Earnings Call Transcript - NHI Q1 2024

Operator, Operator

Good morning, everyone, and welcome to the National Health Investors First Quarter 2024 Earnings Webcast and Conference Call. It is now my pleasure to turn the floor over to your host, Dana Hambly. Sir, the floor is yours.

Dana Hambly, Host

Thank you, and welcome to the National Health Investors conference call to review the results for the first quarter of 2024. On the call today are Eric Mendelsohn, President and CEO; Kevin Pascoe, Chief Investment Officer; John Spaid, Chief Financial Officer; and David Travis, Chief Accounting Officer. The results as well as notice of the accessibility of this conference call were released after the market closed yesterday in a press release that's been covered by the financial media. Any statements in this conference call, which are not historical facts are forward-looking statements. NHI cautions investors that any forward-looking statements may involve risks or uncertainties and are not guarantees of future performance. All forward-looking statements represent NHI's judgment as of the date of this conference call. Investors are urged to carefully review various disclosures made by NHI and its periodic reports filed with the Securities and Exchange Commission, including the risk factors and other information disclosed in NHI's Form 10-Q for the quarter ended March 31, 2024. The Copies of these filings are available on SEC's website at sec.gov or on NHI's website at nhireit.com. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in NHI's earnings release and related tables and schedules, which have been furnished on Form 8-K with the SEC. Listeners are encouraged to review those reconciliations provided in the earnings release, together with all other information provided in that release. I'll now turn the call over to our CEO, Eric Mendelsohn.

Eric Mendelsohn, President and CEO

Hello, and thank you to everyone for joining us today. We're off to a great start in 2024 as the first quarter results exceeded our expectations and represent the third straight quarter of outperformance. The general theme remains the same and is characterized by stable cash collections, steady deferral repayments, improving operator fundamentals, shop occupancy and revenue growth and no unexpected rent concessions. Our excellent start, coupled with good visibility for the rest of the year, prompted us to raise our full year guidance, which implies over 5% FAD growth at the midpoint. The increased FAD guidance is broad-based with several factors contributing to the improved outlook. John will provide more details in a few minutes. As a reminder, our guidance does not include any new investment activity. We believe our portfolio is in great shape and positions NHI for strong organic growth through multiple channels including deferral repayments, rent step-ups with select large tenants, significant NOI growth potential in SHOP and capital investment projects concentrated on the existing real estate portfolio. Our Senior Housing EBITDARM coverage moved higher for the eighth consecutive period to 1.45x with particular strength at Bickford and our other need-driven operators. We reached a favorable outcome with Bickford on April 1 rent reset, which increased the base rent by approximately 10% annually while preserving our ability to receive rent deferral repayments based on growing revenue in the Bickford leased portfolio. Strong revenue growth within our NHC portfolio during 2023 drove an increase in the percentage of rent, which more than offset the scheduled reduction in base rent related to the sale of 7 properties in 2022. As most of you on today's call are well aware, the NHC lease matures at the end of 2026. So we're actively working on creating a favorable outcome for our shareholders. For the record, I need to state that the negotiations related to the NHC lease are sensitive. We understand the importance of this lease to shareholders and our unique relationship with NHC, so we do plan to provide relevant information on the process where and when appropriate. Back to our results. The Senior Housing operating portfolio or SHOP increased NOI by 54.8% year-over-year to $2.9 million on over 13% revenue growth and 600 basis points of margin expansion. Sequentially, NOI increased by approximately 2%, which is encouraging as we typically expect seasonal weakness in the first quarter. Our guidance for 2024 NOI growth remains at 25% to 30%, though continued occupancy improvement, coupled with lower move-in incentives have us optimistic that we'll be at the high end or above the current guidance range as the year progresses. Also supplementing our organic growth is a $25 million NOI producing CapEx program targeted at our leased real estate portfolio. To date, we have committed $19 million at a weighted average yield of over 8%. We view this program as a low-risk investment into properties with good coverage and returns well above our cost of capital. The balance sheet at just 4.4x net debt to adjusted EBITDA continues to be one of the lowest levered among all REITs and positions us for significant external growth. We have plenty of dry powder to execute our growth initiatives with over $970 million in capacity right now on the revolver and ATM. We've been advising sellers and borrowers for several quarters that the higher for longer rate environment could be a reality. It seems to be a certainty at this point, which has created a more active pipeline for us. Our pipeline is currently over $300 million, and we have submitted LOIs on deals valued at over $100 million with initial yields of more than 8% on average. The improvement in our cost of capital is allowing us to become more competitive to other providers of capital. With seller expectations on cap rates adjusting higher and our cost of capital moving lower, we expect external growth to remain robust for the foreseeable future. Kevin will provide more details on the makeup of the pipeline. We clearly see the momentum for NHI across several paths, including our multipronged organic growth strategy, significant external growth opportunities and a favorable macro environment driven by slowing supply and growing demand. In sum, NHI is in a great position to capitalize on several initiatives and create a pathway for several years of exceptional growth. I'll now turn the call to Kevin to provide more details on our operations.

