expensive. So big boxes rarely convert efficiently into the smaller product that competes directly with our shallow-bay buildings.

The next question comes from Connor Mitchell with Piper Sandler. Please go ahead.

Good morning. You discussed merchant builders and regional developers having trouble accessing capital and reaching out to you. What do you see in the near term and longer term: will those competitors remain sidelined longer, or might they find capital soon to jump back in the mix?

It’s a tough one to answer precisely. There’s still a lot of capital that wants to be in real estate and industrial is attractive versus office. However, many merchant developers are uncertain about where cap rates will settle because rates rose rapidly. They were building on thin margins and relied on forward sales or financing that’s no longer as available. There’s also pressure on commercial banks and potential regulatory impacts that could reduce lending for real estate. So loans are harder to come by now compared to a year ago, and I expect many developers to remain on the sidelines for a while until the capital markets stabilize.

Thanks. Second question — with homebuilding activity rising, do you see that translating materially to warehousing demand, or is that more attributable to Sunbelt population growth?

It’s a little hard to isolate, but homebuilding is a positive contributor. We see demand from homebuilding-related tenants — appliance suppliers, tile companies, etc. — in Fort Myers and other markets. However, I wouldn’t want to be overly reliant on homebuilding because it’s cyclical. The bigger drivers remain population growth in the Sunbelt and broader e-commerce and logistics trends, which benefit a diversified tenancy base.

The next question comes from Jeff Spector with Bank of America. Please go ahead.

Marshall, appreciate your comments on demand drivers. There’s debate about what inning we’re in for different demand drivers. Broadly, how are you thinking about each driver — e-commerce, onshoring, etc. — in terms of early, mid or late innings?

I like that we have many demand drivers. E-commerce has progressed but last-mile delivery and curbside improvements still have room to evolve. Onshoring and near-shoring are early innings — moving plants is a multiyear process. Homebuilding and other cyclical drivers ebb and flow. E-commerce continues to gain a bit more market share each year. We benefit from being flexible, low-cost real estate in infill locations, and our top-10 tenant concentration is around 8.3%, which is low. New tenancy categories keep appearing — for example, green energy and online pharmacies are more prominent now than a few years ago. Overall, we see a diverse and growing pool of potential tenants.

Thanks. Second question — can you explain the bump in stabilized development yields?

The bump is driven by rents being higher than were assumed when we underwrote some projects and by faster lease-up, reducing carry costs. We underwrite to current market rents and construction costs. If by the time a building is complete the market rents are higher, stabilized yields will be better. Faster lease-up also reduces carrying costs and improves the yield. Our development program has been a key driver of FFO growth and NAV creation, so it's positive to see yields increase.

The next question comes from Samir Khanal with Evercore. Please go ahead.

Good morning, Marshall. You’ve discussed market strength and strong operations, but development starts are only up modestly. What’s holding you back from pushing starts higher? What guideposts would make you more aggressive?

We are comfortable with $360 million of starts for the year. We maintain a shadow pipeline of potential additional starts if the market pulls the next phases. We’ll act on market signals: if a current phase leases up and field teams call for the next phase, we’ll start it. We’ll go as fast or slow as the market tells us. If projects aren’t leasing up, we’ll wait. Internally, we monitor leasing performance in current projects and the field teams’ feedback — that’s the primary guidepost.

Got it. On your guidance, the implied slower same-store NOI in the second half — which markets are driving that slower growth?

It’s less about systemic weakness and more about where vacancy timing and comps fall. Same-store can be volatile depending on where a vacancy rolls during the year. For example, a property in Fort Worth that turns in a quarter can impact same-store; some markets have slight vacancies to backfill. When you look at our GAAP rent growth and cash same-store NOI, markets like Phoenix, Las Vegas, El Paso and Dallas have GAAP rent growth much closer to historic California levels, which is encouraging. Same-store NOI will ebb and flow as vacancies move in and out of the bucket.

The next question comes from Michael Carroll with RBC Capital Markets. Please go ahead.

When you underwrite new development projects, how have initial targeted yields changed over time? Have higher construction costs and financing costs pulled yields down, or have market rents kept yields unchanged?

Our underwriting threshold has moved up about 100 basis points with the rise in cap rates and interest rates. Two years ago we might have dipped below a 6% stabilized yield in some markets; now the floor to start a new development has moved into the higher sixes. The good news is rents have generally matched construction cost increases, so yields have stayed in that high-six to seven range. If a project is pre-leased the acceptable yield can be lower because the risk is smaller.

