Gladstone Commercial Corp (GOOD) 2016 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Gladstone Commercial Corporation's second-quarter earnings ended June 30, 2016 earnings call and webcast. (Operator Instructions) As a reminder, today's conference call is being recorded.

I would now like to introduce your first speaker for today, David Gladstone. You have the floor, sir.

Thank you, Andrew. Nice introduction and we thank all of you for calling in. We always enjoy these times that we have you on the phone and wish we had more times to talk to you.

If you are ever in the Washington, D.C. area, we are located in a suburb called McLean, Virginia, and you have an open invitation to stop by and see us if you are in this area.

You will see a great team at work. We have over 60 members of the team now, so it is a strong, growing group. We will now hear from Michael LiCalsi. He is our General Counsel and Secretary. Michael is also the President of Gladstone Administration, which serves as the administrator to all of the Gladstone funds and related companies as well. He will make a brief announcement regarding some of the legal and regulatory matters concerning this call and report.

Mike?

Good morning, everyone. The report you are about to hear may include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including statements with regard to the Company's future performance, and these forward-looking statements involve certain risks and uncertainties that are based on our current plants, which we believe to be reasonable. And there are many factors that may cause our actual results to be materially different from any future results expressed or implied by these forward-looking statements, including all the risk factors included in our Forms 10-K and 10-Q that we filed with the SEC, and they can be found on our website, www.gladstonecommercial.com and on the SEC's website, www.sec.gov.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. And in our report today, we also plan to talk about funds from operations or FFO. FFO is a non-GAAP accounting term defined as net income, excluding the gains and losses from the sale of real estate and any impairment losses from the property, plus depreciation and amortization of real estate assets. The National Association of REITs has endorsed FFO as one of the non-accounting standards that we can use in discussion of REITs.

Now, please see our Form 10-Q filed yesterday with the SEC and our financial statements for a detailed description of FFO. And, today, we also plan to discuss Core FFO, which is generally FFO adjusted for property acquisition costs and other nonrecurring expenses, and we believe this is a better indication of the operating results of our portfolio and allows better comparability of period over period performance. And to stay up to date on our fund, as well as all the other Gladstone publicly traded funds, you can sign up on our website to get email updates on the latest news. You can also follow us on Twitter in the username GladstoneComps and on Facebook, keyword, The Gladstone Companies. Finally, you can visit our general website to see more information, www.gladstone.com.

And the presentation today is an overview, so we ask that you read our press release issued yesterday and also review our Form 10-Q for the quarter ended June 30, 2016. Please also see the financial supplement which provides further detail on our portfolio and our results of operations. These can all be found on our newly redesigned website, gladstonecommercial.com.

Now we will begin today's presentation by hearing from Gladstone Commercial's President, Bob Cutlip.

Good morning, everyone. During the second quarter, we acquired a $17 million property located in Salt Lake City, Utah; raised $25 million in a direct placement of preferred equity and implemented an ATM program on this new preferred; executed two new leases with tenants that are partially vacant, Maple Heights, Ohio, and Minneapolis, Minnesota properties; sold a non-core property located in Dayton, Ohio; executed contracts to sell our properties located in Angola, Indiana, Rock Falls, Illinois, and Montgomery, Alabama; refinanced $26.2 million of maturing mortgage debt at lower interest rates and redesigned our website to provide better information to our investors, analysts, investment sales, and leasing brokers and included a new section in our preferred stock.

Subsequent to the end of the quarter, we also announced the redemption of the remaining $13.5 million of our outstanding Series C in August.

We had another excellent quarter as we executed new leases to increase the occupancy of our portfolio to 98.5%. We also put another high-performing asset in our portfolio. We continue to be pleased with our activity and have a healthy pipeline of acquisition candidates, totaling about $300 million. Our acquisitions team has spent considerable time over the past several months, connecting with our peers to determine the direction of the market. Interest rate volatility, a perceived global economic slowdown, and an energy glut raised our concerns.

Our findings reflect that the largest net lease peers have noted that they will be reducing their net acquisitions volume this year or even pausing, due to the belief that valuations appear to be too high. These thoughts, as well as reduced year-to-date investment volumes compared to 2015, as reported by market research firms could be indicating that cap rates may expand in the months ahead. Our team is going to continue to monitor market conditions and will actively investigate opportunities. And we will acquire properties when the tenant credit, location, and asset returns are accretive and promote our measured growth strategy.

