Centerspace (CSR) 2024 Q4 法說會逐字稿

Hello everyone and welcome to the Center Space Q4 2024 earnings school. My name is Ezra, and I will be your coordinator today. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If you change your mind, please press star followed by 2. I will now hand you over to Josh Plat from Center Space to begin. Josh, please go ahead.

Good morning. Center Spaces formed 10K for the year ended December 30, 2024, was filed with the SEC yesterday after the market closed. Additionally, our earnings release and supplemental disclosure package have been posted to our website at centerspacehomes.com and filed on Form 8K.

It's important to note that today's remarks will include statements about our business outlook and other forward-looking statements that are based on management's current views, and assumptions. These statements are subject to risks and uncertainties discussed in our filing under the section titled Risk factors and in other filings with the FEC.

We cannot guarantee that any forward-looking statements will materialize, and you're cautioned not to place undue reliance on these forward-looking statements. Please refer to our earnings release for reconciliation of any non-gap information which may be discussed on today's call. I'll now send it over to Center's President and CEO Anne Olson for the company's prepared remarks.

Good morning, everyone and thank you for joining CenterSpace's fourth quarter earnings call. With me this morning are Bhairav Patel, our Chief Financial Officer, and Grant P. Campbell, SVP of investments and capital markets. Before taking your questions, we'll briefly cover our 2024 results and discuss our outlook for 2025.

2024 was a year of positive platform execution that produced opportunities for strong advancement of our company's financial and market position. Our teams did the work to drive stable revenue growth, strong occupancy, and were diligent on expense control while facing the headwinds of supply and market uncertainty.

During the year, we delivered $4.88 of core FFO per share, driven by sector leading Same-store NOI growth. We were able to expand our portfolio in Denver where we purchased [Viddian]. We continue to simplify our balance sheet with the redemption of our Series B preferred shares while also improving our leverage profile and the issuance on the ATM.

The strong fundamentals of our community were proven, given us positive blended leasing expressed in every quarter while also ending the year at one of our highest Q4 occupancies. We did all this while advancing our mantra of better everyday. Our team members set a company record, volunteering over 2,700 hours in the communities we serve.

We increased our aggregate online review scores by 3.5% over the past year. Had a 16% increase in five star reviews online and showed improvement in every key metric of our resident satisfaction survey, including a 5.3% increase in overall satisfaction which contributed to our outstanding same store resident retention rate of 56.6% for the year.

We also brought home six industry awards for individual and company performance and were named the Minneapolis Star Tribune Great Workplace for the fifth consecutive year. I'm incredibly grateful to our wonderful team for their commitment, passion, and consistently high standard of performance.

These excellent results have led to an increase in our distributable cash flow, and I'm proud to share that our board of trustees has recognized what we've achieved on this front by announcing an increase to our quarterly dividend to $0.77 per share.

As we think about our strategic direction for 2025, we will remain vigilant about our cost of capital while leveraging the strong position of our current portfolio. Depending on where capital markets move, this could take different forms, and with that in mind, I'll highlight different paths we've taken and are ready to pursue again as opportunities arise.

In late 2023, we purchased Lake Vista in Fort Collins, funding the purchase with the disposition of several communities in North Dakota and Minneapolis, which improved our portfolio's operational efficiency and margins while maintaining after CapEx cash flow. After buying back nearly $10 million in shares, we later issued stock under our ATM, raising $114 million and using the proceeds to both simplify and strengthen our balance sheet.

We also successfully executed on the acquisition of the Lydian in Denver in an off-market transaction using both OP units issued at a premium to our current stock price and the assumption of attractive debt. The toolbox we have to improve the position of the company and pursue growth is full and varied, and our team has demonstrated execution when opportunities arise.

As we sit today, we feel these recent moves leave us well positioned to advance our vision to be a premier provider of apartment homes in vibrant communities across the mid and mountain west and to drive consistent earnings growth for our investors.

Grant will give some insight into the transaction market, and Bra will discuss our quarterly results and details of 2025 guidance, but I want to provide an overview of leasing trends for the fourth quarter.

Same store revenues increased 3.1% over the same period in 2023, bringing full year 2024 same store growth to 3.3%. During the quarter, same store new lease tradeouts were down 3.3% while renewals were up 3.2%, leading to positive blended leasing spreads of 45 basis points.

