Elme Communities (ELME) 2013 Q4 法說會逐字稿

Welcome to the Washington Real Estate Investment Trust fourth-quarter and 2013 earnings conference call. As a reminder, today's call is being recorded.

Before turning the call over to the Company's President and Chief Executive Officer, Paul McDermott; Kelly Shiflett, Director of Finance will provide the introductory information. Ms. Shiflett, please go ahead.

Thank you, and good morning, everyone. After the market closed yesterday, we issued our earnings press release. If there is anyone on the call who would like a copy of the release, please contact me at 301-984-9400, or you may access the document from our website at www.WRIT.com.

Our conference call today will contain financial measures, such as core FFO and NOI, that are non-GAAP measures as defined in Reg G. Please refer to the definitions found in our most recent financial supplement. The per-share information being discussed on today's call is reported on a fully diluted share basis.

Please bear in mind that certain statements during this call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially. We provide a detailed discussion of these risks from time to time in our filings with the SEC. Please refer to pages 8 to 15 of our Form 10-K for our complete risk factor disclosure.

Participating in today's call with me will be Paul McDermott, President and Chief Executive Officer; Bill Camp, Executive Vice President and Chief Financial Officer; and Laura Franklin, Executive Vice President and Chief Accounting and Administrative Officer.

Now I like to turn the call over to Paul.

Thank you, Kelly. Good morning, everyone, and thank you for joining us on our year-end 2013 earnings call.

Today I would like to spend our time on the future of Washington Real Estate Investment Trust. Many of you on the call today are aware that we've been focused over the past 120 days on a comprehensive review of the operations and performance of every asset in the portfolio. This deep dive provided us greater insights as to the opportunities and risks of each asset.

The process culminated with a presentation of our strategic plan to our Board of Trustees a few weeks ago. As we said in our meetings at [Knavery] in November, we would be in position to speak with greater clarity about the portfolio and any change in strategy going forward after our triage process was complete.

Let me start by saying that we are firm believers in the long-term viability of the Washington, DC, real estate market. We believe this market can support our desired growth over the coming years, and we are committed to our three remaining lines of business: office, retail, and residential.

With that said there will be much more focus in terms of the type of assets that we are looking for in each one of our portfolios, as well as the location of these assets within the region. Let me expand on this concept. In office, the shift away from suburban office into urban Metro-centric locations will continue. In particular, we favor downtown Metro locations, primarily in the CBD and East End.

We will continue to explore opportunities in the other DC sub-markets, but given our current portfolio composition, any future acquisitions in these markets will be as much opportunistic as strategic. Outside of DC, we will continue to seek Metro locations and each opportunity will be evaluated against the backdrop of future market fundamentals.

With the exception of a few assets outside the Beltway in Virginia and Maryland, our office portfolio aligns well with our stated strategy. Over time, we plan to monetize these assets once we have maximized their value for our shareholders, and we can redeploy the proceeds into new acquisition opportunities.

Over and above these non-core assets, we expect to continue to opportunistically recycle assets that have reached their maturity point in the portfolio. Some of these assets may have historically fallen under the buy-and-hold strategy that was once the foundation of this firm. Going forward, we believe each asset must have a definitive life cycle within our portfolio, and this should include a long-term growth profile which generates solid returns for our shareholders.

Our retail strategy will be the one asset class where we expect to expand our footprint beyond the Metro-centric focus. Our 16 shopping centers provide their respective communities a variety of goods and services with a particular focus on daily needs shopping. Our growth strategy will focus on acquiring high-quality assets within these sub-markets that demonstrate strong, affluent, and growing populations.

Our assessment of the existing portfolio indicates that our assets are typically stable and should continue to post reasonable growth over time. Like any portfolio entered, though, we have several assets that we may position for sale when we can realize a premium price over the next few years.

The residential strategy, similar to office, will continue to target assets in urban sub-markets with good access to mass transportation. We are focusing on two types of products. First, we will continue to seek to add Class A product to our portfolio. We recognize that current pricing for Class A assets is challenging, so we will maintain all options at our disposal to add this product to our inventory.

Our other option is to acquire well-located Class B product that can generate solid NOI growth for unit renovations and amenity upgrades. Overall, much of our existing residential portfolio can be categorized into the latter group, and we have been successful with most of our properties over time generating solid growth through unit renovations. A few of our existing assets that have gone through this renovation process may likely be candidates for recycling to generate a source of lower-cost capital for future acquisitions.

