Highwoods Properties Inc (HIW) 2010 Q1 法說會逐字稿

Welcome to the Highwoods Properties First Quarter 2010 conference call.

During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session.

(Operator Instructions).

As a reminder, this conference is being recorded.

I would now like to turn the conference over to Tabitha Zane, Vice President, Investor Relations.

Please go ahead, ma'am.

Thank you. Good morning everybody.

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 e-mail copies to you.

Please note, in yesterday's press release we have announced the planned dates for our financial releases for the rest of the year. Also, following the conclusion of today's conference call, we will post senior management's formal remarks on the Investor Relations section of our website under the Presentations section.

Before we begin, I would like to remind you that this call will include forward-looking statements concerning the company's operations and financial condition, including estimates and effects of asset dispositions and acquisitions, the cost and timing of development projects, the terms and timings of anticipated financings, joint ventures, 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 to 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, 2009 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 towards the bottom of yesterday's release and are also available on the Investor Relations section of the web at www.highwoods.com.

I would now like to turn the call over to Ed Fritsch.

Good morning and thank you for joining us today.

We are pleased with our first quarter results with FFO up $0.01 from the fourth quarter and essentially flat from a year ago after adjusting for the debt, equity and disposition transactions we planned and executed last year that enhanced our liquidity for future growth opportunities.

We are seeing increased leasing activity in many of our markets including potential build-to-suit opportunities. There appears to be some guarded optimism about the economy, and we are hopeful this will lead to the beginning of meaningful job growth some time in 2011.

As noted in yesterday's press release, we leased 1.3 million square feet of space, 75% of which was office. This compares to 851,000 square feet leased in the same quarter a year ago, 64% of which was office. This is the most office space we've leased since the second quarter of 2008.

We continue to benefit from a higher quality portfolio concentrated in better submarkets, a healthy balance sheet and strong relationships with our customers and the brokerage community. And as a result in every one of our core markets, our office occupancy remains significantly better than the market as a whole.

We are seeing a number of build-to-suit opportunities including projects for both the GSA and the private sector. While we can't predict how many of these, if any, will come to fruition, our proven track record as a developer and our ability to undertake a project without financing contingencies provide us with a distinct competitive advantage.

As stated in yesterday's release, we placed one development project in service in the first quarter, Cool Springs IV in Nashville. Our $41.6 million wholly owned development pipeline now consists of two projects, Triad Centre III, 148,000 square foot office building in Memphis and River Point IV, a 200,000 square foot industrial property in Atlanta.

We're also developing a 171,000 square foot office building and joint venture for the GSA in Charlotte.

Our search for high quality acquisitions to strengthen our franchise, enhance our portfolio and generate long-term attractive returns is ongoing. As all of us know, very little has come to market. What we're hearing from owners, bankers and brokers is that at this point anyway, owners are basically only willing to sell lower quality assets which would not enhance our portfolio. Our search for quality assets continues.

On the disposition front, we continue to make progress towards our selling of $50 million to $150 million of non-core assets this year.

As I do every year, I've recently hosted our annual employee presentation in each of our divisions. This year's theme is focused on a review of the economy, our industry and where opportunities lie. While everyone in Highwoods understands the current operating environment is somewhat difficult, it is abundantly clear that a roll-up-your-sleeves, get-it-done attitude is pervasive throughout our company.

In addition to day-to-day leasing, we are working hard to make some things happen, dispositions, acquisitions and build-to-suit development, and continuing to believe this will be another productive year for Highwoods.

Looking to the remainder of the year, we continue to be comfortable with our FFO guidance of $2.31 to $2.49 per share.

Lastly, we've recently printed our 2010 Annual Report, and you can access it under our Presentations header in the Investor Relations section of our website. If you prefer a hardcopy, please feel free to contact Tabitha and she'll be more than happy to mail one to you.

Thank you for your continued interest in Highwoods.

Mike?

Thanks, Ed, and good morning everyone.

Over the last few months, we've seen a noticeable pickup in leasing activity and deals we're getting done. In total we signed 139 leases in the first quarter for 1.3 million square feet. The average office lease term was 4.7 years which equals our five-quarter average.

