Hudson Pacific Properties Inc (HPP) 2013 Q4 法說會逐字稿

Greetings and welcome to the Hudson Pacific Properties fourth-quarter 2013 earnings conference call.

(Operator Instructions)

As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Kay Tidwell, Executive Vice President and General Counsel. Thank you. You may begin.

Good afternoon, everyone, and welcome to Hudson Pacific Properties fourth-quarter 2013 earnings conference call.

With us today are the Company's Chairman and Chief Executive Officer, Victor Coleman, and Chief Financial Officer, Mark Lammas. Other members of the Company's senior Management team are also here to answer questions.

Before I hand the call over to them, please note that, on this call, certain information presented contains forward-looking statements. These statements are based on Management's current expectations and are subject to risks, uncertainties, and assumptions.

Potential risks and uncertainties that could cause the Company's business and financial results to differ materially from these forward-looking statements are described in the Company's periodic reports filed with the SEC from time to time. All information discussed on this call is as of today, February 26, 2014, and Hudson Pacific does not intend and undertakes no duty to update future events or circumstances.

In addition, certain of the financial information presented in this call represents non-GAAP financial measures. The Company's earnings release, which was released this afternoon and is available on the Company's website, presents reconciliations to the appropriate GAAP measure and an explanation of why the Company believes such non-GAAP financial measures are useful to investors.

Now, I'd like to turn the call over to Victor Coleman, Chairman and Chief Executive Officer of Hudson Pacific. Victor?

Thank you, Kay, and welcome, everyone, to our fourth-quarter 2013 conference call.

The fourth quarter was an extremely productive one for Hudson. Noteworthy accomplishments included the completion of significant new long-term leases, the execution of a purchase contract for a major acquisition announced at the end of the quarter, and preparations for what proved to be a very successful common stock offering following the end of the quarter.

Leasing activity remained robust during the quarter, with the completion of new and renewal leases totaling more than 415,000 square feet during the quarter. Highlights included a 15-year, 284,000 square foot lease for an entire Element LA office campus with Riot Games, a developer and publisher of premium competitive online games. This was the largest new lease transaction in the region in the last five years.

As you recall Element LA consists of more than 12 acres, with five buildings totaling approximately 284,000 square feet, and a five-story parking garage currently under construction. The property is currently being redeveloped as a premiere creative office headquarters, campus for Riot Games, a company which was recently named one of the 15 best small- and medium-sized companies to work for by Fortune Magazine. Commencement of the lease with Riot Games is scheduled for the second quarter of 2015.

During the fourth quarter, we also entered into a new 12-year lease for our entire 63,400 square foot 3401 Exposition Boulevard property with Deluxe Entertainment Services Group, a leading provider of services and technology for the global digital media and entertainment industries. This lease was executed a near five months following the acquisition of this property.

3401 Exposition is currently undergoing a full base-building redevelopment, including new and exterior facades, a new roof, new mechanical and electrical systems, and a complete interior remodel. The renovation process is on schedule for the third-quarter of 2014 lease commencement.

In terms of leasing trends, a solid fourth quarter capped off a year of strong office performance throughout 2013 in each of our core markets. Starting with Seattle, the downtown Seattle market finished with an impressive 311,345 square feet of positive net absorption, resulting in nearly 500 basis point improvement in direct vacancy from 14.6% to 13.9% from the third to fourth quarter, respectively.

Of the major markets, downtown Seattle currently has the highest Class A average asking lease rate of $35.52, a $0.51, or nearly 2% increase from last quarter and the largest jump in asking rates in any market.

In terms of our trends in our submarkets, Class A vacancy in Pioneer Square, where our First & King property is located, dropped an astounding 36% from 7.41% at the end of the third quarter to 4.72% at the end of last quarter. Similarly, the already tight Class A vacancy in the Lake Union market, where our Met Park North project is located, also experienced another good quarter, dropping from 5.44% of the end of the third quarter to 5.39% at the end of the last quarter. Asking rents in Pioneer Square and Lake Union submarkets are also on the rise, increasing by nearly 3% over the past year.

The strong office performance throughout Seattle followed from strong employment gains. 2013 witnessed an increase in the estimated 45,000 jobs, which represents a 3.3% growth rate, placing Seattle significantly higher than the national average. This is quite impressive considering that San Francisco, including the Silicon Valley, added 37,000 jobs during the same period.