In summary, the portfolio triage process we executed allowed us to validate the risks and underlying growth assumptions for each asset in our portfolio. We also came away from this exercise with a better understanding of the opportunities embedded in the portfolio, as well as the metrics that needed to be achieved, asset by asset, to put us on our desired growth trajectory.

Now I will turn the call over to Bill Camp to discuss our performance and guidance.

Thanks, Paul. Good morning, everyone.

Operationally, we accomplished a tremendous amount over the last year. We completed the sale of the medical office portfolio, improved our balance sheet by reducing debt, and had the highest level of commercial leasing volumes since 2007 by signing 1.7 million square feet of new and renewal leases. While same-store NOI growth was flat for the year, there are significant highlights that demonstrate we are continuing to see signs of improving conditions in our portfolio.

The office portfolio led the way, driving our successful year of leasing. Office leasing totaled over 1.1 million square feet, improving same-store occupancy by 140 basis points. While same-store NOI growth in office was slightly negative, it is important to note the NOI in our downturn office assets, representing 22% of our total portfolio, increased 8% over 2012; and occupancy increased over 300 basis points throughout the year.

This strong performance helped us offset the softer conditions in suburban office markets. It also helped us offset the effects of our redevelopment project at 7900 W. Park in Tysons Corner, where we have lowered occupancy to prepare for removing and replacing the skin of the building. Just a reporting footnote -- we removed this building from our same-store pool during the redevelopment. Including 7900 in the pool generates a same-store office NOI change of minus 0.8%.

The residential portfolio performance continues to be a function of our two Connecticut Avenue properties, as we are finishing the HVAC project at the Kenmore and we are beginning unit renovations at 3801. These projects have brought occupancies down in each of these assets to the mid-80% area, with residential same-store portfolio occupancy ending the year at 92.6%.

Same-store NOI performance was minus 1.9% for 2013. Excluding these two properties, same-store portfolio ended the year at 93.8%, and generated NOI growth of 0.6% in 2013.

Our retail portfolio delivered same-store NOI growth of 1.5% for the year, while the fourth-quarter growth rate accelerated to 3.9%. Occupancy generally remained steady throughout the year, ending the year at 91.3%. Leasing activity was good, with approximately 500,000 square feet of leasing completed, representing about 20% of the total retail portfolio.

The operational performance, combined with the impact from the November MLB closing and our three-year long-term compensation plan payout, generated core FFO of $0.42 per share for the fourth quarter and $1.79 for the full year.

Core FAD was $0.23 for the quarter and $1.27 for the full year. Core FAD results remain impacted by higher tenant improvement costs and leasing commissions. In 2013, TI and leasing commissions expenditures totaled $36.3 million, versus $25.7 million in 2012.

We expect these elevated levels for incentive packages to continue into the future until the office market dynamics shift in the favor of the landlord. Currently, we are budgeting approximately $40 million in TIs and LCs in 2014, of which more than half is already committed through signed leases.

We are initiating our core FFO guidance range of $1.56 to $1.64. As most of you would expect, this guidance range is dependent upon our ability to successfully redeploy significant portion of the medical office portfolio sale proceeds into new income-producing acquisitions. We have modeled $250 million to $350 million of acquisitions into this guidance range.

Other assumptions include same-store NOI growth ranging between 1% and 3%, with office ranging between 2% and 4%, retail ranging between 0% and 1%, residential ranging between negative 3% and 0%. Including the effects of our 7900 W. Parker redevelopment project, office NOI growth is expected to range between minus 1% and positive 2%.

G&A is expected to range between $18 million and $19 million. Lastly, interest expense should be approximately $60 million; unless, of course, the acquisition volume materially exceeds the upper end of our range.

Now I'll turn the call back over to Paul.

Thanks, Bill.

Before we open the call for questions, I want to follow up on something Bill mentioned earlier. This Company executed on several key initiatives in 2013. There are two that I feel are noteworthy for our investors.

First, that the leasing volume in our portfolio was near record highs at a time when the market remained challenged. The other is that the medical office portfolio sale accomplished the mission of not only streamlining our operating platform, but allowing this organization to regain its focus and execution on expanding its core lines of business -- office, retail and residential.

