Highwoods Properties Inc (HIW) 2007 Q1 法說會逐字稿

Good morning, and welcome to the Highwoods first quarter conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (OPERATOR INSTRUCTIONS) Thank you, Ms. Zane you may begin your conference.

Thank you, and good morning. On the call today are Ed Fritsch, President and Chief Executive Officer; Terry Stevens, Chief Financial Officer; and Mike Harris, Chief Operating Officer. If anyone has not received a copy of yesterday's press release or the supplemental, please visit our website at www.highwoods.com or call 919-431-1529 and we will email copies to you.

Before we begin, I would like to remind you that this call be include forward-looking statements concerning the Company's operations and financial condition including estimates and effects of asset dispositions, the cost and timing of development project, rollover rents, occupancy, revenue trends and so forth. Such statements are subject to various risks and uncertainties, actual results could materially differ from those currently anticipated due a number of factors, including those identified at the bottom of yesterday's release and those identified in the Company's annual report on Form 10-K for the year-ended December 31, 2006 and subsequent reports filed with the SEC.

The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. During this call, we will also discuss non-GAAP financial measures such as FFO and NOI. Definitions of FFO and NOI and an explanation of management's view of the usefulness and risks of FFO and NOI can be found toward the bottom of yesterday's release and are also available on the investor relations section of the web at highwoods.com. I'll now turn the call over to Ed Fritsch.

Good morning, and thank you for joining us today. I'm pleased to report that 2007 is progressing as expected and we are clearly on track to meet our exceed our goals for the year. In fact, we have already achieve the high end of our guidance for land sales with a total contribution to FFO of $0.26 per share. We are particularly pleased to have completed these very profitable land sales so early in the year. In the first quarter we also received an insurance settlement from a prior year claim that resulted in an additional contribution to FFO of $0.07. As a result of these gains, offset by slightly higher G&A costs, we have raised full-year FFO guidance from $2.53 to $2.65 per share to $2.65 to $2.70 per share. Conditions and trends in our top five office markets remain encouraging with positive net absorption and construction as a percent of total market still below 3%. Overall occupancy in these five markets has improved by 60 basis points in the past 12 months and Highwoods occupancy in these markets has seen a 300 basis point improvement over this same period.

We ended the quarter with occupancy at 90.2%, a slight increase from fourth quarter and a 250 basis increase year-over-year. We continue to make good progress on our strategic plan initiatives. Highlights year to date include starting $39 million of development bringing our total development pipeline to a robust 415 million, that is 54% preleased and this is after deducting 31 million of development placement service in this quarter that was 100% preleased. We also sold $71 million of property at an average cap rate of 6.4%, sold 29 million of non-core land for gain of 16 million, and paid off 80 million of secured debt, which unencumbered $179 million of assets. Another highlight, which Terry will address in his remarks was our successful $400 million bond offering in March.

Last week we also announced that we are redeeming another 40 million of our 8% Series B preferred stock on May 29th. When complete we will have redeemed a total of $220 million of 8% preferred stock since January of '05. The Series B has $52.5 million remaining all of which is redeemable. Development remains a key component of our future growth improving the over all quality of our portfolio and contributing to long-term cash flow stability. Two, 100% preleased build-a-suits replaced in services this quarter, the Met Life building at Highwoods Preserve in Tampa and the ThyssenKrupp building in Memphis. We also announced the start of two new development projects, GlenLake Six and CentreGreen Five, both in Raleigh. I emphasized that we take a very measured deliberate approach in determining which development projects get the green light. There are many factors that carefully reviewed and annualized by our senior leadership team and our investment committee. Such as whether the site is an infill location, the long-term viability of the submarket, is it on land we already own, and what are the projected yields? The 12 projects delivering in 2007 and 2008 are on average already 56% preleased with anticipated stabilized cash yields of 9 to 10%. Cap rates in our markets remain low. Good for our disposition program and of course continuing to be a barrier to making acquisitions that meet our risk return profile.

