Equity Lifestyle Properties Inc Q1 FY2022 Earnings Call

Good day, everyone, and thank you for joining us to discuss Equity LifeStyle Properties' First Quarter 2022 Results. Our featured speakers today are Marguerite Nader, our President and CEO; Paul Seavey, our Executive Vice President, CFO; and Patrick Waite, our Executive Vice President and COO. In advance of today's call, management released earnings. Today's call will consist of opening remarks and a question-and-answer session with management relating to the company's earnings release. As a reminder, this call is being recorded. Certain matters discussed during this conference call may contain forward-looking statements in the meanings of the federal securities laws. Our forward-looking statements are subject to certain economic risk and uncertainty. The company assumes no obligation to update or supplement any statements that become untrue because of subsequent events. In addition, during today's call, we will discuss non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to comparable GAAP financial measures are included in our earnings release, our supplemental information and our historical SEC filings. At this time, I'd like to turn the call over to Marguerite Nader, our President and CEO.

Good morning, and thank you for joining us today. I am pleased to report the results for the first quarter of 2022. We continued our record of strong core operations and FFO growth with the 14% growth in normalized FFO per share in the quarter. At the core of ELS strategy is a commitment to quality; we have built our organization focused on high quality team members, properties, cash flow and capital allocation. The result of this shared focus is sustained value for our residents, customers and shareholders. Our properties are well located in areas where the demographic trends create tailwinds for ELS. We focus our acquisition strategy on increasing our concentration of assets in high demand markets for the baby boomer population. That strategy continues to bear fruit as we see outsized demand and population growth in our key operating states. Our high-quality cash flows are reflected in our reported results and historical trends. The quality of our cash flow is seen in our annual revenue stream. Our long-term relationships with our customers and our manufactured home communities, RV resorts and marinas are one of the hallmarks of our success. The average tenure of our manufactured home residents is over 10 years. Within our RV resorts, we see customers return for generations as they pass along the camping tradition. During the quarter we saw our new home sales increase 36%. The primary driver of the new home sale volume increase was our Florida sales program, where we saw an increase in volume of over 100%. The increased demand for living in Florida is seeing increased home sales, occupancy and lead flow. Over 95% of these new home buyers were cash buyers. This investment is consistent with our entire portfolio, as the vast majority of our residents have made a capital commitment to live in our communities. That commitment from our homeowners results in pride of ownership and a long-term resident base. Core RV revenue increased over 21% in the quarter, driven by the rebound of seasonal demand in the South and the West as we welcomed back our Canadian guests and our domestic customers were able to travel without restrictions. Our first-time transient customers from last year showed a desire to strengthen their relationship with us, with 15 to 18% becoming annual seasonal or members. Our internal surveys, as well as RV industry surveys, support our view that our customers are looking forward to spending more time outdoors at our properties. The internal survey results indicate that the desire to be outdoors, affordability, and safety are the primary reasons for planning to camp more this year. Our flexible work environment has propelled an interesting camping trend, with two out of three RV occupants indicating that having a flexible work and remote environment influences their decision to camp. We consider it a great responsibility to own and operate lifestyle-oriented properties among diverse landscapes and natural habitats and to ensure our properties remain desirable destinations for future generations. We focus on improving the environment within our footprint and will continue to focus on preserving the natural amenities and biodiversity at our properties. I wish to express my gratitude to the entire ELS team for another great quarter. Our operating team will now turn their attention towards the summer season properties and will focus on delivering excellent customer service to our residents, members and guests as they explore our properties this summer. I will now turn it over to Paul to walk through the numbers in detail.