Now, for some details for the quarter. During the quarter ended June 30, we acquired a 107,000 square foot multi-story office building located in Salt Lake City. The purchase price was $17 million and the average cap rate over the lease term is 8.4%. Very accretive for our shareholders. Convergence Corporation occupies 100% of the space and is the second largest provider of business process outsourcing solutions in the US.

Our acquisitions team has been placing significant focus on acquiring properties in growth markets. The hallmark of our continuing high occupancy remains and is going to continue to remain thorough tenant credit underwriting and the mission-critical nature of the property.

Location is also important, and closing transactions and growth markets leads to properties in land constrained locations over time and, hopefully, subsequent increases in property values that will benefit our shareholders.

Over the past two years, to promote this strategy, we have invested in Phoenix, Salt Lake City twice, Denver three times, Dallas four times, Austin, Atlanta twice, Indianapolis, Columbus, Ohio twice, and Minneapolis. The last four acquisitions have been in Atlanta and Salt Lake City, two markets in which we wish to increase our concentration.

Our asset management team continues to be busy, leasing our available space. As noted, we increased our occupancy in our Minneapolis building by executing a new lease for 13,000 square feet, bringing the occupancy to about 80% in the property.

We also increased the occupancy in our Maple Heights, Ohio, warehouse facility by executing a new lease for 40,000 square feet, bringing that occupancy to about 93%. We only have one vacant property remaining today, and that is our property in Eastern Massachusetts, an 86,000 square foot freezer, cooler industrial facility, and we have three full building prospects at this time for that property.

We have successfully extended all of our leases that were originally set to expire in 2016 with the exception of a 2900 square foot office space in our multitenant office property in Indianapolis.

In total, for 2015 and 2016, we successfully concluded 16 of 18 lease expirations and, in doing so, transitioned to a really full service real estate operating company reflecting an ability to execute successfully in every phase of a property's lifecycle. My many thanks to our asset management, acquisition and capital teams working together to achieve these successes.

We sold one property and have four additional properties under contract for sale as part of our capital recycling program. These assets are considered non-core in our efforts to move out of smaller, single asset markets and redeploy the proceeds in our target locations. The better news for our overall growth strategy is that only 4% of forecast rental income is expiring over the next four years through 2019 during a period that we anticipate the industry is going to experience headwinds at some point. So our cash rents will be stable and growing, and our occupancies should remain high, even if economic conditions deteriorate.

This is an important fact for our shareholders as the majority of our peers have a minimum of 25% and as high as 54% of their leases expiring during this same period. The majority of our capital availability will be used to pursue growth opportunities because we do not anticipate needing significant capital for tenant improvements and leasing commissions to retain tenants or to re-lease vacant space or to fund operating deficits.

Danielle, our CFO, is going to expand upon our refinancing activities, but I think it is important to note that our refinancings continue to lower our loan to value, lower our annual interest costs, and the amount of debt maturing reduces through 2017.

So, in summary, we acquired another property in Salt Lake City, leased vacant square footage, refinanced maturing mortgage debt at lower interest rates, and refinanced maturing term debt through a lower cost preferred. Organizationally, we completed the redesign of our website, which provides greater information for our investors, analysts, investment sales, and leasing professionals, and our team continues to have a strong pipeline of acquisition candidates and will adhere to our strategy of only acquiring properties in growth markets that are accretive to our operations.

Now let's turn to Danielle Jones, our Chief Financial Officer, for a report on the financial results.

Thanks, Bob. Good morning, everybody. We continue to have a strong balance sheet as we systematically grow our assets and focus on decreasing our leverage. We have reduced our debt to growth asset level to 54% from 57% at the end of 2015 through refinancing maturing mortgage debt at lower leverage levels. We expect to continue this strategy over the next several years. We continue to only use our line of credit to make acquisitions that we believe can be financed with longer-term mortgage debt or that we believe are good additions to our unsecured property pool.

Long-term mortgage debt continues to be available, but at slightly higher rates than we experienced during 2015. The yield on the 10-year treasury has been very volatile. Despite the federal reserves efforts to raise interest rates, the yield on the current 10-year treasury is 90 basis points lower than it was at the beginning of 2015.