Kevin Pascoe, Chief Investment Officer

Thank you, Eric. As noted last quarter, we're starting to see more actual deal activity and the volume of new inquiries has significantly increased in the last several months. We're looking at opportunities across the continuum of Senior Housing and skilled nursing and across multiple products, including loan, lease and joint venture opportunities. We currently have submitted LOIs on deals valued at more than $100 million with yields of more than 8% on average. These are primarily senior housing focused with an approximate mix of 50-50 in loan to real estate acquisition. In the case of new loan investments, we continue to look for a path to future real estate ownership. As an example, during the first quarter, we funded a $15 million mortgage on an 80-unit assisted living and memory care property operated by Carriage Crossing Senior Living, a well-respected and growing operator of 9 properties in the Midwest and a new relationship for NHI. The 8.75% loan carries a 5-year maturity and NHI has a purchase option on the property after 2 years. Turning to Asset Management. We had another strong quarter with positive year-over-year adjusted NOI growth from the need-driven and discretionary senior housing operators, skilled nursing and Specialty Hospital and the SHOP portfolio. The need-driven operators again had positive coverage trends with EBITDARM at 1.35x representing the eighth straight period of sequential growth. The improvement was driven by both Bickford at 1.58x and other need-driven operators at 1.16x. On April 1, we reset the Bickford annual base rent to $34.5 million, which is an approximate 10% increase from the prior base rent of $31.4 million. On a pro forma basis, EBITDARM coverage under the increased base rent was 1.37x for the trailing 12 months ended December 31. This is still very healthy and well above Bickford's pre-pandemic coverage, so we're obviously pleased with the results of restructuring this portfolio. The next Bickford reset is scheduled for April 2026 and is based on a defined lease coverage ratio with a floor determined by a range of CPI escalators. At a minimum, the base rent will increase 4% to 6% in 2026 from the current level, but could be higher if Bickford outperforms. As a part of the CapEx program that Eric described, we have committed approximately $8 million in NOI producing investments to the Bickford portfolio, which should enhance property cash flow and coverage over the next couple of years. We also adjusted the deferral repayment formula, which we estimate results in quarterly repayments of approximately $1 million going forward while continuing to align us with Bickford's improving fundamentals and revenue growth. Bickford's first quarter 2024 repayment, which is based on the older formula was a record $1.5 million. Through March 31, Bickford has repaid approximately $4 million. Our discretionary senior housing portfolio primarily includes our entrance fee portfolio, which has performed above our expectations since the pandemic began, and that continues to be the case. Coverage improved sequentially to 1.54x from 1.41x driven by an uptick at SLC, our largest tenant on another solid quarter of entrance fee sales. Discretionary coverage, excluding SLC, which largely reflects the performance of our other entrance fee communities improved sequentially to 1.63x from 1.38x. As we have seen, the variability in the CCRC coverage is higher due to the variability in entrance fee sales. But overall, our operators have delivered steady results over a long period of time, and we do not see that shifting in the foreseeable future. SNF and Specialty Hospital portfolio reported solid coverage at 2.83x, which improved sequentially from 2.74x. The coverage at NHC improved to 3.8x from 3.54x. Remember that NHC's reported coverage represents corporate fixed charge coverage and is not comparable to the EBITDARM coverage reported for all other asset classes and operators. For a point of reference, NHC operates 91 properties, of which 35 are owned by NHI, and our lease payment represents their only significant fixed payment obligation. As detailed in yesterday's filings, the NHC first quarter percentage rent increased to $3 million from $1.6 million in the prior year period. The increase in the percentage rent more than offset the scheduled decline in base rent of approximately $363,000. Recall that in September 2022, we sold 7 SNFs previously operated by NHC for net proceeds of $43.7 million and amended the mass release on the remaining portfolio, which effectively has NHC continuing to pay rent on the 7 sold properties but at a declining rate through the maturity of the lease. Separately, we are in the process of transitioning 1 SNF in Wisconsin to another operator that has a much greater presence in that state. This resulted in an $800,000 straight-line rent receivable write-off, which should not impact our cash rent this year. Lastly, in SHOP, momentum continues to build throughout the portfolio. First quarter NOI increased 54.8% year-over-year to $2.9 million. Resident fees increased by 13.3% on an approximate 1,000 basis point increase in occupancy to 85.3%. Operating expenses increased 4.9%, leading to a 600 basis point year-over-year margin improvement to 22.2%. Our strategy continues to rely on using rate to drive occupancy growth, which is evident in the relatively flat quarterly RevPOR. Occupancy improved sequentially by 210 basis points, while the margin declined slightly by 10 basis points. The first quarter is seasonally weak, so we were happy to see occupancy growth throughout the quarter, though our acquisition costs were higher, which weighed on the margin. As we mentioned last quarter, we expect the quarterly NOI cadence to grow throughout the year, which would lead SHOP to be at the high end of the current guidance growth range of 25% to 30%. We also expect to invest approximately $10 million to $12 million into the SHOP portfolio this year, which should help drive margin growth later in the year. Our longer-term view that this portfolio can generate NOI dollars in the high teens on margins in the mid-30% range remains unchanged. I'll now turn the call over to John to discuss our financial results and guidance.

