Empire State Realty Trust, Inc. Q4 FY2020 Earnings Call

Greetings, and welcome to the Empire State Realty Trust Fourth Quarter and Full Year 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Tom Keltner, General Counsel. Thank you. You may begin.

Thank you. Good afternoon. Thank you for joining us today for Empire State Realty Trust's fourth quarter 2020 earnings conference call. In addition to the press release distributed yesterday, a quarterly supplemental package with further detail on our results and our latest investor presentation were posted in the Investors section of the Company's website at empirestaterealtytrust.com.

Thanks, Tom, and good afternoon to everyone. We continue in 2021 to flex and pivot to facilitate employee and tenant reentry to our buildings with confidence in our indoor environmental quality measures. We collect rent, manage expenses, promote Empire State Building Observatory visits and support our smaller retail tenants. Our tenant presence remains relatively unchanged, as many tenants plan their return to the office around the widespread rollout of vaccinations. We reached just under 15% building utilization in our New York City properties and just under 40% building utilization in our Greater New York metropolitan area properties prior to the presently abating virus surge. We are now at approximately 12% and 31%, respectively. Visits to the Empire State Building Observatory continue to grow off a very low base. That said, our visitation is higher than any other Observatory with no discount offered and fantastic visitor feedback from our largely local visitor base to our attraction that features MERV 13 filters, ventilation and active bipolar ionization.

Thanks, Tony, and good afternoon, everyone. In the fourth quarter, we signed 33 new and renewal leases totaling approximately 413,000 square feet. That included approximately 358,000 square feet in our Manhattan office properties, 37,000 square feet in our Greater New York metropolitan office properties and 18,000 square feet in our retail portfolio. Significant leases signed in the quarter were the previously disclosed 212,000 square foot new office lease with Centric Brands for space at the Empire State Building, which Centric had previously subleased from Global Brands Group. A 39,100 square foot new office lease with ClearView Healthcare Partners at 111 West 33rd Street for space that we recaptured from another tenant through early lease termination, which involved payment of a termination fee that will largely offset leasing costs for the ClearView transaction. ClearView previously occupied a recently built 10,500 square foot tower floor that is ready to be leased to a new tenant, a 32,500 square foot new office lease with Transit Wireless at 1400 Broadway. Transit Wireless relocated from 1350 Broadway, where it had previously occupied approximately 24,500 square feet. And a 19,400 square foot new office lease with Dime Community Bank at One Grand Central Place, where Dime had previously occupied approximately 3,600 square feet. Excluding the Centric lease, new and renewal leasing activity in our Manhattan office portfolio during the fourth quarter was approximately 146,000 square feet and reflects a solid quarter despite the COVID-19 pandemic. The new and expansion leases I mentioned with tenants in healthcare, technology and finance have made commitments to increase their employee counts and expand their offices here in New York City. During the third quarter, rental rates on new leases signed at our Manhattan office properties decreased by 6.4% on a cash basis compared to the prior escalated rents. This includes the Centric transaction, which had a leasing spread of negative 15% based on initial face rent, but was approximately neutral on a cash flow basis, inclusive of all related transaction costs and lease termination fee. New and renewal office leases across our entire portfolio were down 5.4%, driven largely by leasing spreads from the Centric transaction. Retail spreads across our portfolio on the 18,000 square feet of leasing were down 43.3% on face rents. However, most of the leases that drove the markdown in rents were restructured leases with small retailers that contain a percentage rent component that is excluded from the calculation of rent spreads.