This growth has been led by tech companies, such as Amazon in the City of Seattle, although hiring was strong across all industries. The unemployment rate stands at 5.2%, with recent forecasts projecting a minimum of 3% annual employment growth through 2016.

In light of these exceptional market fundamentals, we are especially pleased with our latest acquisition of the office and retail property known as Merrill Place, located in Pioneer Square, directly adjacent to our First & King property. The property was acquired in an off-market transaction for a gross purchase price of $57.7 million. Merrill Place consists of four interconnected brick-and-beam buildings, spanning an entire city block, comprising approximately 180,000 square feet in ground floor retail, along with 147 stall standalone parking structure.

The property is currently 93% leased, with approximately 52% of leases scheduled to expire over the next four years. Importantly, we believe that in-place rents are more than 20% below current market rents. Looking ahead, we plan to implement an extensive repositioning of this property, including lobby and common area upgrades, new tenant amenities, an elevator mod, and mechanical and electrical upgrades as well.

Additionally, current zoning for this property allows for the potential development of a new office building, fronting the soon-to-be-improved Alaskan Way waterfront, which the Company estimates could add approximately 140,000 square feet to this project. The entitlement process for this project is underway, with the goal of delivering a new office building sometime in 2017.

Turning now to San Francisco, 2013 was characterized by a strong market activity and further improved fundamentals, driven largely by expansion within the tech industry. The strength of the office market in 2013 was demonstrated by a market-wide leasing activity, which totaled over 10 million square feet for the year. As expected, 2013 leasing activities was dominated by tech industry, which accounted for 50% of the office leases. This was down from 61% in 2012, which is a good sign that greater balance is emerging as other industries gained business confidence.

Market-wide vacancy, as of the end of last quarter, stood at 7.6%, its lowest point since the first quarter of 2001. This represents a 60 basis point drop from last quarter and a year-over-year drop of 190 basis points. Demand from the tech sector drove down vacancy rates market-wide, and provided continuing pressure on asking rents. As of year end, the market-wide asking rent stood at $55.40, which is an increase of 2.9% from last quarter and 13.5% from last year.

Last quarter, we updated you on the status of the new construction in San Francisco. The development pipeline remains stable over the fourth quarter, with approximately 2.4 million square feet under construction, more than 80% of which is already pre-leased.

Approximately 1.4 million square feet of this new construction is scheduled to be delivered in the first half of 2014, at which time, a significant slowdown in new deliveries is expected until at least the middle of 2015. Assuming demand remains healthy over this period, we expect that the low and new deliveries will continue to support market conditions characterized by tightening availability and market-wide pressure on rents.

Before moving on to an [upgrade] regarding 2013 leasing trends in Los Angeles, I'm pleased to report on February 5, 2014, the Company entered into a purchase agreement to acquire 3402 Pico Boulevard in Santa Monica, California. 3402 Pico consists of three contiguous parcels, comprising of nearly three acres. We estimate the site can support between 140,000 and 180,000 square feet of office space, including the completed refurbishment of an existing 40,000 square-foot vacant building.

With the future Expo Light Rail stop at Olympic and Bundy within walking distance, close proximity to other major transportation thoroughfares, excellent visibility, and the opportunity to deliver abundant outdoor activities and amenities, 3402 Pico Boulevard is ideally suited for creative office users looking to be located in this already highly supply-constrained market.

Similar to our successful redevelopment at Element LA and 3401 Exposition, our goal is to fully redevelop this property into a state-of-the-art creative office campus. Subject to satisfaction of customary closing conditions, the Company anticipates closing this transaction either the end of this week or early next.

As for 2013 leasing trends in Los Angeles, net absorption levels in Greater LA were a solid 477,000 square feet of positive net absorption, of which 881,000 square feet, or 185% of the Greater LA total, was recorded in West LA. Overall asking rates in the Greater LA area showed growth, improving 2% over the last 12 months, led by West Los Angeles, which improved 9.7% during the year.

Tenant demand in that region was largely driven by technology and media companies that are continuing to show interest in the Silicon Beach area, where we have a strong presence, including our latest 3402 Pico Boulevard acquisition. Virtually no new construction starts in the third quarter and only 1.3 million square, a scant feet 0.6% in the Greater Los Angeles marketplace, underway as of the fourth quarter 2013 finished, with a very little standalone pure office under construction throughout the Greater Los Angeles area.

One exception to the no-go development mindset has been the creative office projects in the beach communities of West Los Angeles, such as our Element LA, our 3401 Exposition, and soon-to-be acquired 3402 Pico project. These developments afford several advantages over ground-up, higher density projects, as they often take the form of redevelopment and therefore, can come online faster than traditional office products. Moreover, because of restrictive zoning, developers looking to take advantage of the economies of scale by seeking density cannot build in many of the West Los Angeles submarkets where demand is concentrated.

Another exception is in the Hollywood renaissance. While Los Angeles filming production market share has been tested by tax incentives from aspiring filming locations in recent years, LA remains the nation's entertainment capital, dominating the industry to even a higher extent than New York dominates finance, Las Vegas gambling, or Detroit auto manufacturing. According to Film LA, Greater Los Angeles production days in the third quarter of 2013 increased by 9.5% over year-ago levels.

Recognizing that the industry remains positioned to perform the wider metropolitan economy over the long-term, Hollywood has become the most sought after destination in Los Angeles for development, as evidenced by such projects as Columbia Square and our own developments at Sunset Bronson media campus and 5901 Sunset.

While office vacancy in Hollywood remains in double-digits, that number doesn't really tell the full story, as only one-third of Hollywood's current office stock could be considered Class A, which has a direct vacancy of just over 9% as of year-end. In short, fundamentals are tight enough to absorb the new space and usher in the new area of Hollywood's office market.

With that, now, I'm going to turn the conversation over to Mark, who is going to talk about our fourth-quarter financial results.

Thank you, Victor.

Funds from operations, excluding specified items, for the three months ended December 31, 2013, totaled $15.6 million or $0.26 per diluted share, compared to FFO, excluding specified items, of $11.6 million or $0.23 per share a year ago.

The specified items for the fourth quarter of 2013 consisted of expenses associated with acquisition of our office portfolio in Seattle, Washington, of $500,000 or $0.01 per diluted share, and an early termination payment from Bank of America relating to the Company's 1455 Market Street property of $800,000 or $0.01 per diluted share. Specified items for the fourth quarter of 2012 consisted of expenses associated with the acquisition of the Pinnacle office property in Burbank, California of $200,000, or $0 per diluted share.

FFO, including the specified items, totaled $15.9 million, or $0.27 per diluted share, for the three months ended December 31, 2013, compared to $11.4 million or $0.23 per share a year ago. Net loss attributable to common shareholders was $100,000 or $0 per diluted share for the three months ended December 31, 2013, compared to net loss of $5.9 million or $0.13 per diluted share for the same period a year ago.

Turning to our combined operating results for the fourth quarter of 2013, total revenue from continuing operations increased 30.4% to $57.4 million from $44 million a year ago. Total operating expenses from continuing operations increased 12.3% to $47 million from $41.9 million for the same quarter a year ago.

As a result, income from operations increased 378.5% to $10.4 million for the fourth quarter 2013, compared to income from operations of $2.2 million for the same quarter a year ago. I will discuss the primary reasons for the increases in total revenue and total operating expenses in connection with our segment operating results.

Interest expense during the fourth quarter increased 33.4% to $6.8 million, compared to interest expense of $5.1 million for the same quarter a year ago. At December 31, 2013, the Company had $931.3 million of notes payable, compared to $891.2 million as of September 30, 2013, and $582.1 million at December 31, 2012.

Turning to our results by segment. Total revenue from continuing operations in our office properties segment increased 43.4% to $47.7 million from $33.2 million in the fourth quarter of 2012. The increase was primarily the result of a $10.9 million increase in rental revenue from $35.2 million, a $2.1 million increase of tenant recoveries, to $8.3 million, and a $1.5 million increase in parking and other revenue to $4.3 million, largely resulting from the acquisition of Pinnacle I and Pinnacle II buildings by our joint venture with MDP/Worthe on November 8, 2012, and June 14, 2013, respectively, and our acquisition of the Seattle portfolio on July 31, 2013.

The parking and other revenue for the fourth quarter of 2013 includes an early lease termination payment from Bank of America related to the Company's 1455 Street property of $800,000. Operating expense from continuing operations in our office properties segment increased 31.6% to $19.2 million from $14.6 million for the same quarter a year ago.

The increase was primarily the result of the office property acquisitions mentioned earlier. At December 31, 2013, our stabilized office portfolio was 95.4% leased. During the quarter, the Company executed 19 new and renewal leases, totaling 416,948 square feet.

Total revenue on our media and entertainment properties decreased 9.8% to $9.7 million from $10.8 million for the same quarter a year ago. The decrease was primarily the result of the $700,000 decrease in other property related revenue to $3.3 million, primarily resulting from lower production activity compared to the same quarter a year ago, and a $400,000 decrease in rental revenue to $5.8 million, resulting from lower occupancy compared to the same quarter a year ago.

Total media and entertainment expenses decreased 5.2% to $6 million from $6.3 million for the same quarter a year ago, primarily resulting from lower production activity compared to the same quarter a year ago. As of December 31, 2013, the trailing 12-month occupancy of the Company's media and entertainment portfolio decrease to 69.9% from 73.7% for the trailing 12-month period ended December 31, 2012.

Turning to the balance sheet. At December 31, 2013, we had total assets of $2.1 billion, including unrestricted cash and cash equivalents of $30.4 million. At December 31, 2013, we had $250 million of total capacity under our unsecured revolving credit facility, of which $155 million had been drawn. During the quarter, we paid a quarterly dividend on our common stock of $0.125 per share, and we paid a quarterly dividend on our Series B Cumulative Preferred stock equivalent to 8 3/8% per annum.

In addition, we completed several important financing transactions during the fourth quarter and shortly following the end of the quarter. On October 18, 2013, the Company closed a four-year loan with US Bank, secured by the Company's Element LA property, which upon full disbursement will total $65.5 million.

The loan bears interest at LIBOR plus 195 basis points and will mature on November 1, 2017, provided the Company may extend such maturity for up to two one-year period, subject to satisfaction of certain conditions. Proceeds from the loan are expected to be used to fund site-work, a parking garage, base building, tenant improvements, and leasing commission costs associated with the renovation and lease-up of the property.

On November 1, 2013, the Company repaid a $33.7 million loan secured by the Company's 625 Second Street property. That loan bore interest at a fixed rate of 5.85% and was scheduled to mature on February 1, 2014. The repayment was made with proceeds from a draw under the Company's unsecured revolving credit facility.

On January 28, 2014, the Company completed the public offering of 9.4875 million shares of its common stock at a public offering price of $21.50 per share. The net proceeds from the offering, after deducting underwriter discounts but before other transaction costs, were approximately $195.8 million.

The company contributed the net proceeds from the offering to its operating partnership to fund the acquisition of Merrill Place and to repay indebtedness outstanding under its unsecured revolving credit facility, to create availability to fund future development and redevelopment activities, potential acquisition opportunities, and for general Corporate purposes.

The Company is providing full-year 2013 FFO guidance in the range of $1.07 to $1.11 per diluted share, excluding specified items. This guidance reflects the acquisitions, financings, and leasing activity mentioned on today's call, and all previously announced acquisitions, dispositions, financings, and leasing activity, including the January 2014 common stock offering. The costs associated with the consulting arrangement with Howard Stern have been excluded from the guidance estimate as nonrecurring costs.

As is always the case, the Company's guidance does not reflect or attempt to anticipate any impact to FFO from speculative acquisitions. The full year 2014 FFO estimate reflects Management's view of current and future market conditions, including assumptions with respect to rental rates, occupancy levels, and the earnings impact of events referenced in this call, but otherwise exclude any impact from future unannounced or speculative acquisitions, dispositions, debt financings, or repayments, recapitalizations, capital market activity, or similar matters.

Now, I will turn the call back to Victor.

Thanks, Mark.

To summarize, our fourth quarter and all of 2013, for that matter, was highly productive and very rewarding. Leasing activity continues to demonstrate strength in our submarkets, and we are executing on our asset growth strategy, as evidenced by our recent acquisitions in both Seattle and West LA.

As always, we appreciate your continued support of Hudson Pacific Properties, and we will look forward to updating you on our progress again next quarter.

Now, operator, I'm going to open up the call for questions.

(Operator Instructions)

Philip Shen with ROTH Capital.

Operator, let's go to the next one.

Vance Edelson with Morgan Stanley.

Great. Thanks a lot. In no particular order, you had a lot of success last year proactively backfilling space. This year you have a lot less expiring. I would imagine that makes it that much easier to proactively get a jump on it. Is that nearly all taken care of?

Yes, Vance. For this year coming up, we have very little expiring that we are not already in conversations or we're not already dealing with at the time. We've got really, I'd say, about six tenants that we're working through right now that are of material numbers at the end of the day; 40% of that is already spoken for, of the overall portfolio that we've already pre-negotiated. It's one of the lowest rolling years we've had.

Yes. Okay, great. Then, on Merrill Place, could you remind us the pattern of the expirations over the next four years? It sounds like there's a big mark-to-market opportunity. But of that 50% or so that's expiring, is it front-end or back-end loaded over the four-year stretch?

So, we got -- we have approximately 20% roll-up and it's pretty much weighted throughout the next two years, 2015 and 2016. There is, for the most part, we've got about 20% this year and the remaining of the roll, the remaining is pretty equal over the next two years.

Okay. 20% this year and then equal over the remaining two years?

Yes.

Okay, got it. Okay. And let's see what else. How do you feel about the prospects for a recovery in media and entertainment occupancy? You had some fairly bullish comments on Hollywood in general. Do think we've seen the bottom in occupancy there?

Well, that's a two loaded questions. Occupancy and activity for the general office space in Hollywood, for class A space, is exceptionally frothy right now. We've got lots of activity and very little space that's either available or coming online. As I mentioned in my prepared remarks, we've got very, very low vacancy there right now.

In terms of the actual media facilities, we are full. We are seeing a big activity and gross-up right now in demand coming to our sweep season in May, there's a lot of interest. Fourth quarter is typically been always a slow quarter because it's not a full working quarter for actual production and I think that is reflected in our numbers. Perhaps this year, our fourth quarter was lower than year over year last, but overall, the media business, year over year continues, to increase on a gross revenue basis, and we're pretty excited about this spring.

Terrific. Maybe one last question, if I may, on Element LA, the campus renovation. It's very early days, but any surprises so far that you think might put you ahead or behind schedule or ahead of or behind what you are expecting on the cost front?

No. Right now, we are right on budget and it looks like we are right on time. We are about to complete the parking facility, which is the major piece of the new construction. That will be done in the next 30 to 45 days and then the core and shell build-out should be done by July for the tenant build-out to start for occupancy, as I said, in early 2015.

Okay. That's great. Thanks, guys.

Rich Anderson of BMO Capital Markets.

Good afternoon, guys. When you look at the pipeline of potential deals that you are looking at today, how much of it is in Seattle?

Easier said, Rich, is that the [providers of] stuff we're looking at is a combination of Seattle and Los Angeles. We are not seeing marketed deals that fit the prototype of the stuff we've purchased in the past in San Francisco. Pricing has hit levels that we are seeing a much greater flow of activity in Seattle. We're really focusing a lot of our attention on the Pioneer Square area. Also, we are seeing a nice, solid flow of off-market deals in the core markets of LA, which we've been working through, which is really the West Los Angeles through Hollywood marketplace.

How much, as a percentage of the total portfolio, would you say is a reasonable target for Seattle, say, three or four years from now?

I don't know. I can't put a peg on that. As you can tell by our prepared remarks, we are very excited about Seattle. We are excited about our existing acquisition. We are excited about our new acquisition and the potential development.

I was actually up there yesterday with architects and our team up in Seattle, looking at our future development opportunities up there and I think the opportunities there are pretty good. More importantly, the fundamentals are excellent, in terms of the rental rate growth, job growth, and the overall tenor of that marketplace. It's pretty exciting.

Okay. Bigger picture, this time last year, you provided FFO guidance of $0.90 to $0.94 and you reported $0.99, adjusting for everything, so, a nice uptick. First of all, how would you -- would you characterize almost all that as just from your acquisition activity, or did you think some of it is from outperformance from a leasing perspective? How would you characterize the uptick in your performance relative to initial guidance?

As you know, we don't benchmark our guidance on future acquisitions, it's only on in-place acquisitions and assets that are in place at the time we give guidance. Last year, the preponderance of our tick up was performance of the existing portfolio on rental rate movement in some of our key areas and then we obviously had acquisitions, specifically in Seattle, which was our biggest acquisition of the year, that ended up focusing the shift, but we also had an offering last year at the same time, so that was diluted. So the combination -- it's a combination of all three.

Okay. Is there anything about the [vibrancy] of the markets today? You are talking about Southern California more and Seattle, that suggest that your performance -- your leasing and your looking internally could be even better in 2014 versus 2013? How would you describe the canvas that you are working on relative to last year?

If I go market-by-market in our three core marketplaces; as I mentioned, in Seattle, it had a very nice movement in terms of rental rate growth. And looking at that this year, we would be very comfortable estimating -- given the activity and the lack of space that's coming online in that marketplace, we are going to see as good, if not better, rental rate growth and activity in the Seattle and the surrounding markets that we are in, in the Seattle area.

If you look in San Francisco, clearly, that question has been asked year after year, which is what's happening in that marketplace and is it bottoming out? The number was almost a 14% rental rate growth for the full year of 2013. Right now, we still see, in the deals that we are working on right now, we're working on substantial-sized deals and leasing activity and our leasing team up there is still seeing rental rate growth at numbers that are very, very healthy. So I'm very optimistic at the deals that we are going to announce over the course of this year, are going to be very good rental rates in excess of to where they were in 2013.

The biggest movement that is fundamental is that in Los Angeles in the West LA side. The statistics are pretty evident that in West LA you had substantial positive absorption relative to the overall marketplace, which did not -- nowhere near performed to the same levels. There was a definite spread in rental rate growth and absorption of square footage in the West LA marketplace, relative to the rest of the market. So, overall, the fundamentals in those three markets where our core portfolios are, are very exciting and 2014 should prove out to be pretty good year.

Great. Last question is, and I don't know if you can comment on this, but can you give any color on the circumstances for Howard Stern's departure? Was it a mutual thing? Was it him? Was that you? Any comment at all that you can provide there?

Oh yes. Listen, there's no secret there at all. We've commented on this before. It was an absolute mutual decision that was something that we've been in the works for some time and a desire for him to do some other things. And we are excited that he's going to be on board to help us through a transition period and we're excited for him in his future opportunities going forward, and very grateful for all he's added to us in the past.

Okay. Thank you.

(Operator Instructions)

Craig Mailman with KeyBanc.

On guidance, Mark, can you give some of your underlying assumptions, particularly G&A?

Yes, I can give you an idea on that. You know now that 2013 G&A came in cash and non-cash, right around $22.5 million. We are not -- I'm sorry, right around $20 million. As we've announced, we've adopted another outperformance plan, and that's really the difference, as we see it. We are seeing it coming in right around $22.5 million, so call it $20 million, compared to $22.5 million, give or take.

Okay. I know you are excluding Howard's consulting agreement from this. Would G&A have been -- it would have been -- you guys are pulling him out of the consulting agreement but he's also out of the run rate? Is that a fair way to look at it? Or, are we going to see --?

He's in that number. For FFO purposes, because it is a nonrecurring number, we naturally didn't include it in our guidance. But, that number I just provided you factors his consulting cost in.

Okay. Then, moving on to the leasing side of things. The BofA lease term fee, is that space that you guys didn't know you were getting back and now would be available to re-lease? Or are do you guys still really only have -- it's what, the fifth floor available at 1455?

You are referring to that -- our reference to that one-time item with BofA?

Yes.

We knew -- we had struck a deal with BofA back in November of last year, so we knew we were going to get that floor -- those floors back.

Okay. Those have already been re-leased, or are they available now to lease?

They've been re-leased. We've been doing early surrenders in connection with taking advantage of lease-up opportunities.

Right. Okay, that's helpful. Then, I know you guys have a pretty active deal pipeline here, and now you have the proceeds from the equity deal. I know it's not in guidance, but just curious, your thoughts or your tentative thought on potential timing of redeploying that capital?

Craig, we typically don't comment on that. As deals come and we've committed to deals and put them in escrow, that's when we make our announcements. Suffice to say, we've been an active acquirer in markets that we are very comfortable with growing and enhancing our portfolio and there are some synergies in certain assets that we are looking at right now. As times come, over the course of this year, we'll keep you guys informed on acquisitions.

Great. Thank you.

We have no further questions in queue at this time. I'd like to return the floor back over to Victor Coleman for closing comments.

Thank you, operator. Thank you so much for supporting Hudson, as usual. Last year was a great year and we are looking forward to a better 2014. Have a good afternoon.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.