John Spaid, Chief Financial Officer

Thank you, Kevin, and hello, everyone. As Eric and Kevin previously mentioned, our strategy continues to be to execute on our organic opportunities and pivot toward additional NOI growth from accretive investments. Our results today indicate to all of us that our strategy is on track. First quarter results were above our expectations as primarily reflected in the percentage revenue rent results from NHC and Bickford. Our guidance reflects further improvement this year as compared to our February guidance. Kevin previously spoke about our improved pipeline. We believe that we are seeing an inflection point between seller cap rates and our improved cost of capital. I'll talk more about what this means for our guidance in a moment. But first, our results. For the quarter ended March 31, 2024, net income, NAREIT FFO and normalized FFO per diluted common share were $0.71, $1.10 and $1.12 per share, respectively. Our FAD was approximately $51 million, which is a 6.8% increase year-over-year. Compared to the prior year quarter, our net income and NAREIT FFO per diluted common share declined by 10.1% and 5.2%, respectively, while NFFO per diluted common share improved by 0.9%. Our results for the first quarter included a year-over-year net increase in NHC rent of $1.1 million, which was comprised of a $1.4 million increase in the percentage revenue rent for NHC, net of a $400,000 base rent decrease attributable to the scheduled Northeast 7 property disposition rent that occurred in 2022. Also recall that in the prior year first quarter, we recognized $2.5 million in non-cash deferred rents associated with the acquisition of a high-performing Bickford property. Excluding those Bickford rents, deferred rent repayments were up $1.6 million year-over-year. Other significant items impacting the year-over-year results included the write-off of straight-line receivables of approximately $0.8 million associated with the planned transition of one property to a new operator, which Kevin previously discussed. Our strategy in our SHOP segment continues to be to increase occupancy which we believe will result in additional NOI improvements. At the end of March, our SHOP occupancy results were ahead of budget, while our NOI is tracking our forecast and guidance. Our SHOP NOI this quarter when compared to the same period last year was up $1 million. SHOP sequential FAD contribution was essentially flat after including recurring CapEx compared to the fourth quarter. Sequentially from the fourth quarter, FAD improved $3.6 million to which we attribute $3 million of this improvement to cash rents and interest income and $600,000 to changes in cash G&A. The $3 million improvement in cash rents included $1.7 million in net increase in NHC rents. The remaining $1.3 million in cash revenue growth was attributable to annual rent escalators, increased interest income and improved deferred rent collections. During the first quarter, we closed on a new investment mortgage loan for $15 million, yielding 8.75%. Subsequent to the end of the first quarter, we disposed of 2 small properties and we continue to have 1 property in assets held for sale. The impacts from the new investment dispositions and the previously mentioned transition property are all included in our updated guidance. Our Q1 2024 metrics when compared to Q1 2023 saw further improvements. For the period ended March, FAD payout and net debt to adjusted EBITDA ratios improved to 76.6% and 4.4x compared to 81.8% and 4.6x, respectively, in the prior year. Last night, we raised our full year guidance for 2024. Normalized FFO was raised to a range of $190.3 million to $192.5 million or a range of $4.37 to $4.43 per diluted share. This is a $0.06 midpoint raise when compared to our initial February guidance. We also increased our FAD guidance to a range of $196.7 million to $199.2 million, which is a $5.3 million increase at the midpoint compared to February's guidance. FAD guidance also represents year-over-year growth of 5.4% at the midpoint and 6% at the high point compared to the full year 2023 results. A few more comments regarding our guidance. Our guidance includes a recent amendment to the Bickford lease, which Kevin previously discussed. Commencing April 1, Bickford's annual rent was increased to $34.5 million from $31.4 million. And we continue to expect to see increasing Bickford cash rent from the additional collection of Bickford's remaining deferral balance. Our guidance includes the recent increase in NHC rent from the 2023 percentage revenue rent. And as Eric previously mentioned, our guidance includes SHOP NOI growth of up to 30% year-over-year, which we view to be conservative. Eric mentioned, we have $19 million committed already toward the capital expenditure program. The timing of this activity is still uncertain, so the future activity from this program is not yet in guidance. We'll have more to say about this program in future quarters. Finally, our guidance includes a new mortgage investment and the expected fulfillment of our commitments but does not include any unidentified new investments. Our balance sheet continues to be a source of strength for us. At the end of April, we had $228.5 million outstanding on our $700 million revolver and only a single debt maturity this year for $75 million at the end of September. At the end of April, we continue to have ample liquidity of over $470 million in cash and revolver availability and the full $500 million available under our ATM program. Looking towards 2025, we have an additional $326 million in debt maturing, $200 million of this maturing debt is our term loan, which does have an option to extend the loan for up to one year. As we announced last night, our Board of Directors declared a $0.90 per share dividend for shareholders of record June 28, 2024, and payable on August 2, 2024. That concludes our prepared remarks today. So once again, thank you for joining our call. With that, operator, please open the lines for questions.

