Equity Commonwealth (EQC) 2016 Q4 法說會逐字稿

Greetings, and welcome to the Equity Commonwealth fourth-quarter 2016 earnings conference call.

(Operator Instructions)

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sarah Byrnes, Vice President Investor Relations. Thank you, you may begin.

Thank you, Christine, good morning, and thank you for joining us to discuss Equity Commonwealth's results for the year and quarter ended December 31, 2016. Our speakers today are David Helfand, President and CEO; David Weinberg, COO; and Adam Markman, CFO.

Please be advised that certain matters discussed during the conference call may constitute forward-looking statements within the meaning of Federal securities laws. We refer you to the documents that we file from time to time with the SEC, which refer to risk factors that could adversely affect the Company's operating results and financial condition. The Company assumes no obligation to update or supplement any statements made today that become untrue because of subsequent events or otherwise.

Today's remarks also include certain non-GAAP financial measures. Please refer to yesterday's press release and supplemental containing our fourth-quarter and full-year 2016 results for a reconciliation of these non-GAAP performance measures to our GAAP financial results, which is available on our website. With that, I will turn the call over to David Helfand.

Thanks, Sarah. Good morning, and thank you for joining us. I'll begin with a brief comment on market conditions, then provide an update on our 2016 accomplishments, then address our 2017 priorities.

The US economy grew 1.9% in the fourth quarter, resulting in 1.6% GDP growth in 2016. The year produced a slower rate of growth than the 2.4% achieved in 2015, and represents a continuation of the sluggish pace of expansion over the past seven years, with GDP growth averaging just 2.1%. The recent US election and the likelihood of substantial policy changes, has elevated the degree of uncertainty surrounding the economy's outlook.

The market reaction so far has been bullish. Since the November 8 election, the 10-year treasury has risen 66 BPs to 2.5%, and the S&P 500 is up 11%. REITs have lagged the broader market, rising 6%.

In terms of US office fundamentals, 2016 was a decent year. National net absorption totaled 80 million square feet, about 20% lower than the prior year. Rents grew 3.2%, a slower pace than the 4.4% achieved in 2015. Improvement in occupancy on rents is likely to continue to moderate in 2017, with a projected delivery of 90 million square feet of new supply, a 50% increase over 2016.

Switching to the real estate capital markets in 2016, transaction volume was healthy, but did decline about 10% from the cyclical peak in 2015. The investment sales market seems to have settled into a slower pace, higher borrowing costs, fewer bidders, and less aggressive underwriting is translating into fewer completed transactions, and less stout asset pricing, particularly in outside the gateway markets.

At EQC, in 2016 we continued to make progress repositioning the Company. Our emphasis on active asset management has led to strong leasing results and execution on dispositions.

Leasing in 2016 totaled 2.2 million square feet, with 1.4 million square feet signed in the fourth quarter. These efforts have mitigated expiration risks, extended term, and led to substantial value creation. 2016, we sold $1.3 billion in property in 19 transactions. In the fourth quarter, we completed three sales totaling $118 million, and last month sold one asset for $60 million.

I'll briefly cover details of these recent deals. We closed on the sale of 7800 Shoal Creek, 100% leased, 152,000 square-foot office building in suburban Austin, for $29.2 million, pricing was in the mid-7% cap rate range. We sold 1200 Lakeside Drive, a 260,000 square-foot 100% leased single-tenant office building in Bannockburn, Illinois, for $65.3 million, with pricing in the low-7% cap rate range. We also closed on 6200 Glenn Carlson, a 338,000 square-foot, 100% leased industrial building in St. Cloud, Minnesota, for $23 million. Pricing was in the 7% cap rate range.

Finally, subsequent to quarter end, we sold 111 Market Place, a 589,000 square-foot building in Baltimore, for $60.1 million, pricing was in the low-5% cap rate range, which includes adjustments for the scheduled move-out, and partial backfill of the property's largest tenant. We currently have eight properties totaling approximately 3.5 million square feet in the market for sale.