Importantly, we achieved these results while also increasing occupancy to 95.5%, which is a 70 basis point improvement over the same period last year. Our footprint differentiated from other offerings in the public multi-family space is worthy of attention. Our 2024 results demonstrate the consistency and appeal of the Midwest markets.

The majority of our markets experience lower supply, leading to more stable fundamentals. We have excellent resident health evidenced by lower than national average rent to income ratios and low bad debt, and our markets both healthy regional economies.

North Dakota communities continue to lead the portfolio with blended spreads of 4.4%, while our Nebraska and Rochester communities also saw strong blended growth at 2.5% and 2.3% respectively. I'll also highlight our markets where we have experienced supply pressure. In Minneapolis, blended spreads were up marginally.

Well, in Denver they were down 140 basis points. Continued strong absorption in these markets is expected to be a tailwind to our portfolio results, and we believe that this portfolio will produce strong results again in 2025. Grant will now share an overview of the state of the market and how it plays into our continued growth, Grant.

Thanks, Anne, and good morning, everyone. Within the investment landscape, we expect apartment demand and economic growth to remain resilient in 2025. When coupled with the downward trend of new supply additions this year, it bodes well for continued strengthening of underlying fundamentals.

In our two largest markets of Minneapolis and Denver, we are past peak deliveries, so recent supply impacts will affect the cadence of absorption and forecasted rent growth this year. In Minneapolis, deliveries peaked earlier when compared to Denver, where high water mark deliveries were concentrated in the second half of 2024.

Given this, we expect to see relative fundamental improvement sooner in Minneapolis with Denver positioning itself for more defined tailwinds in 2026. In both Minneapolis and Denver, next 12-month deliveries are forecasted at 1.4% and 2.5% of existing apartment stock, respectively, further highlighting the tapering supply profile.

Transaction volumes in our markets improved in 2024, they remain below 2021 and 2022 levels. There is a lot of capital looking for multi-family investments right now. However, real-time transaction velocity is muted, driven by continued interest rate volatility and the bid ask spread.

For instance, recent Mountain West core asset sales that priced at mid to high 4% cap rates inform asset owners' perspective and coupled with their belief in improving fundamentals over the coming 12 to 18 months, lead to a general lack of real-time transaction velocity.

On the capital allocation front, we will remain focused this year on enhancing our differentiated mountain west and Midwest geography. We continue evaluating a variety of new investment possibilities to grow the company and advance our strategic plan while being mindful of our cost of capital.

This could include potential operating partnership unit transactions, acquisitions where we can obtain attractive financing and mezzanine lending pursuits. All areas where we have recently been active. Regarding mezzanine capital funding, we have one small funding outstanding today on a new construction community in Minneapolis.

That project remains on track both from a timeline and budget perspective. And with that, I'll turn it over to Bhairav to discuss our overall financial results for 2024 and outlook for 2025.

Thanks, Grant, and good morning, everyone. Last night, we reported Core FFO $1.21 per diluted share for the fourth quarter, driven by a 2.1% year on year increase in same store and why.

Revenues from same store communities increased by 3.1% compared to the same quarter of 2023, driven by a 2.3% increase in revenue for occupied homes and a 70-basis point year to year increase in rated average occupancy which stood at 95.5% for the quarter.

Same store expenses were up by 4.6% year over year, driven by higher controllable expenses with repairs and maintenance as the largest driver of the increase. Conversely, non-controllable expenses were down 350 basis points, driven in particular by real estate tax refunds received during the quarter.

Turning to guidance, we introduced our 2025 expectations in last night's press release. For the year, we expect core FFO of $4.98 at the midpoint, which would be roughly 2% growth over 2024 final results and $0.18 or 3.75% ahead of our initial guidance for last year.

Guidance assumes that at their midpoint, same store net operating income grows by 2.25%, same store revenue grows by 2.5%, and same store expenses grow by 3%. Revenue growth assumes blended leasing spreads of 2.4% and holding occupancy of 2024 levels.

Within expenses, controllable expenses are expected to increase by 2% at the midpoint, while non-controllable expenses increase by 4.5% as we are comparing to a 2024 where real estate taxes had several one-time benefits from refunds.

The anticipated expense growth will be curtailed due to the benefits of centralization initiatives rolled out in 2024, as well as a favorable insurance renewal that saw our premiums go down by approximately 12% or almost $900,000.