Richard Anderson, Analyst

So on Bickford, I just want to make sure I'm clear. The $3 million increase was not included in the guidance increase. Is that correct? That was already assumed in your previous guidance.

John Spaid, Chief Financial Officer

No. This is John, Rich, hi. There was an increase in our guidance associated with part of it, let's say that.

Richard Anderson, Analyst

All right. Now that you have rebalanced how they are paying you in terms of the percentage rent that covers the deferred balance and the base rent, how has that ratio shifted with the April 1 reset? Can you specify if it's around 80% base rent and 20% deferral repayment, and how has that ratio changed with the new setup?

Kevin Pascoe, Chief Investment Officer

Kevin explained that they adjusted the rental structure by incorporating more base rent based on the previous year's performance and current operations. They also made slight changes to the revenue threshold. Now, approximately 90% of the rent will be base rent, with the remainder being more variable. They anticipate a net increase compared to last year. Additionally, there will be another opportunity for a rent reset in two years. Given their current performance and ongoing leasing efforts, along with the Capital Expenditure they are investing, this interim adjustment seemed wise.

John Spaid, Chief Financial Officer

Hey Rich, this is John Spaid again. Let me see if I can help you a different way. If you go to our result of operations page, you can kind of see in the 3 months ended March 31, 2024, what the results were. If you annualize that number, which is approximately $9.4 million, and you compare it to the $34.5 million plus the annualized $1 million per quarter that Kevin just mentioned, you can see we're signaling that there's a slight increase in what we're expecting.

Richard Anderson, Analyst

So, you are reducing the pace at which they pay back, right? You're willing to sacrifice that in exchange for higher base rent, is that correct?

John Spaid, Chief Financial Officer

Yes, that's precisely what's happened here.

Richard Anderson, Analyst

Okay. Last question for me on the pipeline. You mentioned $300 million, LOIs of $100 million. You said 50-50 debt, is there a risk, though, that even for a period of time, you kind of get overleveraged to being a lender versus a fee simple owner? I mean, how much are you watching that to make sure you don't let those kind of that ratio of loans to equity get too far out of whack even in the short term?