Thanks, Marguerite, and good morning everyone. I will review our first quarter 2022 results and provide an overview of our second quarter and full-year 2022 guidance. First quarter normalized FFO was $0.72 per share, strong performance in our core portfolio generated 9% NOI growth for the first quarter contributing to normalized FFO per share growth of 13.8%. Core community-based rental income increased 5.6% for the quarter compared to 2021, with rate growth of 5.1% exceeding our expectations. Growth in occupancy generated an additional 50 basis points of core MH rent growth compared to last year. Our first quarter core occupancy increase included a gain of 191 homeowners. The continued strong demand for home sales has reduced the inventory available for rental as we have focused on growth in occupancy from home sales. Our rental homes currently represent 4.8% of our MH occupancy. First quarter core resort and marina base rental income increased 21.4% compared to 2021. On a full-year basis, more than 75% of our resort base rent is generated from long-term annual and seasonal stays, while 99% of our marina rents are from annual customers. Rent growth from annuals in the first quarter was 8.6%, with 5.5% from rate increases and 3.1% from occupancy gains. First quarter rent from core RV seasonal increased 65% compared to first quarter 2021, which was impacted by the Canadian border closure and other travel restrictions. Core rent from transient customers increased 21.2% for the quarter, consisting of 11% from rates and 10.2% from occupancy. For the first quarter, the net contribution from our membership business was $17.4 million, and subscription revenues increased 11%, reflecting a 5.3% increase in the member base and a rate increase of 5.7%. The increase in average rate includes the impact of dues related to our Trails Collection product, which provides access to RV properties. At the end of the quarter, 21% of our members held a Trails Collection pass, compared to 13% at the same time last year. The increase in subscription revenues compared to last year offset the reduced contribution from upgrade sales following the introduction of the new adventure product last year. We continue to see steady demand for upgrades, including the adventure product. During the first quarter of 2021, the adventure upgrade represented almost 25% of our upgrade sales. The average upgrade sales price was 9.4% higher than last year. Core utility and other income increased 12%, mainly due to increases in utility income and real estate tax pass-throughs. Utility expense was the largest contributor to core property operating expense growth. We've added a table to our core income from operations page in the supplemental package that shows utility income and expense with the recovery rate for the first quarter compared to the first quarter last year. The recovery rate we achieved in the first quarter of 2022 is consistent with our long-term historical experience. Increases in repairs and maintenance expense, compared to last year, are attributed to repairs to property utility system infrastructure, building and common area maintenance, and snow removal following events in the Midwest and Northeast. In terms of property payroll, staffing levels were consistent with prior year. The payroll expense increase was mainly the result of wage increases, along with a modest increase associated with overtime hours and temporary staffing to cover open positions. Core property operating revenues increased 9.5%, compared to the midpoint of our guidance of 7.6%, while core property operating expenses increased 10.3%, compared to the midpoint of our guidance of 7.9%, resulting in core growth in core NOI before property management of 9%, compared to the midpoint of our guidance of 7.4%. Our non-core properties contributed $10.5 million in the quarter; this group of properties has performed in line with our pro forma underwriting expectations. The first quarter represents approximately 30% of our full-year NOI expectation for this group of properties. Property management and corporate G&A totaled $30.2 million for the first quarter. Other income and expenses net, which includes our sales operations, joint venture income, as well as interest and other corporate income, was $6.5 million for the quarter, while interest and amortization expenses totaled $27.5 million for the quarter. The press release and supplemental package provide an overview of 2022 second quarter and full-year earnings guidance. As I provide some context for the information we've provided, keep in mind that my remarks are intended to provide our current estimate of future results. All growth rates and revenue and expense projections represent midpoints in our guidance range and are qualified by the risk factors included in our press release and supplemental package. Our guidance for 2022 full-year normalized FFO is $2.73 per share at the midpoint of our guidance range of $2.68 to $2.78. We project core property operating income growth of 6.8% at the midpoint of our range of 6.3% to 7.3%. Full-year guidance assumes core rent rate growth in the ranges of 5.1% to 5.3% for MH and 5.9% to 6.1% for annual RV rents. We assume occupancy in our stabilized MH portfolio will be flat to first quarter. Our guidance model includes the impact of all acquisitions we've announced and the impact of the debt capital events we disclosed in our earnings release and supplemental package. The full-year guidance model makes no assumptions regarding other capital events or the use of free cash flow we expect to generate in 2022. Our second quarter guidance assumes normalized FFO per share in the range of $0.59 to $0.65. Core property operating income growth is projected to be 3% at the midpoint of our guidance range for the second quarter, which represents approximately 22% to 23% of our expected full-year core NOI. Our second quarter and full-year guidance assumptions include our expectations for combined seasonal and transient growth of approximately 4% and 14% respectively. The total sites stable in our supplemental package showed sites occupied by annual and seasonal customers, as well as sites available for transient stays; a comparison to last year shows that customer demand for longer-term stays has reduced our inventory available for transient stays. We expect the first six months of 2022 will generate approximately 51% of the full-year core seasonal and transient rental income. This compares to 2021, when approximately 46% of full-year core seasonal and transient rent was generated during the first six months. I'll now provide some comments on the financing market and our balance sheet. As noted in the earnings release and supplemental package, we have closed on a $200 million secured debt refinancing at 3.36% for a 12-year term. Loan proceeds were used to repay all secured debt maturing in 2022, as well as to repay all amounts outstanding on our line of credit. We are pleased with the execution of this refinancing as it further fortifies our rock-solid balance sheet. In this time of heightened volatility and uncertainty, our debt maturity schedule shows that we have only 15% of our outstanding debt maturing over the next five years. This compares to an average of approximately 45% for REITs. I'll also remind you that approximately 23% of our outstanding secured debt is fully amortizing and carries no refinancing risk. Current secured debt terms have moved significantly since mid-February, when we locked in the rate on our refinancing; current 10-year loans are quoted between 4.25% and 3.25% at 60% to 75% loan to value and 1.4 times to 1.6 times debt service coverage. We continue to see solid interest from life companies and GSEs to lend for terms of 10 years and longer. While we haven't tapped the CMBS market in some time, as the pricing has been wide relative to our other options, we understand that market has been experiencing some instability. High-quality age-qualified MH assets continue to command the best financing terms. In terms of our liquidity position, we have $500 million available on our line of credit, and during the quarter, we expanded our ATM program to provide $500 million of capacity. Our weighted average secured debt maturity is approximately 12 years, adjusted for the impact of the refinancing I mentioned. Our debt to adjusted EBITDA is around 5.2 times and our interest coverage is 5.7 times. We continue to place high importance on balance sheet flexibility, and we believe we have multiple sources of capital available to us.