Since taking responsibility for EQC, our Team has completed $4.2 billion in total dispositions. We started with the goal of repositioning the portfolio that just two years ago had totaled 156 properties and 43 million square feet. Today, we own a better and more concentrated portfolio of 32 properties, comprising 15.5 million square feet. Two years ago, our five largest markets; Philadelphia, Chicago, Denver, Austin and Bellevue, represented 40% of annualized rental revenue. Today, those markets account for over 70% of ARR. We made meaningful progress to rationalize the Company's footprint through dispositions of unwanted assets, and improved the physical quality of our portfolio, as well as the attractiveness of the markets we do business in.

With the success we've had executing on dispositions, and the strength and liquidity of our balance sheet, we are in a position today to increasingly shift our focus to capital allocation. To that end, we've completed the conversion to an UPREIT in the fourth quarter, enabling us to acquire assets in a tax-efficient manner. Continuing to reposition the Company going forward, will be a more balanced effort between leasing assets to create value, selling assets when we are able to achieve attractive pricing, and evaluating a wide range of opportunities to deploy capital.

Finally, I would like to acknowledge the commitment and hard work of the EQC team, 2016 was a productive year for us, and we continue to focus on long-term value creation going forward. With that, I'll turn the call over to David.

Thank you, David, and good morning, everyone. I will begin by reviewing our fourth-quarter and full-year leasing activity, and provide an update on our five largest markets. Then I will give an overview of our lease roll for 2018.

The same property portfolio was 91.1% leased at the end of the fourth quarter, up 30 basis points from the third quarter, and down 70 basis points from a year ago. During the fourth quarter, we signed 1.4 million square feet of leases, including 220,000 square feet of new leases, and 1.2 million square feet of renewals. Our largest lease during the quarter was an early 10-year renewal of a 1.1 million square-foot tenant at Research Park in Austin. Our largest new lease during the quarter was a 76,000 square-foot 15-year deal at 8750 Bryn Mawr, in Chicago's O'Hare submarket.

For the year, on a same-property basis, we signed 3.2 million square feet of leases, representing 20% of our portfolio. This consists of 864,000 square feet of new leases, and 2.3 million square feet of renewals. For leases signed this quarter, rental rates increased 20% on a GAAP basis, and 7% on a cash basis. For the year, they increased 11% on a GAAP basis, and were flat on a cash basis.

Overall, leasing fundamentals in our five largest markets are good. Demand in Austin kept up with supply, with 2016 net absorption of 1.7 million square feet. This market ended the year with a vacancy rate of 9.2%, 40 basis points lower than a year ago. The vacancy rates in Bellevue, Chicago and Philadelphia, are all around 11%.

The new supply in Bellevue is being absorbed, and this market's outlook is much improved from a year ago, when three speculative towers, over 1.5 million square feet were under construction. These buildings are now about 70% leased, and most of this occupancy is from new and growing tenants.

Chicago had a good year with 2016 net absorption of 1.4 million square feet. The CBD is still benefiting from in-migration of suburban tenants. Looking ahead, it is likely that Chicago will soften, given the growing availability of quality sublease space, and over 4 million square feet of new construction delivering in the next two years.

Philadelphia continues to do well, net absorption in 2016 was about 345,000 square feet, and the market is also benefiting from in-migration of tenants, which represented about 20% of all leasing activity the last two years. At 1735 Market Street, Philadelphia, we signed 130,000 square feet of new leases in the fourth quarter. Bringing the full year to 200,000 square feet. This property's leased occupancy was 74.4% in the fourth quarter, which is 760 basis points higher than the third quarter.

Denver's vacancy rate remains around 15%. As we had previously discussed, this market has been impacted by new supply and the downturn in the energy sector. 17th Street Plaza, a 670,000-square-foot office tower in Denver has 137,000 square feet of space to lease. This property is one of the top buildings in a competitive market, and we will be aggressive to get deals done.

Finally, I would like to comment on our lease roll of 2017 and 2018. This year, we have 874,000 square feet rolling, and expect to get about 60% of it back, worth 3.7% of our leased square footage. Most of these known vacates are front-end loaded, and we expect our leased occupancy to be lower next quarter.

Through the end of this month we will get back about 370,000 square feet, including 179,000 square feet in Ann Arbor, and 73,000 square feet in Denver. We also got back 48,000 square feet in downtown Austin, though we have signed a 21,000 square-foot lease to backfill a portion of this space.

In 2018, excluding the recently-sold 111 Market Place, we have 750,000 square feet rolling, or 5% of our leased square footage. As mentioned on our last call, in October 2018, M&T Bank will vacate 211,000 square feet at 25 South Charles in Baltimore. The balance of the 2018 roll consists of space that's less than 40,000 square feet.