While still a tenant market and concessions are present in most deals, customers and prospects seem to be adopting a mindset that they need to get on with their business and now may be a good time to lock in favorable lease terms whether renewing or considering relocation. A good bit of the wait-and-see mentality prevalent in most of '09 appears to be behind us.

Average in-place cash rental rates across our total portfolio were 70 basis points from a year ago and across our office portfolio they were up 1.9% from the same period a year ago.

Cash rent growth for office leases signed this quarter declined 11.1% while GAAP rents on office leases signed this quarter were down 2.2%. This decline in cash and GAAP rents is indicative of where we are in the cycle particularly as we aggressively compete to attract new customers.

This quarter we signed 256,000 square feet of new office deals, 52% above our five-quarter average.

CapEx related to office leasing was $12.52 per square foot in the first quarter, above the five-quarter average of $10.83 per foot.

Three deals totaling 180,000 square feet with an average term of 10.5 years were the primary drivers of this higher CapEx number.

Excluding these three leases, CapEx on the remaining 768,000 square feet of our office leases signed in the quarter would have been $6.84 per square foot, well below our five-quarter average.

Office sublease space both in the overall market and in our portfolio remained under 2%. The continued reluctance and/or inability of sublessors to use their balance sheet to fund CapEx has kept sublease space from becoming as competitive as in prior downturns.

I'd like to now provide a bit more color on our Top 5 markets.

The Raleigh market was relatively stable this quarter and we're seeing more activity to backfill the spaces vacated by our customers who expanded and moved into RBC Plaza.

In Tampa, our leasing team did a great job this quarter increasing occupancy 110 basis points to 92% in what continues to be a difficult and extremely competitive leasing environment. This included a 58,000 square foot long term lease in our Spectrum Building in Tampa Bay Park.

Our Atlanta division is seeing some decent leasing activity in our industrial portfolio, including 121,000 square feet at Tradeport IV. This included a 64,000 square foot renewal and 19,000 square foot expansion by one customer and a 38,000 square foot lease with a new customer.

Tradeport IV is now 100% leased.

Nashville remains one of our stronger markets and occupancy in our portfolio was 90.9% at quarter end, 250 basis points better than the overall market.

The 420-basis-point decline in occupancy in our Nashville portfolio from the fourth quarter was driven primarily by two factors.

First, Simplex Healthcare vacated 66,000 square feet in our Westwood South property to expand into 91,000 square feet at Cool Springs IV.

Second, Cool Springs IV was placed in service and is 73% leased.

Our wholly owned portfolio in Richmond is performing well with occupancy at 90.9%. This is a testament to the hard work by our leasing team in Richmond and the strong multi-tenant Innsbrook office submarket.

The Richmond market did experience higher than average negative absorption this quarter primarily as a result of Circuit City finalizing its bankruptcy. This Class B 383,000 square foot special-purpose building with 64,000 square foot floor space is being marketed for single tenant use and is not in direct competition with our properties in Richmond.

Last week, we hosted our in-house leasing reps for our two-day leasing summit. We discussed the current leasing environment, best practices and how we intend to continue beating our local competition.

While everyone is keenly aware of the current environment, attitudes were upbeat and optimistic given the increased volume of leasing activity. The focus remains on retaining our existing customers, attracting customers from our competitors and identifying new opportunities in the market.

We're continuing to leverage our well-maintained properties to provide superior customer service and promote our strong balance sheet. Our financial script continues to differentiate us from the competition.

Terry?

Thanks, Mike.

As Ed mentioned, we are pleased with our financial and operating results for the first quarter with FFO of $0.61per share, up $0.01 from the $0.60 per share in fourth quarter of 2009, excluding the fourth quarter impairments and in comparison to $0.70 per share in the first quarter of 2009.

Core FFO, which excludes non-core operational items such as lease termination fees, condo gains, debt extinguishment gains and losses, building impairments and so forth, was $0.60 per share for the quarter which compares to $0.59 per share in fourth quarter of 2009 and to $0.68 in first quarter of 2009.

The $0.08 reduction in core FFO from first quarter of last year was nearly all due to the diluted impacts of the debt, equity and disposition transactions we planned and executed in 2009 that enhanced our liquidity for future growth opportunities. The largest single impact coming from our offering of 7 million common shares completed in late May last year.