So the targets have risen around 100 basis points, but the realized yields have stayed roughly in the high sixes due to rent growth?

Yes, that’s correct. Our threshold moved up approximately 100 basis points, and market rents have generally kept pace with higher construction costs so realized yields remain in the high-six to seven percent range.

The next question comes from Todd Thomas with KeyBanc Capital Markets. Please go ahead.

Todd Thomas here. Regarding the capital raising in the quarter and the updated forecast for the year on common stock issuance, Brent, can you provide additional detail around the impact of the increase in stock issuance on guidance? From a timing perspective, how should we think about the remaining $175 million of issuance embedded in the guidance? Is that more weighted to the third quarter or ratable through the balance of the year?

The $175 million is generally modeled as equal-weighted across the remainder of the year. Looking back, in 2022 we used more debt for external funding, about $525 million, while this year we pivoted to equity given the higher interest rate environment. In 2023 we’re projecting $475 million of equity issuance, $330 million completed, and only $100 million of debt assumed. Even the revolver, which used to be very cheap, is now more expensive. Equity issuance has been the most attractive source right now. The $175 million remaining is flexible; if development starts rise or opportunistic acquisitions arise we may adjust. We monitor all funding sources continuously and tap what's most attractive at the time.

Okay, helpful. You mentioned remaining development spend near $200 million and acquisitions were quieter this quarter. Can you comment on the pipeline and whether you’re seeing better opportunities?

We were pleased with the Las Vegas acquisition — it’s strategic for us. We haven’t yet found a broad set of core buying opportunities at attractive yields, though we continue to make offers in the market. If we don’t make acquisitions we’ll continue funding development. Where we see opportunities is owner-users selling or developers with permit-ready sites who are capital constrained; we can step in either on the development or acquisition side if the risk-return is attractive. We remain patient and disciplined: we’ll pursue acquisitions that fit our strategy, but we’ll be comfortable focusing on development if acquisition opportunities remain limited.

The next question comes from Jason Belcher with Wells Fargo. Please go ahead.

Hi everyone. I noticed your occupancy was up sequentially in the quarter while lease rate was down. You had said on June 1 that both would be flat to the prior quarter. Can you give color on what drove that divergence over the past month or so?

We’re happy with the quarter’s results. The average quarterly occupancy year-over-year was flat for the overall portfolio and the same-store, and we finished the quarter slightly higher by 30 basis points versus the end of the first quarter. That said, small month-to-month moves can happen and the quarter-end result was consistent with our strong re-leasing spreads — 38% cash and 53% GAAP. For the year through the second quarter things have been fairly consistent around 98% leased and occupied, so we view that steadiness positively in a fluctuating environment.

Understood, thanks. Secondly, you mentioned tenant decision timelines remain elongated. How long are timelines today versus a year ago, and have they stabilized recently?

It feels a bit more normalized now. A few years ago decisions were fast because tenants feared losing space; that caused a rush. Now larger companies often have more legal review and multi-layer approvals, which lengthens time-to-sign. Part of that is psychology given economic uncertainty; part is that higher rents mean lease liabilities are larger and require extra approvals. Smaller, regional companies are still moving quickly. Overall, timelines have stabilized compared to the hot market period and are not necessarily lengthening further.

The next question comes from Ronald Kamdem with Morgan Stanley. Please go ahead.

Two quick ones. First, on same-store NOI for next year: with cash rent increases and many leases coming due, is occupancy and bad debt the biggest delta to watch? Second, any further commentary on onshoring and how you see that flowing through the portfolio?

You are right to focus on rental rate growth — that component looks favorable with annual escalators and stronger rent bumps. The biggest variable into next year is occupancy rather than bad debt — bad debt remains low and collections are healthy. When you look at comparable occupancy benchmarks for third and fourth quarters of 2022 they’re quite high (98.5% and 98.8%), so comparisons will be stiff. If occupancy remains around 98% we’ll likely see solid same-store growth; if occupancy declines, that would be the main headwind.

On onshoring and near-shoring, we see multiple dynamics. In Texas there’s more tech and medical manufacturing growth, and we’ve picked up Tesla suppliers related to their Austin operations. In San Diego, Otay Mesa remains a strong submarket with electronics and medical manufacturers benefiting from proximity to Tijuana. Vacancy rates in Juarez and Tijuana are very low which supports cross-border logistics. Overall, it’s a gradual trend but tangible in certain markets.