Thanks, Tom. For the fourth quarter, we reported core FFO of $47 million or $0.17 per diluted share. This is inclusive of $0.01 per share of expense from a write-off of tenant receivables and a noncash reduction in straight-line rental allowances. Other items that impacted results include a net $0.02 impact from lease termination income and a $0.01 impact from tax benefits. Same-store property operations, if you exclude one-time lease termination fees and Observatory results from the respective period, yielded a 1.5% cash NOI increase from the fourth quarter of 2019. This increase was primarily driven by lower property operating expenses, partially offset by lower revenue from the prior year period, driven by previously communicated large known move out. More detail on the breakdown of our collections can be found on Page 10 of the investor presentation. Turning to our balance sheet, as of December 31, 2020, the Company had $1.6 billion of liquidity, which is comprised of $527 million of cash and $1.1 billion of undrawn capacity on the line of credit. We bolstered our liquidity and balance sheet flexibility with a $180 million mortgage loan on 250 West 57th Street that we closed during the fourth quarter. This 10-year interest-only loan has a fixed rate of 2.83%. The Company had total debt outstanding of approximately $2.2 billion on a gross basis and $1.6 billion on a net basis. The Company's total debt has a weighted average interest rate of 3.9% and a weighted average term to maturity of 8.2 years. Our net debt to total market capitalization was 37.2%, and net debt to adjusted EBITDA was 6.3 times. We have a well-laddered maturity schedule with no outstanding debt maturity until November 2024. Our revolving credit facility expires in August 2021 and has two six-month extension options. During the fourth quarter, we also announced a continued suspension of our dividend for the first and second quarters of 2021. Concurrently, we also announced a new $500 million repurchase authorization for the period of January 1 through December 31, 2021. This replaces the $500 million repurchase authorization that ran through the calendar year 2020. Under the 2020 authorization, the Company repurchased approximately $144 million of its common stock at a weighted average price of $8.32. In the fourth quarter and through February 16, 2021, the Company repurchased $25.3 million of its common stock at a weighted average price of $7.32 per share. This brings the cumulative total since the stock repurchase program began on March 5, 2020, through February 16, 2021, to $147.2 million at a weighted average price of $8.34 per share. We continue to manage expenses tightly across the Company. We achieved our 2020 goal to reduce G&A expenses to $60 million, excluding one-time severance charges, which reflected an $8 million reduction from the prior run rate. We pre-announced that 2021 NEO annual equity compensation will be reduced by at least $3.9 million. Expense awareness and control is a major focus of mine, and I have benefited from cooperative work with my colleagues towards this end. As Tom mentioned earlier, we reduced property operating expenses by $39 million in 2020, driven primarily by reduced building utilization. The Company expects property operating expenses in the first half of 2021 will approximate our current run rate based on continued low building utilization relative to 2019 levels. We believe these proactive measures are aligned with stakeholders and reflect our efforts to operate efficiently and maximize balance flexibility and operating runway in uncertain times. We will continue to see efficiencies and cost reduction opportunities in operating our business.

Thank you. We will now be conducting a question-and-answer session. Our first question comes from the line of Steve Sakwa with Evercore ISI. Please proceed with your question.

I don't know if Tony or Christina wants to take this on kind of buybacks against maybe new investment opportunities. And first, what are you seeing in the market today? What does the pipeline look like of possible deals? And when you are evaluating purchases of buildings, how are you sort of weighing that against share buybacks? Is it simply kind of a yield differential? Is IRR driven? Can you give us a little bit of sense of how you're thinking about those two investment opportunities?

Sure. Thanks, Steve. We weighed the deployment of our capital against all alternatives. And we want to generate shareholder value and maintain a balance sheet to provide us with flexibility and operating runway. As far as actual focus of our acquisition that's on New York City office, retail and multifamily, and we think that outside of prices on assets with long-term credit leases to which investors in search of alternative yield are attracted, prices are very unsettled and trending down. We believe we're in the early stages of a potential reset and more opportunities will arise. And we balance all of this along with runway. We clearly feel that Q1 '22 is the bottom. That said, we go up from there. It doesn't mean suddenly things are back to normal. So our view is early stages. Aaron Ratner, our CIO, and his fully staffed team have begun to uncover more interesting situations, and we continue to weigh the deployment of our capital for new acquisitions against all of the options in this marathon that we are in, not a sprint, it's a marathon. So with that in mind, I would say that we've definitely done deep underwritings on a few, fewer than a handful of assets. We have a tremendous catalog of opportunities out there, which we pursue right now, either directly and/or through brokers. And I'd like to say we're really encouraged by the fact that we have begun to see information come out from brokers, not in the form of polished books, but in the form of short one pagers, two pagers. And that to me, indicates something we've seen from periods before. As I've said before, when the books from the selling brokers get bad, it means that the information flow is not effective due to cutbacks in the sales brokerage side because, frankly, their business model doesn't support the staffing. And that indicates opportunities have arisen, and that's what we see.