Since the beginning of 2016, the yield on the 10-year treasury has been as high as 2.2% and as low as 1.3%. This volatility has been driven by global uncertainty, questions regarding the strength of the economy, and the Federal Reserve's bank's stated desire to increase interest rates.

In response to this volatility, CMBS lenders became a less reliable source of mortgage financing as they increased the spread at which they were willing to make loans.

The banks have also widened their spreads by 10 to 25 basis points, and the life insurance companies have reintroduced floors. Banks in particular are trying to move into the vacuum left by the CMBS lenders. With CMBS loan originations down by more than 40% year to date, the life insurance companies and banks have become more selective in determining which properties they will finance.

However, interest rates still remain attractively low, and we continue to actively try to match our acquisitions with cost effective mortgages. Depending on several factors, including the tenant's credit rating, property type, location, the terms of the lease leverage, and the amount and term of the loan, we are generating generally seeing fixed interest rates ranging from 4.6% to about 5%.

To this end, we repaid $26.2 million of maturing mortgage debt this quarter by refinancing $9.5 million with new variable rate mortgage debt with an interest rate cap on one of these properties and two other previously unsecured properties and the remainder with borrowings under our line of credit and cash on hand. The weighted average interest rate on the maturing debt was 6.3%, and the rate on the new mortgage debt is about 3.2% today, over a 3% decrease from the mortgage debt that was repaid.

Over the past 18 months, we have refinanced $105 million of debt with $53.1 million of new debt at a new weighted average interest rate of 2.84%. Prior to the refinancings, the mortgages had a weighted average interest rate of 5.83%. The combined refinancings will reduce our annual interest expense by approximately $3.1 million, and that is straight to the bottom line.

Looking at our upcoming maturities, we have remaining balloon principal payments on two mortgages of $21 million payable in the fourth quarter of 2016. We anticipate being able to refinance these loans with a combination of new mortgage debt and equity. The weighted average interest rate on the 2016 debt is 4.54%, and while interest rates may increase, we still expect to achieve at least a 100 basis point interest rate reduction when we refinance these loans.

We also have $61 million of mortgage debt maturing in 2017. The weighted average interest rate on this debt is 6.1%, so, again, we expect to achieve be able to achieve better rates that will go straight to the bottom line. We are focused on our strategy of lowering our leverage by reducing our weighted average loan-to-value on both newly issued debt and refinanced debt. We have decreased our loan-to-value from a high in the mid-60s% in 2009 to 54% today.

Turning to equity, we raised, as Bob mentioned, about $25 million of the 7% preferred equity in our new Series D. We used the funds to redeem $25 million of our 7.125% Series C term preferred that was maturing in January of 2017. We have announced that we will redeem the remaining $13.5 million of the Series C term preferred in mid August.

We also put an ATM program in place on the Series D. We now have ATM programs on our common stock and our preferred stock. We raised both common and preferred equity during the quarter for an aggregate of $8.7 million under both of these programs. We use these funds for our new acquisition, refinancings, building and tenant improvement, and building and tenant improvements at certain of our properties.

As of today, our available liquidity is approximately $31.6 million comprised of $3 million in cash and an available borrowing capacity of $28.6 million under our line of credit. With our current availability and access to our ATM programs, we have enough availability to fund our current operations, deals in our pipeline, and any known upcoming improvements at our properties.

Now I will discuss the operating results for the quarter. All per share numbers I referenced are fully diluted weighted average common shares. Core FFO available to common stockholders was $9.3 million or $0.39 per share for the quarter, which increased slightly from the first quarter. Our results are impacted by an increase in rental revenues from re-leasing vacant space, coupled with lower property operating expenses from increased occupancy, and a decrease in interest expense from the lower interest rates achieved in our refinancings. This was partially offset by an increase in preferred dividends paid during the quarter as the Series D preferred raise closed at the end of May and the Series C preferred shares were not redeemed until the end of June.

We encourage you to also review our quarterly financial supplement posted on our website under Presentations, which provides more detailed financial and portfolio information for the quarter. While we continue to have challenges as we work on debt maturities and the headwinds from the global macroeconomic conditions, we believe we have the right team and plan in place to reposition and continue our growth activities. We are confident that the remainder this year and into 2017 will be successful as we continue to increase our asset and equity base and decrease our leverage. We are focused on maintaining our high occupancy.

