Diversified Healthcare Trust (DHC) 2011 Q1 法說會逐字稿

Good day and welcome to the Senior Housing Properties Trust first quarter 2011 financial results conference call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the Vice President of Investor Relations, Mr. Tim Bonang. Please go ahead, sir.

Thank you and good afternoon, everyone. Joining me on today's call are David Hegarty, President and Chief Operating Officer, and Rick Doyle, Chief Financial Officer. Today's call includes a presentation by management, followed by a question-and-answer session. I would also note that the recording and retransmission of today's conference call is strictly prohibited without prior written consent of Senior Housing.

Before we begin today's call, I'd like to state that today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and federal securities laws. These forward-looking statements are based on Senior Housing's present beliefs and expectations as of today, April 28, 2011. The Company undertakes no obligation to revise or publicly release the results of any revisions to the forward-looking statements made in today's conference call, other than through filings with the Securities and Exchange Commission, or SEC, regarding this reporting period.

In addition, this call may contain non-GAAP numbers including funds from operations, or FFO. A reconciliation of FFO to net income, on Slide 31, and the components to calculate AFFO, CAD or FAD, on Slide 13, are available in our Q1 Supplemental Operating and Financial Data package found on our website at www.snhreit.com.

You'll also notice that we've changed the format of our Supplemental. We've taken into consideration analyst and shareholder feedback and are providing more detail around our MOB portfolio now that the medical office properties are a significant portion of Senior Housing's portfolio.

Actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause those differences is contained in our 2011 Form 10-Q, to be filed with the SEC by the end of today. Investors are cautioned to not place undue reliance upon any forward-looking statements.

And now I would like to turn the call over to Dave Hegarty.

And thank you, Tim, and good afternoon, everyone. Thank you for joining us. For the first quarter of 2011, we reported funds from operations of $0.44 per share. This compares with $0.43 per share that we reported for the same period a year ago. However, these results are different from some estimates due to the timing of recent medical office building acquisitions and projecting operating expenses and, to some degree, overestimating percentage rent in our senior living portfolio. We will discuss both of these items in more detail later on in the call.

After the reports, we experienced a significant pickup in acquisition activity this quarter. Let me summarize the activity at a high level. First, as discussed on our last earnings call in January, we closed on the acquisition of seven medical office buildings for $110 million during the quarter.

Second, in March we announced that we entered into an agreement to acquire 20 premier private pay senior living communities located in five states for approximately $304 million. We expect that part of this transaction will utilize the taxable REIT subsidiary, or RIDEA structure.

In addition to the above, we have one additional senior living community and five medical office buildings under agreement to be acquired, for a combined total of approximately $37 million. We expect to close on substantially all of these transactions by the end of the second quarter of 2011.

During the first quarter, we also capitalized on an attractive debt environment by issuing $250 million of five-year senior unsecured notes with a 4.3% interest rate. I'll discuss the above acquisitions, the operating performance of our existing portfolio, and the overall acquisition environment in more detail. But first, Rick is going to review our results for the quarter.

Thank you, Dave, and good afternoon, everyone. For the first quarter of 2011, we generated FFO of $62.1 million, up 13% from $54.8 million for the same period a year ago. On a per-share basis, FFO was $0.44 compared to $0.43 a year ago.

Early this month, our Board declared a dividend of $0.37 per share with preference that they pay a ratio of 84% of the first quarter's FFO.

Looking first to the income statement, rental income increased $17.6 million, or 22%, to $98.1 million compared to last year. Depreciation expense increased by $4.1 million, or 18%, to $26.4 million. Property operating expenses increased by $5.6 million, or 56%, to $10 million, which was in line with our expectations.

General and administrative expense increased approximately $650,000, or 12%, to $6.1 million. Our G&A represents 6.3% of total revenues and continues to be among the lowest of our payers. During the quarter, we expect these items to slightly increase to reflect a full quarter's operations for the seven medical office buildings acquired in late January as well as the other properties we expect to acquire during the second quarter.

The year-over-year quarterly increase on rental income, depreciation expense, property operating expenses, and G&A primarily relates to the acquisitions of 33 medical office buildings acquired since January 2010.

Percentage rent revenue from our senior living tenants for the first quarter increased 8%, to $2.7 million, versus last year. Percentage rent revenue now includes 11 senior living communities that we acquired in 2009, leased to Five Star, based on 2010 revenues.