The office property sold in the quarter were older non-differentiating assets, which on average were 89% occupied and 19 years old. In February, we also sold a newly completed Weston Lakeside, a 332-unit multifamily rental apartment project in Kerry, North Carolina that was developed in a 50/50 joint venture with Grassland for gross proceeds of $45 million our share being $22.5 million. AS background in 2005 , we contributed 22.4 acres of non-core land with a book value of $1.1 million to the partnership for approximately $2 million in cash and a 50% share of the project. The sale of Weston Lakeside resulted in a gain from Highwoods of about $5 million which is not included in FFO. This transaction was similar to our Vinings JV a 156 unit multifamily rental apartment development in Charlotte that we sold for gross proceeds of $14 million in the fourth quarter of '06. In that case, we contributed close to 8 acres of land with an estimated market value of $1.6 million in exchange for a 50% equity stake in the project.

Our share of the net proceeds in that transaction was nearly double the value of our original land contribution. These are two great examples of our maximizing the value of idle, non-core land, that was no longer best suited for office development. As we look out to the rest of the year, we remain comfortable with our year-end target range of 91 to 92.5%. Occupancy will dip slightly in the next two quarters, primarily due to a few industrial expirations, but as I already mentioned we're on track and expect to meet our occupancy and FFO guidance for the whole year. I hope all of you have received a copy of our 2006 annual report. If you haven't, you can access it on our website or contact Tabitha, and she'll be glad to mail you a hard copy. As always, I thank all of my co-workers for their dedication and hard work. Our board for their active involvement and support of our strategic plan and our shareholders for their continued belief in long-term vision for

Thanks, Ed, and good morning, everyone. We had a solid first quarter leasing 1.4 million square feet of first and second generation space, 69% of which was office. The average turn for second-generation office lease assigned was five years, slightly above our five-quarter average of 4.7 years, and average term for first-generation leases was 8.8 years. Office GAAP rents on signed leases increased 6.6% in the quarter, the highest increase in GAAP rents since we started reporting this metric in 2002. It is also well above our guidance of +3 to 5%. Office cash rents on leases signed this quarter declined 4.5%, severely distorted by two deals. A lease in the building in Columbia that we are marketing for sale and the U.S. Airways renewal in the Triad. Excluding these two deals, office cash rents on the other 128 leases signed in the quarter declined by less than 1%. I know that many of you view cash rent growth as one of the signs of a market's fundamental strength, and so do we. However, we also believe taking cash rent growth specific to leases signed in one quarter gives an incomplete picture. Like the lease signed in Columbia, which can distort that metric to the good or the bad. It also doesn't take in to account our annual rent escalators that are built into virtually everyone of our leases or the decline in free rent concessions.

So to provide a more complete picture of cash rent growth in our portfolio, we have taken information, which we have been providing for years on the lease expiration pages and created an additional table in the supplement. It's on page 17 and shows average in-place cash rental rates for our office, industrial and retail portfolios over the last five years. As you can see, average cash rental rates on in-place leases across the entire portfolio were up 4.8% year-over-year, and up 7.4% since the first quarter of 2005. Looking just at office, average cash rents are up 5.3% from the first quarter of 2006, and up 8.3% from the first quarter of 2005. CapEx related to office leasing was $13.38 per square foot in the first quarter, again, excluding the lease in Columbia, CapEx related to office leasing was $10.79 per square foot, well below our five-quarter average of $11.75 per square foot. As I mentioned on our call last quarter, the impact to Highwoods of rising PI construction costs has been offset as a result of lease negotiations shifting from turnkey deals to less expensive fixed allowances. Our goal as previously stated is to exit is the Columbia market this year. We're focusing on increasing occupancy there, and it has grown from 41.4% a year ago to 71% at the end of the first quarter and is expected to be 83% before year-end. This increasing occupancy will dramatically enhance the attractiveness of these assets to potential buyers. Construction starts in our top five office markets still remain at a comfortable level of 2.9% of total market and net absorption in these five markets combined was 1.6 million square feet this compares to 697,000 square feet of net absorption in the first quarter of 2006.