Thank you. Our first question comes from Nick Joseph of Citi. Your line is open.

Good morning. I want to ask about the transient RV bookings and marinas and the impact from higher gas prices. I recognize it's not a big part of the business relative to annual and seasonal, but just how those have trended and how you are assuming that trend in guidance relative to what was previously assumed to guidance?

Good morning, Nick. A couple of things, just as it relates to gas, I think we have a long history of transactions that really indicate that our customers will not defer a vacation due to the price of gas; weather has always been the more likely culprit for volatility in activity and reservations. But as it relates to the transient pace, I think it's helpful to point out that our RV transient revenue is really less than 7% of our overall revenue. We focus our acquisition model over the years on long-term RV resorts. In 2020 and 2021, as you see in our supplemental, we saw an increased number of RV resorts convert from transient to seasonal and annual. Within that, our core portfolio has 1,100 fewer sites that are available for transient customers than we did last year at this time. So as far as pacing, it’s beneficial to break down the reservation pace between core properties that did not see a decline in the activity of available sites, and that pace is really 9% in the second quarter and 18% in the third quarter, with the highest demand we see in California and the North and Northeast properties. It’s also helpful to understand some of the changes in the booking patterns that we’re seeing, and maybe Paul could walk through those changes?

Sure. Nick, when we think about the second quarter, we note that historically, last year was a little different, but typically it's a shoulder season transitioning from winter to summer, with focus shifting from Southern to Northern resorts. We traditionally look to Memorial Day weekend as a gauge of demand at the start of the summer season. The average advance booking window for transient stays is about 45 days. Within that average, there are two distinct customer groups: those that book 90 days out and those that book a few days before arrival. The second quarter reservation pace for the group that books earlier is higher than it was last year. So when we think about that, it's reflective of the growth we experienced in the first quarter. However, as Marguerite mentioned, weather is the key driver of decision-making, so we're mindful of the impact of weather. I'm not sure how it’s been where you are, but in Chicago, it snowed yesterday. April is proving to be a bit of a slow start to our second quarter, and looking back to the second quarter of 2019, we had a strong start, but then faced unfavorable weather patterns in May and June that negatively impacted results. So there's a lot of dependence on the weather as the key takeaway.

That makes sense. We had snow yesterday too. I know it was 80 degrees on Saturday and snow on Monday. Maybe just on the acquisition pipeline: with interest rates rising, obviously cap rates across MH and RVs and marinas have compressed. How do you think about the relationship as rates rise, if they continue to rise or stay here? How much of a spread do you see in the private transaction market relative to those base rates?