Turning to this year, our focus is the same, we want to lease space, continue to reach out to the leasing community, emphasize our responsiveness and speed of execution. We're looking to reinvest in our properties, where it's necessary to maintain their competitive position, or we have seen an attractive return on investment. We will continue to review our portfolio for disposition opportunities, taking into account pricing and the risk profile of each asset.

As David referenced, today we have a higher quality of portfolio in fewer and better markets that we expect will provide greater rent growth and stability, going forward. In the last two years we have made a lot of progress, and we look forward to continuing these efforts in 2017. With that, I will turn the call over to Adam.

Thanks, David. Good morning. I will review our financial results for the quarter and year.

FFO was $0.22 per diluted share in the fourth quarter, compared to $0.25 in 2015. Normalized FFO was $0.23 per share, compared to $0.27 a year ago. This decrease in normalized FFO was primarily due to the success of our disposition program, partially offset by lower preferred dividend distributions, following the Series E redemption, interest expense savings from debt repayments, and an increase of lease termination fees.

Disposition activity alone would have caused an $0.18 per-share decrease in normalized FFO. Savings from retirement of debt and preferred, and higher interest income from our significant cash balance, offset the vast majority of this decline. FFO for the full year was $1.13 per diluted share, compared to $1.53 in 2015.

Normalized FFO was $1.18 per share, compared to $1.70 the prior year. The explanation for the decrease in normalized FFO mirrors the fourth quarter. A decrease from property sales partially offset by interest expense savings from debt repayments and lower preferred dividend distributions.

Same property NOI was up 13.9% in the fourth quarter, compared to a year ago. The growth was driven by higher rental revenue, a significant portion of which was due to an increase in lease termination fee income. Same property cash NOI, which excludes lease termination income, increased 5.1% when compared to the fourth quarter of last year.

The increase was largely due to rental income from leases coming out of free rent and contractual rent bumps. For the full year, same property NOI was up 3%, and same property cash NOI declined 2.7%.

Neither cash nor GAAP NOI currently reflect an additional 400,000 square feet of new leases, which have recently been signed, but have not yet commenced. Most of this space will take occupancy towards the second half of the year, with the balance coming in 2018.

Additionally, cash NOI does not yet include revenue from approximately 750,000 square feet of leases in free rent periods during the quarter. Looking for forward, free rent will increase in 2017, largely as a result of the 1.1 million square-foot renewal that was signed in the fourth quarter. The combination of rising free rent and known move-outs in the first quarter of 2017 will weigh on NOI for the year.

Moving to dispositions, we sold $1.3 billion of properties in 2016. These sales generated a taxable gain, which was offset by a portion of our net operating loss carryforward. As a result, no common share dividend is required or will be paid for 2016.

We continue to improve our balance sheet. In the fourth quarter, we repaid $418 million of debt, and for the year we repaid $557 million. We also redeemed all $275 million of our Series E preferred shares in May. We reduced our total debt and preferreds by 39% during the year, generating annualized savings of over $53 million.

In May, we have a $41 million mortgage loan maturing on Parkshore Plaza in Sacramento, California, so, we are evaluating our options for this property. We also have $425 million of senior notes that are prepayable at par in the third quarter. These notes have a weighted average interest rate of 6.3%.

Our current cash balance is approximately $2.1 billion or $17 per share. We evaluate various uses for our cash, including new investment opportunities, debt repayments, special distributions and share buybacks. In the fourth quarter, we repurchased 1.5 million shares for $43 million, at an average price of $28.81.

For the full year, we repurchased 2.5 million shares for $69 million, at an average price of $27.68. Since the buyback program began in August 2015, we have repurchased a total of 5.9 million shares, or 4.5% of shares outstanding for $157 million. There remains $107 million authorized for share repurchase.

We are well positioned for future opportunities. Our balance sheet is strong, with just $1.2 billion of debt, and $2.9 billion of capacity, between our cash balance and undrawn revolver. This liquidity and balance sheet flexibility are meaningful competitive advantages. Thank you, and with that, we will open it up to Q&A.

(Operator Instructions)

Manny Korchman, Citigroup.

Good morning, everyone.