On other components of guidance, we expect GNA and property management expenses for the year to range between $27.9 million and $28.4 million and interest expense to range between $38.8 million to $39.4 million.

The year over year interest expense increase is primarily driven by the debt assumed in conjunction with the Lydian acquisition. On capital expenditures, we expect value add expenditures of $16 million to $18 million for the year, while we expect recurring caps for homes to average $1150 per unit.

A rally at spending has tapered year to year due to the recently softer market rents coupled with a higher cost of capital. No additional acquisitions, dispositions, issuances, or borrowings are factored into our guidance.

Please note that in 2025 our same store pool will exclude two communities, the Lydian, which we acquired in 2024, and the Basque, a community which is undergoing a full-scale repositioning and has previously been known as Woodland Point.

On the capital front, I'll reiterate our progress from 2024. We sold nearly $1.6 million shares under the ATM program, raising gross proceeds of nearly $114 million retired the CC preferred, and improved our net debt plus preferred leverage profile by half term. Our debt maturity profile remains well laddered, with the weighted average debt cost of 3.6% and weighted average time to maturity of 5.6 years.

To conclude, it was a very active and productive year across the board. We achieved strong operating results, strengthened our balance sheet, simplified our capital structure, and expanded our portfolio in one of our desired markets. We look forward to building upon these results in 2025. And with that I will turn the line back to the operator for your questions.

Thank you very much. We will now open the floor for the Q&A session. (Operator Instructions)

Our first question comes from Brad Heffern with RBC Capital. Brad, your line is now open. Please go ahead.

Hey, good morning, everybody. Just starting with your top two markets, at least in the market data that we see, Minneapolis has been improving in recent months. Denver seems to be weakening, if anything. Does that align with what you're seeing in your portfolio, and can you just sort of compare and contrast the fundamental market drivers there?

Yeah, good morning, Brad, and thanks for the question. It does align with what we're seeing, supply pressure has eased in Minneapolis earlier than Denver. Both markets have had very strong absorption.

So, while our new lease rates have been, less there than in our other markets where we didn't see supply, they are turning the corner, and I would also point out that we've been able to hold occupancy in those markets and even drive occupancy up a little bit.

So, our projects are all stabilized and most aren't competing with the brand new projects coming online, but there is a downstream ripple effect and, I think it what you indicated it does align well a little bit. A little bit softer in Denver than Minneapolis, but both have good prospects for 25 and 26 given the supply pipeline diminishing.

Okay, got it, and then maybe just for the rest of the markets that are harder for us to track, can you just give your expectations for 25 performances of those and maybe any that stand out one way or the other?

Morning, Brad. Yes, with the rest of the markets, 2025 looks a lot more like 2024, where we don't really see a lot of supply coming online in our smaller markets. So we expect, blended spreads over there to be pretty healthy as we wait for, especially Denver to kind of turn the corner, as Anne said, and Minneapolis, as you said, is kind of on its way back to normalization.

Okay, thank you.

Our next question comes from John Kim with BMO. John, your line is now open. Please go ahead.

Thank you. On the guidance this year, you mentioned, 2.4% blended. Can you just break that down between new and renewal and also when you look at it versus 2024, it doesn't seem to be that much improvement, and I'm wondering if you can comment on that.

Sure. Good morning, John. Yes, in terms of the blended spreads of 2.4%, we expect renewals to lead new lease spreads as we expect to kind of digest supply in some of the larger markets, especially so we would say at this point we look at renewals at about 3% with new leases at around, high 1% to 2% range, in terms of, comparison versus 2024.

I think the small markets are going to be roughly in line with 2024. So, but the renewal pricing over there, and as well as the new lease pricing in 2024 is kind of kind of healthy, so we're just kind of tempering expectations over there for 2025, but we'll see as leasing season kind of comes in, what the initial trends look like. So for now we're forecasting pretty normalized growth that we saw as the pre-pandemic.

Yeah, I was just wondering because you're starting out at a higher occupancy point than you were last year, you mentioned that retention rates are higher as well, so the ability to push renewals it seems like would have been more prevalent this year than last year, but just. I'm just wondering how much conservativism is baked in this guidance.

Yeah, John, there is some conservatism I'd say with respect to renewal rates, that high retention rate, that's really a high watermark, and we're really trying to weigh out, if you go back, 34 years, those retention rates were really hanging around 50%. So, I'd say, if in fact we do achieve very high retention again in 2025.