We are beginning to see signs of improving market conditions and we will continue to aggressively pursue strategic opportunities to not only put our sales proceeds back to work, but to restore a path of growth for this Company and its investors.

Now we would like to open the call to answer your questions.

(Operator Instructions)

Our first question comes from John Bejjani from Green Street Advisors.

Good morning, all.

Hello, John.

So there been a few stories floating around suggesting that the World Bank's shopping for office space to consolidate the space it currently leases. Can you guys comment on your World Bank renewal prospects?

Yes, John, I'll talk a little bit about that, because it has been in the news a little bit -- first reported, I think, by Bisnow, and I think they were talking about buying a building out in Tysons and all these things. All I can say is, is that we are working with World Bank.

Our building is right across the street from World Bank's headquarters. We just renewed World Bank last year on partial -- they have staggered lease terms in that building. We just renewed them for a six-year term, out to 2019 last year. And rents were pretty much in line with market.

So while I can't anticipate exactly what World Bank is going to be doing, I know they've talked about consolidating. Quite honestly, they talked about consolidating back in 2009 when we re-upped them for five years. So it's a little bit of a wild card right now. We are working with them. Obviously, our building remains an option for them, and that's about all I can say right now.

I will say -- one more thing I'll point out is, after Bisnow came out with their report, the Business Journal came out with a different report that said this now wasn't quite as accurate as they thought. I don't think USA Today or Gannett is going to sell their building as much as they're going to just lease part of it.

Okay, that's helpful.

Can you comment -- do the World Bank leases have any early termination options?

No. I don't think so. So the one -- the next one expires in December of 2015.

Okay. I guess, a couple other leases -- can you guys provide any updates on the General Dynamics leases?

General Dynamics is in two different places. The one out in Monument and Herndon on the toll road, we've known for a long time that those guys are exiting that building; or planning to exit that building. We actually are working out a lease termination with them for a portion of their space, because we've already re-leased it. So I think we'll be successful negotiating with them.

And then the second lease is at Quantico; and quite honestly, even though it comes up this year, the way their contracts are working, they're not ready to talk to us yet.

Okay. And then, last question for Paul -- just a bigger picture question.

Paul, you mentioned that the plans continue shifting from suburban to urban office, but how wide of a cap rate spread between the District and suburbs would it take for you to consider the opposite side of the trade?

How wide a spread?

Yes.

I mean, right now we are seeing -- there's definitely a widening gap between the downtown and the suburbs. So I don't think it's going to be -- quite frankly, I don't think it's going to be something that is going to be on the radar in the near-term future.

This spread right now -- we are seeing downtown deals. If one of the assets is going off at a number that we think it's going to go off compared to one of the most recent trades in the suburbs, I think you could see spreads right now about 350 basis points wide. So as that compresses and comes in, I think we could probably be more opportunistic with our suburban assets.

All right. Great. Thanks.

Thank you.

Our next question comes from Brendan Maiorana from Wells Fargo.

Thanks. Good morning.

Paul, if I heard your comments correctly, it sounds like office, outside the Beltway -- there's really not much that you think is long-term hold for WRIT. Is that an accurate characterization of your comments? And if so, that's probably around $40 million, maybe $45 million of annualized NOI, which is probably give or take $500 million of asset value?

Not all of those assets we would sell. I think what my comments referred to were, increasing the quality of the portfolio and being opportunistic that, when we could monetize some suburban assets that we would indeed liquidate those and try to recycle that capital into downtown assets.

I think right now the biggest challenge, not just for Wash REIT, but for any owner of suburban assets, is really keeping those assets stabilized and occupied. And I don't think we can derive the maximum value by monetizing those assets today.

So our goal going forward in 2014 and into 2015 will be to continue the aggressive leasing efforts that our asset managers are doing right now. And as we can opportunistically recycle out of those, we will do so.

So is it -- go ahead, Bill.

Just one thing to add to that -- keep in mind that, obviously, just from the math that you did, West Park -- 7900 West Park and our Booz Allan buildings in Tysons -- are technically outside the Beltway, but they wouldn't be necessarily assets that we would consider not falling into the strategy.

Sure. Okay.

NOI out there -- when you threw out your numbers, there's some NOI out in the outer ring that certainly fall in the strategy.

That meets the Metro strategy. Sure. Understood.