I guess, as a follow-up. I didn't know if maybe Tom could talk a little bit about what you're seeing from the tenants? I know you've done a bunch of new deals in the fourth quarter. And I guess, what I'm really trying to piece through here is space utilization, how tenants are planning space for tenants that moved within your portfolio or even new tenants in? How are they space planning today? And how did that maybe compare to space they were coming out of?

Yes, Steve, the biggest focus that we have seen has been and will continue to be on healthy workplace, healthy buildings and indoor environmental quality. This is the most asked about topic by existing tenants and prospects. And as a reminder, we provide tenants with energy-efficient space and fully modernized healthy buildings in which we are the industry leader in indoor environmental quality. And as you know, 95% of our Manhattan spaces have been redeveloped and comply with our high performance, energy efficiency and indoor environmental quality standards. Regarding space design specifically, there's an awful lot of discussion on the topic, which every landlord is asked. However, this is a tenant-driven phenomenon and most tenants are focused on a post-vaccine world. We've seen some slightly less dense furniture layouts, but we've really not seen heavily bench seating, and though we did not see this pre-COVID, as many of our tenants were focused on employee productivity. Except in our prebuilt spaces, tenants are the ones who decide on how spaces will be configured and their furniture layouts, but we haven't seen any radical changes sought by either our existing tenants, new tenants to whom we've leased or by the tenants with whom we're in negotiation with now.

Our next question comes from the line of Manny Korchman with Citi. Please proceed with your question.

Maybe sticking to buybacks for a second, Christina or Tony, how do you think about buybacks from the perspective of increasing leverage? You did a sort of cash-out refinancing in the quarter, and then you've done more buybacks since then. Obviously, leverage goes up in those types of transactions. And I think you've been hesitant to sell assets. So how do we put that all together?

I'll take a first crack at that, Manny, and let Christina add in. I think over time, our track record on the management of our balance sheet suggests that we are prudent in our decision-making. If you recall, we issued shares at an opportune time, exercised discipline on our acquisition underwritings and avoided asset purchases at the end of the bull market, and we borrowed well. We endured a lot of criticism while we waited to repurchase our stock. Our actual decision on how we deploy capital is an active discussion with our Board. To maintain our focus on value generation for shareholders, we believe we really need a flexible balance sheet to provide us with operating runway. So, we look at the length of what we think we will go through in this downturn. We feel very comfortable that we are well positioned there. We look at how the business develops. We have to pay careful attention to the Observatory. And we really look at what will be the most accretive benefit to the shareholders, not just from a cash perspective, but also over the longer term, how we distribute our G&A, how we look at different trends that we can tap into. Runway is the single most important thing, however, when we put all these things into the mix. And will we lever up if we see an opportunity that we think is accretive and delivers value over time? Absolutely, we're prepared to do that. We have low leverage. And of course, as we do better and our stock does better, our leverage goes down as our Observatory kicks back in, our coverage of our debt that we do have has improved. Christina, I don't know if there's anything you'd like to add to that.

Just one additional point, which is, I think we've discussed in the past, it's really about a company's ability to replenish liquidity as they move along with their various capital allocation decisions. It's not a specific target. You mentioned our recent financing that didn't come out of need. It came out of being opportunistic. We saw 2.8%, 10 years interest-only without adding a ton of debt to the portfolio without weakening our unencumbered asset pool that supports our unencumbered debt. We think that that’s really compelling. So it really ties to Tony's comments on maximizing operating runway, having balance sheet flexibility and the dividend suspension ties into that. We have the cash, but we are thinking about all stakeholders in their best interest in an uncertain environment. And when a company has a unique option where it does not need to pay a dividend, we saw that as a chance to make a prudent capital allocation decision. So, we'll continue to demonstrate that as we make these decisions and hopefully drive the point home.

And then, Tony, in the past in conversations like these, you've talked about your relationships and your family's relationships and finding potential opportunities from generational owners of New York City real estate. Have their views on maybe the city generally or their appetite or attitude towards sales changed more recently?