In 2011, all of the eligible communities leased to Five Star, Sunrise Senior Living, and Brookdale Senior Living, are around that revenue-sharing formula. You should note that occupancies have been relatively flat quarter over quarter at our senior living communities and that the first quarter increase in percentage rent is primarily due to the additional properties added to the formula. Until occupancy materially improves and the rates can be significantly increased, we expect a modest increase of percentage rent each quarter.

Interest expense for the first quarter of 2011 was $4.3 million higher versus the 2010 period. The increase relates primarily to the April 2010 sale of $200 million of 10-year unsecured senior notes with an interest rate of 6.75% and the January 2011 sale of $250 million of five-year unsecured senior notes with an interest rate of 4.3%. The increase is offset by the reduced interest expense from the May 2010 redemption of $97.5 million of our 7-7/8% senior notes in a lesser amount outstanding under our revolving credit facility.

Same-store rental income for our medical office buildings decreased $200,000, or 1%, from last year, primarily due to one medical office building located in Lexington, Massachusetts. This building was previously vacated by a biotech company but is now 100% leased effective April 1.

Our property operating expenses decreased $9,000, or 2.1%, on a comparable basis from last year, mainly due to real estate tax reduction, offset by increases in utility costs.

On a quarterly basis, we evaluate our portfolio for impairments and performance. During the first quarter of 2011, we recognized an impairment charge of $166,000 to reduce the carrying value of two properties classified as held for sale to their estimated fair value, or the sales price less any costs to sell. At quarter end, six of our properties were classified as held for sale, with an aggregate net book value of approximately $9 million. We expect these properties to be sold for approximately $19 million during the second quarter.

Now let's turn to the balance sheet. During the first quarter, we acquired seven medical office buildings for approximately $110 million and invested $10.8 million into revenue-producing capital improvements. We fund the acquisitions with cash on hand, the January debt issuance, and borrowing under our revolving credit facility. At March 31, our total debt was approximately $1.3 billion, and our equity was $2.1 billion, for a ratio of debt to total book capital of 39%. On a market basis, our debt to total market capitalization was 29%.

At the end of the quarter, we had $25 million outstanding on our revolving credit facility, three series of unsecured senior notes totaling $670 million, and mortgage loans and capital leases totaling $652 million.

Looking at our upcoming debt maturities, we have $225 million of unsecured senior notes due in January 2012 with a high interest rate of 8-5/8%. We continue to consider opportunities to accretively refinance these notes. In addition, we have $34 million of secured mortgage notes due in 2012 with a weighted average interest rate of 6.9%. Other than the 2012 maturities, 91% of our debt is not due until 2016 or later.

Today we have the entire $550 million credit facility available to fund future investments. Our revolving credit facility expires on December 31, 2011. We continue to monitor banking market conditions for comparable revolving credit facilities and expect to refinance our revolving credit facility in the next several months. Clearly, the margin on our revolver will increase over the 80 basis points we pay above LIBOR today, but we feel the current environment is positive to refinance these notes.

Now I will turn it back to Dave for discussion of the performance of the portfolio and the investment environment.

Thank you, Rick. To say that the acquisition environment has improved for healthcare REITs would certainly be an understatement. As I mentioned at the beginning of the call, we closed on the previously announced acquisitions of $110 million of medical office buildings and discussed them on our last earnings call.

In addition, in March we announced that we entered into an agreement to acquire a portfolio of senior living communities located in five southeastern states for $304 million. We expect to acquire these communities late in the second quarter, subject to required regulatory approvals and lender approvals of our assumption of $79 million of mortgage debt on certain properties.

Fifteen of the 20 communities, costing approximately $212 million, are expected to be leased to a taxable REIT subsidiary, or TRS, that we're creating and will be managed by Five Star Quality Care under a long-term management contract. We see potential upside in the 15 communities going into the TRS, as they are currently 85% occupied and are predominantly need-driven assisted living units. We were willing to accept the lower going-in cap rate at approximately 7% to 7.5%, given the potential upside gain.

The remaining five communities, which will cost approximately $92.5 million, are expected to be leased to Five Star through a traditional net lease and will be added to the combination leases currently in effect. And these five communities are primarily independent living properties with mature operations and a high occupancy of 97%. The initial yield will be 8%, and we are currently in the process of negotiating terms of the management and lease agreements. Our independent trustees are conducting negotiations with the assistance of third-party consultants, and we expect to announce the terms soon.