Now I will turn the program back over to David.

Okay. Thank you very much. Good report, Danielle and good ones from Bob Cutlip and Michael LiCalsi, too.

Just to reiterate in summary, the real big things that happened this quarter, we acquired a new property for $17 million, raised $25 million in new permanent preferred, and redeemed $25 million of term preferred stock. Leasing vacant spaces, we continue to increase the overall occupancy. We renewed all of the 2016 leases except for small office lease, leaving only about 4% of the forecasted rents expiring until the beginning of 2020. We refinanced maturing loans at lower interest rates and positioned ourselves for more growth. We have continued to add quality real estate to the portfolio and shore up the existing properties.

As many of you know, we didn't cut the monthly cash distribution during the recession. That was quite a success story as we watched many of the good companies that we compete with cut their distributions. Most of them have never recovered from the dividend that they had back at the original level. We are in a great position not to have problems if the economy hits the skids again.

Here is what we are doing today. We need to increase the common stock market capitalization in order to increase the trading volume to give some of the institutional investors who want to buy a lot of the stock the ability to do that. The institutional buyers always want to know the number of shares outstanding. So if they buy $10 million to $20 million worth of our stock, then they know that there will be enough liquidity if they want to sell. We still don't have enough shares outstanding to give them that confidence. However, we have been consistently building our assets and equity base. We have actually doubled the size in the last five years. Now, with this growth, we hope to see more buyers coming into the stock and should hopefully help increase the price to a lower cost of capital for us.

It is a key thing that we have always been working for is getting the stock price back up.

We raised more preferred stock in the Series D, and it has a 7% yield. We have a new webpage at www.gladstonecommercial.com that explains the preferred. We cannot redeem this new preferred for at least five years, and we intend to reduce our Series C preferred to zero in August.

Continue to have a promising list of potential quality properties that we are interested in acquiring. Because of this list of properties, we expect to continue to grow the growth in assets during 2016. With the increase of properties means much more diversification and we believe better earnings. And please know that the price that you have to pay today to get good buildings with good tenants is still very high and the yield very low. So we have to be very careful and make sure we don't reach for a transaction.

We are focusing our efforts on good, long-term properties. We put financing in place to match those long-term leases. We love to lock in the long-term financing, and that allows us during the 2016 and 2020 time periods, we only have 4% of the forecasted rents coming due, and we have ample time to rent those up during the next four years. I forecast we will eventually get to 100%.

We are much more optimistic today that things are going to be positive for us. We feel really good about the future. Much of the industrial base and the businesses that rent industrial and office properties like the ones we have remain steady and most of them are paying their rents. As you know, we have a terrific credit underwriting group that underwrites our tenants, and considering the track record of the tenants paying their rent, I think the future is bright. This is a strong underwriting team that has kept us more than 96% occupied since 2003.

While we are optimistic of our Company, we will be fine in the future, I think. Bob and I will continue to be cautious in our acquisitions as we have done in the past years. We made it through the last recession without cutting the dividend and having a lot of problems from our tenants. And if another recession is lurking on the horizon, I think our portfolio will continue to stand up against that test.

Distributions, early this month, the board voted to maintain the monthly distribution at $0.125 per common share for July, August and September for the annual run rate of $1.50 per year. This is a great attractive rate for a well-managed REIT like ours. We have now paid 138 consecutive common stock cash distributions, and we went through the recession without cutting any of our distributions. And that is now more than 13 years, and that is just a wonderful track record.

Because the real estate can be depreciated, we are able to shelter the income of the company in return. This means that we have a return of capital of -- last year it was 79% on the common stock. This is a tax-friendly stock, if you want to put it in your own personal account rather than a tax-deferred like an IRA or a Keogh. The return of capital is mainly due to the depreciation of the real estate assets and other items, and it is has caused earnings to remain low after you subtract the depreciation. That is why we always talk about Core FFO because that is adding back the real estate depreciation. After all, depreciation of a building is really a fiction sense at the end of the depreciation period the building is still standing. So if you own stock in a nonretirement account as opposed to having an IRA or retirement plan, you don't pay any taxes on that part that is sheltered by the depreciation as that is considered a return of capital.

However, as you all know, the return of capital does reduce your cost basis in the stock, which may result in a larger capital gains tax when you sell the stock.