Total revenues from continuing operations were up $2.6 million this quarter, or 2.3%, compared to the first quarter last year. Revenues from same properties, those in service during both periods, were down $2.1 million of which $600,000 relates to lower lease term fees and $800,000 relates to lower straight line rental income. The remaining $700,000 reduction in same property revenues largely reflects a 1% drop in average occupancy in the same property portfolio year-over-year, partly offset by higher average rental rates year-over-year.

Revenues from non-same properties were up $4.7 million, of which $3.0 million is from new development projects and $1.6 million is from our acquisition in fourth quarter 2009.

Total property cash NOI from continuing operations, which excludes straight line rents and lease term fees, was up by 2.8% in first quarter 2010 compared to the first quarter of 2009. This was due to NOI from developments and acquired assets not yet in the same property pool, partly offset by a four-tenth of a percent decline in same property cash NOI.

G&A for the quarter was approximately $300,000 lower than first quarter of 2009 after eliminating the non-cash mark-to-market adjustments on deferred compensation liabilities from both periods. This net G&A reduction resulted primarily from lower headcount and lower incentive compensation.

As we've discussed in a number of prior calls, the deferred comp mark-to-market adjustment in G&A is fully offset by adjustments in the other income line item. The impacts of the mark-to-market adjustments on G&A and on other income going forward will lessen because of lower balances in the program due to scheduled payouts and our decision to discontinue the option to defer compensation beginning this year.

Interest expense this quarter was up $1.1 million compared to last year due to lower capitalized interest from a smaller development pipeline, higher fees on the new $400 million credit facility and slightly higher average rates on our debt. These were partly offset by lower average debt balances compared to last year.

As noted in the release, we reaffirmed full year FFO guidance of $2.31 to $2.49 per share. We were CAD positive in the first quarter and currently project to be CAD positive for the full year.

Our balance sheet and liquidity position continue to be very strong and stable. Our leverage is low at 40% debt-to-gross assets and our ratio of debt to EBITDA is 5.5 to 1. We have plenty of liquidity with nothing drawn on our $400 million credit facility, no debt maturities this year and only $138 million bank term loan coming due next year. In addition, the capital markets are currently open to existing REITs for virtually all forms of debt and equity.

Operator, we are now ready for questions.

(Operator Instructions).

And our first question comes from the line Jana Gallen of Bank of America/Merrill Lynch.

Please proceed with your question.

Hi. Thank you.

I guess what type of industries or companies are behind the high leasing activity in first quarter? Could we kind of generalize to a few? And then kind of what are your expectations on when that absorption will turn positive in your market and where -- which markets will turn positive first?

Wow. Hey, good morning.

With regard to the SIC codes which is how we track that information, the industrial is pretty clear, it's transportation and distribution warehousing. On the office side, it's been technical services, educational services, finance, insurance and healthcare are the Top 4 that have absorp space in this past quarter based on total rents committed in square footage.

We've also seen on the industries that continue to be most prolific with regard to looking and taking down space, clinical research, government, biopharma and legal services.

And then, Jana, the second part of your question?

Kind of what are your expectations on when you'll see net absorption turn positive?

Well, we've seen some signs of that in a few of our markets even this past quarter. I think that when it would get back to equilibrium where we would see positive absorption as a consistent trend, I suspect that won't happen until some time in 2011.

Thank you very much.

You're welcome.

Our next question comes from the line of Chris Caton from Morgan Stanley.

Please proceed.

Hi, good morning.

Good morning.

Could you catch us up on your acquisition activities and what you're seeing in the market now in terms of pricing and whether or not that given, say, a move in cap rates in certain markets, does that remain interesting?

Yes. As we mentioned, the volume of activity remains scant. I think that that's been true not just for us but pretty much across the sector that the number of quality assets that are in the market are few and far between. We have seen assets that are on the lower quartile of the quality spectrum that really the cap rates have been rather high because they're just difficult to trade and there's not much of a market.

But overall, for what we hear, and we understand that a lot of investment sales brokers are making more frequent trips to Kinko's nowadays than what they were just 60 to 90 days ago, that pricing would be expected to be lower in the 50 to 100 foot range. And that we're seeing some deals now trade that are in the mid to low 8s.