Turning to our top five markets, Raleigh absorbed close to 400,000 square feet in the quarter and has had net absorption of 1.8 million square feet over the past year. Office occupancy in this market is steadily increased and our portfolio is 86.6% occupied, almost 400 basis points better than a year ago. We remain encouraged by Raleigh's continued growth, and we are projecting year-end occupancy north of 89%, our 4800 building the 170,000 square foot property that IBM vacated in January 2006, is now 71% released with good prospects for the remaining space. The three development projects scheduled to stabilize in 2009, CentreGreen Five, GlenLake Six and RBC Plaza are on average already 50% preleased. Occupancy in our total Atlanta portfolio was 92.7% at quarter end, 160 basis points above the same quarter a year ago, signalling solid improvement for our assets in that market. Leasing activity in Atlanta was highlighted by the 193,000 square foot industrial lease at New Point Place Five by Icon Office Solutions bringing preleasing at this new development to 73%. As a reminder, stabilization of this project is projected for the second quarter of 2008. We like our improving position in Atlanta as we continue to work through our non-core disposition list and develop additional high-quality assets in prime infill locations that will service well going forward.

Our Florida markets remain very strong with occupancy in both our Tampa and Orlando wholly-owned portfolios above 98%. In Tampa rental rates for Class-A office space have increased by 10 to 15% since the beginning of 2006. Occupancy in our Richmond portfolio was unchanged from last quarter at 89.8% and remains better than occupancy for the overall Richmond office market which is 87.3%. Net absorption for the quarter was 367,000 square feet. Richmond remains one of our steadiest performers and year-end occupancy should be over 90%. Leasing of our newest building in Stony Point is now 86% well ahead of our original leasing projections. Nashville's office market continues to perform well with strong demand contributing to 416,000 square feet of net absorption. Our Cool Springs project is now 91% preleased with stabilization projected for the end of this year.

As a reminder, we started this buildings 100% speck. The Cool Spring submarket remains strong and we're now evaluating commencement of Cool Springs Four. In closing, we continue to be optimistic about the future of virtually all of our markets. We remain focused on improving our operating margins, increasing in occupancy, growing cash rent and seeking new development opportunities that match our risk profile and yield requirements. Terry?

Thanks, Mike. Let me echo Ed and Mike, when I say we were very pleased with first quarter results. FFO per share was $0.91, which included $0.26 in land sale gains and $0.07 from the settlement of a prior-year property damage insurance claim. This quarter there were no impairs on depreciable assets, no preferred stock redemption charges, and no losses on debt extinguishment. The $0.91 of FFO this quarter compares to $0.59 reported for first quarter of 2006. FFO from core operations, that is after taking out land sale gains, the insurance settlement and lease term fees was $0.58 per share, up $0.02 or 3.6% from comparable adjusted FFO in the first quarter of 2006. We are pleased with the positive trend in core FFO, given that this has been occurring during a period of significant property dispositions, rising short-term interest rates and increases in certain operating and G&A expenses.

Total revenues from continuing operations were up 7.7 million, or 7.6% for the quarter, 3.7 million of this revenue increase relates to same properties and the balance of 4.0 million, comes mostly from 171 million of new development properties delivered in 2006 and in first quarter of 2007. The growth in same property revenues primarily reflects the 1.3% quarter over quarter increase in same property average occupancy, plus increases in average GAAP rent per square foot and CAM income. Total NOI was up 4.6 million or 7.2% compared to first quarter 2006.

Same property NOI was up 1.4 million or 2.3% in first quarter '07, compared to first quarter 2006, as noted on page 25 in the supplemental. Excluding straight-line rents and termination fees, same property cash NOI was up 3.6 million or 6%. Our NOI margin, that is NOI expressed as a percent of total revenues, was down slightly from 64.3% in first quarter last year to 64% this quarter. We are expecting our NOI margin to stabilize this year, as the rate of growth in utilities, insurance, and other costs should moderate while revenues in occupancy continue to grow. We are focusing hard on controlling operating expenses and negotiating the most favorable lease terms to maximize CAM income.

G&A was up $0.036 per share in the first quarter compared to last year. The increase included several items that are not expected to continue during the remainder of this year. $0.01 of the increase was from annual merit increases in salaries and other inflationary effects on employee benefits such as health insurance. Audit fees and professional services was about $0.01 higher, and we saw a $0.005 increase from higher write-offs of costs related to potential development projects that are now deemed unlikely to occur. We also incurred increased costs of about $0.01 per share combined from the continued phase-in of our retire plan that started in 2006, and from the Company's share of Medicare and FICA taxes related to stock options exercised in the first quarter. Interest expense and preferred stock dividends combined were down 1.8 million or $0.03 per share in the quarter compared to 2006, primarily due to savings from the 50 million of 8% preferred that we redeemed last year and from higher capitalize interested from our growing development pipeline. Primarily as a result of our refinancing activities, the weighted-average interest rate on all of our debt is 24 basis points lower at the end of the quarter compared to a year ago, which equates to annualized interest savings of $0.06 per share. These positive effects on interest and preferred dividends were partly offset, of course, by the foregone NOI contributions from our dispositions; however, given how we have been able to use the disposition proceeds to pay down some of our higher rate debt and preferred stock and also to fund our development projects and given that our disposition since 2005, were done at an average 6.7% cap rate, we have had minimal FFO dilution from our significant asset sales.

