Healthpeak Properties Inc (DOC) 2016 Q3 法說會逐字稿

Greetings, and welcome to the Physicians Realty Trust Third Quarter 2016 Earnings Conference Call. (Operator instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bradley Page, Senior Vice President and General Counsel. Thank you, sir. You may begin.

Thank you. Good morning, and welcome to the Physicians Realty Trust Third Quarter 2016 Earnings Release Conference Call and Webcast. With me today are John Thomas, Chief Executive Officer; Jeff Theiler, Chief Financial Officer; Deeni Taylor, Executive Vice President of Investments; John Lucey, Chief Accounting Officer; and Mark Theine, Senior Vice President of Asset and Investment Management.

During this call, John Thomas will provide a company update and overview of recent transactions, and our strategic focus. Then, Jeff Theiler will review the financial results for the third quarter of 2016 and our thoughts for the remainder of 2016. Following that, we will open the call for questions.

Today's call will contain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. They are based on the current beliefs of management and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe our assumptions are reasonable, our forward-looking statements are not guarantees of future performance. Our actual results could differ materially from our current expectations, and those anticipated or implied by such forward-looking statements. For a more detailed description of some potential risks, please refer to our filings with the Securities and Exchange Commission.

With that, I would now like to turn the call over to our Company's CEO, John Thomas.

John Thomas Thank you, Brad. Good morning, and thank you for joining us for the Physicians Realty Trust Third Quarter Earnings Call. We are pleased to be able to report to you another strong quarter of operations. While we intentionally slowed down new business development during this quarter as we focused on integration of the Catholic Health Initiatives, or CHI portfolio, we still reported $177 million of new investments, $137.5 million of which was unrelated to CHI.

We have also completed $30 million (technical difficulty) in new investments already in the fourth quarter, none of which are affiliated with CHI, and added important new hospital system relationships in northern Michigan. We now own more than 10 million square feet of high-quality medical office space that is almost 96% leased, for an average lease term of almost 9 years. Our team's attention to detail and focus on tenant satisfaction has produced a remarkable integration of the CHI medical office facilities, and early feedback from physician tenants and the CHI hospitals has been very positive. These efforts and our executive attention to operational excellence, as well as new and renewal leasing, is producing far better results than we could have anticipated this early in the relationship.

We are determined to set a new, high standard for medical office asset management, which starts with sourcing, underwriting, investing, and then managing the best medical office portfolio in the United States. We believe that this will produce outstanding total shareholder returns, year-in and year-out.

Year-to-date, we have acquired $1.1 billion in high-quality medical office facilities, and have increased our percentage of assets that are on-campus or affiliated with a hospital system to 79% from 74% at the beginning of the year. As we look to the balance of 2016, we anticipate closing on one additional CHI facility during the fourth quarter. After this closing, the final building to be acquired in the CHI portfolio is a new medical office facility in Omaha, Nebraska, which will close upon completion of construction in early 2017. The expected investment will be $33.4 million, and will be 100% leased to CHI's Creighton University Medical Center upon closing.

We also have a strong pipeline of anticipated closings still to complete, as well as a nice start to building 2017's pipeline.

2016 has been a transformational year for Physicians Realty Trust, and we are not done. We've crossed several milestones, including two separate long-term, unsecured, investment-grade debt private placements, crossing 10 million rentable square feet of medical office space, completing the largest direct monetization of medical office facilities in US history, and rounding out our senior management team with particular attention to asset management and leasing. These accomplishments have further strengthened our foundation of operational excellence.

As long as the capital markets remain open, DOC shares present the opportunity to own a high-growth organization that can source, underwrite, and acquire the best medical office and outpatient care facilities across the United States while still being able to focus, most importantly, on delivering outstanding results from the assets we already own. We take pride in our relationships and ability to generate repeat business from our clients who trust us with their facilities, trust us with their physicians, and work hand-in-hand with us to serve their patients. We believe that philosophy and delivering on those promises will serve us, and you, well, as we achieve outsize growth and outsize long-term financial results.

We are sure many of you have seen the news that CHI was exploring discussions with Dignity Health to align their organizations. Dignity Health, formerly known as Catholic Healthcare West, is a Catholic faith-based healthcare system based in San Francisco, with a major inpatient presence in California, Arizona and Nevada, with services in over 22 states. CHI operates in 19 states. The synergy and complementary strength of each organization appear compelling, while there is no geographic overlap of their hospital system acute care facilities.