There is some room, for betterment, particularly to push on push on the renewal rates, but a lot remains to be seen there, particularly with will the single-family housing market rebound where interest rates going, how long will, the average age and of our resident is increasing, the average tenure is increasing,

so, we think that trend will continue. We don't know where it will taper off, so our assumptions in the guidance for retention aren't quite to where we hit in 2024.

Okay, and then my next question is on acquisition and disposition activity expect this year. Grant mentioned cap rates in the mid to high 4% range in Mountain West. Is that prevalent in markets that you're looking at today and what's your appetite to acquire with initial negative leverage?

Yeah, good morning, John. So, as you alluded to and as mentioned, there are trades for well-located core assets pricing in that, kind of mid to high four range. We do want to grow. We want to advance our strategic plan. We continue to evaluate a whole host of opportunities that could achieve that.

However, we are very mindful of our cost of capital, so we want to be in positions where, we have a defined path to. Positive leverage. I'll say that could come in a number of different respects. It could be acquisitions where we could obtain some attractive financing. It could be OP unit transactions where there's a little bit more structural creativity that can be employed.

Generally speaking, we're not going through, three rounds of bidding on a marketed process to buy a mid-four cap deal that doesn't include some of those other things that I alluded to.

And do you expect to be net. Acquires this year.

We hope so. I mean, we really do appreciate that scale is something that we need for the company and that comes from external growth. So, but we are committed to continuing to enhance the portfolio overall. So if acquisition opportunities come to us that require capital recycling, we, we've shown that we've been able to do that.

Keeping it AFFO positive, on the cash flow line. So, we will continue to employ that, but we would like to be net acquirers.

Thank you.

Our next question comes from Rob Stevenson. Rob, your line is now open. Please go ahead.

Good morning guys. Brav, what is the key factor factors that drive the same sort of expense guidance towards the 2% end versus the 4% end in the guidance range?

Morning, Rob. With respect to expenses, there's a couple. Of initiatives. You know that we are hoping benefit us on a year-to-year basis, one of them being the centralization. An effort that we expect will benefit us to the tune of about $50 million which is keeping the expenses lower. The other component is insurance costs, as I mentioned in my prepared remarks.

We had a really favorable renewal after a couple of years of, almost 20% growth, so we saved $900,000 on premiums alone. So those are the two components that really keep expenses on the low end.

Okay, that's helpful. And then the same store of recurring CapEx per home guidance is up about 11% at the midpoint of your '25 guidance. Is this increase just inflationary, or is the scope of the 25 projects meaningfully greater than the '24 ones to drive that big of an increase?

Yeah, so with respect to the year over year increase, that's really being driven by timing of projects where what we reported for 2024 is below what the midpoint was for our guidance for 2024. So, we pushed some projects into 2025.

So, the year-to-year increase is really driven by timing, not really a scope of projects on an annual basis, but just when we were able to kind of wrap up some of those projects, it was in the first quarter of this year.

Okay. And then last one for me and how different is the retention rate by markets, especially, Minneapolis and Denver, I guess you're more institutional markets versus some of the smaller markets, and how is that impacting, when you look at it, the market in terms of rental rate growth expectations for '25 here.

Yeah, we've seen a lot more stability and higher retensive in the smaller markets or the tertiary markets, and that you can see that in those rates where we're able to push renewals higher and get some pricing power on new leasing and also just their occupancy in Denver and Minneapolis, where there has been more supply, there's more choice.

I'd say, our high supply communities or, high supply pressure communities in Denver do have some of our lowest retention rates sometimes in the 40s. And then, that's offset by markets like Billings and Rapid City where we have, several communities where we have very high retention rates.

But yeah, in the market where there has been more supply, we just, we do see lower retention rates, and that is being offset by higher retention in the smaller markets.

Okay, and then I guess the last one for me is in terms of non-rent revenue, the fees, and all the other sort of associated stuff, how fast is that growing on an annual basis for you guys versus sort of the core rental rate? And is that sort of a positive boost or a drag to overall revenue growth?

So yeah, with respect. To 2025, it's going to grow in our expectation in line with the rest of the rental revenue items for the last couple of years, as you may have noted, we rolled out the reps programs. There was some noise just due to the rollout of the reps program. So going forward, we are looking at it on a normalized basis and it is growing in line with other rental revenue.

Okay, that's very helpful. Thanks guys. I appreciate the time this morning.