In addition because of the avoided capital expenditures, our dispositions have been net accretive to CAD. On the financing side, year-to-date we have paid off 80 million of debt with an weighted average interest rate of 7.9%. This included 66 million of 8.2% secured debt paid off in February which unencumbered 179 million of assets based on undepreciated book value. Since embarking on our strategic plan in early 2005, we have unencumbered a significant amount of our assets. Today a portion of our total NOI that is encumbered by secured loans has declined from 49% at the end of '04, to about 43%. In late March, we closed on a $400 million 10-year unsecured note offering with a 5.8% coupon rate. These notes are sold to qualified institution of buyers under Rule 144A. This was our first time back in the bond market since 1998, and we were very pleased with the strong and positive response we received. The order indication exceeded 940 million and the quality of investors was top notch. Proceeds were used to pay down borrowings on our 450 million revolving facility and on a smaller non-revolving credit facility. We presently 387 million of borrowing capacity under our unsecured revolving credit facility and our secured construction facility combined. So in summary, first quarter 2007 results were very solid. We do expect some near-term declines in average occupancy during second and third quarters based on our current leasing and start date projections, and while quarter results tend to have some variability we are confident of our overall increased FFO guidance for full year 2007. Operator, this concludes our prepared remarks, and we are now ready to take questions.

(OPERATOR INSTRUCTIONS) We'll pause for just a moment to compile the Q&A roster. Your first question comes from John Guinee with Stifel Nicolaus

Hi, this Mike Hutchison with John Guinee. I just had two quick questions. I did-- I missed the first five minutes, I apologize. I noticed the TIs and LCs have been creeping up, fourth quarter, 13 million, now 14.5 million. I was wondering if there was due to some one-time expensive deals or if that is kind of a run rate?

As Mike Harris mentioned in his comments it was heavily driven by one deal we did, 74,000 square feet for Staples in Columbia, South Carolina, which are assets that we listed for sale.

Okay.

If you net out that one deal the number drops to $10.79 per square foot for the quarter as opposed to $11.43 for the previous four quarters on average.

Great, I apologize if that was already answered.

No problem.

The other question would be on the non-cash compensation charge, sounds like that bumped up a portion of the bump up in G&A and as a result you do have an ad-back of about 1.4 million. What do you see moving forward, the add-back for non-cash comp?

Mike this is Terry. I think that line item will be at the first quarter run rate or slightly higher for the rest of the year, but about that level.

Okay. I think that's about it. Thank you so much. Good quarter.

Thank you very much.

Your next question comes from Steve Beyazian with Credit Suisse.

Good morning. Can you guys discuss the potential that f further unexpected land sale gains in future quarters will cause the company to exceed its revised guidance?

Steve can you restate that we had a little trouble hearing you.

Sure. Can you guys discuss the potential that further unexpected land sale gains will cause you guys to exceed the 16 to 16.5 million of land sale guidance?

Sure. We have done year to date 29 million as we had in the release and $16 million gain. We expect another 6 million or so for remainder of 2007 with a nominal gain in the range of maybe a third to a $0.005 in total.

Okay. Can you guys also discuss what drove the 370 basis point decline in vacancy-- or decline in occupancy in the Pied Montriad submarket and what the prospect for releaseing that space is as well as the long-term outlook for that market?

Let me address-- Steve, this is Mike Harris. On the go-forward we expect the decline coming principally from one large industrial lease in that market, about 129,000 square feet that we would see in this quarter. In the first quarter we primarily had-- again, these were industrial leases-- in Greens Burrow, that drove the occupancy down as we had tenants that renewed-- excuse me-- that expired end of the year and just basically didn't renew.

There was basically one deal, the United States Postal Service about 80,000 square feet.

That's a seasonal requirement that they do every year.