Kevin Pascoe, Chief Investment Officer

Sure. Rich, this is Kevin again. It's definitely a consideration. The keys for us when we look at a loan versus ownership is trying to acquire relationships, making sure that we're at the right entry point, and it's a more stabilized property to put into a longer-term vehicle like a lease. So I think you're spot on. It's something that would be a consideration for us. We don't want to get out over our skis. But I think we have some capacity there. It's really going to be more the relationship acquisition and where buildings are stabilizing versus are stabilized. But again, I think we have some room to run. Our preference is always going to be to acquire. And ultimately, that's what we're angling for even in a loan scenario. So this is more of what we refer to as kind of a dating period where we get to have the new relationship, let them season the property a bit more, see if there's some more business that we can do together and then have a more long-term relationship, whether that be a lease or a joint venture or something else down the road.

Operator, Operator

Your next question is coming from Eric Borden from BMO Capital Markets.

Eric Borden, Analyst

Just on the SHOP guidance, just with the big increase in occupancy, just trying to tie in your prepared remarks about the mix between driving occupancy and potentially pushing rate, should we expect rate to kind of start to accelerate as we look throughout the year? And then where are the risks and opportunities within the portfolio?

Kevin Pascoe, Chief Investment Officer

Kevin here. We will continue to focus on increasing occupancy until we reach around the 90% mark, which will vary by building rather than overall. Each building will be adjusted based on its specific market, our CapEx program status, and leasing volume. You'll notice the incentives we've implemented starting to decrease as the year goes on. We are introducing more short-term incentives initially as we stabilize more residents in the buildings, and then those will likely taper off again after we surpass the 90% threshold. We're making progress on a few buildings. From a risk perspective, it's essential to deploy capital efficiently and maintain our current consistency in move-ins, which has been steady. The completion of CapEx projects has taken longer than anticipated over the past couple of years, but Discovery and Merrill are actively managing to expedite the work. Aligning and overseeing subcontractors has added to the timeline, which is the primary risk at this point, but we are seeing a positive trend and good progress leading into the second quarter.

Eric Borden, Analyst

That's helpful. Regarding the pipeline, is the board considering additional SHOP acquisitions in light of the occupancy recovery and the opportunity for external growth?

Eric Mendelsohn, President and CEO

Hey, Eric, this is Eric. Yes, absolutely. We've had a bit of an experience getting these holiday buildings turned around and assigned to different operators and CapEx program completed. But now that all that's done, they've really perked up nicely. And I think that the Board has seen that this can be an avenue for growth going forward. And I certainly think that having that ability to do more SHOP will help Kevin and his people line up more acquisitions.

Operator, Operator

Your next question is coming from Austin Wurschmidt from KeyBanc Capital Markets.

Austin Wurschmidt, Analyst

Piggybacking a little bit on that last question. I guess given the willingness to do more SHOP, I mean, would you look to do additional deals with the existing operators and scale up? Or would you look to kind of enter into new relationships and sort of diversify the operator base on the SHOP portfolio?

Eric Mendelsohn, President and CEO

This is Eric again. I'd be delighted to do both. If we're going to go with the new operator, the profile would be much the same as Merrill Gardens or Discovery, our current SHOP operators. And by that, I mean deep operating experience, a balance sheet so that they can co-invest with us as joint venture partners and a great reputation. So those are kind of the criteria we look for when we're picking a new SHOP operating partner.

Austin Wurschmidt, Analyst

That's helpful. And then kind of a 2-parter here on just maybe market rent resets in general. But on the Bickford formula clarification, is the revised repayment formula? Is there any cap on the amount that they would repay in any specific quarter? And then separately, I know Discovery isn't as sizable a tenant as Bickford, but there's a market rent reset that was pushed into '25, I believe. I'm just curious, as you look out, what type of opportunity do you see emerging there? How would you kind of compare it and contrast it versus the process for the Bickford rent resets? And how it stacks up occupancy rent coverage and so forth?

Kevin Pascoe, Chief Investment Officer

Sure. This is Kevin. On the Bickford reset, just to clarify your question, when you say a cap, are you referring to the base rent they would pay or the amount of deferred rent they pay at any given time?

Austin Wurschmidt, Analyst

The deferred rent, just in the deferred rent formula, you talked about how that was revised. And I'm just curious if there's any amount with which that quarterly payment NHI would be capped out.