Our next question comes from Rich Anderson with Wedbush. Rich, your line is now open. Please go ahead.

Okay, thanks and good morning. So, the path to get to a more optimal sort of balance in your portfolio, I know we've talked about, maybe 18 months to 24 months to sort of get to a 75, 25 type split between institutional and secondary, correct me if I'm wrong on that.

Is it fair to say that that that it appears that that's going to be extended significantly more. Further out than you know 18 or 24 months just because of how the markets are behaving and you know what should our expectations be about you know the path, the timeline path to get to something that is more in line with what you're thinking long term.

Yeah, thanks for joining us and appreciate the question. I think you're hitting the nail on the head. We need transaction volume and opportunities, we need sellers in order to be a buyer, and while we have the desire and I believe we have the platform to execute quickly on opportunities, particularly creative opportunities that will advance our portfolio strategy,

the lack of transaction volume over the past couple of years has been an issue. Now that being said, we've been, we have been adding, we added in Fort Collins, we've added in Denver, and we've also changed that mix a little bit by trimming some of those smaller markets. So, we disposed in North Dakota, we've trimmed Minneapolis just slightly.

So, we're going to continue to work on that portfolio strategy, but timeline may be a little bit longer, but as I indicated in our remarks. Our goal is to be nimble and ready, and we feel like particularly in 2024, we proved that the platform is ready to take advantage when those opportunities come and we're going to continue mining them wherever we can.

Okay, and on the topic of sort of trading, perhaps older or newer, are you willing, and if you think about the CapEx load that might be involved in an older asset versus a newer asset, are you willing to allow for some FFO dilution in this process if at a FFO line it's more of a wash? Is that a reasonable way to think about how this could happen in the in the in the short term?

It is, and we have, used that exact math to make sure that we aren't diluting the actual, cash flow of the company. So, we have acquired projects and recycled capital where we think it's, net neutral to the cash flow line that maybe. Slightly dilutive on earnings,

we're doing that with real only in instances where we have real conviction that the growth profile of what we're acquiring is, significantly stronger than what we're disposing of. So not only the CapEx, is lower of those newer assets, but also the growth profile of the rents is higher.

Is there any quantifying ability of the pipeline right now, or is it just so quiet that you really can't form a number at this point?

Yeah, I mean, I think it would be difficult to speculate, but I mean, the pipeline probably has generally, I would say half a billion of things that are interesting to us that we're, we take on to, that we're working on in some form to get past initial kind of an initial underwriting, but, that's significantly down from what it what it used to be.

And I grant you maybe want to comment on what you feel like the pipeline and the opportunity for pipeline as the year goes on.

Yeah, I think you know a general thawing of the transaction market as the year progresses seems academically reasonable. What is needed there for that to occur is stabilization in interest rates and reduced volatility, which then begs the question what is the definition of stabilization? Is that 60 days? Is that SIX months? And everyone, including asset owners and potential sellers, have a view there.

They're also informed by, 85% of the market could be over here saying value should be X, but for every mid to high 4% cap rate trade that posts, again, for instance in Denver that does inform asset owners' perspective on pricing.

So, the bid app spread is real reduction in interest rate volatility is needed, and unless you're a forced seller right now or you're coming to the end of perhaps a closed-end fund. There isn't a lot of motivation, broadly speaking for groups to transact where the bulk of the market wants to be from a pricing perspective.

Okay, great, thanks very much.

Thank you. (Operator Instructions)

Our next question comes from Michael Gorman with BTIG. Michael, your line is now open. Please go ahead.

Yeah, thanks. Good morning. Maybe just sticking with the acquisition environment for a moment. Can you maybe share what are your thoughts on what could bring that bid ask spread together, right? I understand some stability in the interest rates, but that wouldn't necessarily collapse the spread. We're on the tail end of a supply shock moving towards stronger fundamentals.

I'm just wondering what you think is in the pipe for a catalyst to bring them together, and do you think the market is going to trend towards the ask or towards where the bid is right now as the market strengthens and maybe more institutional capital comes back into the apartment space.

Yeah, not to sound like a broken record, but people want to know what the inputs are, quote unquote, and if the broader market. Settles on interest rates are generally going to be within this band. It allows people to make yes, no decisions versus somewhat being.