We haven't seen any real change. Last year, our cap rates ranged from 4 to 6%, and this year they haven't changed significantly, with high-quality MH trading at the lower end and transient RV at the higher end. However, while we haven't yet seen a meaningful change in cap rates as a result of interest rate movement, it may take a bit of time to work through the system, and we might see more sellers become committed due to this movement.

Thank you very much.

Thanks, Nick.

Thank you. Our next question comes from Brad Heffern of RBC Capital Markets. Your line is open.

Hey, good morning everyone. In past quarters, you've discussed the trend of weekend RV days extending into the week, given people's freer work flexibility. Has there been any change to that trend at all?

For the first quarter, we saw an increase of weekday nights of about 14%. We're really now comparing similar time periods in terms of flexible work arrangements. But we still believe our properties will be an attractive vacation option for weekday activity for those able to have flexibility in their work schedules.

Okay, got it. I have a question on the OpEx guide: so the first quarter number was 10.3%, the second quarter guide 6.4%, and the annual guide is 4.8%. If I'm doing the math right, that would suggest some sort of 1% to 2% growth number in the second half? Can you confirm that that’s correct and also talk about what gives you confidence in a significant deceleration there?

Your math generally works, Brad. What I'd say overall with respect to our expense growth assumptions is that our process for preparing a budget, as well as our re-forecast, is a bottoms-up approach at the property level, figuring out what we expect the budget to be for the upcoming period and for the re-forecast adjustments. We then come back after that and review it at a consolidated level, focusing on specific guide posts. Our utility, payroll, and repairs and maintenance expenses represent almost two-thirds of our expenses. We've observed a strong correlation between those expenses and our revenues. They generally trade in a tight band in terms of percent of revenues, and as we look at the experience we had in the first quarter, we see that percentage remaining consistent year-over-year.

Okay, thank you.

Sure.

Thanks, Brad.

Thank you. Our next question comes from Michael Goldsmith of UBS. Your line is open.

Good morning. Thanks for taking my question. First, on the transient RV revenue, how much of that occurs in April? And as we think about the cadence of transient RV revenue through the period, are you able to kind of provide us with how much the underperformance is, relative to last year, over the first couple of weeks? And then where you expect to be at the end of the quarter, to get a run rate for entering the third and fourth quarters of the year?

You're diving into a level of detail that becomes challenging for us, Michael. The short answer I'll give is that the guidance we have is based on our current pace. So for the second quarter, the guidance states it is clear as I can provide, and indicates 4% growth, subject to weather conditions. Beyond the second quarter, the third quarter represents almost 40% of our core transient rent for the year, and we're projecting mid-single-digit growth for that. However, as I mentioned earlier, the booking windows are around 90-days out, so it's quite early to have good visibility into the largest quarter for our transient business.

Got it. Just to clarify, it sounds like your guidance of 4% for the second quarter is based on the rate you've seen so far in combination with your forward bookings, despite the weather being less favorable. Is that right?

Yes, that's accurate.

Got it. And as we think about what's implied in the back half: you just mentioned mid-single digits, which I think is kind of like how the math of your guidance plays out. Can you discuss your assumptions that go into it? I think you mentioned the impact of converting transient sites to annuals. Can you elaborate further on those trends and how you expect to see the year play out? It sounds like the sites are down, but how much strength do you expect on the rate side? Thank you.

We continue to see or will possibly see us convert some transient sites to annuals, which are built into our budget. Additionally, we believe we have some pricing power considering the current environment. Hotel rooms are up 40%, airline tickets are similarly up, and rental car rates have seen similar increases. We believe you'll see us continue to push rates where we see that taking place in the market and converting some seasonal and transient sites to annuals.

Thank you very much.

Thank you. Our next question comes from Lizzy of Bank of America. Your line is open.

Hi, good morning everybody. I'm just wondering how much of the core NOI growth this quarter came from the marina portfolio? What does that growth look like for the full year? I think you all had mentioned 4% in the past call. Can you comment on expectations or general trends you're seeing within the marinas portfolio?

Sure. The marinas are performing well for us. We referenced it consistently across earnings calls that occupancy is stable, holding at 90%, and we have had a slight pickup for the quarter. We feel the demand profile is strong as well; we’ve surveyed our customers, and more than 60% of our marina customers plan to spend more time on the water in 2022 than they did in 2021. So, we have a good demand profile. Our rate growth has been around 4%, and that's tracking out at about the same at the NOI level, subject to some of the expense pressures we see in the balance of the portfolio regarding things like insurance and real estate taxes.