The next question comes from Ki Bin Kim with Truist. Please go ahead.

Thanks. On the additional equity, what were the decision inputs to raise the remaining $155 million in the second half? After that issuance, your leverage would approach around 4 times. Is this defensive or are you positioning to pursue larger-scale deals?

The decision is driven by attractive equity pricing relative to debt and our desire to maintain flexibility. In 2022 we were heavier on debt; this year we pivoted toward equity. If you average the two years, we're balanced across capital sources over the long run. The revolver is now relatively expensive, so issuing equity to fund development and opportunistic acquisitions made sense. We remain open to other instruments like convertibles and continue to evaluate all options. We also don’t have a large maturity wall over the next 18 months — only $50 million maturing soon and modest maturities after — so we don’t need a large one-off debt issuance.

We see opportunities on the development side where others are capital constrained. Having equity available gives us optionality to act on shovel-ready sites or opportunistic acquisitions. If we can find attractive acquisitions that meet our risk-return profile, we’ll execute; if not, we’ll fund development. Being a bit ahead of capital needs for a short period is acceptable if it enables us to capitalize on opportunities.

On convertibles, how does pricing and effective yield compare to straight debt, and is that realistic to address any 2024 maturities?

Convertibles generally have a lower coupon than straight debt but come with conversion features that add complexity and cost. You need to evaluate the overall economics including conversion premiums and the coupon. It’s another tool we monitor, but we don’t currently have major maturities that force a large issuance. Most of our maturities are manageable and some are later in the year, so we can be selective on timing and structure.

The next question comes from Vince Tibone with Green Street Advisors. Please go ahead.

Can you discuss Bay Area fundamentals and specifically the Hayward value-add acquisition that transferred to the operating portfolio this quarter? Also, how has the Tulloch acquisition performed over a year or so of ownership versus original expectations?

Bay Area fundamentals are interesting given tech layoffs and the shifting economic backdrop. The Hayward acquisition has leased up slower than we had hoped. It was a value-add property and required some cleanup — painting, parking lot work and office improvements — and it’s one vacancy of about 47,000 square feet. We’re close to a lease signing in the next few weeks. Vacancy in Hayward is low — roughly 2-3% — so it’s a tight market. Regarding Tulloch, leasing to date has been ahead of our underwriting; it’s performed well overall. There’s one vacancy on a submarket within Tulloch we’re working to fill, but overall performance has been better than our pro forma at acquisition.

On the private transactions market, are you seeing more deal activity now or are bid-ask spreads still wide?

Transaction activity has picked up relative to a year ago. There are one-off trades and more activity on core acquisitions than earlier in the cycle. Large portfolios are being priced differently and sometimes broken up. There are still multiple bidders in many cases, and competition persists in the second and third rounds. We’ve been active in bidding and came close on a few deals, but overall it’s improved from the quiet period earlier in the market.

The next question comes from Bill Crow with Raymond James. Please go ahead.

Thinking about development, have we ever seen such a dramatic decline in starts while fundamentals remain strong? Could this be followed by a rapid restart in starts 12 to 18 months out if fundamentals remain healthy?

Usually starts fall because fundamentals are weak. This cycle is unusual because supply is falling while fundamentals remain strong. I haven’t seen such a combination in my experience. We did see a different but related dynamic during the COVID period where development economics shifted quickly. Today, capital market challenges are the main constraint. It’s possible starts could pick up rapidly if capital conditions improve and demand holds, but many private developers are currently capital constrained so it may take a few quarters for the pipeline to refill.

Of the starts you’re seeing or expect, are more of them multi-tenant shallow bay product like yours, or is there still a meaningful share of large-box development?

There will be a mix. Big-box projects remain in the pipeline, but many of the aspiring local developers who jumped into industrial in 2018-2021 are currently sidelined. That means the near-term drop in starts may be fairly broad, though shallow-bay product we've built remains in demand. The pipeline mix may shift slightly, but not dramatically, and we still expect our product type to be well supported.

This concludes our question-and-answer session. I would like to turn the conference back over to Marshall Loeb for any closing remarks.

Thank you for everyone’s time and interest in EastGroup this morning. If we didn’t get to your question or if anything comes up later, feel free to reach out or e-mail Brent and me. We appreciate your interest and look forward to seeing you soon. Thank you.

Thank you.

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