In addition to this last senior living transaction, we've also entered into an agreement to acquire one 73-unit private-pay assisted living community located in the Chicago area for $7.5 million. This property will be operated by Five Star through a traditional net lease, yield 8%, and will also be added to the combination leases currently in effect.

And lastly, on the acquisition front, we've entered into agreements to acquire five medical office buildings and biotech buildings for $29 million. One of the properties is an outpatient center for a highly rated healthcare system in the Midwest, and the other four properties are research laboratories and buildings affiliated with a major university.

We've also had some disposition activity, some of which was discussed on our last earnings call. We've entered into agreements to sell six properties, including three skilled nursing facilities, two medical office buildings, and one former assisted living facility which is being converted to another use. The combined sales price for all six properties totaled $19.6 million, and we expect the sale of these properties to occur during the second quarter of 2011. The sale of the skilled nursing facilities, rather, is in line with our stated strategy of exiting out of the skilled nursing business. In fact, today over 90% of our NOI comes from private-pay resources, including both our senior living and medical office properties.

I'd like to remind you that all of the above pending transactions are subject to diligence and customary closing conditions and may not close. Our pipeline remains strong, as we're currently evaluating a number of opportunities totaling over $1 billion in both the senior living and medical office spaces.

At this point, I'd like to review the performance of our major senior living tenants. Our largest tenant, Five Star Quality Care, reported their earnings earlier this morning and exceeded estimates by $0.04 per share. As their first quarter financials show, they continue to have consistent profitability and are well positioned to take advantage of the anticipated rise in occupancy for the industry. For the 12 months ended December 31, 2010, occupancies across all of our Five Star leases remained flatly aggregate, and rental coverage on an EBITDA basis increased to 1.37 times, or a cushion of approximately $70 million.

Our other tenants also performed well during the same time period. The 14 properties we lease to Sunrise also covered their rental obligations by 1.4 times, and occupancies averaged 89.8% for that portfolio. Our properties leased to Brookdale were 92.9% occupied and covered their rents by over 2 times. And the occupancy across our six private operators increased 20 basis points to 85.3%, and they covered their rents by more than 2 times. And our two wellness center tenants covered their rental obligations also over 2 times. So we've seen a steady, modest improvement over the last several quarters from both our senior living and wellness center tenants. They are well positioned to improve as the overall economy continues to rebound.

Moving on to the medical office building component of our portfolio, today SNH owns almost 6 million square feet of medical office space, which makes us one of the largest landlords for medical office properties in the country. Most of these properties are long-term leases from credit tenants. Occupancy was 97% at March 31, 2011.

Over the next two years, only 5.4% of our annualized rental income comes up for renewal. The little turnover we've experienced is in our multi-tenanted buildings. This quarter, 146,000 square feet was renewed, and we had new leases for 17,000 square feet. This leasing activity has had a positive impact to our net operating income.

Tenant improvement and leasing commissions in the quarter were $2.3 million, with a budget of approximately $6.5 million for all of 2011. All of the medical office property operating data is presented on Slides 19 through 27 of our Q1 Supplemental package.

Now, the dividend remains our highest priority. Earlier this month the Board declared a dividend of $0.37 per share, and our Board evaluates the dividend on a quarterly basis and considers it to be adequately covered. Based on our current FFO payout ratio of 84%, we're generating $46 million of excess cash flow through the year to provide a cushion for the dividend should any operators experience difficulties or any unforeseen needs. The surplus cash flow is currently used to fund improving financing, make new investments, or prepay debt.

We have an extremely high quality portfolio that's been put together through a disciplined approach that has yielded rational book value based on unit square feet and beds, and we maintain this high quality portfolio by consistently reinvesting in our properties. Since 2007, our real estate portfolio has grown like many of our peers, but our FFO per share has also grown during this period as well, which is something that cannot be said by all of our peers.

For the remainder of 2011, we'll remain focused on refinancing our revolving credit facility, refinancing our 2012 debt maturities, executing on our first quarter acquisitions, and continuing to seek out new accretive acquisitions in both the senior living and medical office building space.

And with that, now I'll open it up for questions.

(Operator Instructions.) Todd Stender, Wells Fargo Securities.

When you're looking at the rent coverage by tenants, they were up, just about for all the leases. What's behind that, really in light of what can still be categorized as a stabling senior housing market?