Okay, great. My second question is just around rent regulation. How much more of a concern are rent caps in your manufactured homes portfolio? As we see that becoming more apparent for multi-family and single-family, are you considering specific states, locations, or even certain property types while keeping rent caps in mind?

We have opposed rent control for many years. Regarding our housing options, we do not see rent control making overall housing more affordable; it generally results in the price of the home increasing as the rental rate is decreased. However, the net monthly impact is basically the same for prospective buyers. We work with homeowner associations to agree on fair and reasonable rates that incorporate their concerns at the property, and we believe that approach has been successful over the years. Of our 200 MH properties, approximately 10% have mandated rent control, and there are others in states like Florida that have regulations around rent increases under the terms of a prospectus. However, we are unique in the residential space because of our ongoing long-term relationships with our homeowner base, and we invest in our properties. Our homeowner base is informed about proposed increases well before they are implemented. So, we're closely monitoring activity in all the states we operate in and working with national associations to ensure the information about our industry and the rent increases is accurate.

Great, thank you.

Thanks, Lizzy.

Thank you. Our next question comes from Keegan Carl of Berenberg. Your line is open.

Hey guys, thanks for taking my question. Given elevated gas prices, are you seeing any changes in the demand for extended stays at your resorts? If so, how do you think it will impact the number of trips taken this year? Do you think it will impact your pricing strategies at all?

I believe that trips planned will remain relatively unaffected. Our average RV takes about a 90-mile trip, so an increase in gas prices by $2 isn’t going to dramatically impact the cost for customers traveling to our locations. I think we have the ability to raise our rates, as evidenced by the consistent demand increase. You should expect us to implement that regularly as demand increases on a market-by-market basis.

Got it. Just changing gears here, around your inflation: are you seeing any material impact on demand across your business lines? And how do you see your part-time labor situation developing in the coming summer months?

In terms of labor and expenses, we've adjusted our assumptions for guidance for the remainder of the year, considering full employment, as well as market levels at our properties. What we've experienced thus far has been a number of open positions, but across the portfolio, it's been fairly consistent at about one open position per property type, thus not expecting significant impacts on operations throughout the summer.

In terms of rapidly rising rates, especially regarding mortgage rates, it’s important to note that most of our buyers are cash buyers - about 95% paid cash in the first quarter, which has been consistent throughout our community. So they don’t participate heavily in the financing market.

Thank you. Our next question comes from Samir Khanal of Evercore. Your line is open.

Hey, Paul, on the G&A front: you reported $2 million for the quarter. Is that the right run rate to think about? I know we talked about upward pressure on expenses; just trying to think about the right run rate going forward here.

I think the way we view property management and corporate combined suggests that we’re in the range of about 10% to 11% growth over last year. This increase is primarily due to investments in technology and staffing cost increases.

So going forward, you're thinking the $12 million mark will be slightly lower?

Right.

Got it. Thanks so much.

Thanks, Samir.

Thank you. Our next question comes from Wes Golladay of Baird. Your line is open.

I'd like to revisit the cash buyer comment you made. When someone buys a house with cash, is that usually contingent on selling their primary home? Are these largely second home purchases?

It’s generally a two-step process. A person will come down, perhaps visit us and stay for a month; they might rent, as Patrick mentioned. They typically come from the North, Midwest, or Northeast and may buy or rent in Florida or Arizona while still holding their home up North. It often takes a couple of years to five years before they decide to change their primary residency to ours. So, our residents are at various stages of that decision-making process.

Okay, thanks for that. When we look at the transient and seasonal combined, are you seeing record occupancy right now? Is it relatively full occupancy for the balance of the year? Or is there still room to push occupancy going forward?

I think we still have room to push occupancy. I wouldn't characterize it as a lot of room, but the overall strategy to optimize our sites and retain some portion of transient customers as a feeder for our longer-term rental business is part of our plan going forward.

One thing we’ve highlighted is that weekday camping has increased; however, it’s coming from a low level, so in terms of transient activity, we still have room for growth.

Thank you. You had very strong seasonal trends in RV quarter and talked about a favorable backdrop but your guidance for the year seems to suggest a deceleration. Why wouldn’t this be higher if you see the ability to convert transient to seasonal?