May I ask a quick question? It's interesting because we initially encouraged families to work with us to prepare for disruptions like the ones we're seeing now. Many families are currently facing significant challenges and are starting to realize their capital needs, including required distributions and capital calls. To answer your question, family meetings are happening right now. A lot of the discussions revolve around the tough reality we live in and the determination to get through it. However, there are also conversations about specific assets, particularly regarding whether everyone is willing to contribute to $150 million or $200 million capital calls. The answer to that is no. We believe those who spoke to us earlier would have made wiser choices if they had acted. At present, we are considering these opportunities alongside others and evaluating them accordingly. Just to be clear, if we decide to issue stock or units, we will do so based on the equal valuation of our portfolio and the target portfolio. We would issue units or shares at relative value, not in a way that would allow people to acquire our discounted currency as they might do with cash from others, because that wouldn't make any sense.

Our next question comes from the line of Jamie Feldman with Bank of America. Please proceed with your question.

Tony, you've said a couple of times that you expect to know the bottom in Q1 '22. I'm just curious, what does that look like? Is that office occupancy? Is that net effective rents? It sounds like the Observatory would actually be better by then. Just trying to understand what you're implying.

So the bottom for me, Jamie, is when the distribution of vaccines and vaccinations are broad, widespread and in place. And we've already seen in Israel and in the United Kingdom, where they're way out ahead on their vaccinations. We've seen the numbers really drop tremendously as far as infections. And that bottom, therefore, to me, is based on when people feel, okay, we now know that may be endemic, maybe we get an annual shot. However, we can now plan going forward. So to me, it's a time when people stop on the pivot and flex every single day and say, all right, this day looks a little bit like the day before, the day before that, and we can anticipate tomorrow is the same what decisions do we want to make. And I think a big component of that, Jamie, is the degree from the leasing market, what we have done long-term leases, there are a lot of folks who have focused on users who are focused on short-term renewals while they reevaluate what goes on. And I think that we've seen that behavior in 2021, we will see it in 2021. We definitely saw it in 2020. I think that will also taper off by Q1 '22. I think people will begin to plan longer term, which means, by the way, that the normal roles, which you'll see in '22, '23, '24, people who have roles coming in '22 and have kicked the can down the road, they will already have done that by Q1 of '22. So people will now begin to plan for '23, '24, '25, '26, along with all the other short-term renewals. And that to me will set the stage for resumption of leasing probably with a vigor, real vigor, but I think in '23, '24, '25. And then the last thing I would say is that was a bottom due to the wide distribution and uptake of the vaccine, not only will people return to offices, but when they return to offices, those commercial districts, which have had retail so badly impacted, the retail will know where it is and have a certainty and ability to open. Good news about the U.K. from a tourism perspective is the U.K., at least in the Empire State buildings, are our number one source of overseas visitors. So as the U.K. vaccination gets way out ahead of everybody else, I think with vaccinations, you'll see more normalization of travel. So New York has a hospitality center. New York City is a hospitality center. Again, Q1 '22, I think those are positive, certainly from an internal United States travel perspective, and we'll begin to see glimpses from international, so I would say, across the water. So that's what I think about when I say Q1 '22 bottom.

Okay. That's really helpful. So I guess just to add to that, I mean, do you think, as you look at your lease expirations for the year? I mean I think percent leased declined about 100 basis points in the quarter. I mean do you think that's what kind of continues until then? Or when you look at the expiration schedule today, it's actually conversations are picking up, maybe you're seeing a better renewal percentage. How do we think about just where percent leased or occupancy could go?

Yes. Jamie, this is Tom. Let me jump in here, if I could. As you know, we're about just under 89% leased in 2021. As you see in the supplemental, we have about 311,000 square feet of known tenant vacates and then only about 78,000 square feet of tenants that remain undecided. Now we do have 393,000 square feet of signed leases not yet commenced, that equaled about 3.9% of our total portfolio square footage, again, as shown on Page 6 of the supplemental. And approximately 278,000 square feet of those leases should legally commence by year-end GAAP commencement will follow, again, as shown on Page 6 in the supplemental. I look out in 2022, only 5.5% of our portfolio leases expire. And then 2023, it's about 7%. So I've commented earlier that we have a pipeline of new expansion and extension and renewal activity to the extent that we can sign those this year that will add to our lease percentage. And then the good news is a reminder, 95% of our Manhattan space is redeveloped, and we have 258,000 square feet of prebuilt space ready for lease-up and for immediate tenant move in. So that's how we think about our occupancy trend in the next year.

So I guess, if you add it all up, you're saying it still bleeds a little bit. Is that the right way to think about it?