The stock closed yesterday at $17.80. The distribution yield is about 8.45% now. Tremendous yield. NAREITs are trading at much lower yields now. The triple net REIT business, which we are considered part of, is at 4.7%. So, if our stock was trading at that yield, our stock would be priced at over $31 per share.

So there is a lot of room for expansion of the stock based on the triple net REIT stock prices. Even if it moved down to 6%, that would have the stock price at $25, and we have been over $20 in the past. My guess is that, as investors continue to discover our Company, we will see the prices of the stock increase and the yield in line with the other REITs. There is simply no reason that I can think of for a REIT to trade at such a high-yield given the track record and the past lack of leasings coming due.

I know analysts always talk about we are externally managed. However, being externally managed allows us to access a team of credit underwriters, unlike any other managed REIT out there. Our high occupancy level is a testament to the access we have to the credit underwriters. We have also performed an analysis of the cost to operate REITs, and we are no higher than any of the other REITs, whether it is internally managed or externally managed.

And, folks, we have been decreasing our leverage every quarter. You would think, with the strength that we have, we would want to leverage up as much as possible. But we are lowering our leverage. We now are closing in on 50% leverage. That is about $1 of equity for outstanding for all the buildings that we own. And given the track record of steady income for the last 13 years, that amount of leverage, to me, is very conservative.

Our board will vote in mid-October during the regularly scheduled quarterly board meeting on the declaration of the monthly distributions for October, November and December, and so get ready for that.

Now we will have some questions. So, Andrew, if you will come on, we will get some questions from our stockholders and analysts for this wonderful REIT.

(Operator Instructions) John Roberts, Hilliard Lyons.

Just wanted to get a little more color on your expect -- I think Bob mentioned $300 million in potential acquisitions sort of in your pipeline. I am just trying to get a better feel on what amount you anticipate potentially closing for the remainder of the year.

Okay, Bob. He is going to take over that.

You know, I am always optimistic, but right now we have one property that is in due diligence, and that is about between $22 million and $24 million. We have two other properties in a letter of intent stage that is in excess of $30 million. One of those is what I would consider to be a done deal because it is an expansion of an existing facility that we have next to the Mercedes-Benz assembly plant in Alabama, and we have another property letter of intent stage in Phoenix, Arizona, that is also in the high $20 millions.

So I am encouraged, but one of the things we are finding, John, is that we were bridesmaids on a number of properties and suddenly they are coming back to us. And our leaders in the field, particularly in the Midwest and the Western region, are seeing a little bit of cap rate expansion in some of the markets. Not all the markets, but in some of the markets that we are looking at. So we are still being a little cautious, but as you can see, we are seeing properties a little bit higher in volume then we have had in the past. We have averaged about $16 million to $18 million per acquisition over the past three to four years, and now we are in the low to mid $20 millions, which is somewhat encouraging to me as we get larger.

So I can't give you a specific number on it, but you can see from the pipeline beyond just the initial review, we have a number of assets that are looking pretty good for closing between now and probably the beginning of the fourth quarter.

Super.

Super. That is some great color. The other thing I just wanted to ask, have you looked at any -- obviously, you are a little capital constrained at this point. Are you looking at any nontraditional capital?

No, John, we haven't looked at anything nontraditional. We either do preferred or common in terms of capital.

Not looking to convert? Is there anything along that line, David?

No, I think we can raise pretty much all the preferred we want to at this point in time at [7]. And, yes, we could get a little bit lower price if we went to converts. I just haven't looked at that. I think the stock is going to bounce up pretty quick.

Great.

(Operator Instructions) John Massocca, Ladenburg Thalmann.

A question on -- for the Series -- the term C, sorry, the Series C Term Preferred. Can you give any color on how you guys plan on taking out the remainder of the balance there?

Yes, we have really strong line of credits, so we are also in the marketplace with our ATM program at the market program, and it is generating pretty good success right now on this new preferred that we have. The institutions are liking the idea that you can't pay it back or can't redeem it for five years. So we are getting pretty good transactions there, and the common stock seems to be going very well. So between the common stock, the preferred stock, and our line of credit, we can easily take out $13 million.

And, David, just to add on this, John, this is Danielle. We have actually already put out our intent to redeem notices and are planning to redeem that on August 19. And we have current availability to go ahead and do that.