Well, I think there's a couple of factors affecting the coverage ratios. One is that I believe the discounting that has been going on in the industry for the last couple of years has started to abate, so people are able to -- although occupancy may stay the same, they're able to achieve higher revenue per occupied day.

And then secondly, I do believe that in light of the difficult environment we've had in the last couple of years, people have focused on controlling expenses more, and they have become more creative in keeping expenses down, as well as wages. Many people are just happy to still have their job or have very modest increases in pay, so that's also been a positive factor for the industry.

Okay, thanks. And just switching gears, can you give some more information or just shed some light on the new tenant that will be occupying your Minneapolis MOB that you just closed on?

Sure. At the moment, we're still in diligence. I'm reluctant to say their name specifically, but it's an A-rated healthcare system based in the northern Midwest.

Sorry, the January one. I should have said the January. It's in Mendota Heights.

Right. That's a Chinese pharmaceutical company that does lab testing for multiple companies. I always have difficulty pronouncing the name. It's Wuxi Application Technology. But again, it's one of the top nine pharmaceutical companies in the world.

And can you go into some details on the terms of the lease?

Still, it's a long-term lease, I guess approximately about eight years left on the remaining initial term. Again, I'm going to say the transaction was done in the mid-eight cap rate range. And for the most part, it's close to triple net lease arrangement we've set up. I'm not sure what else is there. It's clearly guaranteed by their corporate parent.

But there were annual rent bumps?

Yes, there are annual rent bumps each year, about 2% per annum. Plus a lot of the expenses are passed through.

Okay, thanks, guys.

(Operator Instructions.) Jerry Doctrow, Stifel Nicolaus.

I think, David, you gave a lot of detail on, I think, the last group of MOBs, the five MOBs. Just a range of the yield on that? Has it held on that 8 to 8.5?

Yes. The current cash cap rates are in the mid-eights.

Okay.

And those, too, have escalated in several of them.

And then I just wanted to chat a little bit more broadly about the acquisition environment. You just did your first -- as you said, obviously, there's been a lot of stuff going on broadly in the sector. You just did your first RIDEA transaction, or announced it, hope to close it. And you're also looking fairly active.

I wanted to understand you on RIDEA. Your cost of capital is a little higher than your peers. Are other people looking at that? I just wanted to get a little, maybe, sense of the context of that deal, and then maybe just a little bit more broadly about how do you see yourself competitively and what kind of rates and stuff you see going forward.

Sure. This particular transaction, portfolio of assets, was done through a marketing process through an investment banking firm. So we believe that everybody else was competing for it. Maybe we were fortunate with the timing of it, because a lot of other transactions have been announced, and I think several people had their plates full.

I do think that our operator was highly regarded by the seller, and that was definitely a positive. The fact that we came with the operator and capital, I believe, was attractive to the seller, because we did not have to have a separate negotiation with an operator for the management terms and so on, that we could work that out.

So as a result, we believe we're getting this transaction in the high 7% cap rate, on a blended basis, between 7.5% and 7.75%. So I can't explain exactly why some of our peers with a lower cost of capital could have easily bid a 7% cap rate or something like that, maybe want it, but maybe they chose not to and didn't feel they needed to. I'm not sure.

But in any event, this is a sizable transaction. We're very positive on it, and we thought we did relatively aggressive because it fit perfectly, or the footprint fell where Five Star has a significant presence, and has a minimal amount of overhead it has to add to take these properties on.

We are sorting through, like I said, we're looking at currently evaluating over $1 billion of possible acquisitions. I do think that is there any asset stratification, where the three much larger REITs probably are not necessarily looking at the $20 million or $50 million transactions or bidding on them as aggressively because it doesn't really do a heck of a lot for their overall cash flow. So I think we're more, now, competing with some of the smaller healthcare REITs and a few of the private healthcare REITs, as well as some institutional investors and so on.

So I think, and clearly the debt markets have been continually improving and moving more in our favor. So we did, obviously, an attractive debt offering in January, and we think that the capital markets for the debt side are still remaining very attractive. So we see our growth coming from making new acquisitions. I don't believe we're going to be doing the multi-billion dollar transactions that others may be doing, much more the smaller ones. And also, we have a significant amount of refinancing of debt coming up in the next year or so that should all be accretive to refinance that debt.

And just in terms of mix of acquisitions, your MOBs versus senior housing, and then maybe how big a piece RIDEA will play?