And finally can you provide some further details on the 4.1 million insurance claim during the quarter and whether there's other settlements or litigation that could impact 2007 results?

Sure, this is Terry, we had a property damage claim, it was a hurricane claim, and the insurance was settled up in the first quarter of this year. We have received in total about $8 million. The last payment was a little over 5 million. It came in this quarter. And the amount of proceeds that we received was in success of the book value of the part of the building that was damaged by the hurricane, and that difference is what generates the gain, and it really is complete at this point in time, so we don't expect any further adjustments or any additional gains from that event.

Great. Thanks, guys.

Your next question comes from Lou Taylor with Deutsche Bank.

Thanks, good morning, guys. Ed, could you talk a little bit about the development pipeline in terms of how comfortable are you taking-- or how big do you think the pipeline could get before you would just say, geeze, it's just too much stress on the balance sheet?

We have guided what we expected to do in the way of development starts for the next couple of years in the range of 100 to 200 million per year. We started this year about 39, so that leaves us about 60 or. We feel comfortable with the 100 to 200 range that we have for 2007. I don't have any concerns about what we put out for '08, but obviously the closer we get the more we'll be able to dial in on it. The leasing as a whole has been good. What we just delivered was 100% preleased in the two build-to-suits. On I think on the average when we look at the buildings that were basically totally speck-- like Cool Springs Three was totally speck and now we're better than 90% occupied and we have no concerns about hitting our projected stabilization date. A few of the deals look probably a little bit light in the supplemental, but we have the benefit here on seeing our prospect list on buildings like Birchshire and Bay Shore Centre Phase One and we feel comfortable with those. If there's any one that I had to point out that-- I mean, it's not to where we're losing sleep over it, but we would like to see more activity on it that's the one in Richmond called North Shores Common B. I think the numbers we put out the 100 to 200 per year is a comfortable range.

Second question pertains to just lease expirations coming up. What is the general mood of tenants these days? Are they fearful of rent increases in '08 and '09, and are looking to renew early or are they taking it in 6-month increments?

I think it comes down to the customer in the submarket. But in West Shore, the best submarket that we have, I think of all, maybe, of our submarkets in Tampa, there aren't many large blocks of space, and the customers that are experiencing some sticker shock and seeing a phase rental rate that starts with $30, may be a bit intimating. So the market fundamentals is good. Demand is good. Construction is limited and there's strong employment growth. And with higher construction costs in a tightening market, those two are going to converge to higher rental rates, and I think that most customers in better submarkets are reading that writing on the wall, but I don't want to overstate that because we still have some pockets that have soft submarkets, where we haven't exited the submarket through dispositions, and it's very clear that we're seeing that, like in Columbia, and Greenville, South Carolina and a few other softer places, but overall I would go back to the first part of my question.

Great. Thank you.

You're welcome.

Your next question comes from Michael Bilerman with Citigroup.

Morning this is Irwin Gusman here with Michael. Are there any markets that you are looking to enter? And if so would that be through acquisition or development?

Yes. We have not targeted any specific markets. Certainly, our capital investments department has done reconnaissance on where it would like likely for us to no get if we had the opportunity go, but as you can see from our acquisition pipeline, acquisitions just haven't been a core part of our strategic plan. We have an abundant amount of proceeds from these non-differentiating dispositions, and we have used it to improve our balance sheet, which we have done so dramatically and improve the quality of our portfolio by funding this what we consider fairly robust product development pipeline. If the pricing in our own backyard is expensive. I think it would be more expensive for us to in to a new market where we begin to set up shop and begin to establish brand recognition. Our objective right now is to continue to be better in the submarkets we're in, and until pricing turns, I wouldn't expect us to venture in to a new market in a substantive way. Now if we have an opportunity for merchant build with an existing customer, we'll file them in to another market and pursue that opportunity. Meanwhile we're just continuing to supplement our portfolio where new development projects and we're building a balance sheet that will enable us to seize opportunities as they come when the market turns.

Great. One other question. What are you budgeting for land acquisitions for the next 12 months? And what is generally the strategy on how long to hold land before developing it?

We have in the past said that if we can't develop out of track within a five-year range, that we would take a hard look at whether or not it was land we should keep or not. Obviously we have sold a fair amount of land that we consider non-core that's not best suitable for our product today. We're little bit lumpy if you look at our land holdings in the submarkets. So I think that you would expect to us to purchase in the 10 to $15 million worth of land over the next 12 months.