David, in your prepared remarks, you commented that you continue to evaluate a wide range of opportunities to deploy capital. Is there any change in how wide that range is, or where your -- the opposite of how you are narrowing that focus and what you are looking more at? Or [what's that] right now?

Good morning, Manny.

No. Really, no change. I think we've tried to be consistent in talking about focus on capital allocation and investment opportunities when we have talked about focusing on office, but not exclusively; that we would not constrain ourselves to just the current business we are in. Having said that, we would look for something where we have an edge, something where there is true value creation, so we have looked at a wide range of opportunities; many of them are office related, but a variety of opportunities not in the office space sector, as well.

Switching to the transaction markets, are you seeing any changes in the buyer pool of your -- marketing your assets to?

Hey Manny, it is David Weinberg.

I'm not sure we're seeing a change in the buyer pool. I think what we're seeing is something we commented on in our last call, more of a change in the mindset. Fewer buyers, more risk averse; and then with the little run up in interest rates we've had, depending on what you are selling, where you are selling it, it could impact ultimate pricing execution.

One more for you, David.

The lease term fee, the large lease term fee in the quarter, could you elaborate on more detail on where that was, and how much that impacted occupancy in the quarter?

We had two tenants that terminated during the quarter, both of which were backfill opportunities for us. One in a recently sold building in Baltimore, 111 Market Place; and the other at 1735 Market Street in Philadelphia.

The occupancy question I don't have at my fingertips, but those were the two large terminations during the period. But again, because they were backfill opportunities, leased occupancy would not be impacted by those terminations.

Thanks, Adam.

Jamie Feldman, Bank of America Merrill Lynch.

Thanks, and good morning.

So, can you just walk us through, I know you outlined the large expirations, both in 2017 and 2018, but maybe give us some color on leasing prospects? And your thoughts of -- are these assets you plan to hold or potentially would sell?

This is David.

Let me walk you through the roll the next two years, and try to address some of your questions. As I said earlier, in 2017 we had 874,000 square feet rolling. We expect to get about 60% of that space back, which is about 525,000 square feet, or 3.5 % of our lease square footage. Much of that is coming back as we speak. So, if we take it one at a time, our large tenant in Ann Arbor will be vacating, actually already has vacated, that 179,000 square feet. I think, as I said either in meetings or on the last call, we are expecting to fill up that space one lease at a time, half a floor and a floor. But having said that, we are always looking at our assets and evaluating whether it makes more sense for us to hold onto them, given the risk profile, as opposed to the price we could achieve selling it as is. So, I cannot speak specifically to what we will do with that asset. As long as we own it, we will try to lease it.

Another large block we are getting back this month is at 17th Street Plaza in downtown Denver. That's 73,000 square feet. That is lower floor space, so that would be priced at a lower price point than some of the deals we've been doing recently at the upper floors. That market has slowed down; it is competitive, but we like that asset a lot. In fact, we're spending money on it now to improve the lobby and enhance the Plaza to maintain its competitive position, and we will work to get deals done there.

I also commented on some space we're getting back in downtown Austin. That market is still doing well, despite the supply risk overall in Austin, and we've already backfilled 21,000 square feet of that 48,000 square feet. In terms of the 18 reliability (inaudible) the specifics, just because our portfolio is continuing to evolve, I did note out of these 750,000 square feet rolling, it just so happens we only have one large tenant, large being greater than 40,000 square feet, and that one tenant, M&T Bank, will vacate 211,000 square feet in October. And like I said with our Ann Arbor asset, we will have to evaluate that office building in downtown Baltimore, determine whether it is better to sell it as is or whether we wanted to take the risk and re-lease it, and perhaps sell it at a later date.

Okay, that's very helpful, thank you.

Maybe just some color on post-election, if you think about your core markets. Has leasing activity picked up? Has it been flat? Have there been any changes in tenant sentiment?

I don't think we've seen anything yet to suggest there have been changes. We have a very strong leasing quarter in the fourth quarter. I would say our pipeline is reasonably healthy right now. And like you and everyone else, we are going to continue to monitor it for any changes coming out of the election.

Okay. Last question for me.

It looks like you did buybacks this quarter at north of $28 a share. I think in the past you had only been buying below $26. Can you just talk about your thought process buying at this price versus prior prices? And maybe what we can expect to see going forward?