Well, again, if you do the math, with 311,000 square feet of known vacates, against 278,000 square feet of leases that should commence by year-end, it's not a lot of leasing to achieve positive lease percentage by year-end.

Our next questions come from the line of Blaine Heck with Wells Fargo. Please proceed with your question.

Maybe for Christina, I just wanted to ask about the Observatory performance and its relation to the dividend. Is there a level of attendance or revenue maybe relative to 2019 levels that would necessitate a dividend reinstatement for you guys? Or is there a better way we should think about the kind of the trigger point for that dividend coming back?

Yes. So the dividend decision was tied to taxable income, as I mentioned. One driver, you are correct to note, is the Observatory business. When it's performing, the way it had it generated intercompany rent paid to the REIT and that triggers taxable income. However, there are other sources that also play into the taxable income such as net operating losses, repairs deductions that we get to take. Recall, we spent over $1 billion on the portfolio since IPO. We've had depreciation, we've had repairs deductions. So all of that plays in terms of what you can deduct against taxable income. So Observatory is a driver, but it's not the only driver. There are other factors in there. And we have not communicated any specific linkage to attendance. So we'll continue to monitor as per what we've communicated in terms of hypothetical ramp up and the expense run rate, but that's all we can say right now.

All right. That's helpful color. And then this was brought up on last quarter's call, but I wanted to see if there was any update or anticipated update to Observatory gift shop lease structure given the extended kind of time frame for recovery there?

Yes. We just renegotiated the agreement with the Observatory gift shop. They currently pay $6 million a year. We have restructured the agreement to provide some rent relief during this period of low visitor volume. It's now a percentage rent agreement, where we have reduced the fixed portion by about half, and it will increase as attendance improves. Overall, it's beneficial for both the gift shop operator and us, given their reliance on visitor levels.

And we also extended the license agreement with them at the same time. So we locked that in for longer.

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

Tony, you mentioned on the investment side that you're looking at multifamily. And I just wanted to see if you could elaborate on that. But you also said that as far as investing capital, this is a marathon and not a sprint. With office sentiments, pretty much at all-time lows, but the economy you're looking to reopen this year, do you see this as a tight window where you can make opportunistic investments?

Our focus in the multifamily sector revolves around properties that are either entirely or mostly market rate rental. We also aim to manage these properties actively through downturns so we can influence their performance. Additionally, we are particularly interested in distressed condominium projects, whether they are confirmed or not. We've had success with this approach in New York City during past downturns and plan to pursue similar opportunities in the future. There are several factors to consider now. The 10-year interest rate has slightly increased, and while appraisals on some assets have fallen, lenders are willing to lend less in the office space segment. These elements are unlikely to change quickly, and as more people recognize the issues they face, including the financial performance of their assets, the window for opportunity widens. Currently, landlords in New York City are finding it costly and challenging to lease office space, requiring significant cash over the next one to two years. These ongoing challenges may ultimately create opportunities for us. We believe this is not just a brief window but a more extended period for investment. Internally, we are strategizing on how best to utilize our cash reserves and leverage capital effectively, including potential partnerships with other investors. It’s worth noting that some REITs have scaled back their investment teams, while we have built a dedicated four-person team since the second quarter of 2020. Our approach is proactive, and we maintain a long-term perspective on the opportunities ahead.

Okay. My second question is about the Observatory. You mentioned a more local mix, which makes sense. I'm curious if there are any strategies you have implemented or can implement to attract local customers, whether through marketing or pricing, even if it's just temporary. We've noticed that occupancy rates among multifamily landlords are increasing as people return to the city, albeit at a lower rate. However, many individuals in New York are still searching for activities. Until recently, indoor dining options were limited. Is there anything you can do to inform potential customers who haven't visited the Empire State Building lately about your recent enhancements and to show them that it is a viable option?