We are biasing our investment bidding towards the medical office building types of investments today, so (inaudible) is probably where most of the growth will come. But every now and then, a situation like this portfolio comes along, and we definitely want to take advantage of a nice portfolio, private-based senior living facility.

As you've probably noted on this morning's call with Five Star, that they have acquired a couple properties of their own earlier this year, and they're looking at acquiring another large portfolio of properties. And again, to the extent they can finance a lot of that on their own, it's in both of our interest that they do that, mainly because of the concentration issue with Five Star. We now have them, believe they're just below 50%, and this transaction will still keep it more or less around 50% of our portfolio. But again, our bias will be towards medical office.

If I remember right, the RIDEA structure, I don't envision it being a large part of our portfolio. It's another option for us, and depending on the situation, I don't think the smaller operators really can expect RIDEA-type pricing, whereas a significant portfolio that's attractive, like this $300 million transaction, probably an operator -- or a seller -- could expect the RIDEA-type pricing, in which case we have to go into the 7's, probably, to compete. And I'm not sure if that's enough, but I don't see it as a big percentage of our portfolio.

And then I just wanted to come back, because you touched on the revenue growth, or the growth from the revenue participation on the senior housing. So as we look at the first quarter numbers, I just want to make sure I understood you. All the properties are now basically in the boat, if you will, and should we be assuming -- are you assuming flat occupancy and maybe 2% to 3% rate growth? I don't know if you want to provide guidance or just -- it's pure revenue sharing, and what do you think is reasonable in terms of assumptions on revenue growth?

Right. Jerry, you're pretty much read right on what we were trying to focus on with that. Across portfolios, the occupancy has more or less stayed flat, and people have been able to raise rates and get rid of some of the discounting. So as a result, we had a modest pickup of a couple hundred thousand dollars of percentage rent revenue for us on a quarterly basis. So you can extrapolate that over the year, and hopefully, at some point soon, we would expect that the occupancy and rates and so on will start to kick in this year, and maybe we'll see faster increases.

But for now, we're assuming that it's more or less status quo, and we're only able to pass -- our operators are only able to pass on 2% to 3% increases, which results in a modest bump each quarter to us.

Okay. And it's recalculated, basically, every quarter adjusted?

That's correct. And there is a year-end true-up.

Okay. Okay. And just on the divestitures, and then I'll jump off. You're obviously selling some of the underperforming assets, the rehab hospital at least, because we were on the Five Star call this morning, and it just began to drag there. Is there anything that you're looking at in your portfolio to prune? And is something like that potentially on the list?

No. I think primarily we've always stated that skilled nursing facilities are something we wanted to exit. It's just very difficult to do in a bulk size transaction, so it's being done piecemeal. In fact, the three skilled nursing facilities that are being sold at this time actually have a meaningful gain built into it. But we are selling off the skilled nursing bit by bit.

The rehab hospitals, again, at attractive pricing and stuff that it makes sense for both of us, we would seriously consider that. Other than that, every now and then we have an underperforming assisted living facility -- maybe it's part of a portfolio that we would sell -- but nothing significant in that way.

All right, thanks. That's all for me.

Dan Cooney, KBW.

Just coming back to the Five Star call this morning, it seems like occupancy has come under a little bit of pressure there in the first quarter. When you compare trends there to maybe your other senior housing portfolios, is it just a matter of a slowdown in demand for those markets, or more a reflection of some market share issues for Five Star? Thanks.

Sure. A couple of things. The first quarter is usually seasonally down versus Q4 of 2010, or Q4 in general. And if you were to look at Q1 this year versus Q1 a year ago, they're really not all that different. I think there was a rise during the year last year, and this year flat, this quarter plateaued or down a little bit.

Also, if you drill down deeper, it's really the skilled nursing is off and the independent living is off, and the assisted living is holding on strong and actually improved a little bit. So I think it's more seasonal or something more specific to the skilled nursing assets. We've scattered skilled nursing assets across three out of the four leases, and so to the extent that they are impacted, they impact each of those leases.

But again, the coverage itself is actually up across the board in each lease.

Okay, great. And I understand you're still working out the management structure for the 15 assets at Five Star, but is it safe to assume that there will be some sort of incentive fee tied to NOI growth as opposed to revenue growth?

Yes, that's correct. It's going to be market structured, so it will probably contain a base fee plus an incentive fee, and those are the big economic points that are to be balanced out.