Sure, this is David.

I think we have tried to evaluate the opportunity to buy back stock in the context of where are other opportunities, but as the portfolio has changed, as we discussed on the call; as cash has been a bigger portion and the quality of the assets have improved, the price at which we are willing to buy back has increased. So prices that we paid for stock in the past quarter represent what we think are a good investment in assets we know well and performance that we see going forward, and we like the stock at those levels.

Okay. Then, I guess, just thinking about allocation, at what point do you feel like too much cash is on the balance sheet? Maybe a special dividend? Or some other -- I guess that's your option?

It is Adam.

As we've said when we really began this journey, we are going to continue to evaluate all opportunities as they come. So, that's going to be looking at the opportunities to repay debt, looking at the share buybacks that you just mentioned. And of course, looking for new investments, for assets, for portfolios, for M&A opportunities. And I think, until we are through all that, until we've exhausted those opportunities, we're going to play it the way we have been playing it, which is to accumulate dry powder, to have balance sheet flexibility, and to be ready to take advantage of any opportunity that comes our way.

Okay, all right, thank you.

Jed Reagan, Green Street Advisors.

Good morning, guys.

You mentioned the increase of aversion to risk among buyers, and maybe some impact on pricing from rates having stepped up post-election. Have you noticed that hurting the pricing you guys have been able to achieve on deals recently?

Jed, it is David.

I guess the best way for me to answer it, is to compare the last four to six months up to the prior year and a half. That's because I think even the last call and the one before that, we started commenting on noticing a slowdown of disposition market. Up until mid-2016, I would say we were executing at a very high success rate, at prices at or exceeding our expectations. More recently, it began before the election, we did notice a slowdown in transaction activity, volume being lower than it had been, fewer bidders showing up, more conservative underwriting.

Having said that, that capital is still readily available, it is still being priced at very attractive interest rates compared to historical rates, and there's a lot of equity searching to be appraised in real estate, so it becomes very deal specific. And I would say over the last three to six months, pricing may have not exceeded our expectations, but more often than not it has been at our expectations. But there have been deals where it has been below, and we have chosen not to execute.

Would you say that softness has been accelerating? Or conversely, maybe post-election, some moderation of that trend?

I cannot think of any deals we've taken to market or priced post-election, so I don't think I have data points to identify any trend yet.

I would say in general, Jed, to address your question, no acceleration and no additional softening. Just a flattish kind of feeling; there's still demand, but it is not robust. But it is also not declining in terms of interest in placing money or underwriting.

Okay, that's helpful.

And just going back to external growth. Are you most focused on private or public market acquisition opportunities? And then, can you elaborate on which non-office property types look most intriguing today? And would those opportunities be focused on the markets that you are targeting on the office side?

We are looking at both public and private opportunities, as you imagine. I don't think it is constructive to talk about what sectors look more attractive or less. We are really looking for a specific opportunity, a specific dislocation, some way to play where we can create value with the assets we have, and I'm not sure the broader picture is as important as finding the right opportunity to go after.

Could that opportunity potentially change your knitting all together, where you all of a sudden become a residential-focused REIT? Or would it be just maybe a diversified story?

If we have found the right transaction, it may change what we do, meaning our focus going forward might not be office, if that's what your question was.

Okay, yes, that's what I was getting at.

Then just on the stock buybacks, why not do that more aggressively at this point, just given that you've got the cash and there may not be tons of distressed opportunities out there at the moment?

We have retired 4.5% of shares outstanding, compared to where we were 2015, when we started this program, so I think we've been pretty aggressive. I get your question, but as I said before, we're always weighing this use of capital versus alternatives, and we have authorization to buy back more now, and we are continuing to have this discussion with our Board, and we will let you know where we end up at each quarter.

Okay, thanks. Maybe last one.

Sounds like the NOI growth trajectory might slow down this year, just from the 5% from the fourth quarter. Should we think of that as potentially a negative number on an absolute basis? Or maybe positive, but just lower than that 5%?

I get the question, and why it is being asked, but we don't provide guidance. I think there's some good pieces of information to help set where your expectation should be, at least directionally, and I think that's as far as we go with that.

Fair enough. Okay, thanks, guys.

Mitch Germain, JMP Securities.

Good morning.