I know it's difficult, and it sounds like maybe if I'm hearing your comments correctly, that the disposition of those assets may be a little bit more dependent on the opportunities that you see for acquiring assets in the District or closer in.

Is that correct? And we've got to wait until that market maybe creates a little bit more opportunity in terms of how you'd redeploy the assets before we think about selling the non-core?

Yes. I mean, first off, obviously we have the medical office proceeds that are our utmost priority. And we will continue, and are, aggressively pursuing right now opportunities within the confines of the District.

Secondly, we look at our current portfolio, quite frankly, as our lowest cost of capital. When we monetize those assets, we think that if we do our jobs correctly that we can recycle those assets and match fund to go into probably more urban, Metro-centric locations. And that is what we are going to attempt to do.

The second tranche of the MOB closed, I think, sometime in mid to late January. I think you had the reverse 1031 on the Paramount deal that you guys did late last year. What is remaining to find, to identify in terms of dollar amount, acquisitions? And what is the time frame that's left to be able to identify those before you have to pay tax?

Let's do the dates first, and then we will talk about amounts. So the dates -- the way that everything works out, the identification date is March 7, but as you know you can put a list together. There's a couple different ways you can put that list together, and obviously you don't have to close on everything that's on the list.

In terms of amounts, we have two buckets. One is roughly $80 million and one is roughly $115 million. The first bucket, we did the reverse, as you mentioned, so that was $48 million of it. So that leaves, call it the better part of $30 million, roughly. And we are working on some things that we are pretty confident that the rest of that bucket will be taken care of.

The second bucket of $115 million is the one we are working on, and we are working diligently to make sure we have identification of the properties that we are pretty certain that we can close.

Okay. And then just last one.

Bill, in the guidance, what is the timing -- the range on the acquisitions, the $250 million to $350 million, I guess at the midpoint? What is the assumed timing of when that would close?

We have about half of the range -- a little better than half of the range -- built into the first half of the year, because we have to close the 1031 money by July 20. So it's kind of spread out, beginning of second quarter and beginning of the third quarter -- right at the beginning of the third quarter, assuming it closes before we hit the July 20 date.

And then the rest of it is towards the end of the year, and it doesn't draw much of an impact to the 2014 numbers as much as it does the 2015.

Okay. I'll get back in the queue. Thanks, guys.

Thanks.

Our next question comes from Dave Rodgers from Baird.

Good morning, guys.

Paul, maybe your comments about what you view, now that you finished the process, is non-core. Can you quantify that in dollar terms?

You get a little bit of the way there on the office side, but can you give us the broader sense of the portfolio and what doesn't fit that strategy?

I don't have specific numbers in terms of what doesn't fit the strategy and what does. What I do have is, that after going through the triage process that we discussed, obviously we're going to continue on our path of which assets are inside the Beltway and outside the Beltway. We're going to be selective about the ones that we liquidate there.

In terms of the multifamily properties, there aren't many that really don't fit our strategy right now. So the question is, really, we have to -- we are, like a number of other apartment owners in Washington, we are keeping our eye on the supply pipeline that is delivering. And that's going to impact, quite frankly, how much we add in terms of Class A inventory and then how quickly we continue to implement our unit renovation program.

In terms of our retail portfolio, I think there are some assets that we will position for growth over the next one to two years. But again, the bulk of that portfolio, I think that we are comfortable with its performance right now. But like any owner we're going to try to be opportunistic and sell when we think we can command a premium for the assets.

Great.

And maybe on multifamily, the same NOI guidance -- 0% to negative 3%. It looked like the two Connecticut Avenue assets had about 2.5% impact in 2013. Can you quantify the impact on your 2014 expectations?

And then, maybe more broadly, talk about the market conditions for apartments and how you see that same-store NOI trending throughout the year? Does it get better by year end? Or does it continue to struggle into 2015?

For residential, Dave?

Yes.

Let's talk about the two buildings first. One, Kenmore, is under the HVAC renovation, and just so everyone knows on the call, that renovation is fairly extensive. It's actually doing core drilling in every apartment, both ceiling and floor, and putting new HVAC in each unit of the building. So it's a fairly extensive construction project.

Anyway, with that said, it's done. We're trying to flip the switch to the new system in April of this year, ahead of the new leasing period. So that building we fully expect to perform better going forward throughout the spring and the summer leasing season in 2014. So to your question, that building should improve as the year goes on.