We have relationships with and a great deal of respect for Dignity Health, with our most important relationship being with IMS, the multi-specialty physician group partially owned by Dignity in the Phoenix, Arizona market, where we own over 400,000 square feet of medical office space we bought from the IMS positions, and anchored by Dignity Health IMS positions on long-term leases.

At this time, and after discussions with CHI senior leadership, we do not have any additional information to share, but also remain confident in the future of our CHI relationship, the value of our CHI medical office facilities, and potentially an increased opportunity to grow with CHI and Dignity combined entity.

We recently had a stewardship meeting with CHI's C-suite, and are more excited than ever about the opportunity to partner with them, their operational plans, their focus on expenses and supply chain management, and strategic plan. There remains an enormous amount of opportunity for them to strengthen and further their mission, and for us to continue to grow our relationship over time.

Yesterday, CMS issued final hospital outpatient roles specifically addressing Section 603. As expected, if an HOPD moves out of their grandfathered, off-campus location to another off-campus address, they will lose their grandfathered higher HOPD rates absent rare, extra-ordinary circumstances, like a destruction of the building or a seismic event. Losing a lease is not an event like that. The rule also allows hospitals that acquire other hospitals to retain the grandfathered status of grandfathered 603 assets. All as expected, and all very positive, for a nice portion of our assets.

Finally, next week our country will have the privilege and duty to elect the next leader of the free world. Whomever is elected will inherit a US healthcare economy that is growing faster than any other part of the economy, fueled by an aging population and technological leadership in the advancement of care across all disease conditions. While many [hospitals] have struggled recently, the need for access to care and the pressure to lower costs from consumers, payers and the government alike, will only continue to push care out of the hospital and to lower-cost outpatient settings that offer higher quality, more convenience, and increased access.

It is estimated that the US healthcare economy will grow from approximately $3 trillion this year, to over $5 trillion in 2024, an average annual increase of about 7%. This growth will fuel growth in outpatient care and the demand for outpatient care medical office space. We are well-positioned with our hospital and physician relationships and partners to capture this demand for the benefit of our shareholders.

With that, I'll now turn it over to Jeff to review our financial results.

Thank you, John. In the third quarter of 2016, the Company generated funds from operations of $33.5 million, or $0.24 per share. Our normalized funds from operations was $37 million. Normalized funds from operations per share was $0.27, and our normalized funds available for distribution were $32.9 million, or $0.24 per share.

In this quarter, we closed on $177 million of investments at an average cap rate of 6.8%. Had we acquired all of these assets at the beginning of the quarter, they would have contributed an additional $1.9 million of cash NOI.

With the closings of Springwoods MOB, Gig Harbor Medical Pavilion, and Midlands One Professional Center this quarter, we now have just two properties remaining to close in the CHI portfolio. We are pleased with the volume and quality of investment opportunities our team continues to source, and as a result we are comfortable raising and tightening our previous acquisition guidance of $1.0 billion to $1.25 billion for the full year 2016, to a revised guidance of $1.2 billion to $1.3 billion of investments for 2016.

On the operations side, our same-store portfolio, which includes every asset that we have owned for a full 15-month period, generated year-over-year NOI growth of 1% with no change in occupancy. Our same-store portfolio currently encompasses 48% of our total portfolio, and NOI growth can be volatile from quarter-to-quarter. We expect to be able to achieve 2% to 3% year-over-year same-store NOI growth on average, so our third quarter result is below our target range.

There were two primary factors that influenced this result -- the first was an operational issue relating to the continuing impact of the early 2016 move-outs we saw at our Peachtree Dunwoody Building in Atlanta, which reduced our same-store NOI growth by 60 basis points this quarter. The good news, is that of the 18,000 feet of leases that expired this year at Peachtree Dunwoody, about 12,500 feet has already been re-leased at significantly higher rates. Tenants take occupancy of the space at the end of the year, so we should see the positive impacts from that starting in the first quarter of 2017.

The second factor impacting our same-store NOI growth specific to this quarter, was a one-time accounting-related adjustment. We booked a property tax credit for our Columbus, Georgia asset in the third quarter of 2015, which led to a $0.2 million increase in property expense for the comparable period this year, resulting in an 80 basis points negative impact to our same-store NOI.