Paralyzed or uncertain on, no activity, I we'll wait to see where the landscape is in 30 to 60 to 90 days. So, I do think it's heavily driven around that interest rate volatility. There is a lot of capital seeking multi-family right now that capital will continue to be aggressive, I think, market dependent if you're talking about some of our other Midwest markets, that buyer profile generally is.

A levered buyer they certainly want neutral to positive leverage so that is going to move. More so the way of the bid, I would say, and in some of these larger institutional markets, it's going to be a hybrid of, capital continuing to find ways to get aggressive to meet the act. It's also going to be sellers saying we feel like volatility has subsided. This is the pricing landscape. We can make a sale decision with conviction and now we're selling at a market price.

And Michael, one other thing to consider about the inputs going in and you mentioned coming to the end of the supply, kind of a large supply wave is if people really start to get constructive about where they think rents are going to go, given a lack of new starts, that is also an input that could move that could move the pricing towards the ask.

People really started underwriting aggressive rent growth, again, that, that's another input that But I think in 2025 could change the dynamic of, I think most owners and operators, we feel like the fundamentals are really good for some stability and growth, particularly across our portfolio.

Hopefully you can see that in our guidance, but I think if we start seeing rents really rising in some of those markets where supply has past peak and there are no new starts, some of the buyers could use that as a reason to get aggressive.

That that's helpful, thanks. And then maybe and just in terms of the pipeline that you talked about being smaller than historically typical when you think about looking at the opportunities set in front of you.

Have the reasons changed for opportunities falling out of that pipeline, i.e. is pricing driving more of those opportunities out of the pipeline, or are you may be able to find more of those unique opportunities starting to come to market?

I think first we're really focused on the unique opportunities. So, when I talk about the pipeline, I'm talking about kind of a traditional pipeline of when we're going to buy a community or maybe two communities. We're really focused on looking at things that might be more strategic, those OP unit deals, maybe portfolio deals, because the reason everything is falling out of the pipeline is pricing.

I mean, it's, we, you used to have a lot of, there'd be 25 things in the market in Denver and we chase the five that we liked the best. We felt like we could be a little bit picky. There was something for everyone could be a buyer in the, 2021, 2022 market. And now, there's only one winner, usually maybe one winner a month.

Because trades are so low, so the reason things are coming out of the pipeline really is pricing and uncertainty around what the inputs might be. And so, our focus really is on building a larger strategic pipeline of larger scale portfolios, potential large OP unit deals, and we have been able to execute on a few of those, both in scale and on a one-off basis. So, we're spending quite a bit of time there.

Great, thank you.

Our next question comes from Mason with Baird. Mason, your line is now open. Please go ahead.

Hey, good morning, everyone. Just going back to the Raco assumption for 2025, I guess how do you expect this to trend throughout the year? Is the second half expected to be better than the first, or should it stay relatively steady throughout the year?

And was that with respect to, I'm sorry, Mason, the beginning of your question cut out a little bit with respect to the renewal rate or leasing rate assumptions.

Yeah, renewal and new, and I guess it's blended, I guess how that's supposed to trend throughout the year.

Okay, great.

Yeah, morning, Mason. Yeah, we would say that to lead the year as we go through the first half, the renewals will lead to new leasing spreads, and we believe in the second half we regained some pricing power, especially in the larger markets where we can see them balance off for the second half of the year.

But at least in the initial part of the year as we enter leasing season, we expect the renewals will lead to new lease spreads, especially in the first half of the leasing season.

Great. And then could you give any updates on the current mezzanine loan? I guess what assumptions do you have for this to be paid off?

Yeah, morning, Mason. That project remains on budget and on track both from a financial perspective and a timeline perspective.

First phases of that construction have been turned over to the developer. That will continue to happen here as we move through the next one to two quarters. We expect that community to stabilize mid-year 2026. Along the way, we'll continue our dialogue with the development partner. And if everything goes according to plan, we would execute a potential purchase of that community in the middle of 2026.

Great, thanks for the time, everyone.

Thanks, Mason.

Thank you very much. We currently have no more questions. I will hand back over to Anne for any closing remarks.

Well, thank you all for joining us today. We are live coming to you live from Denver, where we're at our leadership conference, and so I'd be remiss if I didn't indicate how grateful we are for all the hard work of our team. We're going to spend the next few days getting everyone prepared to execute on our expectations for 2025 and look forward to talking to you all next quarter.

Thank you very much and thank you to all the speakers on today's line that concludes today's conference call. You may now disconnect your lines.