In 3801, it's going to be a matter of, we're doing unit renovations on the empty units right now; and we are just beginning that process. Obviously, we expect to fill renovated units. The question will really be is, how many more units can we get our hands on throughout the year and turn and make them a more competitive product for that building and that market?

So we have -- quite honestly the answer to your question in a long way -- or a shorter way is, we expect both of those assets to materially gain ground on the occupancy level. I don't think rents necessarily will be moving all that much in those buildings, but we are going from zero right now to a real rent.

And what's happening with market rents for multifamily in your portfolio, excluding the renovation impact in revenues, if you can separate it out, or if you have any idea? And again, are those getting better, worse, stabilizing?

You know, the market rents in multifamily have been softer. Delta came out with a fourth-quarter report --

The Class A rents in the Washington Metropolitan area are probably down almost close to 3% after the fourth quarter. I think that, given the supply pipeline, and I think the number that's out there that's being -- becoming more and more consistent, of 39,000 units being added to the inventory -- I mean, when we look at adding Class A inventory right now we are not showing a lot of growth in our underwriting for any of our new acquisitions.

So like everybody else, we are trying to gauge how much the supply is going to impact the movement on rents. But we don't think it's going to have a positive impact in the near term.

There are certain sub-markets out there that we think are less impacted than others. And there are some sub-markets that we don't have exposure to right now that we would like to have some exposure. So the interesting part will be, can we find product in those sub-markets that we think are good long-term holds.

Last question is on the office side, and thanks for that color.

Obviously you've done a great job leasing up office space over the course of the last year. Economics on the leases continue to be more challenged.

The market has been tough. Obviously, the economic margins on the leasing has been challenge because of that, but is there anything within your portfolio, or the spaces that you are leasing, that maybe exacerbate the decline in the economics in office? Or is that the reality of DC today?

I think that's just the reality of DC today. It is hand-to-hand combat to get a deal done. I think the good news for us is, if we step back and look at the DC office market, we did have positive absorption this year versus last year.

We are seeing full-service rents in that $49 to $50 delta. In our portfolio, everybody is pinging hard on DC because of the GSA. We obviously have minimal exposure to the GSA in our portfolio, but I don't really consider the GSA this year to be a market mover. They're going to continue on their trend of consolidation and short-term renewals.

We are really looking at -- we want to be downtown, and what is the supply look like going forward. I think you only had three buildings this year deliver -- 1700 New York and two buildings in NoMa, for just over 600,000 square feet.

Of what is on the board delivering in 2014, I think 80% of it is pre-leased. I think when we look at downtown DC, we don't really see a supply issue. And hopefully, I think, there was some good deals already done, inked in the first quarter this year.

So we are expecting to see better leasing results, both in our portfolio and in the marketplace. And we think that we're going to end the year probably just around a 10% vacancy, maybe a little bit lower. And I think a 10-year average in Washington, the vacancy's around 9%.

So I think we're approaching what our historical average is to be, and we're optimistic about it. But we make no mistake that it's going to be -- we're going to have to be aggressive to keep our assets leased.

Thank you for the detail.

(Operator Instructions)

Our next question comes from Aaron Aslakson from Stifel.

Good morning. Thanks for taking the question, guys.

Bill, you alluded to about $40 million of TIs and LCs expected for 2014. How does that compare with -- how much pressure does that put on the dividend going forward? It looks like that could be below that level going forward.

That is a good observation.

I will say that since we sold $30 million of NOI, and TIs are up basically $10 million from historical averages or even more, a little bit more, than $10 million, it's going to temporarily, I think, put pressure on. But keep in mind that $40 million -- a lot of that is already committed and done in leases, and we think we're going back to a more normal level.

And the reason I say that is, the most expensive deals we've done have been deals either downtown or inside the Beltway. And those deals downtown were 95%-ish leased, so there's not a lot of holes left.

Quite honestly, a lot of the renewals that we are trying to knock out for 2014 in the areas that have higher rents and higher TIs -- those are ready been done. So we think were going to fall more towards a more normal level. And then once we replace the assets, the proceeds of the medical office sale back out into the market and new acquisitions, I don't think will be having this discussion anymore.

Okay. So it's temporary enough in nature. It's not really a concern?

Yes.

Great.