Turning to financing, in August we drew the seven-year, $250 million term loan from our $1.1 billion credit facility, which [pays] interest at a rate of LIBOR plus 180 basis points. We entered into a swap arrangement with our banks that fix our annual payments at a rate of 2.87% for seven years. We also issued a $75 million private debt placement that was split into three equal tranches that were nine, ten, and eleven years. The weighted average interest rate on this financing was 4.17%.

From an overall balance sheet perspective, we ended the quarter in excellent shape with debt-to-total-capitalization around 20%, and net debt to adjusted EBITDA of 4.3 times.

We also implemented a $300 million ATM program in August, which provides additional flexibility for us with respect to issuing equity. The program replaced our previous $150 million ATM program that we terminated earlier this year. We have not issued any shares through our new ATM program.

Finally, our G&A for the quarter was $4.9 million, bringing the nine-month total to just under $14 million. We remain on track with our previously-announced G&A guidance of $19 million to $21 million for the year.

With that, I'll turn it back over to John.

Thank you, Jeff. We're now ready to take questions.

Thank you. (Operator instructions) Our first question comes from the line of Juan Sanabria, with Bank of America Merrill Lynch. Please proceed with your question.

Hello, this is [Camille] with Juan. Rule 603 was finalized yesterday. What are the implications for real estate landlords?

I'm sorry -- so the 603 final reg, is that what you're asking about, Camille?

Yes, I was just wondering what are the implications for real estate landlords?

Yes, so the great news is, as expected, this is the final reg which provided some additional detail and clarity to the proposed reg, which for an off-campus medical office facility that is leased by a hospital and the hospital uses that space for a hospital outpatient department -- if that was in existence, and they were billing as a hospital outpatient department in that space as of November 2, 2015, then that hospital can continue to bill at higher reimbursement rates under the old Medicare regime for hospital outpatient departments that are off campus.

For any new facilities going forward, they can't bill at that higher rate. In fact, in some cases, it's substantially lower, if they open up a new hospital outpatient department off the campus of the hospital.

So, really the big deal, and what was finalized, the reg yesterday, which is those grandfathered locations -- and we own about 53 of our medical office buildings are what are called grandfathered 603 assets -- what the final ruling said yesterday is, if the hospital moves out of that building in the future, in other words they don't renew their lease, unless they move back to the hospital campus they will lose that higher reimbursement rate.

So, for us as landlord, obviously we're always working with our hospital partners and expect them to stay in our buildings forever, but this makes it an extraordinary sticky building as the landlord, and an important development. And again, if they move out of that location because they don't like the lease, they don't like the rent, they don't like us, they'll lose those benefits.

So again, we expect to retain those hospitals regardless, but very positive development and the final rule again solidifies the importance of that grandfather status to us.

Okay, thank you, and can you give us an update on cap rate expectations heading into 2017? And, what are your quarterly acquisition pace, what is it likely going to be going forward?

So, cap rates have continued to stay for kind of best-in-class assets, kind of in general top markets, stayed around 6% for best-in-class assets. And we're still finding lots of nice opportunities between 6% and 7%, in some of the -- in the Boston market, or California markets, you might go below 6%. So, we haven't seen much change in that, really, this year, and in the near term don't have any real expectation of a change in that range.

As far as kind of our pace of growth next year, again, very much capital markets-dependent. We will issue guidance on -- acquisition guidance in February at our next earnings call, but generally, we expect to be able to source, underwrite and close $200 million, $250 million a quarter. But, again, much of that for the future. Right now, as it always is, is capital markets, if they're open, and we can source and acquire that kind of volume.

Thank you.

Our next question comes from the line of Vikram Malhotra, with Morgan Stanley. Please proceed with your question.

Hey guys, this is Landon, on for Vikram. I just wanted to start out, I was wondering if you could take us through any of your exposure to [CYH]? I know they're listed as a tenant, but I'm not sure how big, and any sort of interesting trends you're seeing at any of your other hospital partners, either positive or negative?

Yes, so thanks, great question. We have one building that's leased to a CYH hospital, it's down in The Villages, in Florida. It's actually an outstanding, newer medical office building. They actually pay their rent early, and pretty routinely early for that facility. So, we have a very positive relationship with CYH generally, but it's not a very large exposure financially.