Okay. That makes a lot of sense. And then, touching maybe a little more to the dispositions front. What is the plan for the proceeds or the [ORE] assets that are currently in the contract to be sold?

Well, it would be a combination of use for working capital. And, as David and I have talked in the past, we are getting out of these smaller markets so that we can redeploy the capital into our target markets. So, for example, the four properties that we have under contract right now, those proceeds would be used for the acquisition that we are planning in Florida and the other one that we are looking at partially now, as well as the one in Phoenix.

So we are not in any big rush, John, because most of these properties we have already been through renewals and they have been through the recession. So they are strong companies. But just over time, we think putting our capital in these target markets is going to improve our operating efficiencies. And, also, over time as we do exit some of these, we will be selling three to five assets, which will result in cap rate compression as compared to one-off in small markets.

So it is going to be a work in progress. No big rush, but it will be used to be redeployed in those target locations.

Makes a lot of sense. And then, a quick detail question. It seemed like there was some other income that came in this quarter that was tied to the Newberry property.

Danielle, what is that?

So that was a tenant that vacated that property. It was some settlement income we received. There were some issues with some deferred maintenance and capital. So we reached a settlement with them. And part of it was for repairs. About $800,000 was for repairs, and the excess of it, which is what you see in the other income line, was considered legal settlement income. So it is a one-time thing.

Okay. So it is completely one time.

Yes.

All right. Makes a lot of sense. Thank you very much, everyone.

Okay. Any other questions?

Larry Raymond, LTD Capital Management.

Nice job on the quarter and the call. Quick question, again, with regard to your core portfolio. Could you describe what percentage of the tenants on lease had stipulated rent bumps, and do you account for that on a straight-line basis? I'm just trying to get at the core portfolio growth. If no transaction activity was done, what is the embedded growth in the portfolio?

Bob?

All of ours have stipulated rents -- rent growth. We have a few properties that are CPI related, but most of them are between 2% and 3%. And, yes, and Danielle can maybe add to this, but we do account for them on a straight-line basis.

Yes. That is correct. They are all accounted for on a straight-line basis. So intrinsic rental income growth would be on the growth from our portfolio.

So to follow up, I appreciate that and thank you for that answer. On a reported basis, where you are reporting Core FFO and FFO, that is straight line. Your cash flow on a comp basis could be different and could be growing, whereas the Core may not because you have already accounted for the straight-line acknowledgment of that lease. Would that be fair to say? And maybe that could be helpful for investors to see that cash flow trend in addition to the reported Core and Basic FFO number. Not just -- to make it too complex, but it might help boost the embedded cash flow growth in the portfolio.

That's a good point, Larry. In addition, because we really on every deal we do, we do secured fixed-rate debt and we have locked in that return and that increase in cash flow year over year as compared to if we had variable rate debt in a rising interest rate environment. So that is why we are very excited about the next three to four years with very few leases rolling, and our cash income is going to be growing year over year because we have locked in the debt costs.

Okay. Thank you. And then, just one final follow-up, and then I will bring it back to the floor for anyone else who has a question and that is on the debt summary, just to follow up on just your comment, you have fixed rate financing and then also variable rate financing with with caps. Could you describe the proportion of that breakdown, fixed rate versus variable with caps?

Danielle, do you know the number?

For our total portfolio, I would say that most of the variable rate is on the refinancings we have done in the past 18 months. So I would say maybe $55 million to $60 million of our total mortgage set is variable rate. But, again, they all have interest rate caps that cap them. It is typically LIBOR plus 2.5% -- 2.25% to 2.75%, and then we put a 3% interest rate cap on the LIBOR ones there.

Okay. So with the remaining 90 -- so there is $530 million of debt, about 10% is the variable rate with the cap. The rest is fixed rate financing.

Yes. That is ballpark numbers, but that is correct, yes.

Okay. Thank you very much.

No other questions in the queue at this time, but I will give one more call for questions. (Operator Instructions). And I am not getting any further questions. So I would like to turn the call back over to Mr. Gladstone for closing remarks.

All right. Thank you, Andrew, and thank you all for calling in. That is the end of this call.

Ladies and gentlemen, thank you, again, for your participation in today's conference. This now concludes the program, and you may all disconnect at this time. Everyone, have a great day.