Do you still see value in cap rates at that level?

We do, depending on the quality of the asset of course, how well is it leased, not just in occupancy statistic but the quality of the rent roll, when the rolls come near term or further out, the credit quality, the age of the building, and all the other aspects of the brick and mortar that would be important and then, of course, what submarket it resides in.

The way we measure that is we look at our weighted average cost to capital and then we basically add BPS based on -- the number of BPS we add is predicated upon the quality of the asset inclusive of the underwriting.

Got it. Thank you.

You're welcome.

Our next question comes from the line of John Stewart of Green Street Advisors.

Please proceed.

Thank you.

Ed, could you expand a little bit more on your comments regarding potential GSA build-to-suit activity specifically what markets and agencies and maybe most importantly, what sort of yields you think you can achieve given where we've come in terms of availability of capital?

Sure. I don't want to be too specific so that we don't bring even more competition out of the woodwork. But we are chasing some specific FFOs. I think it's fair that everybody knows that we have more GSA business in the City of Atlanta than any other city. But we are pursuing some FFOs in a number of different markets.

We continue to cling for good reason to the core agencies, agencies that we feel that regardless of the economy or the times that we're in will be core to the government such as CDC, FBI, Homeland Security, FAA, those types of agencies that we've served in the past and where we now have a track record with them which is a substantive measure for the GSA when they look at awarding contracts as prior track records. So I think as we continue to build the book of business with these core agencies that it bodes well for the quality of our bid.

With regard to the returns that we're chasing, they're not far off of what we've been doing with regard to both private and public sector work over the last four years. We've traditionally been in a 9 plus first year stabilized cash range and north of 10 on a GAAP.

And that's representative of what you'd be doing here?

Yes, sir.

OK.

And, John, that would hold up for both because we are chasing a few private sectors as well. As I mentioned in my script remarks, we can't predict what will come to fruition and we can't predict whether or not we'll win or not. But we're certainly in the hunt on them. And the GSA deals, they typically have more GAAP growth, and the longer term with the GSA is usually 15 to 20-year deals.

Got you. OK. And then on the mid to low 8 cap rate range that you referenced, any specific markets that that applies to --

It's just -- I'm sorry.

-- in your portfolio?

John, it's just been so scant. And what I was saying was mid 8s. There's just so little trading out there. We did see one trade that was actually a sub 8, but it's heavily dependent on the credit of the main customer. And then there was a government deal that also traded that I think everybody is aware of and that's got a little bit of time on it now.

I think that we and others will be much more able to give color on this as we get into the next two quarters as our conversations with numerous investment sales brokerage houses all indicate that they're working on putting packages together at varying degrees.

Is it fair to infer then that pricing may have compressed even since the recent Orlando deal that you guys passed on?

Yes. You're kind to say passed. We were after it and we got outbid. I think that that's a fair thing to say. Yes, sir.

OK. Thanks, guys.

Thanks, John.

Our next question comes from line of Brendan Maiorana from Wells Fargo.

Please proceed.

Hi, yes good morning. This is Young Ku here for Brendan.

I just want to talk about your leasing activity a little bit. Seemed like office leasing was very good for the quarter. I'm just wondering when those are expected to commence and how that will translate into occupancy gains later in the year.

Well, the increase in leasing activity is certainly something that we and what we hear from others is up. That activity for the first quarter is substantially better than what we and most of our peers have seen in about a year and a half or more.

I think though that we're all trying to balance the increase in activity with upcoming expirations, potential contractions or move-outs. I think that we are very comfortable with the year-end occupancy range that we forecasted when we gave our guidance at the beginning of the year of 87% to 89%.

There's not a tremendous amount of spec leasing in that. If the volume gets even better, we'll feel better about that. But I think we're comfortable with sticking with the 87% to 89% range, and we'll see how that plays out.

I do want to underscore that sublease space remains almost -- not totally but pretty much a non-issue. It's less than 2% of market in our core markets and is less than 2% of our portfolio. And the sublessor is continuing to be extremely reluctant to and in some situations unable to provide CapEx to make deals work from a lease commission and a build-out perspective.