And then in terms of net effective rents in the office sides, are you seeing any positive movement in any of your markets? Or are you seeing still declining net effective?

The only thing I can say, Aaron, is that when you get your buildings into that low-90%s to mid-90%s type occupancy, you can start moving rents as people want to be in your buildings. And we're seeing some of that downtown versus what we were signing a year ago.

But it's hard to say that you're getting any kind of market movement in rents.

And you are talking about all your sub-markets, not just downtown? (Multiple speakers) How much negative net effective mark to market are you seeing there in the suburbs? If you go to Virginia, what is that looking like?

It varies by lease and by building, quite honestly. Obviously, anything that's coming due that's a shorter term lease is already been marked down, so your impact is less.

On average? On average we are seeing rents in office down single-digit-type negative on a cash basis and still positive on a GAAP basis. It's been that way for better part of two years, if I look back among what we've had historically and what we've talked about on the various calls.

And I think in the supplemental package it goes back five quarters and you can see where it's been. I think that trend will continue for the foreseeable future.

Okay. Thank you, guys.

Sure.

Our next question comes from Bill Crow from Raymond James.

Good morning.

Paul, as you proceeded to the triage process, as you call it, was there any consideration given towards further simplifying and concentrating the strategy by going along that path you went through with the industrial and MOB sales, and just going down to two property types, either on the shorter-term basis or maybe given the proceeds you already had to invest, two or three years out?

How would that process play out?

We did go through the entire -- as I said in my comments, we did go through each product and each asset. I think our conclusion remains that we are very comfortable with the live/work/shop strategy.

We look at it as not all cylinders in the engine are going to fire at the same time; and I think it offers our portfolio some balance. So I'm very comfortable staying with that strategy right now. We don't have any plans to execute out of one of the three remaining asset classes.

Okay, thanks.

And the other question is, if you could tell us what you're seeing trends on new multifamily starts up in that region? Is there any let up in sight?

No, there's not.

I think if I look at the fourth quarter, our typical absorption per quarter in this area is just over 1,400 units, and we had over 3,800 units start in the fourth quarter. So we are aware of the oncoming supply challenge, and as I said earlier, we will address it in any type of acquisition or any type of unit renovation or expansion of the inventory in our multifamily portfolio.

Thank you.

Sure.

(Operator Instructions)

Our next question comes from Mike Roarke from McAdams, Wright, Reagan.

Good morning.

Hello, Mike.

Do you think we are at the bottom for where funds from operations are? And I guess what I mean by that is, what do you think the odds are that this time next year you will be guiding for $1.40 in funds from operations or something?

It's a hard question to answer, but I would say it's highly unlikely. I don't see any reason that we're selling another portfolio of properties. I can't imagine that it continues to fall.

The only reason there's any hesitation in my mind is that we need to put these MOB sale proceeds back to work in the marketplace. And the guidance that we've given is dependent upon that. And if we don't, then it could be a little bit lower than what we've said.

But I can't imagine that we're here a year from now talking about lower guidance.

Okay.

So is this, then, a comfortable level to consider a base from which you're able to resume growth?

That's what we think.

Okay.

So as part of your review plan, I had been very hopeful that you would come out with mid-range targets that investors could keep pace with as far as how you are going to grow revenue, how you are going to grow NOI, and then eventually resume growth of the dividend. Did you establish that as part of your review process? Are you able to share any of those mid-range ambitions?

Well, certainly we're not giving guidance out longer than one year. It is really hard to predict with the markets the way they are today. Our goal, of course -- and certainly it's something that we talk to our Board about every quarter -- is to get into a position to grow that dividend.

So you don't have any mid-range plans, then, to share with us?

Not at this time. You are talking about going out two or three years and telling you what the forecast looks like?

Were you not able to come up with those? Or --

I have them, but we don't share them.

You have them, but you don't share them?

No. We share them with our Board. We have long-range forecasts, but they're highly dependent on acquisition volume, disposition volume. They're harder to predict with any kind of certainty.

Okay. Being able to share those, I think, would really help in developing a better understanding of where you want the company to be, fundamentally, over the next few years, just from an outside investor standpoint.

I understand.

Thanks.

At this time we have no further questions. I would like to turn the call back over to Paul McDermott for closing comments.

Thank you very much, everyone.

Thank you. This does conclude today's teleconference. You may is connect your lines at this time. Thank you for your participation.