Now, they really are a fine organization, we have great relationships there. They have great hospitals that perform very well, but they've had a tough time in the last year with several of their hospitals. So, again, like any large national system, they've got some hugely successful hospitals and some that are not performing as well.

So, the actual size of that building is 28,000 square feet, so we've got [10.5 million] square feet today.

Less than 1%. Actually, less than even half a percent of the portfolio.

Yes, so again -- but it performs well. It's one of those great Florida locations where the parking lot is striped for golf carts versus cars.

Okay, thank you very much for that clarification, and then, just looking at the same-store NOI growth this quarter was sort of low single digits, right around 1%. How should we think about that going forward, now that the portfolio is obviously a lot bigger and maybe more stabilized? And I guess, on that same note, in terms of renewals, what kind of overall re-leasing spreads are you seeing in the portfolio around -- ?

I'll start with the same-store and I'll turn it over to Mark for the re-leasing spreads. But you know, certainly on the same-store, we target to 3%, we talk about that a lot. It came in underneath that level this quarter, and so, we really -- we want to make sure we understand why. Part of it we've talked about the last two quarters, which is the Peachtree Dunwoody move-outs, that problem is resolving itself and I think it's resolving itself very well, actually. One of the advantages of having that great building is that you have a lot of tenant demand for that space. So, that was a temporary blip, but it takes a little bit of time to lease that space up. Certainly, by the beginning of next year we should be in great shape there.

And then, the other item was an accounting adjustment, and that's going to happen from time to time. Agreed, our portfolio is getting bigger, at 48% of the overall in terms of the same-store bucket, but still, it's surprising. Even property tax adjustments on one building can make a significant difference in NOI. So, we feel really good that we'll be back in the 2%, 3% range here shortly, and continue on that pace.

In terms of renewal spreads, I'm going to turn it over to Mark.

Thanks, Jeff. We've seen a lot of leasing activity in the third quarter here, 169,000 square feet of leases renewing or new leases in the portfolio, which is our fourth quarter in a row of positive net absorption. On the re-leasing spreads, we had about an 80% retention rate for the quarter, and re-leasing spreads, as Jeff mentioned, continue to be positive, 2% to 3% as we're working on lease renewals here across the portfolio.

And just to add, Landon, on that Peachtree Dunwoody space that we've re-leased, the new tenants, those re-leasing spreads are actually up 14%.

Okay. And just sorry, quick follow-ups on those, are you expecting that low-single-digit re-leasing spreads to continue? And then, on the same-store, the expenses -- did those changes more or less run through expenses because you're picking out more costs associated with certain assets?

Yes, I mean, some of the expenses, again, was that the property tax adjustment, that showed as a big increase in the same-store.

Okay.

So, that threw that off a little bit, or a lot, I should say. We think expenses will moderate from that 7% level back to something more in line with the rental growth.

Okay great, really appreciate it.

Thanks, Landon.

Landon, one thing, the -- you asked about any other problems. We don't see any problems with any of our major tenants. The LTACs, as we've talked about before, we have one -- we have three LTACs leased to one provider, Lifecare, which really does an outstanding job. As we've mentioned before, they're going through a change in reimbursement structure this year, with the criteria going into effect. So, their EBITDAR coverage is down slightly, but that was expected, and again, they're performing very well.

And also a note, just in light of other news the last 24 hours, we don't have any exposure to Adeptus, and we don't have any exposure to freestanding emergency departments at all. So, it's been an asset class that we've been -- been monitoring, but have not invested in.

Our next question comes from the line of Aaron Wolf with Stifel, please proceed with your question.

Hi, good morning, all.

Hi, Aaron.

Hi. Just a couple quick questions. So, it looks like G&A as a percent of NOI ticked down quite a bit in the quarter. Is this something that we can expect to continue due to operating leverage going forward?

Yes, I think just in general, our G&A was higher than our desired run rate starting the company out. I mean, the company's still three years old, just over three years old. So, we obviously had to build an infrastructure to support a company that we felt could grow, and grow significantly over a long period of time. So, as the Company matures, and as we continue to add more assets and gain more efficiencies, I think you'll continue to see that G&A tick down either as a percent of assets, or a percent of NOI, or whichever metric you want to look at.