Also I would point out that the lease activity that we're seeing, increases have been pretty much across the board in all divisions, not just concentrated in a few.

Got you. Thanks for that.

And just related, looks like the CapEx cost has gone up a little bit on a per square foot basis. Are you seeing that tenants are feeling better about taking commitments that led to the higher leasing volume or are they still pretty sensitive to the inducement dollars that are being put out there?

I think it's more of the latter. It remains a pretty competitive field out there today and it takes some dollars to win some of the bigger deals.

If you look at our number as Mike referenced in his prepared remarks, the number was certainly higher than what our five-quarter trend has been. But akin to like last quarter, we pointed to a specific couple of deals that if you strip them out, the number changes dramatically. And it seems true for this quarter. If you take out three deals which each averaged 60,000 square feet in plus 10 years in term, the number goes on a CapEx per square foot basis from about $12.5 to well under $7.

Got you. That's helpful.

And final question, in terms of your occupancy, when we take a look at the past, say, 10 years or so, your average occupancy was around 88%. But that's obviously including some of the portfolio that were of worse quality in the past, but you've upgraded your portfolio. How would you say - what you would say will be a comparable type of stabilized or average occupancy today?

Yeah. So just to be sure I'm properly understanding your question, so when the world returns to equilibrium, what would be a typical stabilized occupancy for our current portfolio given its 43% difference today day from five years ago?

Exactly.

We would expect it to be in the 92.5% to 93.5% range.

OK, that's helpful. Thank you.

Thank you.

Our next question comes from the line of David Nebinski of Robert Baird.

Please proceed with your question.

Hey, everybody.

Hey, David.

I got a couple of questions. First, how do you guys think about where your incremental capital will come from today, specifically on the debt side? What are you being quoted on for secured mortgage debt and/or unsecured bond debt?

Yes, David, this is Terry.

We haven't really gone out for bids on any secured loans lately because we really haven't had the need. So I can't give you a recent quote. But anecdotally, I would say for us at current 65%, 60% leverage levels, it's probably about maybe 300 over or so on the secured.

On the bond side, we do get quotes on how our stock is trading in the market and using that as an indication of what a new issue spread would be. It would be somewhere I think in the low to mid 6s, maybe from a 6.25% to 6.5% on a new tenure right now.

And is that attractive to you guys to access that to hoard up capital for potential opportunities over the 6 to 18 months or so?

It is an attractive rate, but until we have, I think, better visibility on usage, I have no place to really put that capital to work. There's nothing drawn on my credit facility. I can't pay down any debt. Our secured debt all has heavy yield maintenance penalties if we would prepay existing debt.

So it's just too expensive I think in our view to go out and raise capital and just have it sit in basically cash form until something comes up from an opportunity perspective.

OK, great. And then has there been any change in how balance-sheet lenders are approaching the troubled loans in your specific market?

No. We continue to see a [montessorial] approach to that where the clich "kicking the can" continues to be the mantra of the day. We just continue to hold out hope that at some point, there'll be reconciliation with that and people realize that it's a bottle, not a can and if you kick it enough, it'll break and deals would come to market.

OK, great. And then lastly, is there any either change or trend in the difference between the asking rates and taking rates?

On acquisitions or lease deals?

On lease deals.

Is there any delta between asking and getting? Yes.

Yes. I mean has that changed? So if before the asking rate was 20 and 15, and then now with the leasing velocity and the activity you guys are kind of seeing where that 20 is now being taken at 18 or --

Yes. I don't think the gap was really that broad where it was ask 20, get 15. It is obvious though that customers continue to have many choices when they're out looking for space in the current environment. And given the absence of some strong indicators that there is going to be near-term sustained job growth in the US, I think they're stapling those two things together, the volume of inventory plus the absence of that near-term job growth and leveraging it to their advantage.

I do feel that customers continue to differentiate between quality of landlord and quality of product and space that they'll receive after the sale. And that continues to bring advantages to select landlords.

And I think, David, we also from our perspective try to hold as close to our ask rates as we can even to the extent of giving a little more concessions in order to get our escalations, because we do get annual bumps. We'd prefer to have them on a higher face rate. And then also when that lease expires, it gives us better opportunity to keep it up.