Kevin Pascoe, Chief Investment Officer

Okay. Understood. Thanks for the clarification. No, there's not a cap on there. What we are trying to do is keep in pace with revenue. And as a REIT, we cannot participate in the NOI on a lease. So that's why we're basing it off the revenue formula. We're trying to also keep it in line with where we see margins, but margins, meaning that they still have some cash flow thereafter to continue to invest in the communities and in their operations. So again, no cap, but just more moving the pieces around. So we have the appropriate amount of base rent, but still allowing for a run rate that's in line with what we signaled to the market previously. On the Discovery lease, that rent reset, it's comparable in that we modified the base rent and then added in the revenue participation component. That is still kind of fresh as compared to Bickford in terms of timing. So that was really just done in November. They've started to pay a small amount as it relates to the revenue portion of it. But it's again, small as it relates to that deal now. So we would expect that to ramp up over time, and then we would do some sort of pricing reset like we did with Bickford in 2025. So that's got a little bit more room to season before we're there. They've made progress on occupancy. Overall, I feel like the buildings are operating pretty well, but they just need to keep their move-ins, which the underlying properties on those are not the same as what we've seen in SHOP, but we do have confidence in discovery. You've seen what their progress has been on the SHOP side. They have similar teams that are focused on these buildings. So we have confidence in their ability to keep moving people in.

Juan Sanabria, Analyst

I wanted to ask about NHC. I understand it's a unique situation with the related parties involved in the percent rent reset given the strength in 2023. Can you discuss how NHC's revenue increased by 23% year-over-year and how that compares to pre-COVID levels?

Kevin Pascoe, Chief Investment Officer

Juan, this is Kevin. So the percentage of rent increase was higher for sure this year than we've seen it in quite some time. Part of that, we think is payor is catching up. As an example, specific to Tennessee, there's been some Medicaid rate increases. Some of them were watching to make sure that they're going to be more long term in nature. But the nature of it is that several of the states have done catch-up payments lately. They're rebounding from COVID seen revenues increase. Clearly, we've benefited from that on the rent side. So it's something we're watching closely, making sure that these revenues are going to be sticky. So far, it looks like they are. So I think that's good news, but something that we're still focused on.

John Spaid, Chief Financial Officer

Hey Juan, this is John. I think they are a record. And you got to remember that when you go to pre-COVID, pre-COVID included the 7 properties that we disposed of in 2022. So for the population that we have now, it's a record.

Juan Sanabria, Analyst

And do you guys have any visibility on how that margin would compare to that record on the same-store pool?

Kevin Pascoe, Chief Investment Officer

I'll provide a broader response to that. We've observed that labor margins have been under pressure from many operators. You can review their filings to understand the macro margins on their buildings. It's likely we can all agree that there has been some pressure in that area, making it somewhat constrained compared to pre-COVID levels. It's encouraging to see that there is additional revenue, which is generating extra NOI for them, but there are also some offsetting factors to consider.

John Spaid, Chief Financial Officer

Juan, this is John again. We have a lot of limitations in terms of the information we're getting from NHC. The best we can do is watch the same sort of public information that you see. So I think we're continuing to see improvements of their total revenues on an aggregate basis. So we can't completely relate that to our portfolio, but we're a big piece of them, right?

Juan Sanabria, Analyst

That's helpful. And just the last question. I think, John, you referenced or maybe it was not, John, the expected deferral repayment from Bickford going forward? And is that the amount we should be taking ? I think it was about $1 million, correct me if I'm wrong, per quarter. We should be assuming is built into guidance? Is that going to be cast with this quarterly result?

John Spaid, Chief Financial Officer

So let me answer it this way. Yes and no, I haven't really shared much about what we're assuming regarding concessions. We're not considering any concessions on Bickford, and we're aiming to be conservative in our guidance. I want to convey that we have reason to believe that our performance will exceed what Kevin mentioned, but I may not have answered it very clearly; that’s the best response I can provide.

Operator, Operator

Thank you. That concludes our Q&A session. I will now hand the conference back to Eric Mendelsohn for closing remarks. Please go ahead.

Eric Mendelsohn, President and CEO

Thanks for attending, everyone, and we look forward to seeing you at NAREIT in June.

Operator, Operator

Thank you, everyone. This concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.