Okay great, thank you. And, in terms of the deals you're pursuing, what types of buyers are you encountering? Foreign investors? Private equity? Other REITs?

The most consistent buyers we bump into these days are private equity, private buyers. We don't see -- some of them may be getting capital from foreign investment, but we don't see any direct foreign investment in our asset class at all. I think there's a lot of -- I think there's growing interest by sovereign wealth and other foreign pension plans, if you will, pension funds, but that's where the competition is coming from.

We've seen a little uptick in activity from other healthcare REITs, but again, so much of our business is off-market, we really don't bump into anybody in that context.

All right, well, I appreciate it. Thanks for taking the time.

Thanks, Aaron.

Our next question comes from the line of Jonathan Hughes with Raymond James. Please proceed with your question.

Hey guys, good morning. Earlier, you had mentioned that west coast cap rates, some can be below 6%. Can I take that as an indication you're looking to go west, given you don't have any exposure there now?

You know, Jonathan, like you once did, every once in a while we look at California because it's such a big state and big population, but then decline to invest there. So, we'll be there at some point. We really like the Seattle market, and we've got a big presence there through CHI, but we've seen some assets recently in California that just didn't pass our underwriting standards. So again, big state, big population. As we mentioned, Dignity Health, with what's going on with them and potentially with CHI, that may create an opportunity for us with them there. So, like I said, we're in 30 states today, and there's really no state we won't go to when the right underwriting standards are met.

Okay. And then I guess one on underwriting -- when you look at acquisitions, do you underwrite ground-leased assets differently, and if so, what's the spread on a comparable asset, not subject to a ground lease?

We underwrite the effect of the ground lease. Most ground leases are with hospitals, most ground lease is about the hospital controlling the use of the building. So again, it's really a case-by-case scenario. John, we have 50 ground leases or so?

55, 56 ground leases.

Yes, 56 ground leases. You know, the new accounting standards require us to record those, I guess, differently now, and there's more disclosure about the ground leases. In the end, if you're going to work with hospitals, you're going to have to deal with ground leases, and we're very comfortable with that. All of ours are long-term, and the issues around restrictions are things we get comfortable with, with the hospital. A lot of the CHI assets are on ground leases. So it's hard to say, we underwrite it differently. Obviously, it's always nice to just have a fee-simple deal, but I wouldn't say it drives a major cap rate just as a general rule. Cap rate differential.

Okay, fair enough, and then just one more. I've asked about risks to medical office in the past, and not much out there besides maybe some macro factors. But, I've come up with a new angle, here -- we've heard more commentary about some strip centers backfilling empty small shop space with medical office tenants. Does this represent a potential supply threat to the say 20% of your off-campus unaffiliated properties?

You know, adaptive re-use of strip centers has been going on for a long period of time. We actually own a few -- physicians, we bought kind of in partnership with physicians, and then rehabbed them for them. It's really a nice, cost-effective way to access points that -- in existing locations. We're working with a hospital system today to acquire a meaningful portion of a Class A kind of retail location, but we're acquiring with them the physical building. So, I wouldn't say it's a threat. I think supply across our space, in our top-ten markets -- we were just looking at this data. I don't think in any market we have really 2% or more of new supply coming online, and some of that supply we already have our hooks into the developer, working with the developer to have some long-term opportunity to acquire that. So, just don't see a real supply risk right now in any of our markets.

Okay, that's great. Thanks for the color, guys, appreciate it.

Thanks, John.

(Operator instructions) Our next question comes from the line of Michael Gorman with BTIG. Please proceed with your question.

Thanks. Good morning, guys. John, I just wanted to go back to the 603 assets for a minute, and kind of tie that into the cap rate discussion. As you've gotten more clarity on the impact of the 603 and the final regulations, have you seen any changes in the cap rates on 603 assets that are in the market?

Yes, we'd seen it -- again, historically, off-campus assets have attracted less investors just because of the bias for kind of the on-campus/off-campus bias. You and I have talked a lot about that historically. So, we haven't really seen a major impact on cap rates. In theory it should, these are very strong, as we talk about, and we're really excited about the 53 we have and the prospects at lease renewal of not only renewing the lease, but getting kind of the top-of-the-market rental rates out of the strength of our position and the hospital's need to stay there. So, over time, I think as more and more people find the advantages to the off-campus locations, you probably will see something there, and 603 will be an important factor.