It's interesting that earlier today, during a meeting with our Observatory marketing team, which includes PR, marketing, branding, social, and digital, we discussed our progress in these areas. We have seen an increase in advertising value equivalency in the United States due to our efforts. Our brand remains very strong, largely driven by word of mouth. When we reopened the Observatory, we were experiencing an increase in visits of 2 to 3 percentage points compared to previous activity. Now, in the first two months of 2021, we are close to a 9% increase, even considering that February had two weeks affected significantly by blizzards. We believe there is no need for pricing promotions. Our competitors, like the edge, which offered free admission to first responders in 2020, saw their numbers drop sharply once that offer ended. One World Trade Center is currently open two days a week, and our numbers at Rockefeller Center significantly outperform theirs. The Observatory team has done an outstanding job with cost management and adapting staffing levels, and visitors appreciate the experience. We are utilizing user-generated content and actively engaging on social media and digital platforms to promote the Observatory within the local community. Our brand-building efforts are crucial, as indicated by our recent coverage on CBS This Morning for Valentine's Day weddings, which showed a remarkable increase in advertising value equivalency compared to last year. This exemplifies our marketing activities.

Our next question has come from the line of Daniel Ismail of Green Street. Please proceed with your question.

Tony, you mentioned the cost of re-tenanting office space. And clearly, over the past few years, you spent a lot of time and capital modernizing your portfolio with a focus on ESG. Is it your sense that some of these older or lower-quality buildings in New York, potentially facing pending vacancies, no longer remain office buildings? I know there's been some chatter of office-to-residential conversions. So I just wanted to get your sense on that and if that's something that Empire State would be interested in.

I think I'll let Tom Durels take a crack at that, if I may.

Yes, it's still quite early in terms of converting office buildings to residential spaces. We've observed this in previous cycles, but there hasn't been a significant amount of activity yet. We would certainly consider it, though a lot would depend on the building's layout and whether it can be converted at a viable price given the current market conditions.

When considering acquisitions and investments, it's clear that transforming an office building into residential space requires significant effort. An office owner converting to residential essentially gives up that property, which is a substantial financial loss unless they are starting with a very low investment cost. This conversion involves major renovations, including installing risers and shafts for electricity, waste, and water, as well as adding new bathrooms, which constitutes a considerable financial commitment. Therefore, these properties must be thoroughly re-evaluated and planned out, as failing to do so could result in economically unviable projects.

And then you sense that potentially we could be facing just higher structural vacancy or a higher amount of obsolete office buildings in Manhattan as, say, tenants focus more on ESG and some of those older buildings just simply can't compete with higher-quality offerings?

I definitely think that's the case. They will encounter significant redevelopment costs to meet the standards that tenants want for indoor environmental quality, sustainability, energy efficiency, and compliance with local Law 97. As mentioned earlier, we have already redeveloped 95% of our space in Manhattan. We have no funding for 2024 for Local Law 97, and we are a leader in this area.

And then one more, if I may. Are you able to provide a more portfolio-wide estimate of where in-place rents sit relative to the market today?

For our Manhattan office portfolio, the key issue is the net effective rents, which we estimate have declined by about 10% to 15% compared to pre-COVID levels on a comparable space basis. This decrease is primarily due to more free rent and tenant improvements, along with a slight reduction in face rents. However, it's crucial to recognize that each deal is distinct and influenced by factors such as the space's condition, location, tenant credit, and other variables. For instance, the ClearView deal I mentioned earlier was close to our pre-COVID rent for a fully turnkey space, but we offered several months of additional free rent to incentivize the tenant to lease an entire floor instead of a partial one, allowing us to save on corridor and demising costs. This deal also included recapturing a fully built tower floor. Additionally, we received a significant termination fee related to that deal from a previous tenant. In contrast, we did a deal for an 8,000 square foot lease at the Empire State Building with Nordic-based Swedbank, which has strong credit, where we provided very little tenant improvement. The free rent matched our pre-COVID concession level, but the starting rent was roughly 15% lower than what we would have charged that tenant before COVID. Overall, we believe there’s about a 10% to 15% reduction in net effective rents compared to pre-COVID levels.

Thank you. There are no further questions at this time. I would like to turn the call back over to Tony Malkin for any closing comments.

Look, thank you all for your attendance. We continue to improve our financial disclosures, and hope you find them useful. Take a look at our new investor report, which is online, please remember that forward-looking statements on plans to ramp up the Observatory and return to business over discussion purposes only and to help you with your models. They are not guidance nor are they guarantees. We look forward to the chance to meet with many of you virtually at the upcoming Citi CEO Conference and through roadshows in the months ahead and to share our first-quarter results in April. Until then, stay safe. Thank you for your interest in onward and upward.

Thank you. That does conclude today's conference. We appreciate your participation. You may disconnect at this time. Have a great day.