A big part of it, John, is that when considering the seasonal business and the year-over-year comparison, last year we were short $8 million in seasonal rent in the first quarter. We recovered that to be flat year-over-year in our seasonal business. So there’s been a recovery of the seasonality trend we historically experienced in the first quarter, making the first quarter represent about 60 to almost two-thirds of our total full-year seasonal.

Where do you expect additional conversions from transient to seasonal? Can you remind us what the typical turnover rate is for your annual and seasonal RV customers?

The typical turnover is about 10%. In terms of conversions, I think the rate we have is really dependent on what we're seeing as we go into the summer season. The winter season tends to gain more talent in our seasonal business, while summer is a stronger season for driving annual fill.

We’re also seeing heightened activity post-pandemic, where more people, especially in the northern resorts, are interested in using our properties as their second home or vacation home, resulting in an increase in annual counts.

Thank you.

Thanks, John.

Thanks.

Thank you. Our next question comes from Anthony Powell of Barclays. Your line is open.

Hi, good morning. Regarding your rate growth guidance, it's up 40 basis points at the midpoint compared to last quarter. This is pretty healthy given you should have some visibility on your rent increase. What drove the increase in your guidance?

Sure, Anthony. By the end of April, we'll have sent rent increase notices to about 75% of our in-place residents. Those increases align with our prior guidance at approximately 4.3%. We previously mentioned that about 25% of our leases are tied to CPI while the remaining 75% are market-driven. We value our long-term relationships with residents and understand the interplay between their investment in the homes and the rent they pay us. Hence, we are cautious about the rates charged to long-term residents compared to the rents for new residents, making economic decisions based on local circumstances. Maybe Patrick can explain the process for setting those market rents, which have driven the growth you're referring to.

Regarding the process of establishing market rates, it starts at the core of our business with our existing residents. We're monitoring housing costs and competing housing in our submarkets, which cover competing manufactured home communities, multi-family, single-family rentals, and condos. During discussions with long-term residents, we also take into account new customers who are shopping in the open market and choosing to purchase a home in our properties, which generally represents a turnover of about 10%. Those incoming customers are aware of current market rates, which we continually review throughout the year based on competitors.

I understand, so the growth is being driven more by new residents entering at market rates, and as more residents look to your product given affordability and desirability, we could see further upside over time?

Yes, that's potentially accurate; it's mostly focused on localized market activity.

Thank you. Also, regarding acquisitions, the current volume is down year-over-year. I understand it’s a competitive environment for all segments. Could you remind us what the current transaction environment is like in terms of asset availability and the willingness of sellers to sell?

This year is starting similarly to previous years, with many highly marketed deal auctions that involve bid rounds with multiple best and final bidders. However, as interest rates evolve, it could create incentives for sellers. We're seeing consistent demand for assets, and we have strong relationships throughout the industry. We'll continue to look at MH, RV, and marina deals and will update you as we close them in the coming quarters.

Alright, thank you.

Thank you, Anthony.

Thank you. Our next question comes from an analyst at Green Street. Your line is open.

Hi, good morning, everyone. Regarding the MH business, given the rising interest rate environment, how does that affect your appetite to expand occupancy levels?

Thanks for joining us. There appears to be some feedback on the line; if you could mute your line, it would be appreciated. We've always viewed the rental component as a way to increase occupancy at certain locations. But we believe that where there is a market opportunity for expansion, we will seize it and concentrate on sales. Our operational plan has proven effective for managing large rental pools. In areas where selling proves challenging, we pivot to our rental strategy as a backup plan.

Thanks. Regarding the utility costs, are there ways to increase the share of utility costs that you pass on to customers to offset the pressure on that cost line?

We have a process in place to explore opportunities to separate utility charges from rents and directly pass costs to our residents. While there are fewer opportunities to do so than there were in the past, we may still find a few possibilities, especially pertaining to shorter-term stays in our transient business. It's worth noting that we are achieving a recovery rate that aligns with our long-term historical averages.

Thank you.

Thank you.

Thank you.

Since there are no further questions, I’d like to turn it back over to Marguerite Nader for closing comments.

Thank you for joining us today. We look forward to seeing you at NAREIT and updating you in our next quarterly call.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you all for participating. You may now disconnect. Have a great day.