Got it, great. And then, can you just give a little bit of color on kind of what percentage of the pipeline that you're looking at right now is off-market, and maybe what percentage would also be subject to maybe like an OP Unit deal?

I mean, currently in our pipeline, just sitting here looking at it, it's (technical difficulty) 55%, 60% is considered off-market or widely-marketed.

And Mike, the other question, sorry, was what?

Sorry, just kind of what percentage would potentially be an OP Unit deal?

Oh, the OP Units, yes.

A fairly small number right now. We've got a couple of deals where the doctors have asked about them. We actually had a seller reach out to us yesterday, just directly, asking us to evaluate purchasing their building in an OPU context. So, it hasn't been as active as it was early in our life.

I tell you, interestingly, one of the acquisitions we just completed is actually a 368 reverse triangular corporate merger. This doctor group owned a really nice building in an S-corp, and for several reasons in context they wanted OPUs, but it just worked out even better where we can just use our straight public shares and do a stock-for-stock merger. So, in effect, the same kind of capital for us in an OP deal, but it's actually using our public shares and doesn't affect a partnership. So.

Great. Thanks for the color.

Yes, thanks, Michael.

Our next question comes from the line of John Roberts with Hilliard Lyons. Please proceed with your question.

Morning, guys. Sounds like you -- I know you probably don't want to give this out right now, but it sounds like you've got a pretty good indication of early year pipeline into 2017. Any thoughts on what you're looking at for the full year? Similar to this year? Or do you think you might see less due to higher price, competition, etc.?

John, great question. So, we routinely say, and we don't see anything changing as of today, which is -- we're going to [build] and find, again, and source, and underwrite and close, $200 million, $250 million a quarter. We don't see anything today that would change that, but at the same time we're not issuing that as formal guidance for next year. I think the biggest qualifier to that is whether the capital markets are open or not. So, I guess that's -- in August, we'll provide some formal guidance for the year, but as we sit here today I wouldn't think it'd be inconsistent with that expectation.

Okay, super. I know you've got the ATM open, any thoughts on potential use of that?

Yes, John, so I think the ATM is a great tool to use in conjunction with follow-on offerings. So, it's something that we evaluate every quarter. We look at where our stock price is, both on an absolute basis and where we think it is relative to our competitors, and decide whether that's something we -- obviously we'll also obviously look at our balance sheet and any kind of use of the capital that we have coming up. We put all those factors together, and then make the decision as to whether or not to issue equity, and then from that we make the decision whether or not we think the ATM is a better means of issuing equity or a follow-on offering. So, that's kind of what-all goes into the mix, and we evaluate that quarter-to-quarter.

Great, thanks, guys.

Thanks.

Our next question comes from the line of Jordan Sadler with KeyBanc Capital Markets. Please proceed with your question.

Good morning guys, this is Jeff Gaston on for Jordan.

Hi, Jeff.

Hey. So, a lot of my questions were addressed earlier, but I was just hoping you could clarify -- when you're looking at your investment pipeline, are you seeing any year-end selling pressure, or more deals starting to shake out or become viable with changing interest rate expectations?

You know, I think there's probably been some volume uptick because of the uptick in interest rates, and people trying to capture this -- the kind of current cap rate environment. I think that's offset, the interest rate changes is offset by kind of more and more capital coming into the space, and pressuring supply and demand dollars looking for assets. So, but you know, we haven't seen anybody rush for capturing tax benefits before the first of the year, nothing like that. So, that may -- we'll see who wins the election, that may change that, but don't expect it.

Sure, and then I guess one last, pretty minor thing. Looks like HCN sold an $80 million portfolio during the quarter, and they sold it at like a 7.9% cap rate. I was just curious if you guys have taken a look at that, and what you thought of the assets?

Well, as you know, there was a period of three-and-a-half years where certain people in the room were involved in creating that portfolio. So, if there were assets there we wanted, we'd ask about them and exclude others. So.

Got you. That was it for me, thanks a lot, guys.

Thank you.

Thank you. It appears we have no further questions at this time. I would now like to turn the floor back over to management for closing comments.

Again, thank you for joining the call this morning. It was an outstanding quarter, and as we look to closing out an outstanding year, and going into next year. We look forward to seeing everybody at NAREIT, and give us a call if you haven't gotten on our schedule yet. Thank you again.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.