Okay, great. That's all for me. Thanks.

Jana Galan, Bank of America.

I was wondering if maybe on the refinancing debt opportunity, if maybe Rick could give some color on quotes he's hearing for maybe five-year or 10-year unsecured, and then what the agencies are offering on the secured side, or maybe the life companies as well.

Yes. As you know, our revolver expires at the end of the year, and we had some initial talks with the banks to feel it out and see what the market conditions are out there. They do seem better than they were if we were to try to do it last year before the original expirations. And so I think we're looking now at these banks at maybe about 200 basis points above LIBOR. And we hope to have something in the next couple of months and a new revolver credit facility over a long-term period, either a four- or five-year period.

And then maybe the 8-5/8% notes or the 6.9% that you had mentioned earlier?

Yes. We have the $225 million notes due in January of next year. We have been looking to see how we can refinance those, and we will continue to do that and plan to do that over the next couple of quarters. The rate on those are 8-5/8%, so that will be -- however we do plan to refinance it will be accretive. And we also have a few mortgages due during the year 2012, about $34 million or $35 million with a weighted average interest rate of about 6.9%. So we'll just pay those off as time goes, and those will be all paid off during 2012.

Right. And Jana, for our future objectives for financing, we're pretty much decided we would stay within the public unsecured debt markets, so we frankly don't march with how closely the life insurance companies or necessarily the agency debt. A while back there was a significant differential between agency debt and the public unsecured markets, but frankly, today they're roughly comparable in rates, and the unsecured market is certainly less restrictive as far as covenants and just the fact that you don't have to secure the assets.

So I believe that we probably could do a 10-year debt offering, probably in the range of about 6%, plus or minus, today, and probably in the 4% to 4.25% range for the five-year debt. So again, until you're ready to go to market, all that is theoretical, and I'm sure not in a position today that we want to go to market. But at some point, we will later this year, and we'll have to evaluate where things are at that time.

Thank you very much.

Jorel Guilloty, Morgan Stanley.

During the last conference call, you mentioned that your potential transaction pipeline was about $500 million. Now you mention that it's about $1 billion. I just want to get a sense of what sort of assets you're seeing that caused this pipeline to double in that time.

We are seeing a tremendous increase in volume situations to consider. So on the medical office, I'd say of that $1 billion, it's probably split 50/50 between senior living and medical office to consider. Anyhow then, obviously, we never know which ones we're going to be successful in winning on, but those are what we're evaluating.

And I think we've historically said that $150 million to $200 million would be bread-and-butter acquisitions over the course of a year, and then if we win a significant transaction, that's above and beyond. Like the $300 million acquisition that we've announced in March, I would consider above and beyond what we'd expect the normal quarterly acquisition.

Thank you. In terms of the March transaction, I know you have a couple of hurdles that you need to overcome before these assets come in line. I just wanted to know, is there a possibility as to whether these assets would come in line at different points in time, or do you expect them all to come in line at the same time?

It's possible it could be broken up into two phases, or even three phases, depending on when all the pieces come together. Regulatory, the licensing is one thing that takes time, and if you have a TRF, it would be the week getting licensed, and naturally, it's our first time before the regulators. So they may take a little longer time reviewing a TRF license application versus, say, Five Star just getting their own application approved. That's one consideration.

Then just the lenders, for the debt we're assuming, again, it's tough to predict exactly how quickly that will move. And some of it's agency debt, some of it's bank debt, and some of it's HUD debt. So they all move at different paces. So I think it's possible that it could be broken up into two, or possibly three, closings.

And considering this RIDEA investment, do you expect any effects on G&A going forward?

Not on our G&A. As we make investments with 50 basis points on invested assets, that should be the only G&A increase attributable to this acquisition.

Okay, sounds good. Thank you very much.

And I'll turn it back to Dave Hegarty for closing remarks.

All right. Thank you all for joining us today, and we'll be at the JMP Conference in San Francisco and the Bank of America-Merrill Lynch Healthcare Conference, actually in two weeks in San Francisco and Los Angeles. And then we'll be at the Jefferies Healthcare Conference and the NAREIT Conference, both in New York City in June. So we hope to see some of you at one or more of these events, and we look forward to updating you on our progress during the second quarter conference call later this summer. Thanks a lot, and have a good day.

Thank you. And ladies and gentlemen, this will conclude our conference call for today. Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.