OK, great. Thanks a lot.

Thank you.

Operator

Our next question comes from the line of Suzanne Kim of Credit Suisse. Please proceed with your question.

Hi. Just to follow up on that question, I'm just trying to figure out if that spread -- and I know you guys are keeping -- you said that you're trying to keep to the ask rates. But I'm just wondering if, first of all that sort of pull of a customer, are we seeing a change in that in the past quarter?

Yes, Suzanne, I think that you don't want to put all your cards out on the table on exactly where we'd settle. So we'd ask this but we take that given the breadth of publication of these comments. But I think that what we're seeing with regard to the increase in volume if it sustains, it certainly has thus far into the second quarter.

If this sustains, I think it's probably driven by two things. The fear is gone and there's some higher degree of confidence and that customers are recognizing that at some point that this baton is going to move from the consumer's hand to the provider's hand. And that now is a good time to go ahead and take advantage of that.

So not all the volume of lease activity that we were able to garner in the first quarter were expansions; some of it was where customers came out of competitive product and occupied less space in our portfolio. I just think that some of this is being driven by now it's a good time to take advantage of it.

But I think that's true whether you're leasing office space or buying a mattress; that it's not going to last forever and inflation is going to come, interest rate increases are going to come and at some point the inventory is going to become less. It's certainly at the top quartile of quality as time goes on.

Just a second question, I just saw that you widened your assumptions for the lease termination fees. And I'm just wondering what was the cause of that widening and if there's any visibility on other terminations of significant tenants in the near term?

Yes, Suzanne, this is Terry.

Based upon some negotiations that we're underway right now, we expect it to be a little bit better than the low end. And so that's why we raised that up a little bit this quarter.

OK, great. Thank you so much.

Thank you.

(Operator Instructions).

And your next question comes from the line of Dave Rogers of RBC Capital Markets.

Please proceed.

Yes, this is Mike Carroll.

Would you guys pursue any value-add acquisitions?

Mike, this is Ed. Yes, we would certainly consider that. And we've done some homework looking at that type of opportunity.

Back to a question that we answered earlier, of course we would take our weighted average cost of capital and do a few things. One is have some very conservative underwriting on the lease-up. The price that we would have to pay would have to be somewhat divorced from what the developer likely paid to have that asset built and that it was probably put under contract with general contract as at a point in time when pricing was maybe at an all-time high.

So if they were willing to relinquish the idea of recapturing what they had in it to build it and we could overlay some relatively conservative underwriting, then we would certainly make a run at it. What we don't want to do is buy some development project that was ill-conceived. It has to be a well-conceived development project with regard to floor plates, fit and finish, quality of materials, ingress/egress submarket, et cetera. And if all those things made sense, then it would certainly be something that we would go out and try to create some significant value in.

I don't think we would also want to buy back, Mike, the same stuff that we sold over the last three or four years in terms of considered value-add Class B minus C products that might be able to be bought on the cheap but still not improve the overall quality of our portfolio.

OK. Where would you expect to see the most opportunities with acquisitions or build-to-suit? I guess I'm kind of looking for what markets would you be looking at or you expect to see and then what property type.

Well, the product type that we want -- as Mike said, we have a mantra here that anything that we buy has to lift the overall average of the current portfolio. So we're looking for opportunities that would be Class A assets in submarkets that are traditionally the last to de-lease in tough times and the first to re-lease in good times.

Each of our division heads has a wish list of assets that they would like to own today in the market that we don't currently own that fit that criteria. And it could be a development project where the only Achilles' heel it has is that it was just started way too late in the cycle and as a result it suffers from a lack of occupancy today. But as I outlined earlier, if it has certain characteristics, we wouldn't shy away from taking a hard look at it.

And then build-to-suit opportunities are again as we look, they're pretty much across the system, save maybe a couple of markets. So if not, all concentrated again in any one market.

OK. Thank you guys.

Thank you.

And we have no further questions at this time.

All right, everyone. Thank you again for taking the time to listen in. As always, if you have any questions, please don't hesitate to call us. And, Jose, thanks for your help today.

Thank you. Ladies and gentlemen, that concludes the conference call for today. We thank you for your participation and ask that you please disconnect your lines.