So, last quarter you had 12 assets for sale, 4 sold and I guess you have 8 now. Is it the population of those assets that were for sale as of the time of your third-quarter call versus today, are those the same 8 assets?

They are not the exact same. There have been some changes.

Were those changes a function of what you guys saw in the market during the marketing process, i.e., softer bidding pool, and potential pricing? Or anything leasing-related, anything that you could share?

I think it comes down to pricing did not meet our expectations, and we decided there may be alternative way to maximize the value of the asset, either by working it a little more or perhaps taking it back to market when we think the dust settles with respect to that asset, that market.

Got you, I appreciate that, and last one for me.

Say we'd sell these 8 assets; you guys are left with 25. In your mind, how much of the portfolio at that point do you want to -- you are willing to live with? Versus how much you still consider to be somewhat not core.

I'd say we're willing to live with all the properties we own today, which is 32. We've never really circled a core to not-core portfolio, per se. We have identified smaller assets, non-office assets, that we think we shouldn't own long term, and we are continuing trying to sell those. But living with these assets, 32 properties, 15.5 million square feet, 91% leased, we are very comfortable where we are.

Thank you.

John Guinee, Stifel.

Great, thank you.

First, Adam, you mentioned roughly $465 million of maturities repayable at par sometime in 2017; you did not mention the $400 million of term loans. Are those open to repay any time? And why wouldn't you repay them?

They are open, and clearly, that is one of the many things that we evaluate in terms of uses of our cash.

Okay. Then refresh our memory as to what's going on in Bellevue with Expedia, and Boca Raton with Office Depot.

Sure, John, it is David.

In Bellevue Tower 333, or the Expedia building, Expedia's lease expires December 2019. As we've discussed before, they did buy a campus in Seattle of 40 acres, and the expectations are they will vacate at the end of their lease. There's a chance they'd keep a satellite office in Bellevue; too early to know. But as I said in my prepared remarks, the outlook on Bellevue right now is much better than it was a year ago. So we've got some time, we are in front of Expedia, and we will have to see how that plays out.

Then Office Depot, they leased a 640,000-square-foot three-building property in Boca; their lease expires October 20, 2023. Once again, we are in front of them, but with that term it is too early to know what their plans are at that time.

Do they occupy the entire building?

They do. It is actually three buildings connected to form one property.

Then is the Research Park, the 1.1 million square feet, where I think Flextronics just renewed, is that in fact a flex building? Or is it a low-rise office building? Would you describe it in a little more detail?

Yes, I would describe it as an industrial building that's been expanded over time. It has got some second-floor office space, if you think about this building out some commodities space than an industrial building, how sometimes you see that. Then, more importantly, it sits on about 167 acres of land.

With additional FAR?

We believe so.

Okay, thank you.

Jed Reagan, Green Street Advisors.

Hey, guys, just following up on that, now that you've gotten that big renewal done, is that a core part of the portfolio, that flex building in Austin?

We like Austin. In terms of that asset specifically, now that we've got the renewal done, what we are really focused on is better understanding the development rights. Not necessarily because we are going to develop it, but if we choose to sell off parcels or the whole property, we want to make sure we are maximizing the value.

That make sense. I think you've got at least one asset on the market in downtown Philly. Is there any update you can provide on that process?

It is still in the marketing process, or the sales process; and as we said earlier, things are just taking longer.

Okay. You still feel good about that as a non-core disposition at this point?

I feel good either way. Either we sell at a price we expect to sell it for, or we hold it, and given all the leasing we've done there, there's a lot of embedded growth at that property. So we are good either way.

Okay, makes sense.

And there has been talk that 1031 exchanges could be under the gun if there's major tax reform in the new administration. How are you guys thinking about the potential implication of that for the transaction markets? And could that affect your capital market strategy at all?

On the sell side, we've closed some 40 different transactions over two years. I don't think, I may be wrong, off by one, I don't think we've ever had a fire structure 1031 exchange, so we have not seen an impact to date on that whole 1031 fire mentality, so I would not expect any impact going forward for us. But things could change; don't know.

Okay. Thanks very much.

Mr. Helfand, we have no for further questions at the time. I would now like to turn the floor back over to you for closing comments.

Thank you. Thanks to everyone for joining us. We appreciate interest in Equity Commonwealth. Thanks.

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.