Okay. Thank you.

You're welcome.

Again, ladies and gentlemen, if you would like to ask a question, please press star followed by the number one on your telephone keypad. Your next question comes from David Cohen with Morgan Stanley.

Good morning, just to follow up on your comments an West Shore, it's only 10% preleased. Can you just talk about why are you struggling to get tenants in there? I mean, is it just the $30 plus rent that you are asking? Are you willing to go down any bit on that?

Well, I just-- it's early in the evening. I think that the prospect list that we have is robust. $30 rates are not a in other come parable metro areas. We do have prospects that we're in negotiations with that could-- where you could see a substantive change in our preleasing within the next 90 to 120 days. I just don't think that now is a time to panic and worry about that and I'm not suggesting that that's your comment David, but we need to be appropriate patient on this, and be sure we properly position the tenancy in this building, so we're not worried about it at all at this point in time, the product came off extremely well in our view with regard to the quality of construction, how its positioned and where it is. We have not seen a competitor come out and start a competing project in that submarket. So we feel like we're well positioned with the Class A large block of space to meet demand and that's exactly what is driving the 150,000 square feet of prospects we're currently talking with.

Okay. And just talking about your NAV that you have published. Given where your stock price is, is your stock a good investment at this point?

It's always a good investment.

So why are we not-- are you considering any more repurchasing?

David, this is Terry. Two things I would say. One, as Ed mentioned in his call, we have just announced a repurchase of preferred stock of $40 million, which I think is fairly expensive equity to pull back in. But then one area that's maybe not as obvious is the first quarter we acquired over 600,000 units, common units which are essential to common shares for about $27 million. So there has been some buyback of units, which are equivalent to shares.

And David, also, in '06 we acquired another $26.5 million worth of units so between the two year of date '07, cost '06 about 1.4 million for about 50-plus million dollars.

Okay. Switching to the Atlanta expirations in the first quarter, can you just talk where that space is, and, you know, your prospects on releasing that stuff.

David, this is Mike Harris. Most of that expiration is coming from one project that's currently occupied by Norttell in North Atlanta, almost 246,000 square feet of the 300,000. We have excellent prospects for that are a number of prospects greater than 100,000 square feet in the market including one subtenant that's occupying a substantial amount of that space. WE are on top of it. We feel we have good activity relative to where it sits.

It sounds like for tell is definitely leaving, then. What do you expect rent spreads to be on the old versus, you know, leases that you might sign?

I think it's going to be contracting somewhat. Again, we're in negotiations, so hopefully one of our prospects is not on line, but we expect it to be some contract there.

Another question-- moderating construction costs, are you seeing of that? Are you seeing any changes in the development pipelines or shadow pipelines?

Yes-- again, this is Mike, David. We are seeing some moderation in construction costs. We saw somewhere in the 9 to 10% increase back in '06 coming up from '05, we think that is going to be tapering off is somewhat in '07. Certain products to help us out there particularly things like copper and wood products. Wood products not being a huge component of our development but for blocking and forming it does help out a little bit. A long answer, yes we are seeing sop tapering. We are seeing a slow-down in the increase of construction cost.

Has that on the margin changed-- developers getting more interested in doing some development?

Not really. I think you are still seeing relative to historical levels, it's still very expensive to build, and we have got, obviously the land component in there, so I don't think we see a huge-- there are a lot of plans on the shelf, but we don't see any near-term likelihood that most of those are going to come off and come out of the ground.

David at the risk of shameless help promotion. I think Highwoods has done a good job getting out in front of the competition akin to what we talked about with bay center at West Shore. Us starting when we did I think has and should serve us well. And all on the TI component of construction cost, we continue to have seen those step up, but for the way that the transactions have modified from turnkey allowances to TI allowances, it has made it less expensive for us.

Thanks a lot.

Thank you.

Thanks, David.

At this time there are no further questions. I will now turn the call over to Mr. Ed Fritsch, President and CEO for closing remarks.

Thank you. I also want to thank everybody for taking time to call in and listen to our comments and ask questions, and again, I thank all of my coworkers for all they did for establishing us in a position of delivering a great quarter. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect.