Hersha Hospitality Trust (HT) 2007 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Hersha Hospitality Trust Third Quarter 2007 Earnings Conference Call. At this time all participants are in a listen-only mode. We will be facilitating a question and answer session toward the end of this conference.

(OPERATOR INSTRUCTIONS)

With that, I would now like to turn the presentation over to your host for today's conference, Mr. Bartley Parker, Investor Relations. You may proceed, sir.

Thanks, Sean, good morning, everyone. Before we begin today's discussion, management has asked me to make a cautionary comment regarding the forward-looking statements. This conference call may contain forward-looking statements within the meaning of Section 27A of the Securities and Exchange Act of 1933, and Section 21E of the Securities and Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995.

These forward-looking statements reflect Hersha Hospitality Trust's plans and expectations, including the Company's anticipated results of operations, joint ventures, and capital investment. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance, achievement or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by these forward-looking statements. These factors are detailed in the Company's press release and from time to time in the Company's SEC filings.

With that, let me turn the call over to Mr. Jay H. Shah, Chief Executive Officer. Jay?

Thanks, Bartley. Good morning, everyone. With me today is Neil Shah, our President and Chief Operating Officer and Ashish Parikh, our Chief Financial Officer. I'm going to start the call with some remarks about our excellent quarter and then turn the call over to Ashish, who will provide some additional color on our financial results, and talk about our updated financial guidance for 2007. After we conclude, we'll be happy to answer any questions that the listeners may have.

Our AFFO of $0.44 per diluted share and unit for the third quarter of 2007 was up a significant 13% year-over-year. We're pleased at the strategic investment we've made utilizing our market-based approach and underwriting discipline have enabled us to meet the expectations that we provided to the investment community and to distinguish our portfolio performance from that of our peers.

Our growth this quarter reflects an increasing contribution from internally generated sources of earnings, in addition to the external growth from the accretive acquisitions that we've made in the last year. While acquisitions remain an important part of our overall strategy our asset managers consistently work together with our property managers to ensure that we maximize earnings from efficiently ramping up newer hotels, aggressively growing our ADR and maintaining a strict margin and flow through accountability.

As many of you already know we have one of the youngest portfolios in the hotel REIT sector. 15 of our hotels with a total of nearly 2,500 rooms or said another way, more than one third of our consolidated room inventory is still in the stabilization stage having been opened for less than two years. The central business districts and strong suburban infill markets that these hotels are in have attractive supply-demand dynamics leading to our optimistic outlook on their ability to continue to ramp up and contribute positively to our internal growth profile.

Our strategy continues to be the ownership of limited service and extended stay hotels and high barrier to entry, urban and strong secondary markets. The metro New York City market continues to be our largest as measured by EBITDA. Including our development loan program income approximately 40% of our consolidated EBITDA comes from this market.

Our newer assets in New York City performed extremely well this quarter with RevPAR increasing 17.2% which was driven by a 15.6% growth in average daily rate and remainder in occupancy. Occupancy for all of our New York City hotels remain very strong at approximately 92% during the quarter.

Metro Boston and Metro Philadelphia, our second and third largest markets by EBITDA respectively, have also performed well for us. Both had solid RevPAR gains in the third quarter and our urban locations in Boston had rate and occupancy influence RevPAR growth at 12.3% while our Metro Philadelphia portfolio had RevPAR growth of approximately 8% during the quarter.

The largest hotel in our Metro Philadelphia portfolio, the 250-room Hampton Inn Center City Philadelphia had a very strong 22% RevPAR growth. As we had announced previously we bought out our joint venture partner's interest in this hotel at the beginning of this quarter. We'll continue to look for opportunities to purchase the interests of our joint venture partners in hotels where the performance and pricing meets our acquisition criteria and warrants increased allocation of shareholder capital in those assets or collections of assets.

Looking at our portfolio by chain scale segment upscale and upper upscale hotels, which now comprise nearly 60% of our rooms, have turned in strong performance for the quarter with a meaningful 7.2% RevPAR growth in the third quarter, an impressive 290 basis point margin expansion. The extended stay segment continues to be a desirable niche for us due to our ability to generate strong margins from these properties. This segment of our portfolio had an average RevPAR of $1.05 and yielded impressive EBITDA margins of 41%.

Before I turn the call over to Ash, let me address an item in the subsequent events section of our earnings release that speaks to an element of our capital management strategy. In the fourth quarter we expect to close the sale of two of our New Jersey hotels. These are good assets and the gross sales price of nearly $30 million represents a solid sub-7% cap rate on sale.

The expected net proceeds of $12.5 million are anticipated to be used in the partial reduction of the balance outstanding under our credit line. We believe there are other assets in our portfolio that can be monetized and combined from the solid cash flows of our core properties will serve to help improve our already solid financial position.

With that, let me have Ashish go into some financial detail and provide some more color on our financials. Ashish?

Great, thanks Jay. We were very pleased with the revenue and profitability performance for the quarter as a whole. I'll start by discussing our revenues. For our consolidated portfolio, which comprises the 56 hotels, the acquisitions we've made over the last year along with improved occupancy and strong ADR growth resulted in total revenue growth of 68% for our consolidated portfolio to $65.6 million.

In contrast to the general lodging industry, our portfolio is still showing strong increases in occupancy. This increase in occupancy is the result of a continued supply-demand imbalance in our urban markets and the stabilization of our young portfolio.

For the third quarter our consolidated portfolio ADR increased 11.4% as compared to the same period last year. In addition, our occupancy levels exceeded 80% for the third quarter and exceeded 75% for the nine-month period ending on September 30th. We believe that we're in a great position to continue to grow our average daily rate as our properties continue to mature in our high barrier to entry market.

The revenue performance for our same-store consolidated portfolio, which is now just over half of our total portfolio was also very strong with RevPAR growth of 9.5%. This compares very favorably to overall U.S. RevPAR growth of 6.8% in the third quarter. Our same-store RevPAR growth was driven by a 7.3% increase in ADR and a 2.1% increase in occupancy.

Our same-store RevPAR and margin growth surpassed our results for the second quarter, and provide us with a high level of confidence for our fourth quarter operating forecast. Also in contrast to our second quarter results was our ability to expand our same-store operating margins. The same-store EBITDA margins for our consolidated portfolio were up 94 basis points relative to the same period last year.

As mentioned previously our asset management function has been devoting a significant amount of time developing and evaluating expense control measures to be put into place at our hotels and we were pleased to see a positive impact from these initiatives.

Total development loan financings outstanding including equity in our Manhattan and Brooklyn land leases, totaled approximately $70 million at the end of the third quarter. Approximately 70% of our development loans and land leases are being utilized to finance New York City based hotel projects.

The relationships these loans provide are not only financially attractive but also provide us with an unmatched pipeline of properties at off-market rates. Turning to our financial position, based upon an analysis of our debt service and dividends coverage levels we believe that our balance sheet is in good shape with a large portion of our debt fixed at very attractive rates and with limited debt maturities over the next few years.

We will, however, continue to seek ways to reduce our leverage load and are comfortable with our ability to use our excess cash flows and potential proceeds from asset sales to help pay down debt, fund our dividend and finance our growth. In the third quarter we declared our regular $0.18 per common share dividend or $0.72 on an annualized basis for a payout ratio of approximately 61% of the Company's forecasted AFFO for the fiscal year ending December 31, 2007.

Our annualized dividend yield based upon yesterday's closing stock price is approximately 6.8%. Turning to our updated guidance for 2007 the faster than expected ramp up of our younger assets, combined with the increased income from development loans, the strength of our urban markets, and contribution from completed acquisitions has improved our outlook for the remainder of the year.

Assuming the continuation of strong hotel fundamentals, and limited supply growth in our markets, our updated guidance for full year 2007 is as follows. Consolidated same-store RevPAR growth compared to the full year 2006 of between 7% and 9%, consolidated portfolio RevPAR growth compared to the full year 2006 of 14% to 16%.

Net income available to common shareholders of 10.5 million to 11 million, net income available to common shareholders per share of between $0.23 and $0.25, adjusted EBITDA of 112.5 million to 114 million, and adjusted FFO per share of $1.17 to $1.19 per weighted average diluted share and unit outstanding. Our full year guidance excludes any potential gains from asset sales that may close prior to the end of the year. This concludes my formal remarks.

Now, I'd like to turn the call back to Jay.

Well let me conclude by saying the geographic diversity of our portfolio with our focus on gateway markets has allowed us to produce exceptional financial performance as shown by this quarter's growth. We remain focused on building a strong company with a value-added asset management program and a disciplined acquisition program. As we've demonstrated these attributes enable us to provide solid coverage of our dividend, expand our platform as opportunities arise, and continue to deliver value to our shareholders.

With that, Operator, I'll be happy to open the line up for questions. As I said before Ashish Parikh and Neil Shah are available to answer questions as well.

(OPERATOR INSTRUCTIONS)

And we will take our first question from David Loeb of Baird.

Hi, I wonder if we could start with the development loan portfolio. In fact, I may leave it off there for the time being. Can you give us a little more color on the -- what was it, about 27 million that was added this quarter, and specifically the 167 Johnson Street LLC those two loans? Is that two different hotels, two hotels on the same site? It's clearly two different loans. Can you comment on that?

Sure. Hi, David, this is Ashish. The Johnson Street loan is, it's a Hilton Garden Inn and a Homewood Suites, it is one building. The way it's structured is 40 stories ground floor through -- first floor through to 20. The 20th floor is the Hilton Garden Inn and 21 through 30 is the Homewood Suites and then 31 through 40 is a condominium project.

Our loan is currently on the entire building. We have a first right of -- I'm sorry, we have an option to purchase 50% of the Hilton Garden Inn at 88 million, and we're currently negotiating an option to purchase 50% or more of the Homewood Suites as well.

And so, that accounts for 20 million of the increases. The other 7 million, 5 million of that was related to a boutique hotel in Union Square in New York, which we've had on the books previously. It was paid down for a short amount of time and then it was redrawn by the developer during the third quarter. And then there were just a few ancillary loans that were originated in the third quarter.

On the Union Square was that always listed as a boutique?

You know it was previously a Hilton Garden Inn, but because of the strength of that market we've now decided to make it a boutique. I'll turn it over to Neil, maybe he can talk a little bit about that.

Yes David it's slated to be a four-star inn dependent hotel, which will be an upper upscale boutique hotel. It's a -- the Union Square marketplace is one that has very few hotels. The one hotel that's there today the W Hotel is an extremely strong performer from a rate perspective, and we didn't want to cap our upside in rate with a brand in this case.

That said, we have had a lot of interest from many of the upper upscale brands to brand the hotel. But at this point, we feel that the flexibility that the program will allow being an independent makes that the right way to go. That said we continue our conversations with Marriott, with Ian Schrager, with a whole list of various boutique brands as it were.

And Neil (inaudible) you're involved in all of that. This is the Sam Chang property then?

The Union Square?

Yes.

Union Square, Sam Chang is a partner on that property.

Okay, and who else is involved in that, is that a Hersha?

It's a Hersha Development Corp. asset as well.

Okay so it's Hersha and Sam Chang together okay.

And David the -- the Brooklyn asset that the Homewood/Hilton Garden Inn combination that is a partnership with a new development relationship that we've made across this year, United Homes, a very active, primarily residential developer in New York City, a very high quality developer. This is a great project, one that we're very excited about.

Johnson Street might not ring a lot of bells but it's really at the corner of Johnson and Flatbush Avenue. So this is downtown Brooklyn, very prominent site, very -- has a signature architect building it, Ismael Leyva and we're extremely excited not only about the project, but the pipeline that United Homes is going to bring to us in New York City.

And that's -- that's being developed solely by United Homes?

That's right yes.

And why was it two loans as opposed to one at a blended rate? Is that just something about the nature of the structuring?

Yes, it is, David. The way it's structured right now until we receive an option on the Homewood Suites that portion is at 13.5%. So, whereas because we received an option on the Hilton Garden Inn, we were able to give that loan at 11%.

Okay, so the 9 million portion is likely to go back to 11% once you have -- and you're looking at the same kind of fixed option for -- a fixed price for a fixed ownership percentage?

That's right.

Okay and I guess if you convert this loan into equity and equity interest, your equity interest would be just in the hotel portion?

Just in the hotel portions.

So that's all structured into the loan, because you said the loan was on the whole project?

It's secured by the project.

It's secured by the entire project. But the option is only for the hotel portion.

Interesting, okay so I guess in total then how many is it in Brooklyn that are in this pipeline? Is it just three hotels, two sites?

It is currently the four hotels, three sites actually we have, the Nevins Street project, the two hotels, and then we also have another hotel project at Atlantic and Smith.

Right and that's not in the development loan pipeline?

That is not, no.

Great, that's all I had for the moment.

Thanks, David.

And our next question from Bill Crow, Raymond James.

Good morning, guys.

Yes good morning, Bill.

Jay, could you just talk about what you're seeing from an economic perspective? As you look out toward '08, and I know you haven't given guidance yet, but certainly there are a lot of contrary indicators out there and it's hard to say which way the economy is going, do you see any cracks out there, anybody trading down from other hotels into maybe your price point, or even people trading down from yours into other price points?

Yes that's a good question. Industry guidance has obviously been around 5% to 7%. Our operators are in the process of finalizing budgets, and again the budget forecasts for next year are not finalized. But conversations we're having are around 6% to 8% growth for next year. Now where that's coming from, I don't believe -- since we don't do as many advanced bookings as more of the larger group hotels it's difficult to know whether people are trading down into this, but we're continuing to see a lot of demand just from the general reservation streams and the bit of group bookings that we do have.

I don't know that we're seeing any trading down yet. I think in the markets we're in we're just still seeing primary demand, the business markets in the metros that we're in is holding up well right now, and our operators are feeling pretty optimistic about next year. I think should there be a bit of belt tightening we've seen it in the previous cycle that there will be a good amount of trading down, and we'll certainly be very happy to take that business.

But as we mentioned for instance in New York we're already running 92% occupancy and some of the other metro markets also, occupancy rates are pretty high. But it will allow us to continue to optimize our rates through revenue management. So we would just see that as a bit of a windfall going forward.

Okay switching gears a little bit back to the lending side of things given the debt market turmoil that we've seen this summer, this fall, are you seeing more opportunities to lend to third parties? Do you anticipate getting more active on the mezzanine side and are you getting more juice in the rates because maybe competition is not as significant as it used to be?

Absolutely, Bill this is Neil, but we're seeing a lot more interest in the development loan program from other active developers. We have been able to move the rate from 10 to 11, and now 11 to 12 in certain cases. I'm sure that that will continue to increase. The short answer is yes, unfortunately don't -- besides this most recent one with United Homes in Brooklyn, we don't have others that we can disclose at this time, but we're still very active in the marketplace both in New York as well as in Philadelphia where we're finding some very attractive opportunities.

But strategically, how big do you think this program could get relative to your balance sheet or your hotel ownership operations?

Yes go ahead, Ashish.

Bill, I think that we can expand it and we're going to continue to see some of these projects being completed in the next three to six months, so we would look for some of this capital that we have outstanding right now to be redeployed. I wouldn't say that we're targeting a specific number but maybe something in the 100 million to 150 million range potentially there.

And then how are your spreads looking? What's happened to your cost of debt, your funding source on this?

Well, I mean our funding source it has improved our overall spread is kind of our credit line is down from 775 to 675 so we're saving 100 basis points there yet we're able to get 100 to 200 basis points extra on the mezz.

Okay perfect thanks, guys.

Thanks, Bill.

(OPERATOR INSTRUCTIONS)

We'll go next to Will Marks, JMP Securities.

Hello, guys a question on -- start with the 92% figure you just gave and is that Manhattan, New York City in general or is it year-to-date, just curious?

That was for the quarter, Will, and that is our -- that includes just our New York assets so that would be Manhattan and the boroughs.

Okay, and right now what does that make up as a percentage of the portfolio? I know at one time it was about a third of your income I guess.

I think for next year, Will, we're assuming that it will be pretty close to that, about 30%.

Okay.

And that does not include the development loans.

Okay, and I know you discussed a little bit of an outlook for next year where you're hearing -- how about specifically for New York? I gather it would be at the high end, but maybe not if you're already at those occupancy levels maybe you're seeing some down side?

We're still very confident about New York, as high as our occupancies are, our rates are still trailing the market pretty significantly. I think that's a function of the ramp up of our assets in New York. But to see a 10% increase in ADR in our New York City portfolio would not be unreasonable relative to the marketplace. Our rates are very strong there relative to the national averages and the like, but we still do trail the average market ADR by over 20%. So there's definitely some room there.

Okay great, and one final question; just big picture on your balance sheet as it relates to dispositions/acquisitions. You talked a little bit about on the disposition side, and I can't recall if you mentioned that you're looking at taking bigger steps in that regard, and also are you looking at any portfolios on the acquisition side?

You know, Will, on the acquisition side we continue to underwrite a lot of deals. They're kind of the pipeline on the acquisition side has not slowed down at all in terms of what's coming across our desk, but we continue to have a really hard time penciling acquisitions at the prices that they're being offered. Even this kind of credit prices we were expecting that there would be some kind of impact on cap rates. And in the northeast and in our major markets where we're focusing our acquisitions program we're just still not seeing it there.

What we're seeing out in the marketplace whether they be portfolios or single assets we're seeing cap rates at around the seven cap range. And when we look into New York City and Washington, D.C. we're seeing caps in the five to six cap range. So, we're still not seeing the kinds of deals --. We're underwriting a ton of deals, but unfortunately we're just not able to make them pencil.

Where we continue to expect so much growth from our existing portfolio that it just feels dilutive to make any of these acquisitions come to life. That said, we're continuing to chase after many things, chase after the underwriting of them and putting in our offers at the numbers that make sense for us. And as has been the case all year long we're not getting any of them.

On the disposition side, we do continue to look at some opportunities there. The New Jersey assets that we sold we felt we got a very good price for them although we had not listed them. We were approached by someone on an off-market basis who was able to meet our number. We are looking at a handful of other assets that hopefully across the end of this year we might be able to make a couple of more announcements.

And is this driven by -- or are dispositions right now driven by the pricing, your desire to pare down your debt level or a combination?

It's probably a combination of both Will. You know I mentioned that the two New Jersey assets we were able to get a sub-seven cap rate on the sale of those hotels. We certainly think the buyer is going to do quite well with them. They'll have more of an owner-operator focus on them, but for us we probably didn't have too much more growth left in those assets so we were happy to sell them.

And I think similarly we'll continue -- I guess it's a combination of the two factors you mention, balance sheet and a favorable cap rate environment for a seller, but it's also just long-term portfolio management methods, culling through lower growth assets.

And you'll note in previous calls we've kind of discussed where we feel some vulnerability to supply and south Jersey was one of those markets. But the hotels that we're kind of identifying as non-core are those markets where we do feel that we're susceptible to new supply across the next two to three years.

Great, thanks a lot.

Okay, Will.

Our next comes from Michelle Ko of UBS.

Hi, good morning.

Hi, Michelle.

Hi, just wanted to ask you a few questions. Can you give us an update on the marketing of the Central PA assets, are those ones that you were speaking of? And then also do you have a target debt metric like a debt to EBITDA or a fixed charge coverage ratio that you'd like to reach? And then you also mentioned that you had a few projects under the development loans that might be completed, which assets are those and do you plan on acquiring all or part of those assets?

Michelle we'll start with the last one first then. I mean the ones that will be completed over the next quarter or two the development loans we're still looking at the Sheraton JFK that will be completed. The Holiday Inn Express 29th Street is being refinanced, so we will not have that mezz piece forecasting that gets paid off in the fourth quarter as well.

There are a few of the Connecticut and Rhode Island assets that we're anticipating to be paid off some time in the first and second quarter of 2008. So, we believe that all of those will be paid off by the end of the second quarter of next year. From a target debt range, I mean we look for our fixed -- we don't really have a targeted sort of fixed charge but we would like to see it above 2.2, 2.3, maybe getting into the two and a halfs even. And we're looking at 50% to 55% debt to cap, debt plus preferred to cap for a target range. I forget what your first question was now.

Could you give us an update on the marketing of the Central PA assets?

You know Michelle we've had discussions with a handful of groups and I think our current feeling is for the pricing that we can achieve on those assets that we're not going to look at a wholesale sale of the entire Central Pennsylvania portfolio but we are identifying a handful of assets that we can get the pricing that would justify letting go of the cash flow.

So as for an update nothing solid yet but I think when you do see something in Central Pennsylvania transacting it, will likely be smaller than the entire portfolio.

Okay, thank you.

And we'll take a follow-up question from David Loeb with Baird.

Will did a good job of asking most of my follow-up questions but just to drill a little deeper Neil can you -- you mentioned a supply concern in a few markets, obviously leading you to target asset sales and I know we've talked about the New Jersey assets being among those. What other markets are you seeing new supply in and given that a lot of the supply growth has come in your kind of product and your kind of suburban markets are you seeing that in the suburbs around Boston, New York, Washington or Philadelphia?

We're -- let me say overall we're still seeing I think much less supply than the industry sees because of the markets that we do operate in. That said there's a handful of markets where our concern is higher than others. In suburban D.C. is a marketplace that we're seeing some supply that will be opening across the next two to three years. That's of some concern. This doesn't impact Tyson's Corner or Greenbelt or even Laurel for that matter, but Frederick is a market where one hotel opened this past year, and there's some developers seeking approvals for another couple of hotels. So they're still three years away from opening likely, but that would be a significant amount of supply for that marketplace.

Suburban Boston we're not seeing much new supply at all. There just hasn't been the performance, the uptick in performance in Boston, has come late enough in the general cycle that I think supply is not going to be an issue in suburban Boston.

How about Philadelphia or Long Island?

Philadelphia has not seen much new supply and not expecting to see a lot of supply in our submarkets. Our submarkets in Philadelphia besides the CBD obviously are King of Prussia, Oxford Valley and [Malvern]. And those markets we're not seeing much new supply there at all. The -- what's the other place?

Long Island.

Long Island is a very, very difficult place to develop in and where our two assets are Hauppauge and Brookhaven they're in that three to five-mile radius. There's no new supply that we know of.

Okay, so as you look to exit it sounds like Frederick is one that you're certainly looking at --.

We don't mention that too much, because we do need to sell these assets. But yes, David, there is more vulnerability there than others.

Okay, and it sounds like your asset sale targets are likely to be completed in the next six months, as opposed to having a lot of ongoing asset sales through next year.

I think that's right.

And in terms of acquisition opportunities from the development loans, Ashish mentioned a couple that are being paid off, where do you expect opportunities for acquisitions over the next year from that portfolio?

We're feeling very strong about the JFK marketplace. So the Sheraton JFK is one that we believe that we'll be able to reach terms on at an attractive price. Connecticut and Rhode Island we're going to look at them very carefully, but we feel that the price that the developers are developing them at will make for an attractive acquisition for us. Going further into next year there's a couple, one or two other projects in New York that we'll be completing that we will absolutely target for acquisitions.

So essentially the ones that Ashish mentioned being paid off except for the Holiday Inn Express, it sounds like you're at least looking closely at those.

Absolutely, yes.

So might those be paid off first, and then you'd put cash out later? Or, might you just defer the repayment somehow?

You know, David, it's really us getting to the negotiating point with the developers. I mean we may let it stabilize a little bit, but there's also a good chance on some of these that we just convert our mezz into equity right away.

Okay. So it sounds like in terms of cash needs between the asset sales that you've got under contract in New Jersey essentially fund the mezz loans that you've put on during the third quarter. And, it sounds like other asset sales are likely to fund new mezz loans and existing mezz loans are likely to fund equity investments in acquisitions.

Yes, that's very fair.

Okay, that's all I have, thanks.

Okay, thanks.

And we have another follow up from Bill Crow of Raymond James.

Could you just give me an idea of where CapEx might be going for next year? Are the brands continuing to pressure owners for continued upgrades, and where do you see [FF&E] next year?

You know, Bill, we typically -- we reserve 4%, 5% and 6% for limited service, extended stay and full service respectively. We do not foresee any capital needs in our portfolio to exceed the reserve that we set aside for next year. You know I mentioned earlier it's still a very young portfolio, I mean the average age is still seven years old, and we don't have any major guns to our head. But we do tend to spend all the dollars that we have set aside in the reserve. It just helps us to drive rates and have a strong product. So, I guess you're probably getting at is there any irregular expenses that we're expecting and we don't foresee any.

Okay. No I just -- want to make sure we get the dividend coverage updated for what might be coming down the road for next year. All right, very good. Thank you.

Okay great.

(OPERATOR INSTRUCTIONS)

And it appears we have no further questions at this time. Mr. Shah, I would like to turn the call back over to you for closing remarks.

I just want to thank everyone for being with us this morning. If any questions occur to anyone after the call, please feel free to call us in the office, all three of us are in the office all day, and we'll be happy to answer questions that might come up afterwards. But once again thank you very much, and Operator I think that's it.

Ladies and gentlemen, that does conclude today's presentation. Thank you for your participation. You may disconnect at this time.